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THE SITUATION ROOM

Interview with Republican Presidential Candidate Rick Santorum Interviewed; Israeli Soldier Released by Hamas in Prisoner Exchange; President Pushes Jobs Bill on Bus Tour; GOP Presidential Candidates Prepare for Upcoming Las Vegas Debate; Up for Grabs in 2012?; Mitt Romney's Solution for Nevada Foreclosure Crisis; Interview with Former Las Vegas Mayor Oscar Goodman

Aired October 18, 2011 - 17:00   ET

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


WOLF BLITZER, HOST: And to our viewers, you're in THE SITUATION ROOM.

Happening now, high stakes here in Las Vegas. Seven Republican presidential contenders gearing for up battle on this stage in CNN's Western Republican presidential debate. One of those candidates, Rick Santorum, he's here with me live this hour. We'll talk about a lot, including could he make up the difference in the poll numbers? What's going on?

And President Obama throwing a counterpunch today, day two of his push to convince Americans he's the one for the job. The president expected to speak only minutes from now. We'll bring you some of his remarks live.

Breaking news, political headlines and Jeanne Moos all straight ahead. I'm Wolf Blitzer in Las Vegas. You're in THE SITUATION ROOM.

You're looking at a live picture of our debate hall here in Las Vegas at the Venetian hotel. A little less than three hours from now seven, repeat, seven Republican presidential candidates will take the gloves off in CNN's Western Republican presidential debate.

And arguably, no one stands more to lose than the former Godfather Pizza CEO Herman Cain who has come from way behind and made a very dramatic surge to the front of the pack, at least according to the polls, now in a statistical dead heat with the frontrunner Mitt Romney.

I spoke with Herman Cain just an hour ago here in THE SITUATION ROOM, and I asked him about his opponent. Listen to this.

(BEGIN VIDEO CLIP)

HERMAN CAIN (R), PRESIDENTIAL CANDIDATE: The biggest problem I have with Governor Romney, who I respect, is him trying to say that he is the nonpolitician business candidate. I am the true nonpolitician business candidate in this race. He was a Wall Street executive. I was a main street executive because I dealt with individual businesses, collection of businesses and franchises, et cetera. So there's a big distinction in terms of being hands on Main Street and then being money management Wall Street. (END VIDEO CLIP)

BLITZER: Herman Cain will likely get a lashing from some of his Republican challengers tonight if not all of them. They will be looking to try to squash his soaring popularity.

One of those Republican candidates is joining me now live, the former Republican senator from Pennsylvania, Rick Santorum.

Senator, thanks very much for coming in.

Why are you more qualified to be president of the United States than Herman Cain?

FORMER SEN. RICK SANTORUM, R-PA., PRESIDENTIAL CANDIDATE: Since you just heard Herman talk about Wall Street versus main street, both of them as, quote, "business people" supported the Wall Street bailout, supported the TARP program, supported a huge government intrusion into the private sector, something that is antithetical to most conservatives and certainly most people I'm talking to out on the campaign trail.

So you really need to look at someone who understands the consequences of our actions in Washington. I've been in Washington a long time. I was there 16 years. But you'll learn a lot from that experience. And one thing you learn is you don't give that kind of power to Washington and set a precedent that future presidents in fact did drive a truck through.

BLITZER: You know both Mitt Romney and Herman Cain, Herman Cain a former governor of the Federal Reserve out in Kansas City, they both say in support of that TARP money, millions of Americans would have lost their entire savings if the U.S. would have let the banking industry down.

SANTORUM: And look at what's happening now. Look at the housing market. Look at this economy. It has been on life support for over three years because we didn't let the marketplace work. These are guys who say they believe in the marketplace and yet they were for the biggest government intervention in the history of our country

And what's happened is now government has more control over the private sector. They complain about that, but they were one of the folks who opted that in and encouraged that to be done. I knew enough having the experience I had that the last thing we would do is let the government micro manage the sector. Let the markets do it. Would it have been more severe? Possibly. But what you wouldn't have had is government managing the economy as dramatically as it is now as a result.

BLITZER: So, these two front-runners, Mitt Romney and Herman Cain, who's more qualified to be president of the United States as the true conservative?

SANTORUM: Well, look, I don't think either of them have great conservative credentials. BLITZER: Either of them?

SANTORUM: You look at Herman Cain. He's putting forward a brand new tax for the American public, a national sales tax at the same time that we're going to have an income tax and value added tax, which he calls a corporate tax. That's not a conservative proposal in my opinion. That's giving more tools for Washington to take more money from the American public.

BLITZER: He says most Americans would wind up paying less.

SANTORUM: Most American will wind up paying more. You have half of Americans who don't play any kind of federal income taxes.

BLITZER: So, he's not a true conservative.

