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CNN Late Edition with Wolf Blitzer

Interview With Hoshyar Zebari; Interviews with Senators Biden, Lugar

Aired April 13, 2008 - 11:00   ET

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

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

PRESIDENT GEORGE W. BUSH: Thanks to the surge, we've renewed and revived the prospect of success.

BLITZER (voice-over): President Bush vows to stay course in Iraq. But will election year politics force a change? The Senate Foreign Relations Committee's Democratic chairman, Joe Biden, and the panel's top Republican, Richard Lugar, weigh in.

The view from Iraq, we'll talk exclusively with Iraq's foreign minister, Hoshyar Zebari.

Democratic showdown.

SEN. BARACK OBAMA, D-ILL.: The American people, they are standing up and they are saying we are ready for change.

SEN. HILLARY RODHAM CLINTON, D-N.Y.: Enough with the speeches. Enough with the rhetoric. Let's do what we know works.

BLITZER: We'll assess the Barack Obama versus Hillary Clinton race with Clinton supporter Senator Evan Bayh, and Obama supporter Senator Bob Casey.

SEN. JOHN MCCAIN, R-ARIZ.: There is it no substitute for victory. And withdrawal is defeat.

BLITZER: How will presumptive Republican presidential candidate John McCain win over voters despite his support for an unpopular war? We'll talk with McCain supporter, Senator Joe Lieberman.

Plus, insight and analysis from three of the best political team on television. The first hour of LATE EDITION begins right now.

(END VIDEOTAPE)

ANNOUNCER: Live, from CNN in New York, this is LATE EDITION WITH WOLF BLITZER.

BLITZER: It's 11:00 a.m. here in New York, 8:00 a.m. in Los Angeles, 6:00 p.m. in Baghdad. Wherever you're watching from around the world, thanks very much for joining us for LATE EDITION. We begin with the much-anticipated report to Congress this week from the top U.S. military commander and the top U.S. diplomat in Iraq, the overall assessment from General David Petraeus and Ambassador Ryan Crocker.

There has been progress but the situation is still fragile and a mass exit of U.S. troops would reverse the gains made, reverse those gains potentially very, very quickly. Joining us now, the two top members of the U.S. Senate Foreign Relations Committee. In his home state of Delaware, the Democratic chairman, Joe Biden. And in his home state of Indiana, the committee's top Republican, Richard Lugar.

Senators, thanks very much for joining us. Welcome back to LATE EDITION. Senator Biden, let me start with you. And I'll play a little clip of General Petraeus in his basic bottom line summary of the current situation in Iraq.

(BEGIN VIDEO CLIP)

GEN. DAVID PETRAEUS, CMDR., MULTI-NATIONAL FORCE-IRAQ: We haven't turned any corners. We haven't seen any lights at the end of the tunnel. The champagne bottle has been pushed to the back of the refrigerator and the progress, while real, is fragile and is reversible.

(END VIDEO CLIP)

BLITZER: He obviously remains deeply concerned that if the U.S. were to too quickly withdraw troops from Iraq, it would be reversible and a bad situation would be made even worse. What did you think of his testimony?

BIDEN: Well, I thought his testimony was pretty straightforward. I think the header on your program, "will election year politics change Iraqi politics?", that won't change Iraqi politics. Reality on the ground will change the politics in Iraq.

We cannot sustain troops there. And I didn't read the general's response you just put up there the way you did. He is saying, look, we have made some progress, some progress. We haven't made a lot of progress. And what little progress we made is reversible.

The reason it's reversible is not so much drawing down troops. The reason it's reversible is what little political accommodation has been made is very fragile. The whole deal here for this surge, Wolf, was to provide breathing space so the parties that are killing each other, Sunnis, Shia, Shia, Shia, stop killing one another.

There is no evidence -- let me emphasize, no evidence that has been done.

BLITZER: I take it, Senator Biden, you don't have a whole lot of confidence in the conduct of the Iraqi government of Prime Minister Nouri al-Maliki?

BIDEN: No, no I don't. And nor do I have any confidence in the conduct of the political policy of President Bush.

BLITZER: What about you, Senator Lugar?

LUGAR: Well, I thought the hearing demonstrated that we don't have still a definition of success or victory. As a matter of fact, I asked General Petraeus for some idea really of a formula for how the politics of Iraq might turn out, leaving aside the intrusions of Iran and al Qaeda, which came into the situation.

He really had no response to this, as you pointed out. He saw it as fragile, perhaps reversible. I thought the exchange between Senator McCain and Senator Levin in that hearing was important. Levin was asking the same question McCain said, essentially.

Iraq will be a stable, prosperous democratic country, no threat to its neighbors. Now that is at least the definition of success where we're headed. However, what was being described in the hearings, obviously, was worlds away from that type of definition of success.

And what we were asking in the hearings is how do we get there given the strains on our armed forces to which our military people are testifying, the strains on our economy, the world economy generally, and these intrusions that kept coming up from Iran and where is al Qaeda?

BLITZER: You know, Senator Biden, the U.S. troop levels in Iraq went up to almost 170,000 at the height of the so-called surge by July, about 30,000 troops will be out. It will go down to about 140,000. And then General Petraeus is recommending and President Bush has accepted this recommendation that there be a 45-day pause to reassess what's going on.

After 45 days they then take another look, see where the dust settles and then they move on. Here's how he phrased it using his jargon. Listen to this.

(BEGIN VIDEO CLIP)

PETRAEUS: War is not a linear phenomenon. It's a -- you know, it's a calculus, not arithmetic. And that is why, again, I have recommended conditions-based reductions following the completion of the surge forces.

(END VIDEO CLIP)

BLITZER: I guess that is his response to some Democratic critics like senators Clinton and Obama, for example, who want a -- much more of a timetable for withdrawing brigades of U.S. combat forces on a regular monthly basis.

He's saying condition-based meaning you have got to see what is on the ground before you make any sort of commitment for further withdrawals. What do you think of that?

BIDEN: Well, let me tell you what I think he means. What he means is he's not even going to draw down to 140,000 until midsummer. That is 10,000 above the pre-surge level. Then he is going to wait 45 days, Wolf. Forty-five days takes you into the middle of the election cycle after September.

Whether you draw down or not, you're going to leave the next president of the United States, by the time they're sworn in, with somewhere around 130,000 troops. So what he's really saying is we have no plan to draw down. We don't know what we're going to do and we're really leaving this for the next president.

That is the factual translation. That is what factually will occur. That's what will happen even if in September or October, 45 days after the reconsideration comes up, they decide to further draw down. They're out of office. They are gone by that time.

So really what this is, is punting to the next president. And I asked General Petraeus, I said, would your recommendations be the same if you were the central commander, not just Iraq commander? Or you were the chairman of the Joint Chiefs?

And he said, they would be different. He is telling you what he needs in Iraq. Let me read Admiral Mullen, the chairman of the Joint Chiefs of Staff, he said: "Having forces in Iraq at the level they are will not allow us to fill the needs we have in Afghanistan."

And when I asked Ambassador Crocker where al Qaeda was a greater threat, in Afghanistan or in Iraq? He said, clearly in Afghanistan. So this is a gigantic cost we're paying in terms of our security.

Last point I'll make is General -- if you look at General -- the chairman -- the vice chairman the Army, he said, I've never seen our lack of strategic depth where it is today because of the commitments in Iraq. This is costing us big time.

BLITZER: Is the U.S. military overstretched to the point that it can't get the missions done with, Senator Lugar?

LUGAR: Well, the testimony seems to be to that effect, that is that we simply do not have presently enough armed forces to accomplish our missions in Iraq and Afghanistan, quite apart from anything else that might occur in the world.

And, yet in this hearing on Iraq, Iran kept being mentioned. The fact that the Iranians are intruding. A proxy war is being fought. In other words, it was almost as if we were justifying our continued presence in Iraq with the fact that we may be in a conflict with Iran, and furthermore, the al Qaeda, wherever they may be.

It's a very confusing picture to say the least. Now it seems to me we're going to have to come to grips with what is possible in Iraq and what kind of forces are required for that. But we're certainly not at that point in the hearings.

This is -- I agree with Joe Biden, was simply punting the thing down the road and probably into the next administration. And whoever the candidates may be right now, they face an awesome task of turning around a situation that really has not been resolved during this administration.

And with the depleted armed forces, depleted funds, congressional problems that are very partisan -- for example, in one poll, 81 percent of Republicans were in favor of staying the course in Iraq, 27 percent of Democrats. This is really a polarized situation which is clearly observable, I'm sure, by Iraqis, Iranians, or anybody else looking into it.

BLITZER: And the costs are clearly in the billions and billions, tens of billions, hundreds of billions of dollars. We're going to talk about the money in just a moment.

BLITZER: We have a lot more to discuss with Senators Biden and Lugar, including their take on the race for the White House, as well. That's coming up.

And this important programming note: Tonight, only here on CNN, the Democratic presidential candidates Hillary Clinton and Barack Obama -- they'll face some of the hard questions on faith and values. Our own Campbell Brown hosts what's being called "The Compassion Forum." That begins tonight, 8 p.m. Eastern, only here on CNN.

"Late Edition" continues, right after this.

(COMMERCIAL BREAK)

BLITZER: Welcome back to "Late Edition." I'm Wolf Blitzer reporting from New York. Coming up, by the way, in our next hour, a "Late Edition" exclusive, we'll get the Iraqi perspective on the war in Iraq from the foreign minister, Hoshyar Zebari. That's coming up in the next hour.

