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Federal Reserve Cuts Interest Rates; McCain Speaks in Ohio

Aired October 30, 2008 - 10:00   ET

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

HEIDI COLLINS, CNN ANCHOR: OK. Here is our video of the day. Check this out. A proud mamma and her 16 babies. Look at those little guys. The golden retriever, Retro, gave birth to the puppies by C- section. Retro's owner had to help out a bit, feeding some of the pups with bottles and helping clean them up. Retro has been used as a breeder. But because of the size of this particular litter, her owner says the puppy popping days may be over.
Final push. Candidates make the rounds of the battleground. Live this hour, John McCain in Ohio and new signs of a shrinking economy, but very few signs, as you can see there now of a tanking market. We'll try to make some sense of all of it. It's Thursday, October 30th, I'm Heidi Collins. You're in the CNN NEWSROOM.

It is a battle for swing states with the campaign clock ticking. Presidential hopeful Senator John McCain about to rally voters in northern Ohio. He'll be in that state all day long. His running mate, Governor Sarah Palin set to hold a rally this hour. That will happen in Missouri. Then she'll move on to the battleground state of Pennsylvania. Senator Barack Obama has one more event this morning in delegate-rich Florida before paying another visit to Virginia and rallying voters in Missouri. His running mate, Senator Joe Biden already there. He will end his day in Pennsylvania. The best political team on television following the candidates' every move, CNN's Dana Bash is with the McCain campaign on Ohio, Suzanne Malveaux covering the Obama campaign in Florida. First to you, Dana, while we wait for John McCain to begin speaking, his bus tour of Ohio starts in the town of Defiance, a little bit of symbolism there you think?

DANA BASH, CNN CORRESPONDENT: Dripping in symbolism. There's no question about it. That's where we are right now. We're waiting for John McCain as you said. I mean, there's no question that if you want to label the way the McCain campaign is right now in terms of its mood and the atmosphere, I think Defiance is really it. They're determined not to be resigned, I think. And that is why he's having a bus tour that starts here. He's going to roll his way all the way through northern Ohio.

And these are really towns, Heidi, that Republicans have historically done well in. So what you're going to see from John McCain today is essentially a get out and vote operation. He needs towns like Defiance to come out and to come out big for him in order to win this critical state. We've said it so many times, but it is worth noting that historically a Republican like John McCain has to win Ohio if he wants to win the White House. I should tell you that we are going to have a special guest here. We've heard a lot about Joe the plumber. And Joe the plumber is going to make his very first appearance, I'm told, with John McCain right here in Defiance. We're about an hour from his hometown just outside of Toledo. So that is something we certainly haven't seen. We've heard a lot about him, haven't seen him with John McCain. So it should be an interesting show here, Heidi.

COLLINS: Yes. We're looking at a couple of pictures of him actually signing some autographs at another event. So very interesting. We'll be watching for all that. Dana Bash, we sure do appreciate it.

Senator Barack Obama is also doing everything he can to sway voters. He's got a long day ahead of him starting in Sarasota, Florida, where he's spent a lot of time lately. Our Suzanne Malveaux is doing her best to keep pace. Hi there, Suzanne.

SUZANNE MALVEAUX, CNN CORRESPONDENT: Hey, Heidi. We're trying to keep pace here. Obviously it's a very fast pace starting off here in Sarasota, Florida. This is really an important place for him, central Florida, the i-4 corridor, there are about 12 counties or so, which represents about 40 percent of the electorate. It can go either way, really very much a swing area. But for Sarasota, to kind of give you a lay of the land, 45 percent of those who are here are Republicans, 33 percent Democrats. But if you look at the early voting numbers, there are about 1,000 more Democrats who voted than Republicans. Not since 1944 voters here gone in a way of a Democratic president. But that could change, if you see those early voting numbers continue to trend as they are trending. So the idea behind this visit is Barack Obama shows up. Perhaps the voters will show up, too. It is all about getting those numbers and getting folks out, rallying them to the polls. As you know, Heidi, early voting here in Florida. This is a critical, critical time for Barack Obama. It speaks a lot that in the final days he's right here in Sarasota, Florida. Heidi.

COLLINS: So obviously we see a lot of people gathered there already behind you, Suzanne. I wonder if you had a chance to ask any of them about this infomercial that he aired last night.

