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Campbell Brown

Flashpoint: How the White House Was Won and Lost

Aired December 26, 2008 - 20:00   ET

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

CAMPBELL BROWN, CNN ANCHOR: Think of it as an epic thriller.
In this hour: the critical moments and some of the secrets that led to winning and losing the long campaign for the White House. Like a bestselling page turner, for the last 24 months, no one could turn away. No one knew how it would end. There were wild and unexpected twists and turns, bold deceptions, arcs of hope and fear, moments of joy and great sadness.

And each new chapter seemed to offer yet another all but unbelievable character.

I'm Campbell Brown, and this is our NO BIAS, NO BULL special, "Flashpoint: How the White House Was Won and Lost."

Helping us tell it are the people who followed it most closely, CNN's best political team.

(BEGIN VIDEOTAPE)

BROWN (voice-over): We begin in Iowa January 3, the Iowa caucuses. It marked the first flash point. Of the eight Democratic candidates, seven men and one woman, only one winner would emerge. As for predictions, the experts were wrong. How could Barack Obama or anyone else take on the Clintons?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: And everyone knew Hillary Clinton was going to be the nominee. Was he nuts? He was going to run against the Clinton machine? And he did. And he beat her.

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: The Clinton people underestimated him, or, to use a George W. Bush word, they misunderestimated him. They thought a fellow with 20 percent name recognition and an extremely thin resume had no real shot at the presidency.

SEN. BARACK OBAMA (D), ILLINOIS: It was here in Springfield, where north, south, east and west come together, that I was reminded of the essential decency of the American people, where I came to believe that, through this decency, we can build a more hopeful America.

PAUL BEGALA, CNN POLITICAL ANALYST: Senator Clinton, her chief strategist, I think quite wrongly, decided this would be an election about experience and national security. And so that campaign went off on its trajectory. Senator Obama's went off on its. And he read where the Democratic Party was going to be and indeed where the nation was going to be two years in advance.

OBAMA: When I am this party's nominee, my opponent will not be able to say that I voted for the war in Iraq or that I gave George Bush the benefit of the doubt on Iran or that I support Bush/Cheney policies of not talking to leaders that we don't like.

BEGALA: When Senator Obama gave his speech in Iowa at the Jefferson Jackson Day Dinner, which is always -- I have been to a million of them, and it's always a big event, and everybody brings their A-game. And, you know, he had really good speakers there competing with him. And he blew them all out of the water.

OBAMA: In this election, in this moment, let us reach for what we know is possible, a nation healed, a world repaired, an America that believes again.

BEGALA: He blew them all out of the water. And that told me something, like, whoa.

BROWN: On January 3, 2008, Barack Obama finished first in the Iowa caucuses. Suddenly, Obama's victory speech sounded different to Democrats everywhere. For the first time, it really meant something.

OBAMA: This was the moment. Years from now, you will look back and you will say that this was the moment.

DAVID BRODY, CNN CONTRIBUTOR: If you look at what propelled Barack Obama to victory, it was the Iowa caucuses. I mean, think about it -- 96 percent, or whatever it is, snowy-white Iowa is where he really got his boost. What happened in Iowa? This is a key moment in the whole campaign. What happened in Iowa?

BILL BENNETT, CNN CONTRIBUTOR: When Barack Obama won, I mean, that was extraordinary. I remember just seeing -- didn't see a black face in the screen of hundreds of people, and yet there the numbers were. And I thought, this is a change. This is a really important change in American politics.

(END VIDEOTAPE)

BROWN: It was a dramatic victory, but it pried loose a question about race. Caucuses are open gatherings, not private votes. And some wondered if that format favored Obama. Did caucus-goers worry about being seen as racist if they voted against him?

Was it somehow more OK to be seen as opposed to a female candidate than a black one? It was a question that seemed to hang frozen in the air heading into the next test in New Hampshire, where voters would decide not in caucus, but in private.

(BEGIN VIDEOTAPE)

BROWN (voice-over): In fact, just five days after placing third in Iowa, Hillary Clinton turned it all around in New Hampshire. Her first-place finish in New Hampshire meant she had regained her footing. SEN. HILLARY RODHAM CLINTON (D), NEW YORK: I want especially to thank New Hampshire. Over the last week, I listened to you. And, in the process, I found my own voice.