But right now, we're continuing our conversation with the two top members of the Senate Foreign Relations Committee, Senators Joe Biden and Richard Lugar.

Senator Lugar, there's growing outrage that the United States is still footing the bill for billions and billions of dollars of what's going on in Iraq right now, at a time of huge economic wind falls or the Iraqis, thanks to the economic gains from the oil exports.

According to the GAO, they're going to take in about $56 billion in oil export revenue this year, maybe even a lot more if the price per barrel goes above $110 a barrel, and this at a time when the Iraqis already have about $30 billion in surpluses in U.S. banks alone.

What's going on? Why is the U.S. continuing to foot the bill, at a time when the Iraqis are accumulating these kinds of numbers?

LUGAR: Well, it's a very good question, which came up during the hearings without a good answer. The facts are as you've stated them, Wolf. And we have really have to require the Iraqis to pay for much more of their defense and their government.

One response of the Iraqis is that their central government is so dysfunctional they're unable to spend the money. By that I mean, specifically, that they do not have civil servants who with work with the electrical power companies or deal with health or education or so forth.

So, if you really have no infrastructure, people who are public servants who can deal with this, the money stays in the bank, and as you pointed out, even $30 billion of helping us out, at least, with some capital in the United States.

It's a totally unsatisfying situation, and one which I hope that these hearings will help to correct.

BLITZER: Senator Levin, Senator Biden, the chairman of the Armed Services Committee, made the point that the Iraqis, last year, did allocate some $10 billion for reconstruction, building of roads and bridges, schools, hospitals, money the U.S. has largely spent -- about $27 billion -- for that kind of reconstruction.

But at a time of economic distress in the United States, fears of recession, he noted that, of that $10 billion that the Iraqis earmarked for reconstruction, he said, according to the Government Accountability Office, they only spent 4.4 percent. The White House insists they spent 24 percent of that money.

Irrespective, it is still a small number, compared to what U.S. taxpayers are spending for Iraqi roads and bridges and other infrastructure developments there.

BIDEN: It goes to Dick Lugar's point. They don't have a functioning government, which is one of the points that, unless you get a functioning government, unless you get some kind of political solution, none of this is going to matter.

We're spending $3 billion a week, Wolf. Yet, Dick Lugar and Joe Biden and a majority of the members of our committee think we should be spending, for example, $1.5 billion to see to it that Pakistan doesn't split apart.

We're told we don't have the money to spend $1.5 billion in Pakistan over the next years because we need it in Iraq.

Just imagine, if they just picked up $1.5 billion of what we need to deal with Pakistan and, in turn, Al Qaida, where it lives, in Afghanistan and Pakistan, it would be a big difference.

This is one of the opportunity costs of continuing this war with no end in sight and no political plan to end it. It's killing us, literally and figuratively, in other parts of the world, let alone here at home.

BLITZER: And the other point, Senator Lugar, that came out and is causing a lot of outrage out there in Capitol Hill, as well as among the American public, is the whole involvement of Iran in Iraq.

The Iraqi government of Prime Minister Nouri al-Maliki seems to have a pretty good relationship with the Iranian government of President Mahmoud Ahmadinejad. They just recently exchanged formal visits.

Here was the warning that President Bush made to the Iranians on Friday.

(BEGIN VIDEO CLIP)

BUSH: If Iran makes the right choice, America will encourage a peaceful relationship between Iran and Iraq. If Iran makes the wrong choice, America will act to protect our interests.

(END VIDEO CLIP)

BLITZER: He didn't go beyond that "to protect our interests."

He said -- but it's clear what he meant. The question to you is this. Is Iran helping Iraq try to get some sort of stability or undermining what the Iraqis and the U.S. are trying to do?

LUGAR: Well, the Iranians, as a matter of fact, are helping several factions in Iraq that are rival factions.

BLITZER: You're referring to Shiite militias...

LUGAR: Yes.

BLITZER: ... who are opposed, in large measure, to the Iraqi government -- certainly opposed to the U.S.

LUGAR: They are. And at the same time, they're helping Presidential Maliki, from time to time, likewise. That's why Ahmadinejad, the Iranian leader, was embraced when he came there, certainly in a much more cordial way than many of our emissaries.

I think the thing I was concerned about is that some of the testimony by General Petraeus and Ambassador Crocker said, in essence, if you're not that interested in Iraq and how all that works out, you better be really worried about Iran. That may be the big factor.

Now, that's been a big factor since 2003. That's really not a new factor. Or, if you're not interested in Iran, how about Al Qaida?

Joe Biden just made the very important point that certainly some testimony on Capitol Hill this week said that Al Qaida is principally in Pakistan -- in Pakistan. It seeps over the boarder, occasionally, to Afghanistan. And maybe a few cohorts get to Iraq.

But nevertheless, in terms of our priorities and our overall strategy, the hearings were not very helpful. Because, essentially, we did not get into the overall status of our armed forces, our economy, and our ability to pay for this, quite apart from exactly who enemy is, what the priorities are, in terms of our expenditure of forces and money.

BLITZER: We're almost out of time, but I want to...

BIDEN: Wolf, could I make a very... BLITZER: Make a quick point.

BLITZER: Because then I want to ask you both...

BIDEN: Yes, a very quick point. The president gets it wrong. The president says, and implicated -- they implied that, if we didn't like Iran, we'd make sure Iraq didn't like Iran.

Iran and Iraq like one another. They actually have a relationship with a guy we're pouring billions of dollars to, and kissing Ahmadinejad on both cheeks -- as if we can control that.

I think the president should get realistic about what, in fact, what control we have in Iraq and whether or not Iran is going to have any influence. They will have some influence, no matter what. It's called geography. They sit on the boarder.

BLITZER: All right. Let me quickly pick both of your brains on the race for the White House.

(LAUGHTER)

First, to you, Senator Biden. You haven't endorsed either Hillary Clinton or Barack Obama. Do you plan on doing that?

BIDEN: No, I do not. But I'm helping them both when they call me. I speak to them not infrequently. I guess, on average, three, four times a month, they each call me. And I'm happy to give them advice when they ask it. But I will leave that to the folks in the primaries to decide.

BLITZER: How come? Why don't you want to weigh in?

BIDEN: Because I think that -- they're both my friends. And quite frankly, Wolf, the moment I weighed in, you'd be speculating as to whether I was looking for a job, so...

(LAUGHTER)

And I'm not looking for a job. And so I'm going to help whoever the nominee is. And they both know that.

Immediately, when I got out of the race in Iowa, they each asked me, almost the same day, to join them. I told them I would not. I would not endorse either one. I've kept that commitment, and I'm helping them when they call me.

BLITZER: You seem to have a pretty good job, right now, as chairman of the Foreign Relations Committee.

BIDEN: I do. I like that job.

(LAUGHTER)

BLITZER: All right. Senator Lugar, I'm sure, would like that job.

But let me ask you, Senator Lugar -- and you've had that job in the past. I know it's better to be chairman than the ranking member.

But let's talk about Indiana. This is a state you know about as well as anyone. You've been elected statewide, I don't even know how many times, but I'm guessing at least five or 10, as a governor, as a senator, and everything else.

Let's talk about who's going to win on May 6th in Indiana. Who do you believe -- will it be Hillary Clinton who will win Indiana, or Barack Obama?

LUGAR: For the moment, I believe that Senator Clinton has a lead. But it's very competitive. And it might be largely determined by independents and maybe even some Republicans who will vote in the Democratic primary.

Indiana's rules of the game are such that you can vote in the primary you wish to vote in. It ought to be an honest choice. And Democrats are protesting that they're fearful Republicans crossing over will foul up nominations for other offices while they're busy attempting to fix whatever is going to occur on the Democratic presidential side.

BLITZER: We'll leave it on that note.

Senators -- the two top senators of the Foreign Relations Committee. I know they are personal friends, have a very good relationship. And I'm glad both of you could join us today on "Late Edition."

Thanks, Senators, for coming in.

LUGAR: Thanks, Wolf.

BIDEN: Thank you, Wolf.

BLITZER: And up next, there's been a new development on whether President Bush should attend the opening ceremony of the Summer Olympic Games in China. We're going to tell what you the White House is now saying. That report when we come back.

(COMMERCIAL BREAK)

BLITZER: Welcome back to "Late Edition." I'm Wolf Blitzer, reporting.

There's a story surrounding the Beijing Olympics that we're following this hour. There have been some new developments. Fredricka Whitfield is joining us from the "Late Edition" update desk with some details. What are we learning, Fred?

FREDRICKA WHITFIELD, CNN ANCHOR: Well, good morning you to, Wolf. Well, with pressure building for world leaders to boycott the opening ceremonies at the Olympic Games in Beijing, President Bush's national security adviser say that's a cop-out.

(BEGIN VIDEO CLIP) NATIONAL SECURITY ADVISOR STEPHEN J. HADLEY: You know, I think this issue is, in some sense, a bit of a red herring. I think, unfortunately, a lot of countries say, well, if we say that we are not going to the opening ceremonies, we've checked the box on Tibet. That's a cop-out.

What -- if other countries are concerned about Tibet, they ought to do what we are doing, through quiet diplomacy.

(END VIDEO CLIP)

WHITFIELD: Well, the Olympic torch in Tanzania's capital today, free from demonstrations that disrupted runs in other countries, including the U.S.