SANTORUM: The reason I've been as you know, Wolf, I've been sort of somebody who's been out there and interacting with the candidates because I have the most consistent conservative record on whatever issue it is, whether it's moral, cultural issues, whether it's economic issues, or whether it's national security issues, I've got a strong conservative record, a good background in all of them and can be very aggressive.

BLITZER: You're not sure that Mitt Romney's a true conservative either. Is that what you're saying?

SANTORUM: I think Mitt Romney is someone who raised taxes, someone who instituted gay marriage in the state of Massachusetts when he didn't have to. You look at Romneycare, which is a huge government takeover. It's and just interesting that Duval Patrick, the governor who succeeded him, says now we're going to get to the real job in Massachusetts, and that is cutting costs. So he even admitted that Romneycare was about increasing access to care, which of course is a function of higher costs. And they didn't deal with the cost issue. That's the problem with Obamacare.

BLITZER: So I'll be precise. Is Mitt Romney a true conservative?

SANTORUM: I would say I'm the most conservative, the most electable conservative in this race, and neither Romney nor Cain is conservative as I am.

BLITZER: I'll ask you the same question I asked Herman Cain. Is Mitt Romney a Christian?

SANTORUM: I think this whole idea that Mormonism is a cult -- look, every Mormon I know with the exception of Harry Reid is a good solid, conservative and has great values. And I don't second guess anybody's religion. There's no religious test in this country. They're good people. They made great contributions to this country, and that is not a disqualifier for Mitt Romney.

BLITZER: Why has Rick Perry's campaign sort of collapsed the way it has?

SANTORUM: Well, you got to be ready for the job. You have to have someone, again --

BLITZER: He was governor of Texas for 10 years.

SANTORUM: Like I said, you have to be ready for the job in Washington, D.C. A lot of folks out there who think they can come out and tackle these very, very tough issues without the experience necessary, without having been through interviews with Wolf Blitzer, which isn't an easy thing to do. I've been doing this for a long time, and I think you need someone you can trust, someone who's been through the crucible, who's been beat up, as you know I have for a long time in this town for being a conservative, is the kind of mettle you need to have tested for someone who is going to take on Barack Obama.

BLITZER: Let's talk about your campaign. You have, what, $200,000 of cash on hand. He's got like $15 million or $18 million. Your poll numbers not very impressive, right down there at two percent. How you going to change that?

SANTORUM: I would say if you looked at a month ago, you would have probably made the same comment to Herman Cain. This is a very fluid election. We're doing it the old fashioned way. When we're spending time in Iowa, New Hampshire, South Carolina, I've done 150 town hall meetings in Iowa, been to 70 counts. We're building our base on the activists.

And as you know, those are the folks who show up at the caucuses. They're going to be the ones who are going to call this field. We're working really hard in New Hampshire. Those are the first two primaries. And polls right now don't matter. Governor -- told me when I first went to New Hampshire, he said work hard, pay no attention to the polls. New Hampshire breaks late. It's the last two or three weeks, then you'll see what will happen.

BLITZER: What are you doing to get ready for tonight's debate?

SANTORUM: I'm doing Wolf Blitzer's show.

BLITZER: Rehearsing and practicing?

SANTORUM: This is my rehearsal. How am I doing?

BLITZER: You're doing all right. Thanks, Senator, good luck tonight.

SANTORUM: You bet.

BLITZER: I'll see you up on stage.

Jack Cafferty is here. He's got "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN CONTRIBUTOR: Sobering headline, "America must manage its decline." That's the title of the piece in the "Financial Times" an article that explores what the United States must do to come to terms with its changing role in the world. If the U.S. and its leaders could actually acknowledge that our global power is in decline today, it would be easier to figure out what comes next. But politics being what it is, big surprise that no one is being honest here or about much of anything else these days either. Instead, it's practically unacceptable to suggest that there may be no coming back to the United States of America. And that's the cold, hard truth. There may very well be no coming back, at least not to where we once were.

For now, the U.S. is still the world's largest economy, the top military and diplomatic power. But a time when China becomes the largest economy isn't that far away. This article suggests that's why now is the time for America to have what it calls a rational debate about what relative decline means. Decline may not necessary mean the end of prosperity, but it likely means making choices and alliances.

It turns out those who refuse to even talk about decline may actually speed up the whole process. By not addressing our changing position in the world, we're not going to be able to deal with other issues that need or attention now, things like deficits and educational reform.

Lastly, the "Financial Times" article says managing decline has as much to do with psychology as with politics or economics. Listen up now, because this is interesting. "Britain had an easier go of it at the end of World War II because they were essentially handing over superpower status to the United States, a country with a shared heritage. But this could be a much more difficult task for the United States if we have to eventually hand over power to China."

Here's the question: Is America in denial about its decline?

Go to CNN.com/CaffertyFile and post a comment there, or go to our post on THE SITUATION ROOM Facebook page -- Wolf?

BLITZER: Good idea, Jack. A lot of people should go to that Facebook page. Appreciate it very much.