BROWN: After New Hampshire, the race for the Democratic nomination turned into an epic seesaw battle. On February 5, Clinton and Obama would split Super Tuesday's 24 contests and turn the race into a marathon that would run through all 50 states. It also forced Obama to toughen his strategy and sharpen his message.

BEGALA: You could see the effect that she was having on him. He was much more practical, much more down-to-earth, much more accessible. She, I think, brought out the old community organizer in him. And he left that law professor back at University of Chicago and brought the community organizer back out.

(END VIDEOTAPE)

BROWN: But before the candidates could take up the crushing problems, two wars, and early warning signs of an economy that would crater in a few months, an ugly and enduring challenge claimed the headlines.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: When we saw the Reverend Wright burst on the scene at the national press club in Washington, it seemed right there that this was going to be a huge problem for Barack Obama.

BROWN (voice-over): It was a flash point. And, from that moment forward, there was no ignoring race.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

BROWN (voice-over): This man was at the center of one of those unimaginable twists. For weeks, we all watched spellbound as this man hijack what he preached from the pulpit all but overwhelmed Barack Obama.

UNIDENTIFIED MALE: Barack Obama, David Axelrod, his campaign, were able to take a situation that would have been and could have been extremely explosive, could have, in essence, taken down his campaign. But, instead, they not only turned it in a positive direction, but they were able to talk to a broader, bigger story, race relations in this country.

(END VIDEOTAPE)

BROWN: Race relations in this country, easy to say, incredible difficult to discuss for many of us. Race has been the elephant in America's living room for more than three centuries. And it was the next flash point, the way it emerged in the campaign, with the controversy over Barack Obama's longtime pastor, the Reverend Jeremiah Wright.

(BEGIN VIDEOTAPE)

REVEREND JEREMIAH WRIGHT, TRINITY UNITED CHURCH OF CHRIST: God bless America? No, no, no, not God bless America. God damn America.

OBAMA: As imperfect as he may be, he has been like family to me. He strengthens my faith, officiated my wedding, and baptized my children. Not once in my conversations with him have I heard him talk about any ethnic group in derogatory terms or treat whites with whom he interacted with anything but courtesy and respect.

He contains within him the contradictions, the good and the bad, of the community that he has served diligently for so many years. I can no more disown him than I can disown the black community. I can no more disown him than I can disown my white grandmother, a woman who helped raise me, a woman who sacrificed again and again for me, a woman who loves me as much as she loves anything in this world, but a woman who once confessed her fear of black men who passed her by on the street and who, on more than one occasion, has uttered racial or ethnic stereotypes that made me cringe.

These people are part of me and they are part of America, this country that I love.

ROLAND MARTIN, CNN CONTRIBUTOR: Senator Barack Obama was personally hurt by the whole Reverend Wright deal. The last thing that he wanted to do was to break ties with his pastor, with his church. But, after that National Press Club debacle, he had no choice. I know, from talking to folks very close to him, he was angry. He was absolutely ticked by what he saw.

BRODY: I think both campaigns wanted to play down the race factor, for different reasons. Clearly, the McCain campaign didn't want to stoke any negative vibe, if you will, in this country when it comes -- when it comes to race. And Barack Obama wanted to be known not just as the African-American candidate, but a candidate for all people.

(END VIDEOTAPE)

BROWN: The tone of the campaign at that point could have been different. Indeed, some veterans of political hand-to-hand combat think it should have been different, that John McCain didn't seize the obvious advantage from the Obama-Wright connection.

(BEGIN VIDEOTAPE)

BAY BUCHANAN, CNN POLITICAL CONTRIBUTOR: He made a huge mistake. You know, this was a battle for -- he talks about war with foreign countries, and he always says you leave everything on the table. All weapons have to stay on the table.

And that is smart. Well, this is a war for the heart and soul of America, the election is. You keep everything on the table. So, he made a major mistake in taking that off the table. I thought that was an injustice to the Republicans, to our side, that we weren't allowed to use something that I felt without question was fair game in a tough campaign.