MALVEAUX: Well, there are a lot of people who actually watched the infomercial. It was a wide range. As you know, they spent a lot of money, multi-million dollar ad, to get it that, to get that to eyeball directly to the people. What was interesting about it was that there was no John McCain in this ad, 30 minutes. You didn't see him, you didn't hear about him. Barack Obama essentially trying to connect with voters in a very personal way. He was narrating some of these stories about people's struggles and how he would as president basically go about to help them in their lives. And so you heard a very different tone from Barack Obama, very empathetic, really kind of calm and some would even suggest presidential. Take a listen.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: As president, here is what I'll do. Cut taxes for every working family making less than $200,000 a year, give businesses a tax credit. For every new employee that they hire right here in the U.S. over the next two years and eliminate tax breaks for companies that ship jobs overseas. Help owners who are making a good-faith effort to pay their mortgages by freezing foreclosures for 90 days. And just like after 9/11, we'll provide low-cost loans to help small businesses pay their workers and keep their doors open. None of that grows government. It grows the economy and keeps people on the job. This is what we can do right now, to restore fairness to the American economy and fulfill our commitments to the American people.

(END VIDEO CLIP)

MALVEAUX: So Heidi, it's a message not like we haven't heard before. But certainly it's delivered in a way that is meant to be empathetic, to really kind of counter what John McCain has been trying to portray Barack Obama as being distant or risky, that type of thing. And it's notable that John McCain not in this add really trying to portray kind of a post-election, post-John McCain period. Barack Obama not only wanting to appear presidential, but speaking as if he is the president, trying to solve and help people's lives an relate to them in that sense. That's certainly what the campaign was trying to accomplish, Heidi.

COLLINS: All right. CNN's Suzanne Malveaux in Sarasota, Florida, this morning. Where later on we expect Senator Obama to be there. Thank you, Suzanne.

Turning out the vote in Florida. 230 absentee ballots to be exact. Election officials in Duval County say the ballots are no good because they have no signatures. They are also examining 1300 more ballots with what officials call questionable signatures. As of yesterday, Duval County have received just under 35,000 absentee ballots. Another 98,844 people cast early votes in that county.

Counting down to the presidential election, ten issues in ten days. We are breaking down the candidate's positions on some of today's biggest challenges. We're taking on the important topics. And ahead we will focus on housing.

Turning now to your money. Wall Street off to a pretty strong start as you can see there this morning. Dow Jones Industrial average now up about 210 points. This morning new signs of a possible recession. Government figures show the gross domestic product shrank at an annual rate of 0.3 percent in the third quarter. The GDP is a key measure of the economy. It includes all goods and services produced within the United States. One consolation, analysts expected today's number to be even worse. That might be some good news.

Optimism appeared to be the mood in fact overseas. In Asia markets in Hong Kong and Japan both soared ending the day more than nine percent higher. Also positive news across Europe. Markets in Britain, France and Germany have been higher this morning. The rallying markets are pushing up the price of oil, from its 17-month lows, just yesterday prices jumped nearly $5.00 a barrel.

The nations money crisis, millions of Americans are at risk of losing their homes and now help may be on the way. We'll get some details from CNN's personal finance editor Gerri Willis. She's joining us again from New York. Hi there, Gerri.

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Hi there, Heidi. We're just beginning to hear details about this plan, it hasn't been announced in full yet. But reports this morning saying that a $500 billion plan to back consumer mortgage loans costing $50 billion could help up to three million people. Now, Heidi, we talked a lot about those toxic loans out there that folks had where the interest rate is set over and over again. Fees are high. These are causing people to struggle with those loans, fall into foreclosure and it caused the mortgage crisis that we've been dealing with ever thins.

Let's talk a little bit about how this fits into the big picture. We've had many, many programs for homeowners out there. Most of them have been less successful than we would have liked. They targeted the financial institutions instead of the individuals. Now, this particular program would be paid by that $700 billion bailout we've been talking about that Congress passed. Here is how it fits in with the other programs. Remember Hope Now, that was a program announced last year. There was a Hope Now hotline. It helped about five million loans, people with loans and prevented about 1.2 million foreclosures. FHA secured another program, 400,000 loan modifications. Then there was Hope for Homeowners. This was a very big plan that came out of this summer's bailout, expected to cost maybe $300 billion, could be spent helping people with these loans that we've been talking about.

So, we've had many programs. Many of them have fallen short in terms of expectations about what they can do to help folks. You know, the thinking here is that this particular program could increase housing stability. It might put a floor under housing prices which is the big problem for individuals right now. Help boost those home values which people are struggling with so much. Get some relief to lenders because the government might under the terms of this program actually stand behind a portion of the debt of these mortgages, and they would be able to do this in a systemic way instead of one by one, each little individual mortgage do it in a big batch. Also it would lower the odds for foreclosure moratoriums. Something Barack Obama has said he would like to put into place. It's something that I think lenders are very wary of. You can see how this lines up with sort of the government's, the government's priority for solving this crisis. I'm sure we'll be getting details in the weeks and days to come. We'll be following this for you. Heidi.

