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The Situation Room

Interview With Chevron CEO; Courting the Independent Vote

Aired June 17, 2008 - 18:00   ET


WOLF BLITZER, CNN ANCHOR: And, to our viewers, you're in THE SITUATION ROOM.
Happening now, an oil industry chief confronted with your pain at the pump. I will have an exclusive interview this hour with Chevron's chairman and CEO. He's taking some of your questions as well.

Plus, John McCain shifts into reverse on energy.

Also this hour, new sparring by the presidential candidates over the terror threat, the McCain camp accusing Barack Obama of making a stunning and alarming remark.

And the desperate race against floodwaters -- we're following the breaking news out of the Midwest, where some levees are threatening to burst. This is a race against the clock under way right now -- all that coming up, and the best political team on television.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.


DAVID O'REILLY, CEO, CHEVRON: I want someone to be elected who will help resolve our energy crisis.


BLITZER: The chairman of Chevron weighing in on the presidential race and the blame over soaring gas prices.

We want to welcome our viewers in the United States and around the world.

My exclusive interview with the Chevron chief, Dave O'Reilly, that's coming up.

But, right now, America's oil addiction is the focus of Republican presidential candidate John McCain. He just wrapped up a speech on that issue in Houston, Texas.

Dana Bash was listening very, very closely. Let's go to Dana right now.

All right, update our viewers on what the Republican candidate had to say.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Wolf, you know, what really came across in John McCain's speech was how challenging it is for him to find his way, running as both a traditional Republican on issues like taxes, and a Republican who bucks his party on the environment. What you get are some contradictions.



BASH (voice-over): In the heart of Texas oil country, John McCain went after Barack Obama for supporting a windfall profits tax on oil companies.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: If the plan sounds familiar, it's because that was President Jimmy Carter's big idea, too.


J. MCCAIN: And a lot of good it did us.


BASH: Critical now, but, just last month, McCain said he was open to the idea.

J. MCCAIN: And I would be glad to look, not just at the windfall profits tax -- that's not what bothers me -- but we should look at any incentives.

BASH: The change, proof of how tricky gas price politics is for McCain. On the one hand, he's pushing green energy alternatives, like wind, solar, and biodiesel, pushing away from George Bush with this new ad.


NARRATOR: John McCain stood up to the president and sounded the alarm on global warming five years ago.


BASH: But in the face of voter outrage over high gas prices, McCain is changing his position on an issue that helped define him as an environmentally conscious Republican. He used to oppose lifting a federal moratorium on offshore drilling. Now he wants to lift the ban.

MCCAIN: The broad federal moratorium stands in the way of energy exploration and production.

BASH: It's a risky reversal for a candidate trying to use the environment to appeal to Independents, especially in the battleground of Florida, where many Republicans like Governor Charlie Crist and Senator Mel Martinez, have long opposed offshore drilling. But, as McCain changes his position, so are they. SEN. MEL MARTINEZ (R), FLORIDA: It is an evolving position for him, as it is for me, as it is, I think, for a lot of Floridians, who are now being tremendously upset by the high cost of gas.

GOV. CHARLIE CRIST (R), FLORIDA: It is something I would least like to do, but I also understand the economics of what's happening in our country.


BASH: Barack Obama accused of John McCain of taking the -- quote -- "politically expedient" way out, and said offshore drilling is no quick fix.

Now, it may be an open question whether McCain's change on offshore drilling will hurt him in Florida, but several Republican strategists in the environmentally conscious state of California tell us that this move makes what was already a long-shot win for McCain there now near impossible.

BLITZER: Dana, thank you very much.

And just ahead, as I said, we will be speaking with the Chevron chairman and CEO, Dave O'Reilly. He's going to be answering your questions about gas prices and how high they will climb in the weeks and months ahead, also taking questions from our I-Reporters. Stand by for this exclusive interview.

Barack Obama, meanwhile, is making another appeal today to voters in Michigan. Just hours earlier, an effort to bring Democrats in that state together took a rather embarrassing turn. And now there are fresh concerns within the party about whether Obama can bring Hillary Clinton supporters into the fold.

Here's our senior political correspondent, Candy Crowley -- Candy.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Wolf, the Obama campaign had hoped to use this time between now and the convention to help heal some of the wounds in the party, and along the way, there have been some speed bumps.



Ladies and gentlemen, the next president of the United States of America, Barack Obama.


CROWLEY (voice-over): Twenty thousand people showed up for another step in the healing of the party, the picture of unity, Democratic golden boy Al Gore, presumptive nominee Barack Obama, and Michigan Governor Jennifer Granholm, a former supporter of Hillary Clinton. It's going to take more than a picture.

GOV. JENNIFER GRANHOLM (D), MICHIGAN: For all of those who, like me, supported Senator Clinton, we recognize that Senator Clinton -- Senator Clinton...


GRANHOLM: Come on, now. She's a great American.


GRANHOLM: She's a great senator.

CROWLEY: There are bad feelings on both sides of the Clinton/Obama fault line, the aftershocks of a fierce, sometimes bitter, primary season.

And he, of course, has the most to lose as he courts the Clinton vote. A "Washington Post"/ABC poll found, a quarter of Clinton supporters say they will vote for John McCain. A prime-time appearance in an arena full of supporters jeering Hillary Clinton's name does not help the cause.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: She has, in her own words, shattered a glass ceiling into 18 million pieces.