BROWN (voice-over): A missed opportunity in the view of some. To others, it was an extraordinarily graceful and gracious response by the Republican candidate.

GERGEN: One of the most honorable things that John McCain did throughout his campaign was that he kept race off the table and he kept Wright off the table. You could have easily seen that as a big, big issue in the closing days of the campaign, because it would have been extremely divisive and had all sorts of racial overtones, had he brought it up. And he -- on that, I think he truly did put country first.

BROWN: Ironically, it was Bill Clinton who, as president, was widely admired by blacks, who ramped up the race issue. Campaigning for his wife in South Carolina, at a critical moment during the primaries, he made a comment many criticized as race-baiting. It backfired. And polls showed it hurt his wife.

ALEX CASTELLANOS, CNN POLITICAL CONTRIBUTOR: When you have an economic crisis, when you have a fire, people don't particularly care, I think, about the color of the fireman, the gender. They just want to know, can you put the fire out? And that's how I think both campaigns handled the race issue this year.

OBAMA: Contrary to the claims of some of my critics, black and white, I have never been so naive as to believe that we can get beyond our racial divisions in a single election cycle.

GERGEN: That was a serious, eloquent speech. It ranks right up there with some of the speeches by Lincoln.

OBAMA: We do not need to recite here the history of racial injustice in this country, but we need to remind ourselves that so many of the disparities that exist between the African-American community and the larger American community today can be traced directly to inequalities passed on from an earlier generation that suffered under the brutal legacy of slavery and Jim Crow.

BROWN: Finally, Reverend Wright went so far that Barack Obama said, enough. He sharply criticized his pastor and severed all ties with him.

(END VIDEOTAPE)

BROWN: For so many Americans, both black and white, it was as if the promise and the hope in Obama's Philadelphia speech on race made it OK finally to talk openly about some ugly truths in this country. Looking back now, it seemed also to set the course for how the election would end.

(BEGIN VIDEOTAPE)

SCHNEIDER: I grew up in the segregated South in Virginia. I went to segregated schools all my life. I am saying now what millions of Americans are now saying. I never thought I would live to see the day. We have lived to see the day.

BROWN (voice-over): But, as the Democrats battled it out for the nomination, John McCain's presidential campaign was rising from the ashes, catching fire, and then, it now appears, wasting a golden opportunity.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

BROWN: John McCain's presidential campaign had been through several flash points, even before 2008. In early March of 2007, when the wide-open Republican field included even more than the eight candidates who would compete in the primaries, McCain finished fifth in a straw poll among conservatives. Four months later, his campaign manager and chief strategist were gone and his campaign broke.

McCain cut back, but never quit.

(BEGIN VIDEOTAPE)

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Lots of us in the press gave up John McCain as roadkill when his campaign ran out of money. And we all thought it was over, that he couldn't possibly come back.

John McCain, through sheer force of his own fortitude and his own willingness to go back to New Hampshire, to have 102 town hall meetings, to talk to every voter who wanted to talk to him, on low budget, he came back. And you have to give the guy a lot of credit.

BROWN (voice-over): New Hampshire was a flash point for McCain. He won the primary, finishing nearly six points ahead of his closest rival, Mitt Romney.

SEN. JOHN MCCAIN (R), ARIZONA: I talked to the people of New Hampshire. I reasoned with you. I listened to you. I answered you. Sometimes, I argued with you.

(LAUGHTER)

MCCAIN: But I always told you the truth as best I can see the truth. And you did me the great honor of listening. Thank you, New Hampshire.

BEGALA: Oh, when John McCain resurrected himself in the New Hampshire primary, and then won the whole thing in Florida, that was one of the great political stories of our time. And people should remember that. I wrote him off for dead.

BROWN: The win in the Florida primary, followed by an awesome string of victories in the Super Tuesday primaries, made McCain's nomination inevitable. By early March, three months before the bruising Obama-Clinton fight would finally end, McCain had sewn up enough delegates to win the Republican nomination. And he began coasting.

ED ROLLINS, CNN SENIOR POLITICAL CONTRIBUTOR: McCain should have basically been organizing in the states. He should have gone and coalesced the conservative base, which he hadn't won in the primaries. He paid no attention to them. He should have used people like Mike Huckabee and others to go into that Christian community that was so important to both of Bush's elections.

