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Iowa Votes; Obama Campaign's Biggest Fear?; Firebombing Suspect Arrested in New York; Interview With Iowa Senator Chuck Grassley; Countdown To Caucuses

Aired January 03, 2012 - 15:00   ET

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

BROOKE BALDWIN, CNN ANCHOR: And here we go, top of the hour. I'm Brooke Baldwin. Watch this.

(BEGIN VIDEOTAPE)

BALDWIN: Tonight, just hours from now, voters in Iowa will make their choices. And CNN will cover this like no one else can. We will have all the action, all the new technology, and a couple of surprises up our sleeves.

I'm Brooke Baldwin. The countdown to the caucuses start now.

(voice-over): They came, they saw, they competed. Well, most of them anyway. Now the Republicans who want to be president let the Iowa voters decide.

RICK SANTORUM (R), PRESIDENTIAL CANDIDATE: I'm not a perfect candidate, but I would make the argument that I believe that we're the best alternative out there.

BALDWIN: Rick Santorum riding a wave, but has he done enough to convince voters on the fence?

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: Get the ballots I need, the votes I need to become our nominee.

BALDWIN: Mitt Romney hoping to win 2012's first prize while his ads target a big threat.

NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: If he can't level with the American people about these ads, why should we expect him to level about anything if he's president?

BALDWIN: Other candidates hoping to surprise, including the one with a sea of loyal supporters.

REP. RON PAUL (R-TX), PRESIDENTIAL CANDIDATE: The most important responsibility of government is to protect liberty.

BALDWIN: Strap in, get ready. The candidates make their final pitches.

(END VIDEOTAPE)

BALDWIN: All right. Here's what we're watching for you out of Iowa.

The negative vibes rising on the campaign trail. Also question for you, what happens to tonight's losers? Newt Gingrich changes his expectations today.

Time to play "Reporter Roulette" Iowa caucus style.

Dana Bash, let's begin with you there live in Des Moines.

I know you spent the morning at the Rock the Caucus even at a local high school with I know multiple candidates, Michele Bachmann, Rick Santorum, Ron Paul. You were there. Who got the warmest welcome?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: It was really interesting, Brooke.

I think all of them got pretty warm welcomes. And one of the reasons I think is because a lot of the young people there -- there were 800 students in this one auditorium. They were undecided. We talked to several of them. Many of them -- in fact, most of them are going to go and caucus for the very first time tonight.

And they were all willing to listen to Rick Santorum, to Michele Bachmann, to Ron Paul and also to Mitt Romney's kids about why they thought that their candidacies were the best.

Very interesting. This caucus is generally -- this is a very small universe of people we're talking about. About 120,000 people only caucused in 2008. If you have a room full of 800 people, that's a lot of people to try to sway.

BALDWIN: Good for those young people though for being active and caucusing tonight.

I know, Dana, I know that you have been with the Ron Paul camp the last couple of days. You're going to be with them tonight. He's been slipping in popularity lately. Define his confidence level? Are they still confident he can take one of the -- let's say one of the three spots tonight, top three?

BASH: They still claim that they are confident. But if you look at what they are doing a little bit under the radar today, it kind of gives you a sense of what they are thinking.

Our Lisa Desjardins, our CNN Radio correspondent, found a new radio ad that is running today where Ron Paul really slams Mitt Romney as a liberal. That's the same kind of -- exact same term that he used in an interview with me yesterday talking about Rick Santorum.

So he is trying very much to hit the other two candidates by using the L-word, which is kind of ironic, especially when you think about Rick Santorum, not so liberal, but the point he's trying to make is that he, Ron Paul, is somebody who is going to cut $1 trillion in spending he insists in the first year and that he's been consistent with his views. His views are certainly offbeat when they look at the rest of the Republican field. But it's true he's been consistent. And back to those young voters that I spoke with this morning, many of them said that they are going to go and vote for Ron Paul. And for the most part, the reason they gave is because of his views on the economy and because they say at a time where they just don't like politicians, at least he's been consistent with his views.

BALDWIN: A lot of those young people, they love Ron Paul, Texas congressman.

Dana Bash, thank you.

(CROSSTALK)

BASH: He's the oldest candidate.

(CROSSTALK)

BALDWIN: He was the oldest, right? What is he, 77? I think he's 77.

Next on "Reporter Roulette," let's go to Shannon Travis.

Shannon, you have had an Iowa mailing address for a little while now. You have been there for so long. Seriously, though, you really have come to know the voters there better than just about any national political reporter on the beat.