One Republican presidential frontrunner we're talking about Mitt Romney, getting some serious heat from leading Democrats for his controversial plan to try to solve Nevada's housing crisis. Just ahead, the comments that ignited the fire storm.

Plus, one captured Israeli soldier's freedom in exchange for the release of more than a thousand Palestinian prisoners. Ahead, the latest on this pivotal moment potentially at least in the Middle East.

(COMMERCIAL BREAK)

BLITZER: We'll get back to the Republican presidential debate, last minute preparations underway, in just a moment. But there's other important news we're following today including in Gaza, where jubilant Palestinians are welcoming return of the first wave of prisoners held by Israel. It's part of a major swap for the soldier Gilad Shalit held by Hamas for more than five years. In all, more than 1,000 Palestinians are expected to be freed, many of them convicted of crimes against Israelis, including terrorism and even murder.

The prime minister of Hamas is calling the deal a major victory for Palestinians.

(BEGIN VIDEO CLIP)

ISMAIL HANIYA, HAMAS PRIME MINISTER (via translator): The Israelis brought war on Gaza and made thousands of martyrs. And we've carried these martyrs on our shoulders and buried them. Israel was looking for Shalit, but after the war the enemy withdrew and Shalit remained in the hands of our heroes. And now we have made our victory.

(END VIDEO CLIP)

BLITZER: We'll go to Israel in a few moments, but let's go to Gaza first where CNN senior international correspondent Matthew Chance is standing by. Set the scene for us, Matthew. What was it like when these first several hundred Palestinian prisoners showed up?

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, it's very much been a carnival atmosphere. There's been none of the sort of divided concerns that we've seen being played out in Israel about the validity of this deal.

Over here in Gaza, people see it as a very favorable deal indeed. There's been 1,027 Palestinian prisoners who have -- the Israelis have agreed to release from prison in exchange for that one Israel soldier, Gilad Shalit. The celebrations are very intense, family members embracing these prisoners who they haven't seen on many occasions, sometimes for 10, 20 years on some instances. That was very emotional as well.

These bizarre scenes, as well, of masked gunmen carrying guns in tears, embracing people who were their former comrades in arms, who had been released from prison. So some very bizarre scenes indeed.

It moved on into the evening into a big street party in the center of Gaza city, tens of thousands of people coming out to welcome the several hundred prisoners who have been released in this first batch of returnees from Israel.

BLITZER: I take it, Matthew, Hamas sees this as a major victory over Israel.

CHANCE: It does, and it's been characterizing as a victory not just of Hamas, but for all of Palestinians. Remember it's not just Hamas members who were released in this prisoner swap deal. It's all the sort of main Palestinian factions. Even some Israeli Arabs were included in that prisoner swap. So it's meant that Hamas can say, look, we don't just represent the Islamists. We represent all Palestinians. So advancing is a major boost for obviously their image and popularity amongst ordinary Palestinians. Wolf?

BLITZER: Let's go to northern Israel right now. Gilad Shalit was given a very, very warm welcome as he returned to his hometown after more than five years in captivity. For more on that emotional homecoming, here's CNN's Fred Pleitgen.

(BEGIN VIDEOTAPE) FREDERIK PLEITGEN, CNN INTERNATIONAL CORRESPONDENT: Freedom after more than five years in captivity as Gilad Shalit crossed into Israeli territory. But his first words recorded before the handover in an interview with Egyptian TV. "I received this news a week ago," he said, and then I felt it would be the last chance for my freedom." Shalit was flown to an Israeli military base for medical evaluation. There he was met by Prime Minister Benjamin Netanyahu and finally reunited with his father, who had campaigned tirelessly for his release.

Freedom for Shalit in return for release of more than 1,000 Israeli prisoners, some Israelis have criticized it, but a majority supports the move.

"I would like to make clear that we will continue to fight terror," Netanyahu said, "and every released terrorist who returns to terror will find his blood in his head. He will be responsible for the state."

In Gilad Shalit's hometown many gathered in anticipation of the soldier's arrival. People have been coming here to Shalit's his home since the early morning hours, even preparing the place, signs saying "Welcome home Gilad," waving the Israeli flag. And of course they want to give him a hero's welcome after five and a half years in Hamas captivity.

A convoy with Gilad Shalit arrived in the early afternoon hours. He was immediately whisked into the family home. His father later explained that his son was healthy, but weak.

"Gilad feels good," he said. "He had some injuries that weren't treated and results from lack of sunlight. But now he will get appropriate treatment." Noam Shalit added that his son would now begin a period of recuperation, one that his family hopes will help him start a new life after captivity.

Fred Pleitgen, CNN, Israel

(END VIDEOTAPE)

BLITZER: We're counting down to a huge debate that potentially could change everything in the Republican race for the White House. One of the frontrunners may be in a bit of trouble for something he said about the economic situation right here in Las Vegas. Stand by.