However, Kenyan Nobel Peace laureate Wangari Maathai pulled out of the run to protest China's human rights record. Tanzania is the only African country to host the torch. Next up, Oman.

And that's the latest from the news desk here in Atlanta. Now back to you, Wolf.

BLITZER: Thanks very much, Fred.

It seems, based on what you hear from Stephen Hadley, the president's national security adviser, that the president might be leaning to actually attend the opening ceremonies, although the president himself, in recent comments and interviews, has been vague on whether he will attend the opening ceremonies. He is going to watch the games.

We'll continue to watch this story, Fred. Thanks very much for that.

Hillary Clinton is slamming her Democratic rival, Barack Obama, for what she calls his elitist comments. We're going to be talking about that with Clinton supporter, Senator Evan Bayh, when "Late Edition" returns.

(COMMERCIAL BREAK)

BLITZER: Welcome back.

Although she's behind in the pledged delegate count and the popular vote, Hillary Clinton is by no means giving up, and she's now aggressively going after some very controversial comments by Senator Barack Obama.

Joining us now from Washington to talk about the Democratic race for the White House, the Clinton supporter, Senator Evan Bayh of Indiana. His state will be holding a huge, potentially decisive primary on May 6th. Senator, thanks very much for coming in.

BAYH: Good to be with you, Wolf.

BLITZER: Here's a little clip. Last Sunday, exactly a week ago, although we didn't learn about it until Friday, Senator Obama said that these controversial words -- the audio is not good, but we put up on the screen what he said. I want to discuss the fallout of what is going on. Listen to this.

(BEGIN VIDEO CLIP)

OBAMA: It's not surprising then they get bitter, they cling to guns or religion or antipathy to people who aren't like them, or anti- immigrant sentiment or anti-trade sentiment as a way to explain their frustrations.

(END VIDEO CLIP)

BLITZER: He was referring to those who may have lost their jobs in recent years, and he suggests they have become bitter. It's not surprising then that they get bitter. They cling to guns or religion or antipathy to people who are not like them, or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations.

That's what Senator Obama said at a fund-raiser out in San Francisco last Sunday. And that's causing a lot of commotion.

Now he said yesterday in an interview with the Winston-Salem Journal, he said this. He said, "Obviously, if I worded things in a way that made people offended, I deeply regret that. The underlying truth of what I said remains, which is simply that people who have seen their way of life upended because of economic distress are frustrated, and rightfully so, and I hear it all the time when I visit these communities."

It may not have been politically artful, but what he said was, at least his supporters maintain and a lot of other people maintain, is factually accurate. All these unemployed people, they become bitter.

BAYH: Well, Wolf, I think we have a substantive issue and then a political problem, potentially. The substantive issue is that, yes, there is economic anxiety out in the heartland, no question about it. I see it in my state every day. But to imply, even mistakenly, that people's religious faith or that their devotion to hunting or fishing, or their other cultural values in some way is dependent upon anger and bitterness or economic frustration I think just is not an accurate reflection of how middle Americans feel.

The political point is -- and this is unfortunately prevalent in some places out in the Midwest -- they do view our party -- mistakenly, I think sometimes -- as being culturally elite, and that we kind of look down our nose at people too often, people of faith, people who are patriotic, people who hunt and fish, those kinds of things. And they just think we don't understand their values.

Now, as I said, I think that's mistaken. But that costs us too many elections. And we have two good candidates in this election. We can't afford four more years of what we have had. We have to win in November. And this could be the kind of political issue that Karl Rove and the Republicans use to beat us over the head with, and that would be a tragic thing.

BLITZER: But he comes from very humble origins, Barack Obama. Do you see him as someone who is culturally elite?

BAYH: Wolf, I like Barack Obama. I think he's a good person. But these comments are subject to misinterpretation. And you remember, remember John Kerry when he said -- I don't think John Kerry is a chronic flip-flopper. But you remember when he said he voted against the $87 billion before he voted for the $87 billion? And they took that one soundbite and just beat it and beat it and beat it. And this is the kind of -- look at what the Republicans did here in the last 48 hours. They're calling on everyone who's received contributions from Senator Obama's political committee to give the money back. They're calling upon people to disavow his remarks all across red-state America.

So this is the kind of thing, again, between two good people -- I think our superdelegates and our voters have to ask themselves, you know, who is in the best position to win the fall election, to deliver the kind of change that we need in this country? And I'm afraid that this gives the Republicans a stick to beat us with.

BLITZER: Well, it's not just the Republicans and Senator McCain. It's Hillary Clinton -- and you're a major supporter of Hillary Clinton -- you're beating him over this issue very, very aggressively yourself.

BAYH: Well, Wolf, what I'm saying is -- I'm not saying anything derogatory about Senator Obama as a person. I think he is a good person. And it's entirely likely that he misspoke. But the political reality is that things like this can take on a life all their own, and as people who believe that we need a change, with two good candidates, one very close election here for the nomination. One of the things that we have to ask ourselves is, who is in the best position to win some of these swing areas? Small towns, blue-collar voters, those kinds of people? And we shouldn't let us get distracted from that mission by some things that the other side may use, blow out of proportion, to keep us from winning.

BLITZER: If we take a look at the most recent so-called poll of polls, the average of the polls in Pennsylvania -- they're holding their primary April 22nd, only nine days from now. A few weeks ago, Hillary Clinton had an enormous advantage in those polls, 14, 16-point advantage. It's now narrowed to only four points in the most recent average, 46, 42, 12 percent unsure. He's obviously doing something pretty impressive in Pennsylvania right now to reassure a lot of those voters.

BAYH: Well, he's an impressive person. And I think he's outspending her, Wolf, by what, 3 or 4 to 1, or something like that. And any time there is that sort of resource disparity, it is going to have an impact.

But I think at the end of this, particularly those blue-collar voters, and particularly, ironically, the people who have these economic anxieties the most, are going to ask, who can deliver for them? Who actually has a track record of delivering on jobs and health care and those kind of things? And I think her strength, her experience, her speaking directly to and acting directly upon their concerns will stand her in good stead and help her win the state of Pennsylvania and elsewhere across the middle section of our country.

BLITZER: The Pennsylvania primary is April 22nd. And then two weeks after that, on May 6th, two very important primaries, in North Carolina and in your home state of Indiana.

Here's how Barack Obama assessed what's going on. I'll play this little clip.

(BEGIN VIDEO CLIP)

OBAMA: Senator Clinton, I think, is more favored in Pennsylvania, and I'm right now a little bit more favored in North Carolina. So Indiana may end up being the tiebreaker.

(END VIDEO CLIP)

BLITZER: What do you think? What is going to happen in Indiana, based on your -- you're a former governor of that state. You've been elected a couple of times as a senator. What do you think?

BAYH: Well, first, Wolf, I hope we are the tiebreaker. And it's just nice that we matter. We haven't had a primary that mattered in 40 years. So it's a good thing that we're going to have our say.

And one of the things that rankled people in my state are these calls by some that, you know, she ought to quit and drop out so that we don't even get a chance to vote. So I'm glad we are going to have a chance to vote.

It's going to be hard fought. It's going to be very close. He comes from next door. He has a little bit of a home court advantage, because about 25 percent to 30 percent of Democrats in our state watch Chicago TV on a daily basis. I assume he'll continue to outspend her by 3 or 4 to 1, which gives him a little bit of an advantage.

But Wolf, I think at the end of this, particularly for those blue-collar workers, the people who have the greatest stake in this election, because they're not doing as well as they would like, I think her strength, her seasoning, her focus on those kitchen-table, bread-and-butter issues, not just, you know, speaking about it or, you know, hoping about it, but actually delivering for them, I think that will stand her in good stead. And while he started off ahead in the polls in our state, I think she's going to win a narrow election at the end in the state of Indiana.

BLITZER: Last Sunday we spoke to Congressman John Murtha, who is another Hillary Clinton supporter in Pennsylvania. And he acknowledged she's behind in the pledged -- and the total delegate count right now. But the pledged delegate, she's behind. He says she has to win the popular vote in all of these contests going into the convention. Otherwise, she probably is not going to convince the superdelegates -- she probably shouldn't even convince the superdelegates she could be -- she should be the nominee.

I'll play a little clip of what senator -- of what Congressman Murtha told me.

(BEGIN VIDEO CLIP)

REP. JOHN P. MURTHA, D-PA.: She has to, that's all there is to it. And I think they recognize that. You can't expect superdelegates to support the candidate, even though she's ahead in the electoral vote, so-called electoral votes...

BLITZER: In the states that have the most electoral votes.

MURTHA: Electoral votes. But still, you have to have the popular vote.

(END VIDEO CLIP)

BLITZER: Do you agree, Senator, with Congressman Murtha, that whoever should -- whoever has the most popular votes should get the nomination?

BAYH: I think that's a key indicator, Wolf. I do. And we're going to go through the rest of these contests and then total up those votes, and I think that is the most important factor.

But there is unfortunately a complicating issue here, and that's what do we do about two of the largest states in our country, Florida and Michigan? So, you know, if you count those states, she may very well win the popular vote. But there were some imperfections there. Frankly, what we ought to do is have a re-election. But that doesn't look like it is going to be possible in those two states. So we're left with a choice of less than perfect alternatives. And so, how we count Florida and Michigan is going to have a big impact on what John Murtha and I think is a key factor here, and that is the aggregate popular vote.