CASTELLANOS: Imagine if McCain had taken advantage of the spring to talk about the economy and burnish his economic credentials. Then, when the economic collapse occurred, he would have been in the catbird seat. So, you can say in a way that McCain just wasted the spring and I think ended up paying a price for that.

(END VIDEOTAPE)

BROWN: By early summer, Barack Obama had beaten Hillary Clinton to win the Democratic nomination. The conventions were still far off, and it was as if McCain was finally ready to engage his opponent. He zeroed in on Obama's inexperience.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: The McCain camp felt that Barack Obama was really never qualified to be president of the United States. They didn't think he was ready for prime time. And it was very frustrating for them all along to be able to try and convince Americans about this. But, yet, that message wasn't really getting them anywhere.

MCCAIN: He doesn't understand the situation in Iraq. He doesn't get it. This is now the 872nd day since Senator Obama went to Iraq, once.

BROWN (voice-over): Some concluded McCain actually forced Obama's next move. It was the next flash point. In mid-July, Obama took off on a high-stakes overseas tour. He started a whirlwind week in Kuwait, sinking three-pointers for U.S. troops. Then came Afghanistan, Iraq, Jordan, Israel, then Europe, and his Berlin speech in front of some 200,000 people.

HILARY ROSEN, CNN POLITICAL CONTRIBUTOR: I think there were some Democrats that were a little nervous that Obama was going to Europe with as much fanfare as he did.

OBAMA: We have made our share of mistakes. And there are times when our actions around the world have not lived up to our best intentions.

But I also know how much I love America.

(CHEERING AND APPLAUSE)

OBAMA: I know that, for more than two centuries, we have strived, at great cost and great sacrifice, to form a more perfect union, to seek, with other nations, a more hopeful world. BEGALA: I loved the speech in Berlin. I thought it was great. It was a little airy fairly, OK? I'm a more practical guy. But the notion of 100,000, 200,000 foreigners out in the street and chanting, "We love America," not "Death to America," was a wonderful thing.

BORGER: I think the speech in Berlin, when you look back at on it, was something that they gave McCain an opening, and he took it.

(BEGIN VIDEO CLIP, MCCAIN CAMPAIGN AD)

NARRATOR: He's the biggest celebrity in the world.

CROWD: Obama! Obama!

NARRATOR: But is he ready to lead?

(END VIDEO CLIP)

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: It was so controversial at the time, because it really hit Barack Obama hard. But it showed, on the positive side, that the McCain camp had a message, a clear message, which is that they thought Barack Obama was this huge international celebrity, but didn't have a lot of substance to him, that he wasn't experienced enough to be commander in chief. And they hit him really hard.

(END VIDEOTAPE)

BROWN: Obama began looking ahead to the Democratic Convention to turn things around and regain his momentum. Talk turned to running mates. Who would be Obama's? He faced intense pressure to choose Hillary Clinton.

And, remember, John McCain had not yet even hinted whom he would pick.

(COMMERCIAL BREAK)

BROWN: The country, if not the world, was spell bound. Everyone knew, regardless of the outcome, history would be made. No matter how the Democratic Party struggle ended, either a woman or an African- American would run for president as the nominee of a major political party.

Either one would be a remarkable first. And the frustrating, if not divisive reality for Democrats, to say the least, was having to choose between them. Well, they made their choice.

(BEGIN VIDEOTAPE)

SEN. HILLARY CLINTON (D), NEW YORK: Although we weren't able to shatter that highest, hardest glass ceiling this time, thanks to you, it's got about 18 million cracks in it. And the light is shining through like never before filling us all with the hope and the sure knowledge that the path will be a little easier next time. That has always been the history of progress in America. BROWN: (voice-over): 18 million cracks, it was her metaphor for all the votes she received. Die-hard Hillary voters, would they now actually vote for Obama? It was an unknown and it grew into a debate. Should Obama ask her to be his running mate?

If not, would he risk losing those Hillary Clinton voters? Of course, in the end he chose another Washington veteran, Senator Joe Biden.