COLLINS: Yes. Got to get the lenders to lend first certainly.

WILLIS: That's right.

COLLINS: Personal finance editor Gerri Willis from New York this morning. Thanks, Gerri.

WILLIS: My pleasure.

COLLINS: The money crisis does extend well beyond the U.S. shores though. The International Monetary Fund, the IMF, launching a program to bail out about two dozen countries. The short-term loans will rush money to developing nations that still have strong economies. About $100 billion will be available to countries in Latin America, Asia and Africa. Loans would have to be repaid within one year. Rob Marciano standing by in the weather center now to take a look at the weather picture all across the country. Because we are thinking about Halloween.

ROB MARCIANO, CNN, METEOROLOGIST: We are. And depending on where you are, the weather will be different on this national news network. A tail of two sides of the country. That's for sure. This has been the theme all week long. A lot of cool air with a diving trough allowing cold air from Canada and the Arctic to release southward. And you know the atmosphere has a funny way of evening everything out. So the western end of the country reacted by warming up. And that's what we've seen out there. Record highs across parts of southern California and record lows meanwhile on the east coast. Temperatures, a departure from average. Normal has been anywhere from 10 to 15, on the East Coast 20 to 25 across parts of the northwest and northern high country.

Check out some of the lows yesterday, Gainesville, Florida, 32 degrees. The swamp a little bit frosty if not frozen. Apalachicola, 34, Orlando 43 degrees, Ft. Myers all the down to 47 degrees. So certainly some chilly numbers there. And even colder just a little farther north. Greenwood, Mississippi, 28 degrees, Montgomery, Alabama 31, Alexandria, Louisiana 32. Rebounding somewhat today across the southeast, still pretty cold across the northeast. And still pretty warm across parts of the southwest. Temperatures tomorrow will be a little better actually with the exception of the west coast which will see a pretty strong storm system heading that way for Halloween. Rain from anywhere almost just north of Santa Barbara all the up to Seattle. Snow in the high country. Everybody else will be dry. It's a matter of how much you want to layer the kiddies up and what kind of costume you want to wear. Farther to the south you can show a little more skin than those to the north. Of course, be safe if you're doing some trick or treating and take care of the kids.

COLLINS: Or if you're showing skin or whatever that was.

MARCIANO: Speak for yourself, you know. I'm just here giving the forecast.

COLLINS: Yes. All right, Rob. Appreciate it. We'll check back a little later on.

MARCIANO: All right.

COLLINS: Why a lead in the polls may actually be misleading. We look at the x factor making it tough to predict the race.

(COMMERCIAL BREAK)

COLLINS: I want to let you know we are waiting for two political rallies to happen this hour. You see both of them there. The crowds that have gathered. Senator John McCain is about to speak in Defiance, Ohio, that's to the left of your screen there. Just one of four events he has scheduled around that key state today. His running mate, the other side of the screen, Governor Sarah Palin, about to speak in Cape Girardeau, Missouri and then she will head off to Erie, Pennsylvania. We'll bring those to you as they happen.

Count down to the election, ten issues, ten days. We've already looked at where the presidential candidates stand on the economy, taxes, energy, health care and education. So today we will turn our attention to housing. Ten issues in ten days, counting down to the election with a look at the issues that matter the most to you. So today talking about housing. Senator Obama proposes a $10 billion foreclosure prevention fund. Senator McCain wants to spend $300 billion to buy bad mortgages from banks and homeowners. Obama supports maintaining the role of Fannie Mae and Freddie Mac in guaranteeing mortgages. McCain supports government aid to prevent the collapse of Fannie and Freddie.

Obama supports allowing troubled homeowners to refinance with loans insured by the Federal Housing Administration. McCain backs a so- called home plan that converts bad mortgage loans into low interest loans insured by the Federal Housing Administration.

From putting a lid on loose nukes to tightening the borders to keep out terrorists, we are going to be setting our sights on Homeland Security tomorrow. What will the candidates do to keep you safe? The problems, the plans, ten issues in ten days, only right here on CNN.

So what are voters thinking right now in those crucial swing states we've been talking about? New numbers out just a few hours ago. These are CNN-"Time" opinion research corporation polls. It's the first that you see, John McCain maintaining a lead in his home state of Arizona, 53-46 percent. Barack Obama holds a seven-point advantage in Nevada, 52 to 45 percent. He leads in North Carolina 52 to 46 percent. The presidential race stick neck and neck in Ohio where only four points separate the candidates. As you can see Barack Obama has a comfortable 12-point lead in Pennsylvania.