BLITZER: If you listen to the DNC, the Democratic National Committee, those two states are out of it because they broke the rules. They moved up their primaries, and they're at least as of right now not going to have any say in this delegate count or the popular count, for that matter. But we'll see. Maybe there will be a change when all the dust settles.

Senator Bayh, thanks very much for coming in.

BAYH: Wolf, great to be with you.

BLITZER: Now, we'll get a very different perspective in the next hour, by the way, from Senator Bob Casey of Pennsylvania. He's a major supporter of Barack Obama.

But coming up next, he went from pro wrestling to politics, becoming Minnesota's governor. Now Jesse Ventura is thinking, thinking about another political run. And he's proposing an unusual idea to shake up the U.S. election process. That's coming up next. (COMMERCIAL BREAK)

BLITZER: Coming up, my interview with Joe Lieberman. But right now, Jesse Ventura, he stunned the political world back in 1998 when he was elected the governor of Minnesota. Since then the former pro wrestler and governor has soured on politics here in the United States. He now lives at least part of the time in Mexico.

I spoke with him this week in "THE SITUATION ROOM."

(BEGIN VIDEOTAPE)

BLITZER: Let's talk presidential politics right now. Correct me if I'm wrong, you don't like Hillary Clinton, you don't like Barack Obama, you don't like John McCain. So who are you going to vote for?

JESSE VENTURA, FORMER MINNESOTA GOVERNOR: Well, you know what I wish they had in the United States, Wolf? I wish they had on all of the ballots, be it local, state or federal, "none of the above."

And everyone chuckles at that. But what that truly would mean is that I'm here, I'm participating in the system, I'm voting, but it's also a vote of no confidence in your government.

And I believe strongly that if they did that at local, state, and national, you would see "none of the above" occasionally win.

BLITZER: So what's wrong with these three presidential candidates?

VENTURA: Well, they're all part of the system. Look what the Democrats and Republicans have done right now. You know, in the private sector, you work your whole life to save money and to leave your children something, whatever it might be. Well, in our public sector, what we're going to leave our children is a $9 trillion debt. That's where it's at right now, courtesy of the Democrats and Republicans, who have created it. And...

BLITZER: So, is there -- is there an independent candidate out there you would vote for?

VENTURA: Not right now, I don't think, because it's so difficult to get on the ballot. Look what they did to Ralph Nader. Whenever he would get ballot access, then they would sue him. They would tie it up in court. And they would hold it until he couldn't get the ballot access. And that's, of course, what they call democracy, the two- party system.

BLITZER: So you're not going to vote; is that right?

VENTURA: I don't know if I will vote or not. If I do vote, I will pick out somebody, the Libertarian, the Green Party. I know that I will vote for anything but a Democrat or Republican.

(END VIDEOTAPE) BLITZER: And Jesse Ventura also told me, by the way, he's thinking, he's thinking about being a third-party candidate in the Senate election this year against the incumbent Republican, Norm Coleman, and the Democratic challenger, Al Franken. We'll see what he decides on that front.

Up next, interview with the independent Democrat who supports John McCain for president. That would be Joe Lieberman of Connecticut. He may agree with Senator McCain on the war, but what about on other issues? LATE EDITION continues right after this.

(COMMERCIAL BREAK)

BLITZER: Welcome back to LATE EDITION, I'm Wolf Blitzer reporting. Despite being on the opposite side of voter sentiment over the war in Iraq, polls show the presumptive Republican presidential nominee, John McCain, running strong against both Hillary Clinton and Barack Obama.

His war stance is certainly one reason Senator and former Democratic vice presidential nominee Joe Lieberman decided to cross the aisle and back McCain. Senator Lieberman is joining us now from Washington.

Senator, thanks very much for coming back to LATE EDITION.

LIEBERMAN: Wolf, a pleasure to be with you. Thank you.

BLITZER: I believe that's the major reason why you decided to endorse McCain over the Democrats, his stance on the war, is that right?

LIEBERMAN: Well, that is certainly a big reason. Look, I think John McCain is the best prepared to be the commander-in-chief we need now not just to take us to victory in the war on terrorism but to better relate to countries around the world, in some sense to rebuild bridges.

John knows the world, I have traveled with him around the world. The leaders of the world know and respect him. But there was a second major reason why I'm supporting John McCain. And to me, there is a problem here in Washington that we have to solve before we can solve any of the other problems, like the economy and health care and education and environment and fiscal imbalance. And that is partisanship.

This place has become a kind of partisan mud wrestling arena. And John McCain clearly, more than any of the other candidates remaining, has a record of being willing to reach across the party lines to get things done.

This guy is a reformer, a restless reformer. And that's what Washington needs. He'll always put the country ahead of party. And that's what the people want.

BLITZER: How worried are you, though, Senator, that what is happening in Iraq -- and a lot of Democrats and a lot of others believe this is really a civil war, that the Iraqi Shiites, they feel much more comfortable with Iran, for example, than with the U.S, and the Iraqi Sunnis, 90,000 of whom, the so-called Sons of Iraq are now on the U.S. government's payroll -- they could flip back and become Sunni insurgents, just as quickly as they are now supporting what the U.S. is doing?

How worried are you that the U.S. is simply involved in a quagmire in Iraq with no end in sight?

LIEBERMAN: Yes. Well, in fact, it was heading toward a civil war until President Bush adopted the so-called surge strategy, sent General Petraeus in. We have the counterinsurgency programs going on. And this thing turned around remarkably, so that now you have Shia, Sunnis and Kurds cooperating at the national governmental level. You have the -- basically, this Sunni Arabs turning against their fellow Sunni Arabs who were members of Al Qaida, in putting them on the run.

And most recently, you had the Shia Prime Minister al-Maliki...

BLITZER: But this is all so very fragile, as General Petraeus kept telling members of Congress.

LIEBERMAN: Yes, it's fragile in the sense that it's impermanent. And that's why we're not going to just pick up and retreat, because then you would have civil war and Al Qaida and Iran dominating this country in the heart of the Arab world.

This is not a quagmire. We're making progress. We're bringing home five brigade combat teams between now and July. That's more than 20,000 American soldiers who will not be replaced.

Yes, we're going to stop after that and consolidate and evaluate. But everybody, including me, certainly Senator McCain hopes that the Iraqi security forces continue to get better, that the political leadership works together, and that we can continue to draw down our troops, based on conditions on the ground.

BLITZER: The Iraqis now have a lot of money in oil exports. The U.S. is spending tens of billions of dollars in Iraq. It's already spent hundreds of billions of dollars.

The Iraqis are keeping their money, at least, in large measure, according to Senator Levin, the chairman of the Armed Services Committee and others, in surpluses, including $30 billion in surpluses in U.S. banks, at a time when American taxpayers are shelling out billions of dollars.

How frustrated -- how angry are you that the Iraqis are not stepping up?

LIEBERMAN: Well, I am frustrated. And listen, when Senator McCain and Senator Graham and I met with Prime Minister Maliki, about three or four weeks ago in Baghdad, this was one of the major points we made, that, as the Iraqi oil industry is producing more -- and the price of oil obviously is going sky high, they've got to -- the Iraqis have got to pick up essentially all the costs of economic reconstruction and methodically all the costs of their security forces.

And he said he understood that. In fact, Wolf, a lot of that is beginning to take place. But this is one on which most everybody in Washington has a bipartisan agreement.

And I think the Iraqis hear that. They've begun to respond to it. And they're going to have to respond more. They've got to pick up the bill for their own future. That's part of why we're there fighting, to give them that opportunity, instead of having chaos and civil war.

BLITZER: Well, a lot of Democrats say to me, Senator Lieberman -- and I'm sure to you as well -- that they're upset about your decision to endorse McCain, not necessarily because of the war, even though they disagree with you on that, but because you disagree with him on so many other issues, including issues like abortion rights for women and tax cuts for the rich.

How do you justify supporting McCain on -- for the presidency, at a time when you disagree with him on a lot of the economic bread-and- butter issues and then social issues?

LIEBERMAN: It's a good question and an important one. You know, and I said to somebody who said, "How could you support John McCain, a Republican?" -- I said, you know, I did what most normal people do, but politicians tend not to do in an election, which is to actually decide to support the person I think would be the best president of the United States, not the person who happens to be in my party.

I don't agree with anybody on every issue. I agree with John McCain on the important issues, as I've described. Commander in chief...

BLITZER: But how worried are you, Senator, that, for example, on abortion rights he would nominate Supreme Court justices like, let's say, the two most recent, Samuel Alito and John Roberts, and they might then get the majority to overturn Roe versus Wade, a decision that would have ramifications for 20 or 30 years?

LIEBERMAN: Of course I'm concerned about that. But remember, John and I were -- John McCain and I were two of the 14 in the gang of 14 that preserved the right to filibuster judicial nominations. John is a conservative, but he's a common-sense conservative. And I think that's the way you'll see him govern as president.

The point I'm making -- and Senator McCain has always done this in his own legislative life. That's why some Republicans are angry at him. He'll work with a Democrat that he agrees with on a particular issue, even if he disagrees on most other issues. That's what we need in Washington to get things done. And that's the kind of president John McCain will be.

He's going to be a leader. And a leader reaches across the aisle because he's not just interested in sound bites and partisan game- playing. He's interested in reforming our government and improving life in America.

BLITZER: On the issue of taxes, the economy issue, number one for so many Americans right now, this is what you said back in 2003, when you were running for the Democratic presidential nomination. I'll put it -- I'll play it for you.