ROLAND MARTIN, CNN POLITICAL ANALYST: Biden was the smartest call I think. He can talk all day about the gas and things along those lines. But again, Biden brought a lot more to the table that I think overshadowed that. That's why he was picked.

UNIDENTIFIED MALE: The guy of hope and change picked the establishment candidate of very little change. And I think that tells you how President Obama may govern. He may be much more middle of the road and centrist than a lot of people think.

DAVID BRODY, CHRISTIAN BROADCASTING NETWORK: He knew that he was weak when it came to foreign policy. What does he do? He picks someone that's very strong on foreign policy. Very smart. Understood exactly what he needed to do. And it turned out it became the right pick.

(END VIDEOTAPE)

BROWN: But the choice only fueled more speculation about hard feelings and alienating Hillary Clinton voters. The wither (ph) Hillary Clinton and her supporters question ended in Denver in August. And Obama sealed the deal with a historic acceptance speech. Imagine the convention as the opposite of a perfect storm, everything going right instead of wrong.

(BEGIN VIDEOTAPE)

MARTIN: Forty-five years earlier, Reverend Dr. Martin Luther King stood on the steps of the Lincoln Memorial and gave his famous "I have a dream speech." And for Obama to be giving that speech, I thought it was divine order that it would happen according to that timeline.

And so to stand there and watch as an African-American walks out on that stage to accept the Democratic nomination was absolutely stunning. You saw with your own eyes what people literally died for. And that, to me, was what that night -- what that night meant.

BRODY: Democrats really felt energized by Barack Obama. But it wasn't just Barack Obama, it was Michelle Obama. Remember that night that she spoke at the convention? That was an electrifying night where the kids came out on stage and said, "Hi, daddy."

PAUL BEGALA, DEMOCRATIC STRATEGIST: It was a very nearly perfect convention speech. The best convention speech I ever heard because it interwove his personal biography with the issues of the day. He talked about his wonderful grandmother and how she was discriminated against as she was working in a bank because she was a woman. That's why I will fight for equal pay for women.

You know, he talked about his remarkable wife and how she struggled to balance work and family and how that inspires and motivates. He interwove all of that together and then he turned his guns on McCain, blasted him on security, on social issues, on economy, and then he stitched it all back together and ended with hope.

In a time of change, America's anxiety very easily turns to anger, and a lesser politician would have tried to tap that anger. But Barack Obama understands America will never elect an angry person president.

BRODY: There was so much made at the time, that fighting between Hillary Clinton and Barack Obama, all of that infighting and how the Democrats were going to come together. It turned out it was really much ado about nothing. They did come together because they smell victory.

HILARY ROSEN, CNN CONTRIBUTOR: I think what ended up healing the rift between Obama and the Clintons and what ended up bringing the party together was a recognition on both of their parts that they needed to get back to their core interests.

DANA MILBANK, "WASHINGTON POST": So many of the Hillary Clinton voters were just appalled by the selection of Sarah Palin, that it sort of drove them back into the Obama camp. So actually the one who gets the most credit for unifying the Democrats was in fact John McCain.

(END VIDEOTAPE)

BROWN: But the day after the INVESCO Field extravaganza, John McCain had a surprise of his own. A twist that would once again take this thriller of a campaign to a place no one expected.

(COMMERCIAL BREAK)

BROWN: The day after the Democratic convention ended, the focus turned back to John McCain. Who would be his running mate? And how could he top the Democrat's Denver love fest? His stunning answer to both questions is one of the biggest flashpoints of his campaign.

(BEGIN VIDEOTAPE)

SEN. JOHN MCCAIN (R), ARIZONA: I am very pleased and very privileged to introduce to you the next vice president of the United States, Governor Sarah Palin of the great state of Alaska.

ALEX CASTELLANOS, REPUBLICAN CONSULTANT: My first reaction when I heard a Sarah Palin pick was, who? Never heard of her. I mean, I knew she was the governor in Alaska, but she was not high on anybody's list.

And got to know a little bit more about her and I thought wow, this could have some potential. McCain picked himself. He picked himself in a skirt. He picked a maverick. DAVID GERGEN, FMR. PRESIDENTIAL ADVISER: Well, at the time that John McCain chose Sarah Palin, I sat here on CNN. This is the biggest strategic gamble I've ever seen a candidate make. I remain of that view.