So, to you, what should we expect tonight?

SHANNON TRAVIS, CNN POLITICAL PRODUCER: Well, to that first question, Brooke, I have been here for about five months now. That will end tomorrow, a great place to be here in Iowa, but it will be nice to sleep in my own bed.

Now on to your second question about what we can expect tonight, what you can expect, once you're covering candidates here in Iowa, what you can expect is for these Iowans to buck the polls, buck the pundits and say, you know what, we are going to support the candidate that we like best.

They will come in here tonight and they will say, you know what, we don't care if Rick Santorum is up or down. We don't care if Newt Gingrich is up and down. We have met these candidates face-to-face. We have vetted them. We have pressed the flesh. And we're going to caucus behind the candidates that we feel will best take on Barack Obama.

That being said, a few things that we could probably expect, a lot of Iowan economic conservatives to support Mitt Romney, a lot of the more independent and libertarian leaning to obviously caucus behind Ron Paul.

But what is really a big question about tonight is who the evangelical Christians that make up so much of the electorate here in Iowa, who will they coalesce around? We have seen recently some of them going towards Newt Gingrich, some of them going towards Michele Bachmann, even Rick Santorum. So that will be a key question for tonight that we won't have answered until after the caucuses, Brooke.

BALDWIN: We talked so much -- you mentioned the coalescing, the potential winners. But what about potential losers, Shannon? Because the caucuses are also very much so known for ending political campaigns. Will people bow out after tonight, you think?

TRAVIS: Yes, Brooke, we all know that the Iowa caucuses have been known to crush many a campaign.

In terms of that question, it's hard to tell. Look, all of the candidates up until now will say, we're going to forge ahead. I talked with Michele Bachmann on Saturday. She said she's running a 50-state campaign. Even Rick Santorum is saying, no matter what his showing will be, he will forge ahead.

But the reality is that if some of these candidates don't do as well as they hoped they would, if someone comes in last, they will seriously have to reassess and reevaluate the status of their campaign. They will have to look at their money. They will have to look at how much support they got in these races tonight.

And you might see someone, some people, some candidates actually bow out. But, again, there's no sign of that at this point. All of the candidates say that they will continue going no matter what happens tonight, Brooke.

BALDWIN: Shannon, let me just -- as I look at you there in Cedar Falls, it's empty for now. Cedar Falls, that is the largest caucus location in the state, correct?

TRAVIS: Yes. You will probably see behind me. I'm in this huge auditorium at the University of Northern Iowa.

There are several bleachers that we expect to be filled with about 6,000 people tonight.

BALDWIN: Wow.

TRAVIS: It's the largest caucus site here in Iowa. They are going to be tabulating votes. They're going to have Boy Scouts running from end into another, sending the vote tallies up to the official table where they count. I will be doing a lot of chasing. I don't have on my sneakers right now, but I probably should put them on.

BALDWIN: Definitely throw on the sneaks. Thanks to your P.J. for pulling out so we can sort of see how big that place is.

Shannon Travis, you have got your work cut out for you tonight. Five months in Iowa. All right, thank you, sir.

Next on "Reporter Roulette," Joe Johns following Newt Gingrich on the trail day. Joe, let's just get a check of Newt Gingrich's confidence level. How is he feeling?

JOE JOHNS, CNN SENIOR CORRESPONDENT: Newt Gingrich lowered expectations to go along with his lower polling numbers, but he did stop saying he was not going to win in the Iowa caucuses after a supporter told him that kind of language is not helpful.

He has actually sharpened his language when it comes to Mitt Romney, going as far as calling him a liar. Expect more of that kind of talk as the Gingrich campaign moves to New Hampshire, South Carolina, and beyond.

But for today, the Gingrich campaign expected to wrap up the day at a big caucus site in the Cedar Falls area, then coming here to Des Moines to await results -- Brooke, back to you.

BALDWIN: Joe, thank you so much.

Don't forget, tonight, live, America's Choice 2012 coverage of the Iowa caucuses, the big show begins tonight 7:00 Eastern right here on CNN.

Still ahead: Iowa Republican Chuck Grassley has yet to make an endorsement. So I will put him on the spot hours before the caucuses to back one candidate. We will see what the senator has to say live coming up.

Also, a bizarre murder mystery after a body is found on Queen Elizabeth's estate. This is the near the mansion where the royal family holds holidays like Christmas.

Also, Iran delivering a big warning to the U.S. involving a warship that could spark a nasty standoff.

And on the first trading day of the year, stocks surging. We will tell you why next.