LIEBERMAN: OK.

(BEGIN VIDEO CLIP)

MCCAIN: Senator Clinton and Senator Obama will raise your taxes. I intend to cut them. I will start by making the Bush tax cuts permanent.

(APPLAUSE)

(END VIDEO CLIP)

BLITZER: All right. That was Senator McCain, obviously.

(CROSSTALK)

This is what you said in 2003. I'll read it to you.

(LAUGHTER)

LIEBERMAN: OK.

BLITZER: "Immediately, as president, I would attempt to repeal the Bush tax cuts on the highest-income Americans. They don't need it. It sent us in a deficit that will cost the middle class.

So this is issue number one, the economy. You and McCain clearly disagree on tax cuts for the wealthy right now, keeping in place the Bush tax cuts.

LIEBERMAN: Yes, that's true. On that point we disagree. I think there is an important point, which is to say, I would raise the taxes on the highest-income Americans.

But, you know, it's important to say that, when John says he would make the Bush tax cuts permanent, that also means he'd make permanent tax cuts that I want to make permanent, which is the tax cuts on the lower and middle-income Americans, and the tax cuts that have been...

BLITZER: So on that issue you agree with Clinton and Obama. Because they want to keep those permanent. They just want to eliminate the tax cuts for the rich.

LIEBERMAN: That's correct. And that's why we're going -- John and I always have a good dialogue. You see, he doesn't fear dissent. He welcomes a good debate, and then he's going to try to put something together to bring about progress.

You know, he's very interested in tax reform, for instance. I think this guy is a common-sense conservative who is going to finally get our government to get things done.

BLITZER: Senator Lieberman, thanks for coming in.

LIEBERMAN: Thank you, wolf. Have a good day.

BLITZER: Up next, with high oil prices in Iraq generating billions in oil export revenues, why is the U.S. still paying most of the bills? I'll ask Iraq's foreign minister in an exclusive interview from Baghdad.

Much more "Late Edition" at the top of the hour.

(COMMERCIAL BREAK)

BLITZER: This is "Late Edition," the last word in Sunday talk.

(BEGIN VIDEOTAPE)

PETRAEUS: The situation in certain areas is still unsatisfactory and innumerable challenges remain.

BLITZER: When will Iraq be able to stand on its own? We'll talk exclusively with Iraq's foreign minister, Hoshyar Zebari.

Hillary Clinton versus Barack Obama.

CLINTON: I believe I can walk into the Oval Office on January 20th, 2009, and be prepared to protect and defend our country.

OBAMA: It is time for something new. It is time to turn the page. It is time to write a new chapter in American history.

BLITZER: Only nine days until the critical Pennsylvania showdown. That state's senator, Obama supporter Bob Casey, weighs in.

MCCAIN: There's a backlash in America today against corporate greed.

BLITZER: Presumptive Republican presidential nominee John McCain says he feels voters' pain over the ailing U.S. economy. We'll sort out the race for the White House with three of the best political team on television. "Late Edition's" second hour begins right now.

(END VIDEOTAPE)

BLITZER: And welcome back to the second hour of "Late Edition."

We learned this week that Iraq is sitting on billions of dollars in surpluses from oil exports, while the United States still continues to pay most of Iraq's bills. At a time of major economic stress in the United States, that is causing outrage on Capitol Hill and among the American public. So, what exactly is going on? In an exclusive Sunday interview, I spoke about that and much more with the Iraqi foreign minister, Hoshyar Zebari, in Baghdad, just a few moments ago.

(BEGIN VIDEOTAPE) BLITZER: Foreign Minister, thanks very much for joining us. Welcome back to "Late Edition."

Let's get right to the big news of the week here in the United States, the testimony of the U.S. military commander, General David Petraeus, and the ambassador -- the U.S. ambassador to Iraq, Ryan Crocker.

One thing we did learn, and it was stunning to a lot of Americans, was that Iraq is now flush with a lot of cash. I want you to listen to the chairman of the Senate Armed Services Committee, Carl Levin, in saying that Iraq is now getting a windfall from the huge oil exports that it has now generated. Listen to this.

(BEGIN VIDEO CLIP)

SEN. CARL LEVIN, D-MICH.: On the economic side, five years after the war began, skyrocketing oil prices have swelled Iraqi oil revenues beyond all expectations. Iraq now has tens of billions of dollars in surplus funds in their banks and in accounts around the world, including about $30 billion in U.S. banks. But Iraqi leaders and bureaucrats aren't spending their funds.

(END VIDEO CLIP)

BLITZER: I have to tell you, Minister, there is a lot of outrage here in the United States when they look at how much the United States has been spending, hundreds of billions of dollars, now Iraq has all of this money, why aren't you spending the money for Iraqi reconstruction, for the Iraqi military, for salaries and other expenditures?

ZEBARI: Yes, Wolf, with all due respect to the statement of the honorable congressman, Carl Levin, in fact, Iraq is spending its money on its defense, on infrastructure, on provincial councils.

And the ratio actually is 10 to one in terms of what the U.S. is spending and what is Iraqi spending.

Yes, there has been some slowness before in disbursing the money to the provinces, but that bottleneck has been overcome. And I think the record speaks for themselves.

BLITZER: Because on the issue of reconstruction that Carl Levin spoke about, the United States appropriated $27 billion to build bridges and roads and schools and hospitals in Iraq. He made the point, Carl Levin, that last year, Iraq appropriated $10 billion. But of that, he quotes the U.S. government's General Accountability Office as saying that you only spent of that $10 billion, 4.4 percent. Although the White House -- the Bush White House says you spent 24 percent.

And then he goes on to say this. Listen to what he says.

(BEGIN VIDEO CLIP) LEVIN: The Iraqi government seems content to sit by, build up surpluses, and let Americans reconstruct their country and Americans foot the bill.

(END VIDEO CLIP)

BLITZER: Now, as you know, Foreign Minister, there are a lot of Americans, especially lawmakers on Capitol Hill, who feel they are being played for suckers right now, that the Iraqis have all this oil money, but the U.S. taxpayers are still paying the bills.

ZEBARI: Well, we appreciate very much what the U.S. is contributing to help the Iraqis to rebuild, reconstruct the country. But in fact, we are shouldering the main burden on looking after our people, and extending services, and carrying out reconstruction projects throughout the country.

And again, I would say, really, that the figures that Mr. Levin introduced, compared to what we have spent, differ widely. And I agree to a certain extent that there is some shortcomings in the management, in the administration, in the corruption level. But we are doing our best.

We are not standing by. This is our country. And we are spending on ourselves.

BLITZER: Let's talk about those 90,000 so-called Sons of Iraq, Iraqi Sunnis, mostly in the al-Anbar province, who at one point -- some of them were insurgents, but in the past year or so, as a result of the new U.S. military strategy, they are now working with the U.S. and Iraqi forces.

Those so-called Sons of Iraq, Iraqi Sunni militia men or whatever, they are getting what, about $300 a month each, 90,000 of them. Who pays that? Because the U.S. supposedly is paying the bills, the salaries of those Sons of Iraq at a time when they say the Iraqis -- the Iraqi government should be paying those salaries.

ZEBARI: Yes, well, this Sons of Iraq phenomenon, or the Awakening movement in Anbar and Diyala and Salahuddin and all of these hot provinces and hotbed of insurgency and terrorism was a major, major development in changing the security equation in the country, and to defeat Al Qaida, to win over the hearts and minds of these people.

And this was a wise policy the U.S. military adopted, and General Petraeus takes all the credit for that. Something that we have been advising for three or four years to do so. But now, in fact, it is true that the U.S. Army has paid those people just to win them over. The Iraqi government has integrated about 20,000 of them in the police and the army and other security agencies.

And also, the government has plans to integrate the rest in public services. And we are doing our share here also. We are not shying away from our responsibility. But it is true that the initiative was taken by the U.S. military and it was a successful strategy.

BLITZER: The question, I guess, just to wrap up this part of the interview, when will the Iraqis, who now have a lot of money coming in from oil exports -- it is projected you could have $60 billion this year alone in oil exports -- some are saying if the oil continues at about $110 a barrel, you might have $100 billion this year.

A, when will you be able to take over full financial responsibility for your country without U.S. assistance? And B, at what point will you be able to start repaying the U.S. government for some of these hundreds of billions of dollars in expenditures over the past five years?

ZEBARI: Well, the U.S. contribution is declining, actually. I mean, according to our figures. As I said, we appreciate that. But the end goal is definitely that we should take full charge and control in our spending and looking after our people.

I really don't have a timeline in my mind. But as you said, yes, due to the increase in oil prices, we are getting more revenues. And now we have a comfortable budget. The budget law was passed by the parliament, and it has been disbursed to the ministries and government departments, to the provinces, in order to spend it.

This is not just to deposit it in accounts abroad and so on. In fact, this is the people's money, and it must be spent for their welfare.

BLITZER: Let me ask you about Iran right now, because we heard from President Bush, from General Petraeus, from Secretary of Defense Robert Gates and others that Iran is now the biggest threat to the problems of instability in Iraq.

And I want to play a little clip of what the defense secretary, Robert Gates, said.

(BEGIN VIDEO CLIP)

SECRETARY OF DEFENSE ROBERT M. GATES: We are going to be as aggressive as we possibly can be inside Iraq in trying to counter their efforts.