BAY BUCHANAN, CNN CONTRIBUTOR: The day he picked her, I called my office and I said, get me a ticket to the convention. I called a friend at the White House and said I need a ticket into the hall. I want to be there when she speaks. That's how excited we were.

I'll tell you, I have not seen so much excitement at a Republican convention since Ronald Reagan's days.

BROWN (voice-over): Only political junkies will remember that the first night of the Republican convention was washed out because Hurricane Gustav hit Louisiana that same day, or that President Bush spoke on Tuesday on a TV hook-up from the White House and never came to the convention. Everyone will remember who spoke on Wednesday.

GOV. SARAH PALIN (R), ALASKA: Here's a little news flash for those reporters and commentators. I'm not going to Washington to seek their good opinion. I'm going to Washington to serve the people of this great country.

BRODY: Boom. John McCain's speech at the Republican National Convention is not the speech that is going to be remembered. What's going to be remembered is Sarah Palin coming out on that stage and hitting a home run.

PALIN: I love those hockey moms. You know, they say the difference between a hockey mom and a pit bull? Lipstick.

DANA MILBANK, "WASHINGTON POST": I think the greatest single moment for the McCain campaign was when Sarah Palin gave her speech on the floor of that convention in St. Paul, went on about hockey moms and pit bulls with lipstick. And suddenly, this demoralized party turned out to be somewhat short-lived but suddenly this very demoralized party was really fired up in a way that only the Democrats had been before. And it seemed at that moment that he rolled the dice and it worked.

BROWN: After the convention, McCain and Palin hit the road together. Suddenly, the McCain campaign was drawing huge crowds at every stop.

PALIN: We're going to Washington to shake things up.

BUCHANAN: Because of the excitement that she generated, our crowds became as big as Obama's. All kind -- everybody was like, my golly, now it's even. She's historic. Obama is historic.

GERGEN: It was a gamble that paid off at the moment, but didn't work over time. Sarah Palin was like a sugar high that falls off very quickly.

BROWN: While Palin started doing her own campaign rallies, the McCain camp kept her away from reporters. Her first nationally broadcast interview wasn't until September 11th, a full week after the convention, with Charles Gibson of ABC News.

(BEGIN VIDEO CLIP)

CHARLIE GIBSON, ABC NEWS: Do you agree with the Bush doctrine?

GOV. SARAH PALIN (R), ALASKA: In what respect, Charlie?

GIBSON: The Bush -- well, what do you interpret it to be?

PALIN: His world view.

GIBSON: No, the Bush doctrine enunciated September 2002 before the Iraq war.

(END VIDEO CLIP)

BROWN: For Tina Fey and "Saturday Night Live" it was all just too perfect.

(BEGIN VIDEO CLIP, "SATURDAY NIGHT LIVE")

AMY POEHLER, PLAYING HILLARY CLINTON: I don't agree with the Bush doctrine.

TINA FEY, PLAYING SARAH PALIN: I don't know what that is.

(END VIDEO CLIP)

BROWN: Then came the next flashpoint, Sarah Palin's next network interview.

MILBANK: When Sarah Palin went on with this series of interviews that was strung out by CBS with Katie Couric, in which she had this absolutely devastating inability to talk about her knowledge of Russia, which in turn made her the subject of Tina Fey's jokes on "Saturday Night Live" and created this fundamental, if perhaps unfair impression that she was completely not up to the task.

Sarah Palin went from being the person who could energize John McCain's campaign to being a laughing stock that was a tremendous drag on his ticket.

WILLIAM BENNETT, FORMER U.S. SECRETARY OF EDUCATION: There's an idea going around that, you know, she hurt the ticket. She did not hurt the ticket. She might not have gotten as many independents, as say Lieberman might have, but she fired up the base and the base needed firing up.

(END VIDEOTAPE)

BROWN: In picking Sarah Palin, John McCain had pulled an August surprise. But that was just politics. The next surprise came in September, a crisis so large it turned everything upside down.