Just because they say they will, will they? The large number of newly registered voters in this election making it hard for pollster predictions. CNN's Joe Johns explains why.

(BEGIN VIDEOTAPE)

JOE JOHNS, CNN CORRESPONDENT (voice-over): Like other national pollsters, Michael Demick of the Pew Research Center is pouring over spreadsheets and trend lines and grappling with a big problem. If you don't know who will vote, you can't do an accurate poll.

MICHAEL DIMMOCK, PEW RESEARCH CENTER: Gauging turnout effective in a poll is a very tricky thing to do. Not everyone you talk to in the survey is actually going to end up voting on election day.

JOHNS: Accurately defining a likely voter is a huge deal. Using its traditional likely voter model, Gallup has Obama up just three points. But when Gallup expanded the definition of likely voter in anticipation of record turnout, Obama's edge jumps to seven. What makes identifying likely voters so hard this time are the x factors, x factor one, new voter. If a voter has no history of voting, do they really mean it when they say they're pumped up, determined to vote? DIMMOCK: It may well be that even though they're telling us they have every intention of voting and they're telling us that they're very excited and engaged in this campaign, which they are, that they may actually not turn out at the rate we might expect them to.

JOHNS: X factor two, cell phones. For the first time ever major national polling organizations are calling not just land lines, but mobile phones as well.

DIMMOCK: People who are cell only, maybe not surprisingly favor Obama by a wider margin than the rest of the country mostly because they're so much younger. We're in untested waters here.

JOHNS: And it's possible that younger, less-rooted voters won't in fact turn out at the same rate as older land liners. And then there are the fence sitters, 5 to 10 percent of the electorate who say they are likely voters but are still undecided. Most pollsters expect them to get off the fence any day now. But guess what? They may not.

DIMMOCK: Experience has shown in the past that a lot of these folks really don't end up voting. They're so conflicted, and at the end of the day they don't have a clear enough preference for them to be really motivated enough to get out there and show up.

JOHNS: Joe Johns, CNN, Washington.

COLLINS: CNN is keeping them honest. If you have trouble at the polls, call the CNN voter hotline. Help us track the problems and we'll report the trouble in real time. The number, you see it there at the bottom of the screen, 1-877-462-6608. We are keeping them honest all the way through the election and beyond.

Quickly want to show you a couple of live events that we are getting ready to bring to you. Senator John McCain you see at the left there. His event, Senator Lindsey Gram is actually at the podium. Defiance, Ohio, will bring that to you, it should begin any moment now. Governor Sarah Palin, his running mate. Her event on the right-hand side of your screen there in Cape Girardeau, Missouri. We'll bring them to you when they happen in just a moment.

(COMMERCIAL BREAK)

COLLINS: A couple of live events that we are keeping our eye on here and we'll bring to you just as soon as they happen. We have on the left-hand side of the screen Defiance, Ohio, Senator John McCain will be taking to the podium there shortly. And on the right-hand side of your screen, Governor Sarah Palin is in Cape Girardeau, Missouri where the crowd has gathered there. We'll bring them both to you when they take to the microphones.

Meanwhile, another batch of dangerous eggs found in China contaminated with melamine. The same chemical found in China's tainted milk now showing up in the fresh eggs of a second supplier. Also, new word this morning from China's state media, they are reporting melamine is being used in animal feed. That could expand the scale of the contamination concern. The problems in China affecting the world's food supply. CNN's John Vause takes a closer look.

(BEGIN VIDEOTAPE)

JOHN VAUSE, CNN CORRESPONDENT (on-camera): The Chinese import more food than they sell to the rest of the world. Even so they managed to corner the market on things like garlic, this country produces about 75 percent of the world's garlic. That's one reason perhaps why food exports to China have increased by almost 30 percent this year alone and Japan is China's number one customer. Last year the Japanese bought about $9 billion worth of food, and a third of that was seafood. The United States also bought more than a billion dollars worth of seafood. And overall, the U.S. is China's number two customer for food. And despite all the controversy there over brand China, the Americans actually buying more food from China than ever before, up almost 20 percent this year alone according to the Chinese Ministry of Commerce. So what are the Americans buying?

So far this year Americans have bought more apple juice than they did in all of 2007, spending half a billion dollars, a lot more than any other country. The same deal with canned mushrooms. In fact, China is one of the biggest exporters of fruit and vegetables, sending apples to Russia, tea to Morocco, rice to Korea. Last year, selling more than a million tons of fresh eggs around the world. But it's still not known what impact the contaminated milk scandal will have on exports. Tainted milk powder ingredients have been found in everything from cookies to chocolate to pizza in more than a dozen countries so far. In the coming months, the world might just lose its appetite a little for food coming from China. John Vause, CNN, Beijing.