(COMMERCIAL BREAK)

(NEWS BREAK)

BALDWIN: Still ahead: a city on edge after a series of firebomb attacks apparently targeting Muslim and Hindu groups. And there is one very big development on this story today.

Plus, what's the Obama campaign's biggest fear when it comes to tonight's caucuses and primaries down the road? And it's not just Republicans caucusing tonight.

Jessica Yellin standing by once again for us in Iowa. She's next.

(COMMERCIAL BREAK)

BALDWIN: A little bit more on the Iowa caucuses now, but from a different perspective. What about the view from the Obama campaign?

For that, we're back to Jessica Yellin, chief White House correspondent, once again pulling double-duty for us in Iowa.

Jessica, do you have any inkling at all what the Obama folks are hoping for in terms of tonight's outcome?

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Well, look, they are watching with interest like everyone else is.

But the ideal outcome for them would be, in my estimation, a long, drawn-out Republican primary to begin with, and, for tonight, if the most conservative candidate were to win.

So, a Rick Santorum victory, for example, would bring smiles in Chicago and the White House. And here's why. Because if a more conservative candidate wins, the belief is that Mitt Romney will be the eventual nominee. So if the Obama campaign believes that that's the most likely outcome, but a conservative like Rick Santorum wins tonight, in theory, then that would force Mitt Romney to run to the right, to win more votes in the upcoming states to beat Rick Santorum or whoever conservative wins.

And then Romney would have to defend his more conservative positions in the general election, when he tries to run to the center and woo independents. And that would make a more challenging reality for Mitt Romney.

So, a little confusing, convoluted maybe, but that is the scenario that could maybe bring some smiles in Chicago.

(CROSSTALK)

BALDWIN: We're absolutely with you.

What about Democrats? Are they caucusing at all tonight?

YELLIN: Yes.

It doesn't get a lot of attention, but they are. Democrats are not only caucusing, but they're organizing to turn people out. And this is the state that gave President Obama his big first boost toward the White House four years ago. So, the president is also going to be addressing the caucus-goers here and taking just a few questions from caucus-goers in an interactive Q&A.

And they are using this as a way to sort of start energizing voters here because this is a big swing state that they plan to try to win on November 6 -- Brooke.

BALDWIN: What about going to -- here's a different scenario I'm going to throw at you -- Romney? How fearful is the Obama campaign in this scenario in which Romney wins tonight, blows the doors off in New Hampshire, uses that momentum to win South Carolina coming up January 21, so you have a one, two, three and done, though. Do they fear that could happen? YELLIN: I wouldn't say fear, because let's be realistic.

Look at all the fire Democrats are aiming at Romney. The truth is, they are planning for a Romney campaign, a campaign against Romney. They expect him to be the nominee. The only worry would be that he would get there more quickly, and then they would have to start the general election soon. And that would be less ideal for the Democrats, because, A., they would prefer that drawn-out Republican primary, because then the Republicans are all taking aim at each other and doing the work of attacking Romney, so the president doesn't have to do that.

And, B., a shorter primary and longer general election means it will cost the president more money. And it's just that much more travel and time away from the White House. So, it's really about how long a general election would be, Brooke.

BALDWIN: So then we really can't -- you really don't know the answer to when we would see the president full time on the campaign trail. That is all sort of predicated upon the results of the primaries?

YELLIN: Largely is.

The expectation is that he will definitely be full-time on the campaign trail from the convention on. We will see him more regularly on the campaign trail beginning in the summer.

And, for now, we're going to see him doing events two, three days a week, but not more than that at the very next few months. He does have an event tomorrow, as you know, in Ohio, where he will be pushing some of his jobs ideas and his "We Can't Wait" agenda, where he is pushing his own executive actions that he can do on his own without Congress, Brooke.

BALDWIN: OK, Jessica Yellin thank you so much for us in Iowa covering the president and also some of the candidates for us as well. Thank you.

We're going to take you back to our special political coverage in a moment. But, first, I want to get to this mystery. It's unfolding in New York involving firebomb attacks apparently targeting these religious groups, different ones. And in one attack, someone threw a Molotov cocktail through a living room window. The feds are now involved and there's a really big development today. We're going to pass that along to you next.

(COMMERCIAL BREAK)

BALDWIN: Right now, New York City police are questioning this man who may be behind the series of firebombings in Queens.

So, surveillance video -- take a look with me -- it shows one of the attacks at a home that doubles as a Hindu temple. The other targets hit Sunday, an Islamic center, a convenience store, and also a house. The weapon, Starbucks Frappuccino bottles filled with explosive liquid. It's not clear if the man questioned was found through this sketch. Here it is just released today of the suspect. Take a good long look.