Also, Hillary Clinton comments on the hunt for ousted Libyan leader Gadhafi during a surprise visit today to Tripoli.

(COMMERCIAL BREAK)

BLITZER: Secretary of State Hillary Clinton becomes the highest ranking U.S. official to visit Libya since the ouster of Moammar Gadhafi. Lisa Sylvester is monitoring that and some of the other top stories in THE SITUATION ROOM right now. What's going on, Lisa.

SYLVESTER: Hi, Wolf. Secretary Clinton was in Tripoli today for talks with the leaders of Libya's National Transitional Counsel. Clinton told reporters that she hopes former Libyan Moammar Gadhafi will soon be captured or killed, and she pledged that the United States would support the democratic process in Libya. Forces loyal to Gadhafi are still battling troops from the transitional government and parts of that country.

And there are calls for actress Susan Sarandon to apologize for reportedly calling Pope Benedict a, quote, "Nazi." According to a news report, Sarandon made the comment during an interview at the Hamptons film festival. She reportedly made the comment while talking about her 1995 film, "Dead Man Walking" and her efforts to campaign against the death penalty. The anti-Defamation league says she should apologize to the Catholic community.

And there is new hope that decades of effort to develop a malaria vaccine may finally be paying off. Result from a clinical trial conducted on 15,000 children in Africa indicate a new vaccine cut the number of malaria cases roughly in half. An official at the Centers for Disease Control and Prevention says the findings show researchers are quote, "on track to develop an effective vaccine against the disease." That would be really good news to see that happen, Wolf.

BLITZER: It certainly would. Lisa, thank you.

President Obama by the way, expected to hit Republicans hard for opposing his jobs plan. We'll go there live. We're going to go to Virginia live and show you what's going on with the president.

Also CNN's western Republican presidential debate now, what, a little bit more than two and a half hours away. What will make the difference tonight? We're asking our CNN political contributors James Carville and Ari Fleischer. They're both standing by live right here. A special THE SITUATION ROOM continues. We're live in Las Vegas.

(COMMERCIAL BREAK)

BLITZER: While the political world has its eyes here on in Las Vegas for CNN's Republican presidential debate, President Obama is stepping up his attacks on the GOP using a three-day bus tour through North Carolina and Virginia to paint the Republican party as being simply unwilling to stand up for struggling middle class Americans.

Our White House correspondent Brianna Keilar is traveling with the president in Virginia right now. The president is expected to speak any minute now. But set the scene for us. What happened today?

BRIANNA KEILAR, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, we're here in Virginia. The president spoke earlier today in North Carolina, but we're here in southern Virginia now at Greenville County High School where the president, as he did in North Carolina, will be speaking to a predominantly African-American crowd. Remember, it was really black voters, a very enthusiastic voting bloc in 2008, that helped push him over the edge certainly by a very slim margin in North Carolina, also helped him secure Virginia, two states that he's hoping to hang onto in the next election. But he's been traveling through the northern North Carolina, southern Virginia today, making some stops at restaurants, at schools, visiting with students, teachers. This will be his second speech of the day, and he's trying to convince voters he's doing everything he can to create jobs and that it's Republicans that are standing in his way following that vote in the Senate last week where his jobs plan failed to move forward with Republicans united against him.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Just last week all the Republicans in the Senate got together and blocked this jobs bill. They refused to even debate it. Now, keep in mind, one poll found that 63 percent of Americans support the ideas in this jobs bill, but 100 percent of Republicans in the Senate voted against it.

(END VIDEO CLIP)

KEILAR: Now, Senate Minority Leader Mitch McConnell, back in Washington today, responding to this criticism. Republicans have been paying a lot of attention to the president as he goes on this bus tour. McConnell saying the president's $447 billion jobs plan is just more of policies that have failed.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R), MINORITY LEADER: 1.5 million jobs lost since the first. Now, he's coming back and asking us to do it again. You all have heard this before because it's one of my favorite sayings. At home, we say there's no education the second kick of a mule.

We've already done this. We've tried it. It failed.

(END VIDEO CLIP)

KEILAR: Now, as we await the president here in Emporia, Virginia -- he could be speaking really in just a matter of minutes to this crowd -- we expect him to call again, as he did this morning, on Congress to pass his jobs plan. But now that it hasn't passed as a whole, to pick it up piece by piece and pass it, ultimately, in its entirety, but do so piece by piece.

The first bit he's calling -- and we're expecting this to happen later this week -- $35 billion to rehire or keep teachers, firefighters and police officers employed, when, as you know, Wolf, a lot of states and local governments have been cutting their budgets.

BLITZER: They certainly have. All right, Brianna. Stand by. When the president starts speaking, let us know. Maybe we'll listen to hear what he has to say.

Brianna Keilar, traveling with the president in Virginia right now.

Virginia and North Carolina, two major battleground states. Clearly, the president is seeking to win both of them. He did last time around in 2008.