(END VIDEOTAPE)

COLLINS: Quickly happening right now, we have Senator John McCain who has taken to the podium at his event in Defiance, Ohio. Let's go ahead and listen in.

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: ... win Ohio on November 4th. With your help, we're going to win here and we're going to bring real change to Washington. I need your energy, I need your enthusiasm, and, my friends, I know history. I know the last time anyone was elected president of the United States without carrying the state of Ohio was John F. Kennedy. My friends, we're going to carry Ohio, and we're going to win the presidency. We need you out there working every single moment for the next five days.

We need a new direction and we have to fight for it, my friends, and I've been fighting for this country since I was 17 years old, and I have the scars to prove it. And there's others who have been fighting for this country and this group of people and great Americans who are here today. I'd like to ask them to raise their hands. Thank you for your service to our country, our veterans, thank you so much, thank you.

My friends, if I'm elected president, I will fight to shake up Washington and take America in a new direction from my first day in office until my last. I'm not afraid of the fight. I'm ready for the fight.

(CHEERS AND APPLAUSE)

I have a plan to hold the line on taxes and cut them, to make America more competitive and create jobs here at home. We're going to double the child deduction for working families. We'll cut the capital gains tax. We'll cut business taxes to help create jobs and keep American businesses in America. We have a clear difference, Senator Obama and I do. He wants to raise your taxes. Raising taxes makes a bad economy much worse. Look at history. Keeping taxes low creates jobs, keeps money in your hands and strengthens our economy.

If I'm elected president, I won't spend nearly a trillion dollars more of your money. Senator Obama will. And he can't do that - and he can't do that without raising your taxes or digging us further into debt. I'm going to make government live on a budget just like you do. I'll freeze government spending on all but the most important programs like defense, veterans' care, social security and health care until we scrub every single government program, get rid of the ones that aren't working for the American people. And my friends, I will veto every single pork barrel earmarked bill that comes across my desk. I will make them famous and you will know their names. No more, no more pork, my friends. No more bridges to nowhere. No more DNA -- $3 million to study the DNA of bears in Montana. I don't know if that was a criminal issue or a paternity issue. But we're not doing it anymore.

I'm not going to spend $750 billion of your money just bailing out the Wall Street bankers and brokers that got us into this mess. Senator Obama will. I'm going to make sure we take care of the working people who were devastated, and are being devastated by the excesses and greed and corruption of Wall Street and Washington. I'm a reformer. I've fought for reform. Senator Obama has never taken on the leaders of his party on any major issue, and that's a matter of rhetoric - a matter of record and not of rhetoric.

My friends, I have a plan to fix our housing market so that your home value doesn't go down when your neighbor defaults, and so that the people in danger of defaulting have a path to pay off their loans. That's the American dream. We've got to buy up these bad mortgages and keep people in their homes, and give them an affordable mortgage. That's the American dream, staying in one's home. That's my first priority for the American people.

(APPLAUSE)

If I'm elected president, we're going to stop sending $700 billion a year to pay for oil from countries that is don't like us very much. My friends, the other night in the debate, the last debate I had with Senator Obama, I recognized his eloquence, I appreciate it, but you have to pay attention to the words. Remember when we started talking about drilling offshore. He said he would, quote, "consider drilling". We're going to drill offshore and we're going to drill now! When I'm president we're going to do it now.

(APPLAUSE) And we're going to build nuclear power plants, and we can create 700,000 new jobs by building 45 new nuclear power plants. There's some Navy veterans in this crowd that will tell you we've sailed ships around the world with nuclear power plants on them and it's safe. Senator Obama won't do that. My friends, we will use clean coal technology, clean coal technology will restore the economy of this part of the country. The United States of America sits on the world's largest coal reserves. Clean coal technology will do it.

(APPLAUSE)

Today -- today ExxonMobil reported record profits. Senator Obama voted for billions in corporate give-aways for the oil companies. I voted against it. When I'm president we're not going to let that happen. As I said, we're going to invest in all energy technologies, nuclear, solar, wind, tide. We'll encourage the manufacture of hybrid, flex fuel and electric automobiles and we will restore the automobile industry in America to its preeminent position. We must do that for the future of our children and our grandchildren.

And we will lower the cost of energy within months. We'll create millions of new jobs in America and get this economy out of the ditch.

(APPLAUSE)

We've learned more about Senator Obama's real goals for our country over the last two weeks, than we learned over the last two years, and that's only because Joe the Plumber asked him the right question right here in Ohio.