Authorities are investigating the bombings now as hate crimes. And New York City community leaders of all faiths say, if that's the case, all New Yorkers should be outraged.

(BEGIN VIDEO CLIP)

MAAN AL-SAHLANI, MEMBER OF FIREBOMBED ISLAMIC CENTER: We are one family. If one gets hurt, all the family will get hurt. So we have to be shoulder to shoulder. We have to protect our country. We have to protect our society.

(END VIDEO CLIP)

BALDWIN: I'm going to bring in Jim Cavanaugh, special agent, was a special agent in charge for the Bureau of Alcohol, Tobacco, Firearms.

And this is considered a hate crime, so how does that change the investigation going forward?

JAMES CAVANAUGH, FORMER ATF SPECIAL AGENT IN CHARGE: Well, it changes, Brooke, who the investigators will look at and the universe of people they can look at.

They are going to look at people who might have been verbally making hateful statements, could be fringe groups, but also it bleeds into the revenge motive. Hate and revenge are very close in a crime like this. And it remains to be seen whether the fellow is tied to the religious community there in some way, has he had dealings with them, and it may lean a little bit more toward revenge, or is it complete -- he's a stranger and it's more towards just complete hate.

BALDWIN: What about the fact, though, that he appears to be targeting Hindus, Muslims? He tossed a Molotov cocktail in a bodega, so appears to be attacking Hispanics as well. What do you make of that? Do you think he is just ignorant and lumping it all together, all these different ethnicities, or it very much so has a purpose?

CAVANAUGH: Well, I think what he is, is he is targeting the Hindu and Muslim communities, but this bodega, the New York Latino term, was run by a Yemeni man, an immigrant who is a Muslim.

And that attack is particularly telling of this guy's anger and determination, because he went inside the deli and threw the bomb behind the counter. Now, that's a guy who is really willing harm, kill, injure people. So he's a determined and angry, methodical guy, but not a lot of planning in the crime, Brooke. You can see from the video you're showing just at the front door of these places, with the exception of the small bodega.

BALDWIN: Yes. I was about to interject, from what I have read, it doesn't appear very sophisticated because he's tossing these Molotov cocktails in and they are not doing very much damage, thank goodness.

CAVANAUGH: Right. Exactly. Unsophisticated in planning, but very determined to cause injury and death.

If they catch the guy -- NYPD has a suspect, if it turns out to be the guy. And also you have the L.A. fires. If I was a sentencing judge on either one of those cases, I would be throwing the library at these people for trying to burn people out of their homes and their houses of worship.

BALDWIN: Final question. There's a person of interest now being questioned. Do you think this case will move pretty quickly?

CAVANAUGH: Yes, I do.

Actually, I think it's going to move quickly for the same reasons the L.A. case moved quickly, a lot of public support, a lot of aggressive police action up front, the media putting out the videos in both cases, and the sketches now out. The community is behind law enforcement. That's the formula for success. If it's not the person they're questioning, they are going to wrap it up pretty quick, and that dark night is going to come to an end in New York as well.

And it's thanks to everybody involved, law enforcement, the citizens, the media, all working together.

BALDWIN: Sure. Sure. Here's hoping that they have caught the guy.

Jim Cavanaugh, thank you.

CAVANAUGH: Thanks, Brooke.

BALDWIN: Coming up next: He is a senator, he's a Republican, and he is from Iowa. But even though Chuck Grassley may have a lot of pull in his state, he's not backing a candidate. But Grassley is praising one contender.

So will he, might he make a little news here with a last-minute endorsement on my show? We're going to ask him, the senator, live next.

(COMMERCIAL BREAK)

BALDWIN: Joining me now live from the biggest caucus location tonight, Cedar Falls, Iowa, is Republican Senator Chuck Grassley. Six terms, sir, six terms in the Senate, absolute stalwart in Iowa politics. Good to have you on.

Let me just see if I have this right. October 13th you said you might endorse a candidate before the caucuses. October 19th you said you wouldn't make an endorsement. Next day you said you might change your mind. Senator Grassley, you kind of sound like an Iowa voter.

SEN. CHUCK GRASSLEY (R), IOWA: Well, listen, it's a fact that I'm announcing right now that I'm not going to back anybody. And the reason I'm not going to do that is I find each of the candidates -- some of them have some differences of opinion with me -- but for the most part I think we have a very strong field and any one of them can beat Barack Obama.