(END VIDEO CLIP)

BLITZER: This comes on the heels of the visit recently by the president of Iran, President Mahmoud Ahmadinejad, to Baghdad. A lot of Americans, Minister, are confused. Is Iran, from your government's perspective, a friend or a foe?

ZEBARI: Yes, well, during -- President Ahmadinejad to Baghdad, in fact, during the meetings that I have participated, we did raise this issue in a frontal way with him and with his delegation. And really Iran is a neighbor.

Our destiny is to live with them. We have problems. This is not a secret. But we have been conveying to them all of the intervention that they do. And we have been urging them to deal with the government in a formal, official, through protocol, as a sovereign, friendly government to them.

And secondly, we are meeting them soon in Kuwait on the 22nd. We have an expanded regional conference. In fact, where all our neighbors will participate, all the GCC, the P5, the G8, the international organizations. And this would be a forum for the Iraqi government, in fact, to speak out against all such intervention that undermine peace and security in Iraq.

BLITZER: But right now, is it fair to say that Iran has been fomenting, has been part of the problem in terms of the Shiite militias of Muqtada al-Sadr and others who are standing up now and fighting, whether in Sadr City or in Basra or elsewhere against U.S. and Iraqi forces?

ZEBARI: Well, the Iraqi government took a decisive action in confronting, actually, those militias who are believed to have some support across the border. And that was a defining moment for this government.

And what happened in Baghdad also and other places and that our government will not take any chances with such militias or with any such intervention, coming from Iran and elsewhere in our neighborhood.

But Iran is a neighbor. I mean, we are destined to live with them. Really, we need to assume some good faith in dealing with them, trying to engage them, try to activate this tripartite dialogue between the United States, Iran and Iraq in order to address those issues of interventions and to address the issue of Iraq's security and stability. BLITZER: Foreign Minister, you have got a tough assignment ahead of you. Good luck, thanks very much for coming in.

ZEBARI: You are most welcome, Wolf.

(END VIDEOTAPE)

BLITZER: And up next, the Pennsylvania senator, Bob Casey, he's standing by live. We'll talk about whether Barack Obama's use of the word "bitter" has hurt his case with voters in Casey's crucial home state. That's coming up.

And a reminder that tonight, only here on CNN, Democratic presidential candidates Hillary Clinton and Barack Obama, they'll face the hard questions on faith and values. Our own Campbell Brown hosts "THE COMPASSION FORUM," from Messiah College in Pennsylvania. That begins 8:00 p.m. Eastern later tonight only here on CNN. LATE EDITION continues right after this.

(COMMERCIAL BREAK)

BLITZER: Welcome back, we're reporting today from New York. I'm Wolf Blitzer, this is LATE EDITION. Both Hillary Clinton and John McCain are taking on Barack Obama's comments about some working class voters being, in his words, "bitter." And that raises the question of what impact his remarks will have on the outcome of Pennsylvania's primary one week from Tuesday. Joining us now is the Pennsylvania senator, Bob Casey. He's a strong supporter for Barack Obama. He is joining us from Scranton.

We heard from Evan Bayh, Senator, in the last hour. As you know, your colleague from Indiana a strong Clinton supporter. We'll get your perspective this hour. Thanks very much for coming in.

SEN. BOB CASEY JR. (D), PENNSYLVANIA: Thank you, Wolf. Good to be with you.

BLITZER: All right. Here are the words, it's bare audible, but we'll put them up on the screen, of what Barack Obama said a week ago in San Francisco at a closed-door fund-raiser when he was describing some Pennsylvanians and others who have lost their jobs because manufacturing jobs were simply eliminated and their reaction.

Here's what he said.

(BEGIN AUDIO CLIP)

OBAMA: It's not surprising then they get bitter, they cling to guns or religion or antipathy to people who aren't like them or anti- immigrant sentiment or anti-trade sentiment as a way to explain their frustrations.

(END AUDIO CLIP)

BLITZER: I'll read it to you in case you didn't see it on the screen. "It's not surprising then" that "they get bitter, they cling to guns or religion or antipathy to people who aren't like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations."

Here's how Senator Clinton responded to that yesterday.

(BEGIN VIDEO CLIP)

CLINTON: They seem kind of elitist and out of touch and talking about people who live in small towns and rural areas throughout America. You know, Americans who believe in the Second Amendment as a constitutional right, Americans who believe in God as a matter of personal faith.

(END VIDEO CLIP)

BLITZER: She's suggesting that your candidate, Senator Obama, is elitist by these words that he delivered. Let's get your reaction.

CASEY: Well, Wolf, I think that's ridiculous. Anyone who knows Barack Obama, knows his life story, knows that that's not true. But he expressed regret and we understand. I think he understands why some people could be offended by those words.

But here's the larger point. He was trying to express the frustration that people feel, not only with this economy, but what has been happening in Washington, where special interests have had a stranglehold on the process in Washington.

He was trying to express that. I have to say, Wolf, I know Barack Obama and I know Pennsylvania. And I've been blessed with the votes of people all across our state, including a lot of smaller communities in Pennsylvania, and I don't think they're going to judge him by one statement.

I think they're going to judge him by his record, by his commitment to change. But, also, I think they're going to judge him by the person that they met along the campaign trail.

I traveled with him across Pennsylvania in a lot of small towns. We were in places like Altoona and Johnstown, which have had great economic difficulty over many, many years. They met him, they shook his hand, they know how the kind of time he spent with them.

So I think that when people spend time with him, they know his values, they know his heart, and I think he's going to do just fine.

BLITZER: So what did he mean when he said, they become bitter, and then he said, they cling to guns or religion. What did he mean by that?

CASEY: Wolf, I think he's trying to express frustrations that people have. And there's no question that people shouldn't generalize about how people think about these issues. I think he was just trying to express it. He used a poor choice of words.

CASEY: He's taken responsibility for it. And he said he deeply regretted the words that he chose.

But I think we shouldn't lose sight of what's happening here. You have politicians across America, on the other side, and in the Republican camp, jumping on him. A lot of them don't know much about Pennsylvania, like I do, and a lot of them don't know very much about Barack Obama.

His whole life story is the story of America, overcoming tremendous obstacles, growing up in very modest circumstances, getting scholarships and achieving and winning. He didn't have someone go ahead of him and pave the way for him. He had to overcome a lot.

And I think people in Pennsylvania understand that, and I think they understand the point he was trying to make.

And I think that, in the end, they're going to vote for one or the other candidate based upon who they are, their record. And I have great confidence that, as we go forward, Barack Obama's values, his heart, his commitment to his faith, and his commitment to change is going to be a significant factor in him being the nominee.

BLITZER: Here's what the McCain campaign said immediately after hearing, on Friday, of these comments, Steve Schmidt, a McCain senior adviser, saying, "It shows an elitism and condescension toward hard- working Americans that is nothing short of breathtaking. It is hard to imagine someone running for president who is more out of touch with average Americans."

And if you were watching your friend Senator Bayh from Indiana, in the last hour, he expressed alarm that, if Senator Obama were to get the Democratic nomination, the Republicans, in the general election, would hammer him away on this elitism issue, going into November, and it would be very tough for him to be rebound.

Do you want it react to that?

CASEY: Barack Obama is a father and a husband. Everyone knows his great story. He's someone who's a person of faith and he's someone who understands what it's like to struggle.

And a lot of people in the McCain camp don't seem to understand that people realize, now, that the McCain campaign is about a third Bush term. I don't think people want to run up a debt number. That's what President Bush's administration is leaving us, a $10 trillion debt, a war without end in Iraq, and $50 billion of tax cuts for millionaires and multi-millionaires and billionaires.

I don't think people are going to vote for that. I think they're going to vote for change. And they're going to vote for the candidate who doesn't just talk about change, someone who's willing to do the hard things to break the stranglehold that special interests have in Washington, sometimes on both parties.

And there's only one candidate, I think, who can do that. And I think people know that's Barack Obama.

BLITZER: Your governor, Ed Rendell, is another Clinton supporter. He spoke to our John King yesterday. He also expressed fear that, if Obama were to get the nomination, this could hurt him in November. He then went on and said this. I'll play the clip.

(BEGIN VIDEO CLIP)

GOV. EDWARD G. RENDELL, D-PA.: It shows a real lack of knowledge of what's going on here. I worry about the senator's electability.

(END VIDEO CLIP)

BLITZER: And he also said that "Senator Obama does not have a very good understanding of Pennsylvania or Pennsylvanians." That's pretty strong words from Governor Rendell.

CASEY: Well, I don't agree. Look, Pennsylvania has a lot in common with the state of Illinois -- big states that had an industrial base, major rural areas, and a lot of smaller communities. He understands Pennsylvania.

I'll tell you one thing, Wolf. I understand Pennsylvania, and I know Barack Obama. There aren't many people who can say that. And I know that, with his message of change, his focus on bringing tax relief to seniors in Pennsylvania and across the country, his message of hope and of change, I think, is going to be a very powerful message in a general election. And I've won four general elections in Pennsylvania. I know how to win this state. Barack Obama is going to be the nominee and he's going to win in November. And part of that means he's going to win Pennsylvania.

And I think people that saw him on that bus trip know this person. They know his heart. They know his values. And they know his commitment to his faith and his family.

And I don't think there's any question in the end. The more they get to know him, the more they're going to understand his heart and his values. And I think he's going to win.

BLITZER: There's going to be a faith and values forum tonight that CNN will televise have at 8 p.m. Eastern. Senator Clinton will answer questions. Senator Obama will answer questions.