(APPLAUSE)

That's when Senator Obama revealed he wants to, quote, "spread the wealth around", spread the income around. Joe is with us today. Joe, where are you? Is Joe with us here today? Joe, I thought you were here today.

All right. Well, you're all Joe the Plumber. So all of you stand up and say -- I thank you. I saw Joe on television this morning. He did a great job. And wherever you are, Joe, let's give him a round of applause for what he's done for America.

Now, Joe didn't ask for Senator Obama to come to his house. And he certainly didn't ask to be famous, and he most certainly didn't ask for the political attacks on him from the Obama campaign, and they're investigating everything about him. What's that all about? What's that about?

Joe's dream is your dream, to own a small business that will create jobs. The attacks on him are an attack on small businesses all over this nation. Small businesses employ 84 percent of Americans. And we need to support these small businesses. Taxing small businesses will kill jobs. We can't let that happen.

(APPLAUSE) So we finally learned what Senator Obama's goals are, and to spread the wealth. In a radio interview revealed this week he said the same thing, that one of the, quote, "tragedies" of the civil rights movement is that it didn't bring about redistributive change. You see, Senator Obama believes in redistributing wealth and income, not in policies that grow our economy and create jobs. He said that even though lower taxes on investment help our economy, he favors higher taxes on investment for, quote, "fairness". There's nothing fair about driving our economy into the ground. We all suffer when that happens. And that's the problem with Senator Obama's approach to our economy. He's more interested in controlling wealth than creating it, in redistributing wealth instead of spreading opportunity. I'm going to create wealth for all Americans by creating opportunity for all Americans.

(APPLAUSE)

Senator Obama is running to be redistributionist in chief. I'm running to be commander in chief. Senator Obama's running to spread the wealth. I'm running to create more wealth. Senator Obama is running to punish the successful. I'm running to make everyone successful.

(APPLAUSE)

He and Senator Biden made a lot of promises. First he said people making less than $250,000 would benefit from his plan. Then this weekend he announced in an ad that if you're a family making less than $200,000, you'll benefit. But this week, Senator Obama said tax relief should go only to middle class people, people making under $150,000 a year. See, where we're headed, my friends? It's interesting how their definition of rich has a way of creeping down.

At this rate it won't be long before Senator Obama is right back to his vote that Americans making just $42,000 a year should get a tax increase. We can't let that happen. We can't let that happen to America.

(APPLAUSE)

This Democratic Congress, this Reid-Pelosi group of liberals including Congressman Barney Frank is planning all sorts of new taxes this week. This week we're hearing they want to tax your 401(k) contributions. This is a time when we need to be encouraging more investing, not taxing it. We can't let them get away with making a bad economy even worse. Now is the time to grow our economy, and that's what I'm going to do.

(APPLAUSE)

My friends, my opponent's massive new tax increase is exactly the wrong approach in an economic slowdown. The answer to a slowing economy isn't higher taxes. But that's exactly what's going to happen when the Democrats have total control of Washington. We can't let that happen. We need pro growth, pro-jobs economic policies, not pro- government spending programs paid for with higher taxes. This is the fundamental difference between Senator Obama and me. We both disagree with President Bush on economic policy. The difference is he thinks taxes have been too low, and I think that spending has been too high.

(APPLAUSE)

If we're going to change Washington, we need a president who has actually fought for change and made it happen. The next president won't have time to get used to the office. We face many challenges here at home and many enemies abroad in this dangerous world. You know, just the other day Senator Biden warned that Senator Obama would be tested with an international crisis. I have been tested. Senator Obama has not.

(APPLAUSE)

Senator Biden referred to how Jack Kennedy was tested in the Cuban missile crisis, and I have a little personal experience in that. I was on board the U.S.S Enterprise, sat in a cockpit on the flight deck waiting to take off. I had a target. I know how close we came to a nuclear war, and I will not be a president who needs to be tested.

(APPLAUSE)

We know Senator Obama won't have the right response to that test because we've seen the wrong response from him over and over during this campaign. He opposed the surge strategy that's bringing us victory in Iraq and will bring us victory in Afghanistan. He said he would sit down unconditionally with the world's worst dictators. When Russia invaded Georgia, Senator Obama said the invaded country should show restraint. He's been wrong on all of these. When I am president we're going to win in Iraq, win in Afghanistan and our troops will come home in victory and honor.

(APPLAUSE)

Not in defeat.

(APPLAUSE)

So let me give you the state of the race today, my friends. There's less than a week to go, five days. The pundits have written us off, just like they've done several times before. My opponent is working out the details with Speaker Pelosi and Senator Reid of their plans to raise your taxes, increase spending and concede defeat in Iraq .