And I want the process to work its way through and I want to see my job tonight as encouraging the party as I go around to the different caucuses. And secondly I want to make sure that we're able to coalesce around our candidate to see elected sometime this summer.

BALDWIN: So let me just press that on you. I mean, you're officially saying you're not endorsing anyone. Is it because the top of the crop isn't that appealing or like you said, you think any of those three -- you think any of those three could defeat Barack Obama?

. GRASSLEY: Of course, that's the way I feel. I think that we've got a very strong field. And I want to make sure that the process works out. And I believe that one of the three or four that come to the top tonight and move on through the process, one of those will be the next President of the United States.

BALDWIN: OK, Senator, I know even though you're not making an official announcement, you have said some pretty nice things about Rick Santorum. Let me just quote you, "He's a tough fighter, not afraid to take on tough issues ," this is you, Chuck Grassley, on Rick Santorum.

Would a strong showing tonight, a strong showing on behalf of Rick Santorum benefit your party or just cause additional chaos down the road?

GRASSLEY: No. I think that you're going to have two or three people go through New Hampshire, South Carolina, Florida and maybe that's the end of it, or maybe into Nevada but not through the whole primary system.

I think a long time before that we're going to have a ticket. But you're going to have some philsophical differences that are going to make one or two of these three people beyond Mitt Romney that are going to be able to this a contest for several state primaries coming up yet.

BALDWIN: Iowa, it's probably less known for picking winners than for eliminating loses. Is there anyone out there that you want to see eliminated by caucus-goers tonight?

GRASSLEY: Well, I think even if I wanted to see somebody eliminated, I obviously wouldn't say that.

BALDWIN: Oh, come on. It's just us talking.

(CROSSTALK)

GRASSLEY: (Inaudible). OK. But I think you're -- I think you've got to look at it from a practical standpoint. So as long as you have these free debates and people get free TV, they are not anxious with all of the work that they've put in for the last six or eight months to call it quits just because they maybe come in fifth or sixth in Iowa.

BALDWIN: Ok. But before I let you go, Senator Grassley, I'm going to give you one more chance to make news, make an endorsement. How about -- how about Mitt Romney, Senator?

GRASSLEY: Listen, you're not going to do that to me. I've been in politics a long time but I can say this. You have a right to do it. I appreciate you trying to feel me out.

I know you have a responsibility to do that but I want you to know that I'm going to be satisfied with the outcome of the Iowa caucuses and I think where one of these people that are going to be in the top three or four, one of them is going to defeat Barack Obama.

BALDWIN: All right. Senator Chuck Grassley, thank you so much, sir. I had to try again.

Coming back, if Mitt Romney wins tonight, it's a pretty big deal because his campaign didn't even consider initially -- didn't even consider Iowa a winnable state. But now as you can tell the situation has changed a bit.

It is all part of Mitt Romney's extra careful strategy of avoiding the mistakes he made four years ago. We're going to take you inside his game plan next. But, first, a last minute pitch from the Republican hoping to be president, take a listen.

(BEGIN VIDEO CLIP)

FORMER GOV. MITT ROMNEY, R-MASS., PRESIDENTIAL CANDIDATE: He's on track in his first term and his only term to --

(LAUGHTER)

(APPLAUSE)

ROMNEY: -- to have amassed public debt which will be almost as much as all the prior presidents combined. He went on the "TODAY" show, shortly after being inaugurated and said if he's not able to turn around the economy in three years, he would be looking at a one- term proposition. I'm here to collect. He's out.

(APPLAUSE)

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BALDWIN: Rick Santorum has done it. So have Newt Gingrich and Ron Paul, giving live interviews to news programs in these final hours before voting tonight. But the one face you have not seen a whole lot of lately is the front-runner Mitt Romney. This is all part of the candidate confident yet very careful strategy. With more, here is Joe johns.

(BEGIN VIDEO CLIP) JOHNS (voice-over): On the final day of campaigning, energy is everything in Iowa. You watch for loud applause, size of crowds, signs of enthusiasm. The Romney campaign projects confidence here, but they're careful not to predict the win. In fact, officially they say they never planned to win Iowa which, will be the excuse if they don't.

ANN ROMNEY, WIFE OF MITT ROMNEY: I sense a feeling, a coalescing, a momentum or whatever it is you want to call it around Mitt and I think people are starting to figure out that this is the guy that is going to beat Barack Obama.