Let's bring in CNN's Tom Foreman to take a closer look at these states.

All right, Tom. Set the scene for us about what's going on.

TOM FOREMAN, CNN CORRESPONDENT: Well, Wolf, Brianna alluded to it there a moment ago. Republicans are saying this is a campaign trip, pure and simple. The White House says no, we're out pushing a jobs bill, but the Republicans say look where the president has been.

This is where he is right now, but since mid-August, these are all the places he's visited. Only one trip to red America, meaning parts of the country that voted against him. All his other trips have been to blue America, and particularly, there's been a preponderance of visits to these striped states. Those were states that were right on the edge that switched from Republican to Democrat in the last election, including North Carolina and Virginia.

Important factors to consider there.

In North Carolina, one Republican seat was gained in the House, so there was a sense that the state was shifting a bit back against the Democrats there. And as Brianna said, a very strong African-American vote there. That's very important to this president.

If you look now at Virginia, you have a different equation. Again, three Republican seats gained in the House. The governorship was also taken back by Republicans. But Virginia also has a different constituency that the president has appealed to, which is young, urban professionals.

They have been growing in Virginia, particularly in the areas close to Washington, D.C. He wants to reach that group with the message that says this is about jobs and it's about Republicans who don't really agree with you philosophically, Wolf. So this is the fundamental reason why Republicans look at this trip and say, you may say it's about jobs, but we think it's about one job -- yours -- and you're trying to keep it.

BLITZER: What about Nevada, where I am right now, in Las Vegas, getting ready for the big debate tonight? What does it look like? I suspect that's also up for grabs.

FOREMAN: You're absolutely right, Wolf. If you look out here at Nevada, here's a simple equation in Nevada. One Republican seat gained in the House.

Remember, Nevada is the home to Harry Reid, who's the big Democrat on the Senate side, so that matters. But more importantly, Nevada has the worst unemployment in the country, 13.4 percent. Also a strong union presence.

So that's one of those states where the president has not been lately, but you can imagine that he may very well head there at some point, because he's got to fight off these numbers and pin these numbers to Republicans instead of keeping them in his own House -- Wolf.

BLITZER: I want all of our viewers also to check out my blog, CNN.com/situationroom, where I write about a little bit of what's going on in Nevada and Las Vegas right now.

Tom, thanks very much.

The Republican presidential candidate Mitt Romney, he's got some controversial remarks he's presumably going to have to deal with later tonight. We'll assess what's going on.

James Carville and Ari Fleischer, they're both standing by live.

(COMMERCIAL BREAK)

BLITZER: Beneath all the glamour and the glitz here in Las Vegas, especially here on the Strip, there are serious economic problems. Unemployment has soared to 14.2 percent -- 14.2 percent housing foreclosures in Nevada, the highest in the United States.

Here's how one Republican presidential front-runner -- we're talking about Mitt Romney -- says the problem should be solved. Listen to this.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: As to what to do for the housing industry specifically -- and are the things that you can do to encourage housing? One is, don't try and stop the foreclosure process. Let it run its course and hit the bottom.

Allow investors to buy homes. Put renters in them, fix the homes up, and let it turn around and come back up. The Obama administration has slow-walked the foreclosure process that has long existed, and as a result we still have (AUDIO GAP).

(END VIDEO CLIP)

BLITZER: Harry Reid is slamming that idea. Listen.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MAJORITY LEADER: Nevada has the highest foreclosure rate in America, and it has for almost three years. And here's what Mitt Romney said. He would just let them hit rock bottom. I don't know what's more graphic than that in how we have different views of what the world should be like than our Republican friends.

(END VIDEO CLIP)

BLITZER: The Obama campaign now also weighing in via Twitter saying -- and let me quote -- "Let foreclosures hit the bottom? Our take, Romney won't lift a finger to protect the middle class."

Let's talk about this with two CNN political contributors, the Democratic strategist, James Carville, and the former Bush White House press secretary, Ari Fleischer.

Ari, could this potentially come back to haunt Mitt Romney not in the Republican race here in Nevada, but in a general election, assuming he's the Republican nominee?

ARI FLEISCHER, CNN POLITICAL CONTRIBUTOR: I don't think so, Wolf. I think this is one of those issues where you're in favor of government intervention, and if you believe government spending such as the two rounds of homebuyer tax credits that President Obama put through to solve the problem, the problem would already be solved.

The issue is you have to let the market rebalance and the market come back. That's how you restore housing on a long-term fundamental foundation. If we go back right away, there's a problem when government spends money, we are never going to get rid of the deficits and the debt we have.

BLITZER: James, you agree with Ari?

JAMES CARVILLE, CNN POLITICAL CONTRIBUTOR: No, not at all, and neither does Martin Feldstein, who was President Reagan's head of the Council of Economic Advisers who wrote a piece last week talking about how devastating this was and said that the government should come in and secure the mortgages, and I think 110 percent of the value of the home, and change from a non-recourse to a recourse loan. Pointing out just the devastating effect this has on the economy -- on a much, much larger economy.