(COMMERCIAL BREAK)

BROWN: In September, a financial tidal wave started on Wall Street and is still rising today. Whole countries nearly went under. Banks, an insurance giant, and big brokerage houses actually did go under. The damage is still growing. And John McCain put himself right in the tidal wave's path.

(BEGIN VIDEOTAPE)

SEN. JOHN MCCAIN (R), ARIZONA: I do not believe that the plan on the table will pass as it currently stands. And we are running out of time. Tomorrow morning, I'll suspend my campaign and return to Washington.

BARACK OBAMA, PRESIDENT-ELECT: I believe that we should continue to have the debate. I think that it makes sense for us to present ourselves before the American people to talk about the nature of the problems that we're having in our financial system.

GERGEN: He said, "I'm going to Washington, the cavalry is coming to the rescue." And then they went in without a plan and the Republicans voted down the first bailout package. And, again, it seemed very impulsive. And I think those two moments undercut whatever possibility John McCain had of winning.

CASTELLANOS: The perception that was relayed to voters was one of incertitude, of indecision. They saw McCain say that he wouldn't debate, but then he would. They saw McCain say he'd never support a bailout bill that had pork and then he did. And he looked erratic. And erratic is the dark side of maverick.

BRODY: One of the big risks that John McCain, if not the biggest risk in this whole campaign, was suspending his campaign and going back to Washington, D.C. to help with the bailout. It did not work the way that he intended.

OBAMA: Presidents are going to have to deal with more than one thing at a time. It's not necessary for us to think that we can only do one thing and suspend everything else.

BRODY: With John McCain and the economy, it always kind of felt that he was saying, trust me. You can trust me. I'm going to take care of it. I'll do it. But the problem is, is that people at the end of the day really didn't necessarily trust him to do it.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: When John McCain decided to suspend his campaign, I got a phone call from somebody in the Obama campaign and they said, "We're going to go steady as she goes and we don't need to insert ourselves into the political turmoil in Washington because that won't help Washington get a solution." I think that decision that they made left the American public with a sense that Barack Obama is steady as she goes. And if you look at the polls taken afterwards, it helped them.

BOB SHRUM, DEMOCRATIC STRATEGIST: The McCain people thought they were having a big success when he suspended his campaign in the middle of the financial crisis. They didn't realize it was one of their worst moments. The reason it was a devastating moment for him was because Obama looked calm, reassuring and presidential in the way he reacted to the financial crisis.

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: It was the turning point for the Obama campaign. They definitely got their message together. They decided that this is the link between the bailout, the credit crisis, your job, your ability to get paid your small business. They put that link together very quickly.

The McCain campaign again, right until the end, continued to struggle by dropping crumbs of ideas. John McCain, from beginning to end, looked like a guy who was fighting the fact that the economy was the biggest issue in this election.

BEGALA: When the financial crisis struck, there you saw McCain at his most erratic. He was out of his depth. The truth is he knows more about Abkhazia in South Ossetia than he does about the bond market or collateral debt obligations.

And I think that pulled away the last plank in the McCain argument. When Obama was able to paint McCain as erratic, I think everything else --

(END VIDEOTAPE)

BROWN: The campaign was sprinting at light speed. The economy was falling almost as fast and it all finally merged when people started going to the polls.

Next, the country reaches a flashpoint.

(COMMERCIAL BREAK)

BROWN: We had never seen anything like it. In states that allowed early voting, the lines were two, four, sometimes ten hours long, day after day, including Election Day.

It was history in the making. We all knew it. It was as if everyone wanted to say, I was there.

When they counted all those votes, the turnout was a surprise. Not much bigger than four years ago. The big difference was who voted and who they voted for.

Nearly 67 million people voted for Obama, more than 58 million for McCain. Obama got more votes than any presidential candidate in U.S. history. His 53 to 46 percent win in the popular vote was much more lopsided than the electoral college. His final edge there over McCain, better than 2-1.

(BEGIN VIDEOTAPE)

BARACK OBAMA (D), PRESIDENT-ELECT: This is our moment. This is our time to put our people back to work and open doors of opportunity for our kids. To restore prosperity and promote the cause of peace, to reclaim the American dream and reaffirm that fundamental truth that out of many, we are one. That while we breathe, we hope. And where we are met with cynicism and doubt and those who tell us that we can't, we will respond with that timeless creed that sums up the spirit of a people, "yes, we can."