JOHNS (voice-over): In Davenport, the cautious candidate didn't stray from his cautious ways. Other candidates were taking questions, mixing it up. Romney was playing it safe. Speaking of his wife, he might as well have been talking about himself lately.

M. ROMNEY: She was marvelous. They asked her tough questions and she did exactly what you're supposed to do. She didn't answer them.

(LAUGHTER)

JOHNS (voice-over): What the head-on camera, the one facing the candidate did not show at this moment was empty space in the room.

M. ROMNEY: This kind of did good things for me last time around. I think you need to get out and do that again with even more votes. Get out and vote and vote and vote.

JOHNS (voice-over): Usually advance people get paid to make sure guys like Romney give speeches in smaller rooms where it's easier to pack in the people, making it look more well attended.

Maybe that's all this was, a mix-up, though there was a day four years ago in Iowa when Mitt Romney, heading into the caucus, facing a surging social conservative Mike Huckabee. Huckabee would win and Romney would not recover.

This campaign would rather not see history repeating itself with the current surging conservative, Rick Santorum. When the Romney road show got to Dubuque this day, it was a much larger crowd and smaller space, different energy and more of the stump speech, playing it safe.

M. ROMNEY: I believe in an opportunity nation, a merit society.

JOHNS (voice-over): Romney actually made a reference to the campaign four years ago, but said nothing about the loss. It was another joke about his wife, Ann.

M. ROMNEY: I was standing here, she's standing there, and suddenly her half of the stage collapsed in Dubuque, at the Best Western hotel, and she went down on the ground, landed on her backside.

And I said, "How are you, honey?" A little later she said, "Well, I fell on da butt in Dubuque." So --

JOHNS (voice-over): One thing is for certain, a winner in this crowded field will be crowned Tuesday night no matter what. But if the polls hold up, the real story out of Iowa maybe just that neither Mitt Romney nor any other candidate, for that matter, will have achieved more than 30 percent of the vote here.

In other words, 70 percent will have voted against the winner for only the second time ever in the Republican caucuses, most likely leaving no one Republican candidate the clear national front-runner -- Joe Johns, CNN, Marion, Iowa.

(END VIDEO CLIP)

BALDWIN: Coming up next, we're going to speak live with Wolf Blitzer, who is get miked up as I speak and we'll get a sneak peak of tonight's special coverage which includes amazing technology -- there he is -- and a couple of surprises. Hey, Wolf. Be right back.

(COMMERCIAL BREAK)

POPPY HARLOW, CNNMONEY.COM: Time now for "THE HELP DESK," where we get answers to your financial questions. Joining me this hour, Gary Schatsky, a financial planner and the president of objectiveadvice.com. Gail Cunningham is with the National Foundation for Credit Counseling. Thank you both for being here.

Gail, your question comes from Jeff in Virginia. Jeff writes, my wife and I are 57 and both working with a combined income of $270,000. We have 800,000 in 401(k) accounts but we owe $400,000 on a $750,000 home. Should we pay off the house with our 401(k) money when we retire or continue making the $3,000-a-month payment?

GAIL CUNNINGHAM, NATIONAL FOUNDATION FOR CREDIT COUNSELING: Well, this is a question lots of people are asking. As a matter of fact, some studies show that four in 10 seniors enter retirement still with mortgage debt. But I don't want them to beat themselves up over that. They are actually in good shape.

I would recommend that they set their money aside and draw it down as they need it. And here's why. If they were to ask their friends and neighbors, if you needed to tap the equity in your home, would that be an easy thing to do?

Well, with the number of homes that are under water today, you have to sell your home to get your own money back. And you don't want to be put in that position. So I would say, keep the money set aside, dedicate it, earmark it for your mortgage payment and you'll be fine.

HARLOW: All right.

And, Gary, your question comes from Hong in Nebraska. Hong writes, I have contributed the maximum amount to my 401(k) over the last 10 years, knowing that my tax bracket will be higher in the future. Is it better to reduce my 401(k) to the company match and invest the rest in a higher-yielding taxable account? What do you think?

GARY SCHATSKY, FINANCIAL PLANNER: Interesting question. Well, first of all, how do you know your tax bracket's going to be higher?

HARLOW: I was wondering the same thing.

SCHATSKY: You know, that's one of the key things. And if you think you're going to be in a much higher tax bracket, the thought -- and that's what he's thinking about -- is that the value of the deduction will be more valuable in the future.

Well, if you are in a really low tax bracket presently, what you can do is see if a Roth 401(k) is available. A Roth 401(k) is not deductible but it grows tax free for the rest of your life.