And I don't think that Romney is right. The problem is, is that we have too many foreclosures in this country, not enough foreclosures. He seems to be arguing that we need more foreclosure. And I don't think people buy that, and I know that Professor Feldstein, who's a pretty knowledgeable guy, doesn't buy it at all.

BLITZER: But you've got to admit, in fairness right now, James, the president, all these efforts almost three years to stop these horrible foreclosures, they really haven't made much of a dent yet, have they?

CARVILLE: Right. I think it's a valid point to say -- to make that point, but what Professor Feldstein is doing is -- some people are saying that the government should take an equity position in some of this -- is to say that this is a event, you know, that we haven't had since the Great Depression, and that we ought to be trying more. And I think people would acknowledge that some of the stuff that the president's tried has not been there. I'm sure the president would agree with that, too.

So, as opposed to trying to think of something new and fresh and different, Romney goes back to Hoover economics, and they're not going to work any better now than they worked in 1932.

BLITZER: Strong words, "Hoover economics" and "Romney" in the same sentence, Ari.

FLEISCHER: Well, look, with trillion-dollar deficits, one thing our country has to decide is, are we going to do keep just doing what we've always done for 30 years, which is, if there is a problem, that government knows how to spend money to fix the problem? It's proved it isn't working.

And one of the reasons we have so many foreclosures now is exactly because we gave so many loans to people who can't afford to pay their loans, so therefore they foreclosed. It was a government program that was a well-intentioned program to help create the mess we're in today.

So you can't think along government lines if you really want to solve these economic problems. You have to think differently.

BLITZER: James, let me just ask you about the debate tonight. If you were advising -- and I know you're not -- Rick Perry, what does he need to do in order to get himself back in the game?

CARVILLE: String two sentences together. That would be a start.

There's only one storyline. There's only one storyline in this debate, and that is, can Rick Perry sort of come back?

He's got two gifts. He's got this thing on housing, he's got this story in The Times this morning. He's the only guy other than Mitt Romney -- only person other than Mitt Romney -- that has any chance whatsoever of being the Republican nominee.

The Republicans don't want to nominate Romney, but Perry can't make a credible place for himself. I mean, for God sakes, man, do something tonight. Get up and show people you can do something. That's the whole story here.

BLITZER: Is he up to the challenge, Rick Perry? Can he do it?

FLEISCHER: Oh, he sure can do it. And I think this is still a very wide open race at the top tier of them. He has to punch up tonight.

BLITZER: His poll numbers have plummeted.

FLEISCHER: That's right. You have to look at a couple months' trend, and this is not over. There's a couple of months to go. And he has to recover. He's faltered.

But he has to punch it up tonight. He's got to be the one in this last debate for a month to set this tone for November that he's back in the game, that he can take on Romney. And he's just got to be aggressive in doing so, and articulate.

Rick Perry is both of those things. He hasn't been so far in the debates. I expect him to be that way tonight.

BLITZER: We'll see how he is. We're standing by.

Ari and James will be watching, as all of us will be.

Much more on the economic crisis in Las Vegas, Mitt Romney's controversial foreclosure plan. The former mayor, Oscar Goodman, he's standing by live. Also, our own Piers Morgan. Oscar and Piers and Wolf all together, coming up, right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: All right. Let's continue the lead-up to the huge Republican presidential debate tonight.

Joining us now, our own Piers Morgan. He's of course the host of CNN's "PIERS MORGAN TONIGHT." Also, the former -- yes, former mayor of Las Vegas -- Oscar Goodman. His wife Carolyn is now the mayor of Las Vegas.

Guys, thanks very much.

How's it feel being a former mayor of Las Vegas?

OSCAR GOODMAN, FMR. MAYOR, LAS VEGAS: I don't know. They're not sure what to call me, so she refers to us as mayors one and two, and she won't tell me which one I am.

BLITZER: You know, when he was mayor, he always had these very tall, beautiful young ladies walking around.

PIERS MORGAN, HOST, "PIERS MORGAN TONIGHT": I went to interview them in his mayoral office. It's the most extraordinary thing I've ever been in.

This guy's met everybody, and he holds power in this town. If we want to go out tonight, Wolf, he's the guy you want to go with.

BLITZER: Go out with him and you. The three of us will go and celebrate a little bit. I don't know what we'll celebrate, but when you're in Vegas, you've got to celebrate something.

GOODMAN: Absolutely, and I'm buying.

BLITZER: But you know what? I tweeted -- I not only tweeted, I wrote about this in my blog. It looks great, packed restaurants. The gym, I was working out this morning. You couldn't even find a treadmill. The Strip, packed.

But there's some serious problems. This city is in deep trouble. The whole state is in trouble.

GOODMAN: Well, see, I don't agree with that.