(BOOS, JEERS)

He's measuring the drapes, and he gave his first address to the nation before the election.

(JEERS)

Never mind.

We're a few points down, but we're coming back.

(APPLAUSE)

Last night Senator Obama said if he lost he would return to the Senate and try again in four years for the second act. That sounds like a great idea to me. Let's help him make it happen.

(APPLAUSE)

(END LIVE FEED)

KYRA PHILLIPS, CNN ANCHOR, CNN NEWSROOM: Senator John McCain for you coming to us from Defiance, Ohio, today. A little flavor of what he is talking to people there about. If you would like to watch more of that, you certainly can. Go to cnn.com/live.

Also, now, to the right of your screen, we want to listen in for a moment to Governor Sarah Palin, his running mate, of course. She is in Cape Girardeau, Missouri. Let's listen.

(BEGIN LIVE FEED, IN PROGRESS)

SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: We'll keep American businesses in America. And you can trust John McCain, and me, to keep our promises, because we're the only candidates in this race with track records of reform. I've done it up in the state of Alaska by confronting the good old boy network and cleaning up corruption and greed there, vetoes wasteful spending. John McCain, he's known, of course, in the U.S. Senate not just as the patriot, but as the maverick. He's taken on the wasteful spending and the abuse.

(APPLAUSE)

Our ticket has the track record that proves we can do this. We haven't just been talking the talk, we have both walked the walk.

(APPLAUSE)

So when it comes to the economy, on this economic front, our tax plans reflect the clear choice that you face in this election. John and I have a very basic fundamental disagreement with our opponents on this issue. Senator Obama has an ideological commitment to higher taxes. And though, granted, he's changing it seems his tax plan pronouncements almost every day now, flip-flopping around on the details, but his commitment to higher taxes though never changes. You just have to look at his record to be able to prove this. He voted 94 times for higher taxes even on hard-working, middle-class individuals making just $42,000 a year. He wanted to take more from them; 94 opportunities that he had to be on our side, and instead, he chose the side of bigger government taking more from you.

And now, he's committed to almost a trillion dollars more in new spending, though he won't tell you where the dollars will come from to pay for those proposals. You can either do the math or just go with your gut, and either way you draw the same conclusion. Barack Obama has always been on the side of bigger government and raising taxes.

(BOOS) And he calls it taking more from you and then doling out those dollars according to his priorities. He calls that spreading the wealth.

(BOOS)

His running mate, Joe Biden, calls it patriotic, higher taxes. But remember good old Joe the Plumber there in Toledo, Ohio?

(APPLAUSE)

Joe the Plumber said to him, that plan sounded like socialism. Now is no time to experiment with that, and Joe the Plumber, here, good, hard-working American who asked a simple straight-forward question. And ever since then because he finally - he finally got a candid answer, not a scripted answer from Barack Obama. Ever since then the guy has been investigated and attacked just for asking a good question.

(BOOS)

Our opponent says he's for a tax credit, which is when the government takes your money and gives it away to someone else according to their priorities, the politician's priorities. John McCain and I we are for a real tax cut, which is when the government just takes less of your earnings in the first place.

(APPLAUSE)

Our opponent's plan is just for more big government. Government too often is the problem. It's not the solution.

(APPLAUSE)

So John and I, we have just the opposite commitment in all of this. Instead of taking more of your hard-earned money and your property and spreading your wealth, we're going to spread opportunities so you can create new wealth.

(APPLAUSE)

Bottom line there, as Joanne (ph) was suggesting, also, we don't think that government should take more. We think bureaucracy should do more with less so that you can prosper and thrive. You should not be working for government. Your government should be working for you.

(APPLAUSE)

So we're going to put government back on your side. It will always be country first. And I promise you, after that victory on November 4th, those country-first posters won't just be put away in some warehouse, just as some campaign slogan. That's going to be printed on every page in the federal employee handbook, country first.

(APPLAUSE)

Now, if you share that commitment, Missouri, if you work hard, if you know what hard work feels like, and if you believe that America is the land of possibilities and you want to get ahead, and you don't want your dreams dashed by the Obama tax increase plan, then we're asking for your vote. And Missouri, I will ask you, will you hire us? Would you send us to Washington?

(APPLAUSE)

Well, good.

CROWD: Sarah! Sarah! Sarah! Sarah! Sarah! Sarah! Sarah! Sarah! Sarah! Sarah! Sarah! Sarah! Sarah! Sarah! Sarah!