HARLOW: And we always hear about Roth IRAs but you're talking about a Roth 401(k).

SCHATSKY: Exactly. Many companies are now offering Roth 401(k)s along with normal 401(k)s. And his idea of making sure you get that company match, that's absolutely essential no matter what you do.

HARLOW: Good to know. Thank you, both. And if you have a question you want answered, send us an email any time to CNN Help Desk at CNN.com.

(COMMERCIAL BREAK)

BALDWIN: So 12 minutes away from this man and what do you have coming up?

WOLF BLITZER, HOST, THE SITUATION ROOM: "THE SITUATION ROOM" at the CNN Election Center tonight, 4:00 to 6:00, I take a break from 6:00 to 7:00 Eastern.

BALDWIN: A little break.

BLITZER: Then starting at 7:00, the election, Iowa, all Iowa. We've got a lot of fancy things coming up in our coverage -- some surprises.

(CROSSTALK)

BALDWIN: I was trying to get this pried out of you at the commercial break.

BLITZER: If I told you, you'd tweet it and, you know, it would -- people have to watch. Because right at the top of 7:00 we have new stuff, some new toys we're going to be showing off. It's going to be good.

BALDWIN: You did your 5 mile run --

BLITZER: I ran this morning. BALDWIN: (Inaudible) you're ready.

BLITZER: You know, I run five miles every morning on a treadmill.

BALDWIN: I was on the treadmill; I did 4. so --

BLITZER: Yes, but you're -- because if I don't, by late afternoon I don't have the energy.

BALDWIN: Gets the brain going.

BLITZER: I really need to do it, yes.

BALDWIN: OK. Who else do you have coming up?

BLITZER: All right. So we have all of our reporters. We also going to have a lot of cameras. You're going to be interested in this.

At the caucus locations, so we're going to see democracy unfold. We're going to show what people do when they show up at a Republican caucus which is very different by the way, than a Democratic caucus. They have whole different rules, different procedures. It's going to be a lot of fun.

BALDWIN: Excellent. We'll see you in a few. Thanks for stopping by.

And now, this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: You heard we're a bunch of knee jerk conservative reactionaries. I guess that's why we went Democratic by the last six presidential elections. How do you like me now?

(END VIDEO CLIP)

BALDWIN: Since all eyes are on Iowa tonight, this guy, getting creative to bust stereotypes. So forget the candidates, forget the pundits. What are the people of Iowa saying right now? Lisa Desjardins joining us once again today. She has learned a lot. She is next.

But first, no more Mr. Nice Guy, Newt Gingrich taking on Mitt Romney and some last minute pitches by the candidates. Here you go.

(BEGIN VIDEO CLIP)

FORMER REP. NEWT GINGRICH, R-GA., PRESIDENTIAL CANDIDATE: How many of you are fed up with the negative ads and negative mailings and negative (inaudible)?

(APPLAUSE) And I would simply ask you to go to the caucus tonight and say to your friends and neighbors that Iowa has a remarkable opportunity to say no to every candidate who's been running negative ads. And if you were to do that, you would be able to change the entire culture of campaigning in America.

You know, as long as the consultants believe the negative attack ads work no matter how dishonest, and as long as they think they can raise money for millionaires to pay for millions of dollars of attack ads, we're going to remain sick.

REP. RON PAUL, R-TEXAS, PRESIDENTIAL CANDIDATE: Economic liberty is very important and you come to the conclusion that economic liberty is important because individual liberty is important. Our -- in our founding, Jefferson stated very clearly that our lives and lifes are gifts from our God and therefore, your income, the fruits of your labor, should be yours and not the government's to spend.

(APPLAUSE)

FORMER SEN. RICK SANTORUM, R-PA., PRESIDENTIAL CANDIDATE: I would make the argument that there's a lot of people in America today -- and unfortunately, some in the White House -- who don't believe that anymore, who don't believe that America is a great country, because we are great, because we have great people who build great things from the bottom up, but that America could be better if we built things from the top down.

That may be the way other countries have done it. In fact, it is, but a lot of people who are in this country left those countries because, like my grandfather, they wanted a country that believed in him.

(COMMERCIAL BREAK)

BALDWIN: A little bit more on the Iowa caucuses now. And a lot of folks seem to have a certain picture of Iowa. And I won't spell it out, but it may be at odds with reality. Watch this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: You heard we're a bunch of knee jerk conservative reactionaries, I guess that's why we went Democratic in five out of the last six presidential elections. How you like me now?