BLITZER: Tell me why -- 14.2 percent unemployment.

GOODMAN: See, that's a false figure. And people don't understand how we arrive at the real figure.

You look across the street, they've built some 8,000 to 12,000 new rooms during this recession, 35,000 construction workers were very, very busy. And the construction stopped. You take the workers out of that equation, we have about 7 percent unemployment. Maybe one of the best figures in the United States.

Now, I'm not going to tell you everything's rosy, because --

BLITZER: The highest home foreclosure rate in the country.

GOODMAN: And the truth of the matter is, everybody was making so much money here, that the domestics who were working in the hotels, they went out, they bought two or three homes, they financed them, they put nothing down, and then when it came time to pay the piper, they couldn't do it. Those are the homes that are being foreclosed, not the American dream homes --

(CROSSTALK)

BLITZER: You've been to Vegas many times. Do you buy that, what the mayor is saying?

MORGAN: Not entirely, because I think that Vegas actually personified a lot of the problem of corporate America. And I remember when I interviewed you, that one of the big problems of Vegas came when the president stood up and said, I don't want people coming to Vegas corporately and spending loads of money here. And that was a big problem.

GOODMAN: That hurt us.

MORGAN: That hurt, but also, people here were spending money they didn't have. It was a get rich quick mentality.

I'm sure you'd accept that to a certain degree.

GOODMAN: Well, of course, because people come to Las Vegas to have a good time, and part of having a good time --

MORGAN: Well, I don't mean the casinos. They were treating property like a casino. And they were gambling --

(CROSSTALK)

BLITZER: Because you thought you couldn't lose in real estate.

GOODMAN: Well, that's what happened. For many, many years, you couldn't lose in real estate. And then, all of a sudden, the banks pulled the plug, and they haven't done anything to rectify the situation. And people were left --

BLITZER: Who do you want to be the next president of the United States?

GOODMAN: Oh, probably myself.

(LAUGHTER)

BLITZER: Other than you.

GOODMAN: My wife?

BLITZER: Other than your wife. She's got a good job. GOODMAN: I don't know. She has a great job. Being mayor of Las Vegas is the best. I don't know. I'm going to keep that one to myself.

BLITZER: But you're originally a Republican.

GOODMAN: I came out here as a Republican, switched to Democrat. One of my law partners was running for political office, and the only thing that meant anything in those days was the Democratic primary.

And then, about two years ago, I said I've had it with both parties, they're not doing what I want them to do, they're gridlocked. So my wife and myself both became nonpartisans. That's not Independent, that's a party, nonpartisans.

BLITZER: Piers, you look at this Republican field, seven Republican candidates up on the stage tonight. What do you think?

MORGAN: I think it's getting very interesting. I think Herman Cain is a fascinating --

BLITZER: You're talking to him after the debate.

MORGAN: I'm doing a big interview with him after the debate for Wednesday night for my show. And he's a very interesting character, isn't he? He's come sort of out of nowhere.

BLITZER: Amazing.

MORGAN: And yet, he has a simple way of talking that is resonating with the public, he has simple ideas that have yet to be tested. What will be fascinating tonight, will the other candidates now go after him in the way they went after Rick Perry, for example, and will he be able to withstand the pressure of now being --

BLITZER: You think they should?

GOODMAN: They have to.

BLITZER: Because they're going to want his support. Mitt Romney's going to want all those Herman Cain supporters, if he gets nominated.

GOODMAN: Absolutely, and this is a good place to do it.

They're in Las Vegas. It's going to be a national audience. You gentlemen are going to be commenting upon what they're saying.

I think they're going to take him on. And he's very glib. And he does something which I love. He smiles. It's almost self- deprecating.

He sort of laughs at himself, which is a very good technique for a politician. But, on the other hand you can't say you're going to put up an electrocuting fence and look very serious about it -- I'm going to put up this fence and I'm going to keep them out.

MORGAN: Well, I think he meant it.

GOODMAN: At that time, right.

MORGAN: I don't think it was a joke.

GOODMAN: I agree with you.

MORGAN: But the interesting thing I think, also, is Mitt Romney, because he's been absolutely steady as a rock, isn't he?

GOODMAN: Yes.

MORGAN: Under any normal way of assessing these things, you say this guy should be romping home, but he's not. And there's a reason he's not, and that reason is that the Republican vote doesn't really find him sexy enough. And until they do, until he whips himself up to get that vote, it's an open field.

BLITZER: Piers, Oscar, Wolf -- what happens in Vegas --

MORGAN: Stays in Vegas.

BLITZER: Not tonight.

GOODMAN: Not tonight.

BLITZER: What happens in Vegas tonight at the debate, the whole world will be watching.

(CROSSTALK)

GOODMAN: You bet. We're going to have a good time.

BLITZER: Good luck. Enjoy the interview. We'll be watching.

Mr. Mayor, thanks very much.