BRODY: At the end of the day, people want to have an emotional connection to a candidate. And Barack Obama, whether you love him or you hate him, he had that emotional connection with the vast majority of Americans in this country. You cannot make that up. That is something that you cannot create politically. Indeed, that's something that only Barack Obama had in himself and he was able to portray it to the American people.

SEN. JOHN MCCAIN (R), ARIZONA: In a contest as long and difficult as this campaign has been, his success alone commands my respect for his ability and perseverance. But that he managed to do so by inspiring hopes of so many millions of Americans, who had once wrongly believed that they had little at stake or little influence in the election of an American president is something I deeply admire and commend him for achieving.

BENNETT: No man who has ever run for president, or woman, has suffered as much for his country. The strength of McCain is the story. And I'm glad that story was told and heard by children around this country.

BEGALA: Senator Obama was both different and new, someone who we did not know very well and yet he overcame that so seamlessly, effortlessly. He didn't try too hard and work too hard. But he just came at us I think with this strong sense of himself and of poise and calm and confidence. And that gave us a sense of ease. Pretty impressive.

UNIDENTIFIED MALE: When you look at an FDR, Kennedy, Reagan, it's the same guy. It's a visionary, inspirational leader who's going to take us over the horizon to a better America. And you find those candidates and leaders in times like this time when the world seems to collapse around you and the country wants to find out where it's going. This was the year for another one of those transformational leaders.

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BROWN: It was a thriller. None of us could turn away from it. And now, of course, we are waiting for the next story. How Barack Obama leads the country through these difficult times or doesn't.

It is a story we will all be watching closer than ever. "NO BIAS and NO BULL".

I'm Campbell Brown, thanks for watching. The news continues now on CNN.

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ERICA HILL, CNN CORRESPONDENT: I'm Erica Hill. Here's what's happening now in the news.

Forget shop till you drop. Many shoppers have simply dropped out. The latest holiday shopping numbers, actually worse than predicted. Spending plunged three percent during the critical months of November and December, while luxury sales plummeted -- get this -- 34 percent.

Even online shopping took a hit. Though there was one exception. Amazon.com says this has been its best holiday season ever.

A man in the running to take over the Republican National Committee is now defending his controversial Christmas gift. Chip Saltsman, who was head of Mike Huckabee's presidential bid, sent out a CD with a song called "Barack, the Magic Negro." Saltsman tells CNN the tune, a takeoff on "Puff, The Magic Dragon," is clearly meant as political satire. That song debuted in 2007 on Rush Limbaugh's radio show.

It has now been one year since the assassination of Pakistani Prime Minister Benazir Bhutto, and there is now new concern Pakistan and India could be headed for war. In the aftermath of last month's Mumbai massacre, Pakistani patrols have beefed up -- have been beefed up along the border out of concern that India may be planning an invasion.

Now India believes the Mumbai gunmen were trained in Pakistan. An Indian military spokesman though denies its country's troops are massing along the border as well.

There is no trace of a woman who may have fallen overboard from a cruise ship. U.S. Coast Guard planes and Mexican authorities are searching 15 miles off the coast of Cancun. 33-year-old Jennifer Feitz's (ph) husband reported her missing early this morning. They left Miami aboard that cruise ship on Sunday.

President Bush might be feeling nostalgic about his time in office but most Americans are not. A new CNN/Opinion Research survey shows 75 percent of Americans are glad Mr. Bush will be moving on come January 20th. Just 23 percent say they will miss him as commander in chief.

Only a third of those questioned want Mr. Bush to stay in public life after leaving office. Now contrast that with just 51 percent of those polled when Bill Clinton's term ended saying there were happy he would be leaving the Oval Office.

And today marks the start of Kwanzaa. An estimated 20 million people will celebrate this year around the globe, including in Washington. The week-long holiday celebrates African-American heritage and pride. Kwanzaa was created just after the Watts riots four decades ago inspired by the civil rights struggles of the 1960s.

I'm Erica Hill in New York. I'll be back with you hosting Anderson Cooper "360" in just an hour. But first, "LARRY KING LIVE" starting right now.