Does your state legalize gay marriage before us? Probably not. The first woman in America to become a lawyer was in Iowa in 1869. You think we're all hillbillies. Well, four out of five of us live in the cities. What about farmers, you say. You think farmers are hillbillies? Sit down, son One Iowa farmer feeds 155 million people. Do you like to eat? Looks like it.

(END VIDEO CLIP)

BALDWIN: I want to bring in Lisa Desjardins, once again, good enough to join us from Des Moines. And, you know, you're there. You -- we wanted to talk to you because Lisa D., you have been talking to the people, to the Iowans. I mean, what do they really think? Talk to me about just some of the people you've met and interviewed.

LISA DESJARDINS, CNN RADIO: I am so excited to talk about this. I feel like you guys are right to get into this. Everyone from the man who parks the cars at my hotel, his name is Joe, he was telling me just yesterday he's working two jobs, Brooke. He's trying to take care of his 14-year-old granddaughter. And I said, are you going to caucus?

He said, I've been Republican since I was a little baby. I was on politicians' knees since I was a kid. And I'm so disgusted with politicians I don't think I can go this year. There's a lot of Iowans who feel that way. Also let's talk about maybe some farmers. That was in that great video. You know, everybody thinks about farmers, right, Brooke, in Iowa?

BALDWIN: Sure.

DEJARDINS: I talked to two, a woman and her husband. Their names are Sharon and -- I'm sorry, Cheryl and Randy Shults (ph). And they own just a small little farm. They are worried because a lot of young Iowans, their kids, in fact, all three of them, are moving out of this state. They're worried that there's going to be no one to take over their farm.

But here's the thing. They told me, just last month, their daughter said, I think I do want to take over the farm. So now, they're worried about are they going to have the money to do it, to help their daughter take over this two-generation, three-generation farm?

It's interesting, Brooke, that couple, the dad was for Mitt Romney. The mom was choosing between Romney and Santorum. I met them at a Romney event. She was dying just to get a question in. If she had been able to speak to Mitt Romney, I think he would have earned her vote. But the way that event worked -- let's talk about real life -- actually, the media crushed forward.

There was almost no organization and I don't think that the former governor really talked to many caucusgoers at all. It seemed like he really only talked to the media, so that farmer's wife I talked to, she walked away disappointed and he may have lost her vote.

BALDWIN: Well, what about -- I was talking to Dana Bash --

DEJARDINS: It's interesting, lots of people --

BALDWIN: Yes. I was talking to Dana Bash earlier because she was at this "Rock the Caucus" event, a couple candidates were there and she was saying that there are a lot of young people, very much so engaged, you know, and for the first time, they'll be caucusing tonight. I'm just curious if you talked to other young people. We saw, you know, the last general election, there was a lot of young people very invigorate d by politics. Do you feel they're on the ground at all in Iowa? DEJARDINS: You do feel that. And when I talk to young people, I hear the same thing that Dana was hearing.

I hear that Ron Paul momentum among young people who are Republican, but I think, you know, we're so focused on the Republican race, Brooke, that I have to say, I probably talked to more people who still say they are for Barack Obama than for any Republican candidate, but among young Republicans, yes, I would say that Ron Paul is the one that is winning their imagination.

And I guess another story about an Iowan that I met, just to say how diverse this state is, a waitress that I met from Bosnia -- how about this, Brooke? She escaped Bosnia when she was a child. In fact, her father was murdered in the Bosnian war. They became refugees and where did they go? To Iowa. A

nd one of her friends at the table joked, she said, oh, yeah, you wanted to get away from every border you could. So you went to the middle of the country. And she said, yes, that's right, we sure did. And she's so happy here.

So really kind of an amazing place. I think that this is not a state that's fully understood and I also think that where evangelicals -- there's a lot of evangelicals here, Brooke. But the ones I talk to, when they say evangelical, Brooke, they mean something different than I think what the outsiders think. Brooke, back to you.

(CROSSTALK)

BALDWIN: It's so nice to hear anecdotally all these different people you're talking to. And so many people who want to talk to you, Lisa D. Follow Lisa Dejardins at lisadcnn, she's got her podcast, "American Sauce." Thank you very much.

Before we go to "THE SITUATION ROOM," let's get just a quick check on the boards as we are 30 seconds away from this first closing day of this first year. And you can see a huge rally. The Dow up 174 points.

And that will do it for me. I'm Brooke Baldwin, here at the world headquarters at CNN. Now to the heart of the CNN Election Center hours before the Iowa caucus. Let's go to Wolf Blitzer. "THE SITUATION ROOM" starts now.