GOODMAN: Thank you. It's great seeing you.

BLITZER: You've got a huge future in show business, I take it.

GOODMAN: That's what I understand.

BLITZER: All right. Thanks very much.

Let's check back with Jack. He's got "The Cafferty File" -- Jack.

CAFFERTY: Good stuff.

All right. The question this hour: Is America in denial about its decline?

Susan says, "Yes. All I hear is that this is the greatest country in the world. This is nothing but propaganda."

"People are drinking Kool-Aid by believing this nonsense. Our education system and health care systems are rated at the bottom compared to other countries. Our infrastructure is crumbling. The only thing this country knows how to do is war -- war, war, war."

"That's where all the tax money that could go to other things goes, to the Pentagon. It's a shame what has happened to the U.S. When I retire, I'm leaving here for good, and I won't miss any of it."

Ann in South Carolina writes, "I think so. I don't think Americans see a global economy."

"Americans want merchandise made in America, but they don't want to pay the price of American-made goods. Many don't see that our lifestyle of consumerism is ruining the planet."

"There seems to be a sense that if one goes to church, one is a Christian and all is well with our country, while our moral fiber is deteriorating all around us and greed pervades our society. The values that made our country great are slowly disappearing."

Steve writes, "No, I don't think America's in denial. I think the government is."

J.K. in Minnesota, "It depends on who you talk to, Jack. I'm sure the one percent doesn't think so. But the U.S. is looking more and more like it is, to me, in decline. The wealth and power in so few hands. A big hand goes to the Supreme Court in their Citizens United ruling. It's sad when it's thought that a corporation is a person."

Peter on Facebook writes, "What decline? Only the left thinks we're declining. Everyone else thinks it's just a bad patch that will smooth out as soon as we can get rid of the apologist currently in power in D.C."

And Mr. Nero writes, "I can't hear you, Jack. I'm busy fiddling."

If you want to read more on this, go to my blog, CNN.com/caffertyfile, or through our post on THE SITUATION ROOM'S Facebook page -- Wolf.

BLITZER: Jack, thank you.

It's always wise to get a designated driver when you've had a little bit too much to drink, unless you let a 9-year-old get behind the wheel. Jeanne Moos is next.

(COMMERCIAL BREAK)

BLITZER: Here's CNN's Jeanne Moos with a most unusual designated driver.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): The way she drove up to the gas pumps was a little jerky, and when she got out you saw why. It was a 9-year-old driving her allegedly drunk dad, something he bragged about inside the store.

SHAWN WEIMER, LET 9-YEAR-OLD DAUGHTER DRIVE: Nine years old. Nine. Gas, brakes. Listen, we're leaving and she's driving. I'm drunk.

MOOS: And she didn't just drive.

UNIDENTIFIED FEMALE: And I parked.

MOOS: Her dad bought her a caramel apple, then she got back on the booster seat behind the steering wheel and slowly, off they went, while a customer who saw the whole thing dialed 911 and followed them.

911 OPERATOR: Is the vehicle staying on the road?

UNIDENTIFIED MALE: Yes, she's driving pretty good. I'm telling you, I can't believe it.

MOOS (on camera): When police stopped the van, the girl said what most people say, why did you stop me? I was driving great.

(voice-over): But her dad's not looking so great. Thirty-nine-year- old Shawn Weimer wiped his eyes as his preliminary hearing postponed. He's been charged with child abuse.

UNIDENTIFIED FEMALE: What made you think it was OK to let a 9-year- old drive on a public road?

WEIMER: No comment.

UNIDENTIFIED MALE: Do you have anything to say to your daughter at all?

WEIMER: No comment.

MOOS: Friends say he's a great dad who had weekend visitation rights with his daughter.

JILL THIEL, FRIEND OF FATHER: Now he can't see her.

UNIDENTIFIED MALE: What's that doing to him?

THIEL: That's going to destroy him.

MOOS: He told a reporter for WXYZ that he's a good dad who made a bad decision.

He's been busted before after crashing while driving under the influence. This time, his daughter said he had been drinking whiskey all day. He refused a breathalyzer test and told police he was just teaching his daughter how to drive.

There have been lots of stories of little kids driving their parents' cars --

UNIDENTIFIED FEMALE: I am trying to drive, but I couldn't reach the pedals.

MOOS: -- from this 5-year-old to a 7-year-old who told police he was trying to avoid going to church. At least Shawn Weimer's daughter didn't hit anything.

(on camera): "The Detroit Free Press" reports she was even seen using her turn signal, at least twice.

(voice-over): It's her father who seems to have taken the wrong turn by turning to his daughter.

WEIMER: I got -- I got a designated driver.

MOOS: Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

BLITZER: And that's it for me. Thanks very much for watching.

I'm Wolf Blitzer in THE SITUATION ROOM.

Don't go anywhere. Our coverage leading up to the Republican presidential debate here in Las Vegas continues with John King right now -- John.