PALIN: We cannot wait to get to work for you. Now one of our first missions, John and I, embarking on setting this country firmly on a path towards energy independence.

(APPLAUSE)

Now, it doesn't seem that our opponents want to talk a whole lot about this either, because you go back in their track record and you realize that they have said no, no, no, to the domestic solutions that are there for us to allow us to be energy secure, energy independent. John McCain and I, we're going to develop new energy sources, and we'll tap into what we've already got, like our oil and our clean natural gas, and our abundant coal. We will. Drill, baby, drill. Yes.

CROWD: Drill, baby, drill! Drill, baby, drill! Drill, baby, drill! Drill, baby, drill!

PALIN: We'll adopt the all-of-the-above approach that's needed to meet America's great energy challenge and that means harnessing alternative sources, like wind and solar and biomass and geothermal. We've got to develop clean coal technology. Joe Biden has said, to a voter in a rope line, he said - now, there's no such thing as clean coal, we don't support clean coal. They can do it over in China, but not here in America. No, we've got to develop that technology because things like that, it's going to create jobs here in America.

(APPLAUSE)

Now it's nonsense, Americans, what's going on today with the lack of an energy policy in our country. It is not fair to you, because presently what we're doing is circulating hundreds of billions of dollars, your dollars, into foreign countries asking them to ramp up production of energy supplies for all of you. So we can purchase from them. Some of these dollars end up in the hands of volatile foreign regimes that do not like America. And they use energy as a weapon. Those hundreds of billions of dollars need to be circulated here, creating the jobs for you and making our nation more secure.

(APPLAUSE)

We will drill here. We'll drill now. This is for the sake of our nation's security and our economic prosperity. We need American resources brought to you by American ingenuity and produced by American workers. (APPLAUSE)

So good, once we are hired, John McCain and I, a couple of those assignments that we just mentioned to get to work on for all of you, we're looking forward to that. We're going to accomplish for you that energy independence and that reform of government.

And then there's another mission that is especially near and dear to my heart, and that is working with our families who have children with special needs.

(APPLAUSE)

Because it is time, it is time to change the mindsets in this country. When you consider that for too long now and too often children with special needs have been set apart and excluded and made to feel that there is no place for them in this great and beautiful country. And this attitude is such a grave disservice to these beautiful children, to their families, and to our country. And I will work to change it because John and I have a vision of an America where every innocent life counts.

(APPLAUSE, CHEERS)

Our vision is of an America where everyone has a chance to contribute and every child is cherished and that's the spirit that we want to bring to Washington. Now, as governor I've been able to secure more assistance and funding for our students with special needs. But as vice president, to be able to do so much more there, making sure that these children and their families, that all of our families in America know family comes first. You'll have a friend and an advocate in the White House.

(APPLAUSE, CHEERS)

So Missouri, with each passing day in this campaign, getting closer and closer to that time of choosing. You're getting a clearer and clearer look at the choice that you have on election day. It's the choice between a politician who puts his faith in government and a leader, John McCain, who puts his faith in all of you.

(APPLAUSE)

It's the choice between a politician who wants to spread your wealth around, and John McCain, a leader who will spread opportunity and lower your taxes.

(APPLAUSE)

And, too, Missouri, it's a choice between a politician who still hasn't disavowed a group committing voter registration fraud, and a leader who will not tolerate it.

And we need a leader, a true leader who is ready on day one, a leader with experience and good judgment and that truthfulness and character that this country needs. Remember, Missouri, too, we are a nation at war. We need someone who can talk about the wars that America is fighting and isn't afraid to use the word victory.

(APPLAUSE, CHEERS)

(END LIVE FEED, IN PROGRESS)

PHILLIPS: Governor Sarah Palin there in Cape Girardeau, Missouri. A little while ago we heard her running mate, John McCain, from Defiance, Ohio. Later today we will be hearing from Senator Barack Obama he will be in Sarasota, Florida. That will happen next hour. You can see it right here next hour on CNN.

So with five days to go in the campaign we're covering all the candidates' rallies. We'll be checking in with Senator Barack Obama a little bit later on. For now you can join me again tomorrow morning at 9:00 a.m. I will see you then. CNN NEWSROOM continues with Tony Harris.

(COMMERCIAL BREAK)

TONY HARRIS, CNN ANCHOR, CNN NEWSROOM: Thursday October 30, five days until election day. Barack Obama coming to you live this hour. A big rally in Florida, on the heals of that mother of all political ads, his half-hour TV infomercial.

And trying to slow the foreclosure tidal wave, the government planning a multi billion dollar bailout for you, the struggling homeowner.

Good morning everyone. I'm Tony Harris. You're in the CNN NEWSROOM.