You know that they're going to ask -- they're going to be asked about the words "clinging to religion" -- "clinging to religion."

What do you think Senator Obama should say tonight to try to explain what he was thinking?

CASEY: I think that Senator Obama, tonight and any night, whether he's talking about faith or whether he's talking about our economy, is to deliver the message that he's delivered in this campaign.

And I think it's great that Democrats are at an event tonight where we're talking about faith because, for many years, at the national level, people who were running for national office wouldn't talk about it.

I think it's a very important thing that we talk about, to express, as Barack Obama has expressed, not just his own faith and the faith of his family, but, really, the way that he's shown respect for people that disagree with him, people of different faiths.

One of the most important things that we can do when we're talking about faith -- and I think he's done this very well -- is to listen to people talk about their own faith. And I think he's done that very well. I think tonight he'll have another opportunity to do that.

BLITZER: I want to just end this interview by saying happy birthday, Senator Casey. I take it you're 48 years old today. Is that right?

CASEY: I am, Wolf. Thank you very much. My sister Margie has the same birthday, so I want to wish her a happy birthday, as well.

BLITZER: Same year?

CASEY: Not the same year. Some years apart, we'll say.

(LAUGHTER) BLITZER: OK. I just want to make sure.

CASEY: Wolf, thank you very much.

BLITZER: I didn't know -- I just wanted to make sure you weren't a twin.

CASEY: Not a twin.

(LAUGHTER)

BLITZER: Happy birthday. Thanks very much for coming in.

CASEY: Thanks, Wolf. BLITZER: And we're going to hear about the latest back-and-forth between Barack Obama and Hillary Clinton, only nine days before the very important Pennsylvania primary. We're going to continue to get some insight and analysis from three of the best political team on television. That and a lot more, coming up, right here on "Late Edition."

(COMMERCIAL BREAK)

BLITZER: The next primary for Hillary Clinton and Barack Obama is in Pennsylvania, April 22, nine days from today. The candidates are also, though, campaigning in Indiana, which holds a potentially decisive contest on May 6th.

Jim Acosta is following all the action. He's in Indianapolis right now. What is the action? What's the latest today, Jim?

JIM ACOSTA, CNN CORRESPONDENT: Well, Wolf, both Democrats are back in Pennsylvania after a raucous day of campaigning in the Hoosier state.

Hillary Clinton is looking to get back in the driver's seat in this campaign. She was out to make Barack Obama pay for his comments calling blue-collar workers "bitter" in Pennsylvania, at campaign stops across Indiana. She slammed Obama as elitist, and reminded voters of her blue-collar upbringing, in Pennsylvania.

Barack Obama spent much of the day trying to explain away those comments, but, at the end of the day, he told a North Carolina newspaper that he deeply regretted those remarks.

As for John McCain, he is also weighing in, his campaign releasing a statement calling Obama "out of touch."

Now, as for Hillary Clinton, she capped the day at a bar in northwest Indiana, where she knocked down a cold beer and a shot of whiskey, another image crafted by her campaign to bolster her blue- collar credentials. Both candidates are wrapping up their weekend in Pennsylvania this evening with the CNN Compassion Forum. It should be one of the first opportunities for Barack Obama to respond to this controversy on camera -- Wolf.

BLITZER: We'll be watching and listening, thanks very much. Jim Acosta on the scene for us in Indiana.

Up next Hillary Clinton tells Bill Clinton to back off of Bosnia. And more on Barack Obama's so-called "bitter" controversy. Three of the best political team on television, they're standing by live. We'll tackle that and a lot more when we come back.

(COMMERCIAL BREAK)

BLITZER: A lot going on in the Democratic race for the White House. So let's get right to it. Joining us now, CNN's senior political analyst Gloria Borger, she's in Washington. Out on the campaign trail in Pennsylvania, our own congressional correspondent, Dana Bash. Also in Pennsylvania, CNN's Campbell Brown. She'll be leading tonight's Compassion Forum featuring Hillary Clinton and Barack Obama from the Messiah College campus near Harrisburg. You're going to want to see that at 8:00 p.m. Eastern.

Campbell, let me start with you. Tell us a little bit about what is happening at 8:00 tonight, faith and values. You'll be talking to Hillary Clinton, you'll be talking to Barack Obama, no doubt Barack Obama's most recent comments suggesting some Pennsylvanians who are unemployed might be bitter, clinging to religion. No doubt that is going to come up.

BROWN: Absolutely, Wolf. It will be really the first opportunity, hopefully, where we will have a chance to hear from him at length explain that specifically. I think clinging to religion and also to have Hillary Clinton talk a little bit about it.

The forum will be a lot broader than that. I think it's fair to say that is likely where we're going to start, but this is an event where we're going to have a cross section, a broad cross section of leaders from all different faiths who will be participating in it, as well. I'm moderating tonight, along with Jon Meacham, who is the executive editor of Newsweek magazine.

But then we'll be bringing in people from the faith community who will be asking questions, as well. And addressing a lot of the issues that have really evolved, I think it's fair to say, and changed over the years where the faith agenda has sort of transcended ideology in a lot of ways, especially in the evangelical community where they're talking about issues like the environment and global warming and AIDS in Africa, and it's not just about abortion or some of the other social issues. And so you're going to see a lot of interesting questions tonight on that front. And I think the other thing that's worth noting, Wolf, and worth sort of watching for tonight is the fact that we have got two Democrats. John McCain is not participating.

But it is pretty unusual to have the Democrats be the ones who are sort out of in front talking about faith as an issue in the campaign. In the past that has generally been Republicans and it is an issue that people do want to hear about.

There was a Pew poll recently that said seven in 10 Americans want their president to have strongly-held religious beliefs. And that crosses party lines and that has, in the past, has been a problem for Democrats. Less the case, apparently, in this campaign. If anything, it's the Republican who has been less inclined to talk about his religion. But I think starting us off tonight...

BLITZER: He was invited tonight, wasn't he?

BROWN: He was, in fact, invited. Of course he was invited, and declined to join. But I think, you know, it will be interesting to see whether, you know, as we get further into the campaign, John McCain feels compelled to talk a little bit more about his faith.

But I think it's fair to say we will start with and hopefully have a lengthy explanation from Barack Obama about what he really meant by those comments, which are certainly going to resonate well beyond Pennsylvania.

BLITZER: Gloria, is this a big deal or a little deal, these controversial remarks that Barack Obama made a week ago Sunday that surfaced only on Friday?

BORGER: Well, I think it has become a big deal because you're very close to a very important primary and Hillary Clinton jumped on those remarks. It took Obama a couple of days to say that the remarks were a mistake.

And I do agree with Campbell that tonight will be an opportunity for him to explain again what he meant by those remarks. But they contained every hot button in American politics when you look at it, economics and every cultural issue. Religion, guns, immigration, you name it. So, you know, it's tough remarks for him to explain. It could be a real problem, but we'll see.

BLITZER: And, Dana, Senator McCain wasted no time through his adviser, Steve Schmidt, going after Barack Obama when these words surfaced on Friday.

BASH: Oh, absolutely. I mean, for any Republican this is political tee-ball, because they have used this playbook successfully before. You remember 2004 what the Republicans -- the way they painted John Kerry. They painted him as a windsurfing, French- speaking guy who really is very, very liberal.

There is no accident in the fact that the statements that the McCain campaign have been putting out have been reminding people that these statements that Barack Obama made were in San Francisco, which is the ultimate connotation in Republican circles for the ultimate liberal.

So, there's no question that these Republicans that John McCain and his campaign, they have been preparing to run against Barack Obama and they now say, very forcefully, that if they do run against him, they will do it through the prism of this idea that they're calling him an elitist.

But you know, the question, though, Campbell touched on this before, is whether or not John McCain, who, following him around, he does not talk about God, he does not talk about guns, whether he is the kind of person who can provide a contrast to Barack Obama, if, in fact, Obama is the nominee.

BLITZER: This is a critical moment right now in this Democratic race, Campbell, nine days before Pennsylvania. For Hillary Clinton, she has to win. Some suggest she has to win impressively, decisively in order to continue on to North Carolina and Indiana on May 6th. Just give us some context right now. How important, Campbell, is Pennsylvania right now?

BROWN: Well, I think -- you know, I think Barack Obama's comments, not to put too much emphasis on them, but I do think they have changed the dynamic here. I think, you know, it is breathing new life into her campaign. It certainly would have been better for her had it happened a few weeks ago and she had more time to pursue it.

We're moving to a new camera, Wolf, so I'll continue on this one. But what -- I think the risk here for her as she goes forward -- and this goes, again, well beyond Pennsylvania, she has made it clear that, you know, Indiana is equally crucial and North Carolina, but the question is, will they -- she's going after this point very aggressively, but could she overplay her hand?

BROWN: I think there is a chance of that happening, especially given, you know, it was just a little over a week ago that her tax returns came out. And she's accusing him of being an elitist, while, at the same time, you know, she's got to, sort of, explain how she's more in touch with the working class of Pennsylvania, having made over $100 million -- she and Bill Clinton -- since leaving the White House.

So it's a little bit of a balancing act over which of the two, frankly, is the quote, unquote "not elitist."

BLITZER: And there are of plenty Democrats who just hate this whole back-and-forth between Hillary Clinton and Barack Obama. They like both of them and they just get disgusted to see these two Democratic candidates hammering away at each other.

All right, guys, stand by for a moment. We have a lot more to discuss. Our political panel will be right back.

Also coming up, the former president Jimmy Carter -- he's now speaking out about the Israeli-Palestinian conflict and the U.S. presidential election. We're going to tell you what he had to say in our very popular "In Case You Missed It" segment. That and our political panel, coming back.

(COMMERCIAL BREAK)

BLITZER: We'll get right back to our political panel, but, first, in case you missed it, let's check some of the highlights from the other Sunday morning talk shows here in the United States.

On Fox, President Bush's national security adviser Stephen Hadley, rejected claims by some Democrats that President Bush should withdraw a significant number of U.S. troops in Iraq, in September, to help Republican presidential candidate John McCain, that he might do that. (BEGIN VIDEO CLIP)

NATIONAL SECURITY ADVISOR STEPHEN J. HADLEY: His objective is to leave Iraq in a situation, at the end of his term, where we have a strategy that is succeeding, that the American people can see progress, and that -- hand it over to the next administration, whether Republican or Democrat, so that they will inherit a strategy that is working and don't have to confront a crisis on Iraq policy in the first months.

(END VIDEO CLIP)

BLITZER: On CBS, the defense secretary, Robert Gates, discussed the conditions needed in Iraq to allow a significant drawdown of troops.

(BEGIN VIDEO CLIP)

SECRETARY OF DEFENSE ROBERT M. GATES: When the Iraqi security forces are good enough; when the situation locally has -- the security situation is calm enough that we can then recede into the background.

This is the process that's under way. And there are clearly large, populous areas that aren't in that category yet. But that's the direction in which we're headed.

(END VIDEO CLIP)

BLITZER: On ABC, the former president, Jimmy Carter, talked about why he's decided to go ahead and meet with the leaders of Hamas in Damascus, despite the strong objections of the Bush administration and many Democrats.

(BEGIN VIDEO CLIP)

FORMER U.S. PRESIDENT JIMMY CARTER: I think there's no doubt in anyone's mind that, if Israel is ever going to find peace, with justice, concerning the relationship with their next-door neighbors, the Palestinians, that Hamas will have to be included in the process.

I think someone should be meeting with Hamas to see what we can do to encourage them to be cooperative and to find out what their attitude is.

(END VIDEO CLIP)

BLITZER: On the political front, President Carter, who's a Democratic superdelegate, warned against superdelegates going against the trends of voters.

(BEGIN VIDEO CLIP)

CARTER: I think it would be a very serious mistake for the Democratic Party if, for instance -- I'm not anticipating what's going to happen over the next contest. I think there are about a dozen of them. If a candidate had the majority of popular votes, the majority of delegates, and a majority of states, all three, for the superdelegates to vote contrary to that, I think, would be very difficult to explain.

(END VIDEO CLIP)

BLITZER: Highlights from the other Sunday morning talk shows here on "Late Edition," the last word in Sunday talk.

Up next, President Bush's approval ratings may have hit a new low, but will it affect Senator McCain's chances in November? Our political panel standing by live with their perspective -- that when we come back.

(COMMERCIAL BREAK)

BLITZER: We're back, talking about this week's politics with CNN's Gloria Borger, Dana Bash, and Campbell brown. There was a little bit of, I guess, an uproar over Paul Begala, our Democratic strategist, CNN contributor, here, who had some tough words against the former Clinton chief strategist, Gloria, Mark Penn.

BLITZER: "I have nothing but contempt for Mr. Penn. And for those of us who wanted to see him out from the beginning, it became almost a Rumsfeldian thing."

(APPLAUSE)

And he is not even fired. He has been demoted. How could this be?"

What do you make of this, Gloria?

BORGER: I think that Paul is really expressing a lot of the frustration that those of us who talk to folks in the Clinton campaign hear all the time about Mark Penn.

There was a sense that he was a strategic leader, that he made some really bad mistakes, talking about micro-targeting this election to assorted constituent groups, when, in fact, this election has turned out to be about one big idea, which is change; making Hillary Clinton the candidate of experience, making her seem inevitable, making her run as an incumbent, when that's not the way you want to be running in an election year that seems to be very anti-incumbent and anti-business as usual.

So I think he's expressing what a lot of people inside the campaign are saying.

BLITZER: And, Campbell, former president Bill Clinton, all of a sudden, last week, he revived this whole issue of Hillary Clinton's trip to Bosnia, at a time when it had basically gone away. And then she later suggested to him that was not necessarily that good of an idea.

Here's how he responded to that. Listen.

(BEGIN VIDEO CLIP)

FORMER U.S. PRESIDENT WILLIAM J. CLINTON: Hillary called me and said, "Look, I misstated it. You said I misstated it. But you don't know -- you're going to let me handle it because you don't remember it, either. She's right. I wasn't there. I don't remember the facts right, either. So she said, look, just let me handle this because you don't remember it, either.

(LAUGHTER)

I said, "OK."

(END VIDEO CLIP)

BLITZER: And he said, "Yes ma'am."

What do you make of that little to-do?

BROWN: Frustrating for her, I'm sure. Because he did misstate the facts, as well, when he repeated the story. And it was, like, right at the moment where it looked as though she had put that behind her and begun to move on and move forward from it and, you know, having gotten it behind her, here she was having this opportunity, given Barack Obama's comments, to capitalize on that, and she's having to tell her husband to, you know, put a zipper in it, or put a lock on it.

So, you know, every second counts for her. They are running out of time. I think there's that sense that, like I said earlier, had this happened a few weeks ago, it would have been a real momentum boost for her, heading into Pennsylvania and beyond. So anything like this that, sort of, stymies that can be extremely frustrating.

BLITZER: All right. Campbell, stand by for a second. I think one of our producers, Ted Metzger, maybe, keyed into me, and I wasn't exactly hearing what you were saying. Somebody's keyed into me.

But let me go to Dana Bash. And Dana -- and let me point out to you what Barack Obama said the other day. Senator Barack Obama speaking Thursday in Gary, Indiana, going after Senator McCain on issue number one, the economy.

(BEGIN VIDEO CLIP)

OBAMA: Don't expect it to actually help struggling families because Senator McCain's solution to the housing crisis seems a lot like George Bush's solution to the housing crisis, which is to sit by and hope it passes by, while families are facing foreclosure and watching their home values decline.

(END VIDEO CLIP)

BLITZER: All right, Dana, what do you think about that attack from Obama on McCain?

BASH: It's a stinging one. And that is exactly why, Wolf, the McCain campaign switched gears, big time, this past week on -- when it comes to McCain's tone on the economy.

A couple weeks ago John McCain made a speech about the housing crisis that gave that very opening to Barack Obama and Hillary Clinton to make them say, over and over again, that John McCain doesn't care about you.

Because McCain gave a speech trying to lay out his Republican philosophy and his principles of limited government in regard to dealing with these issues. Well, you know, talk to the campaign and they fully admit now -- and it was evidence in the reversal, at least reversal of tone, this past week, from John McCain, that that was not the right thing to do.

You know, you can talk about your philosophy and principals all you want, but in this kind of economic environment, when you have this kind of economic pain out there, across the board, you, as somebody who wants to use the bully pulpit and be president, need to really convey a connection. And he simply was not doing that. So that's why they tried to switch course.

The question is, though, Wolf, whether or not John McCain can continue to try to, you know, fix that, basically. Because the Democrats really have seized on this issue and they've been able to make this the narrative.

McCain is going to come out next week, on Tuesday, on tax day. He's going to have another economic plan. But he still doesn't have anything on the books, in terms of getting out there, in, sort of, a PR way and having images of him with voters who are really hurting.

He's giving a lot of speeches, using teleprompters, laying out his ideas, philosophies, and, next week, his proposals. But, you know, the Democrats are sitting down with people who are hurting. John McCain hasn't done that yet. And there are a lot of people I talked to who are McCain supporters, and they say he's missing a big opportunity and an important one, not doing that.

BLITZER: And, Gloria, he's all in when it comes to the war in Iraq, all in on what's going on right now. Let me play this little clip of what he said.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN, R-ARIZ.: We're no longer staring into the abyss of defeat, and we can now look ahead to the genuine prospect of success, success, the establishment of a peaceful, stable, prosperous democratic state.

(END VIDEO CLIP)

BLITZER: All right. What do you think, Gloria? How is this going to play out?

BORGER: Well, John McCain staked his entire political career on the war. And it worked for him because the surge was working. And I think we're going to have to see how this plays out in a campaign. Having said that, I think he's going to run as a values candidate. John McCain presents himself as somebody who is authentic, who's a leader, somebody who believes what he says. And I think that's going to be the largest part of his message to the voters.

However, as Dana points out, he's got to start talking about the economy. He's got to start talking about things other than Iraq.

BLITZER: Gloria Borger, thanks very much.

Dana Bash, thanks to you.

Campbell, we're going to be seeing you later tonight, 8 p.m. Eastern, over at Messiah College, near Harrisburg, Pennsylvania, for this faith and values forum that you're going to be moderating with Hillary Clinton and Barack Obama -- 8 p.m. Eastern, only here on CNN.

Guys, thanks very much for coming in.

And this reminder, if you'd like a recap of today's program, you can get highlights on our "Late Edition" podcast. Simply go to CNN.com/podcast. And for our North American viewers, coming up at the top of the hour, "This Week in Politics with Tom Foreman."

(COMMERCIAL BREAK)

BLITZER: For "Late Edition," I'm Wolf Blitzer, reporting.

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