OBAMA: She has lifted up the sights of young women all across America, including my two daughters. She is worthy of our respect.

CROWLEY: Also unhelpful, at least among insiders who pay attention to these things, the recent Obama hire of Clinton's former campaign manager, Patti Solis Doyle. She was one of those blamed for early Clinton mistakes and bounced from the Clinton campaign. Hard feelings still exist.

Solis Doyle will be the chief of staff for whomever Obama taps as his vice presidential nominee. At least two high-profile Clinton supporters see the hire as a slap in the face and a sign Clinton will not be Obama's pick. Camp Obama insists, there was no such message and no offense intended, but, certainly, some was taken. Party unity is harder than it sounds.


CROWLEY: On his plane headed back here to Washington for some meetings, Senator Obama said that Solis Doyle's family goes back with the Obama family to his community organizing days. She has, said Obama, a skill set we can use -- Wolf.

BLITZER: Candy, thank you.

Let's go right to Jack. He's got "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Do you suppose that was just an oversight, that that might be offensive to Hillary Clinton? I don't think so.

BLITZER: These guys are pretty smart in the Obama campaign, pretty good strategists.

CAFFERTY: They didn't make a lot of mistakes.


BLITZER: No, they didn't make a whole lot of mistakes.

CAFFERTY: Pretty careful.


CAFFERTY: Yes, pretty calculating. OK.

Here's a depressing statistic. That's what I do, you know, for a living. Fewer than half of Americans, fewer than half, approve of the job performance of all three branches of the federal government, the president, the Congress, and the Supreme Court.

There's a new Gallup poll out. It puts President Bush's approval rating near an all-time low of 30 percent. Some other polls show his approval rating even lower than that. The all-time low for any president, 22 percent, for Harry Truman, 1952.

Congress' approval stands at a pathetic 19 percent, but it's a point better than last month's 18 percent, which was the worst rating ever. Congress usually gets the lowest rating of all three branches of government, and with good reason.

As for the Supreme Court, 48 percent of those surveyed say they think the high court is doing a pretty good job. That is significantly better than the president or Congress, but still less than half. And the court has only measured a lower approval rating one other time. It's no surprise Republicans rate President Bush much higher than Democrats or Independents, and Democrats give Congress slightly higher marks than do Republicans.

But, taken together, these numbers show just how fed up the American people are with the way Washington is currently operating. It's not good news for incumbents in Congress who are up for reelection. That would be all of the members of the House and one- third of the members of the Senate.

And Barack Obama and John McCain better take note. Whichever candidate better understands what needs fixing down there in Washington will probably be the next president.

Here's our question: All three branches of government are near historical low approval ratings. What will that mean for the upcoming election?

Go to Post a comment on my blog.

Whenever we bring up these dismal approval ratings, I get e-mails talking about, it's time for the next revolution.


BLITZER: See you in a few moments, Jack. Thank you.

CAFFERTY: All right.

BLITZER: You pay growing gas prices. The oil prices get growing profits. What do you think of that?


O'REILLY: It's a big business. And on a return-on-sales basis, we're right in there with the average of American business today.


BLITZER: My exclusive interview coming up with the chairman and CEO of one of the big oil companies, Chevron. And you're going to get a chance to ask him questions, as well, about those high gas prices.

November 4 could be Independents' day. The presidential election could turn on those Independent voters. Who has the edge with them?

And work fast, or waters could unleash even more catastrophe out in the Midwest. There is a serious race against time right now to stop some levees from holding back rising waters from breaking.

We will have the latest right here in THE SITUATION ROOM.


BLITZER: Drivers across the country are reeling at record-high gas prices, even as U.S. oil companies are rake in record-high profits. So, how do the oil company executives explain all of this?


BLITZER: Joining us now, the chairman and CEO of Chevron, Dave O'Reilly.

Mr. O'Reilly, thanks very much for coming in.

O'REILLY: Nice to be with you, Wolf.

BLITZER: You know you have, you and ExxonMobil, the big oil companies, have a huge public relations problem. In all the recent polls, when the American public is asked who do you blame for these huge gas prices at the pump, they -- more than any other single source, they blame big oil. They blame you. What's going on?

O'REILLY: Well, I don't think they blame us as much as you think. It looks to me like there's a lot of blame to go around.

BLITZER: There's other blame, but more than any other single source, they blame big oil. O'REILLY: It depends on the poll you look at.

BLITZER: The recent Gallup poll.

O'REILLY: Let me point out what we're trying to do about this, because I think issue here is one of supply.

And prices are high today, but it's fundamentally a concern about oil supplies -- 75 percent of the price of gasoline is related to crude oil. We're very dependent on crude oil imports. The total world demand for crude oil has been growing steadily over the last decade. And that is affecting everybody's price.

So, it is a concern, but we need to work on the supply side, as well as the demand side, to bring change.

BLITZER: Because you have had record profits, right?

O'REILLY: We're investing those record profits...


BLITZER: But billions and billions of dollars in profits, more than ever before.

O'REILLY: Yes, but it's a big business. And on a return-on- sales business, we're right in there with the average of American business today.

What we're doing is investing that money. For example, last year, we did make a lot of money, $18.7 billion. This year, our capital investment in new supplies is $22.9 billion, almost $23 billion.

BLITZER: You know that Barack Obama says, if he's president, he wants a windfall profits tax. He wants to take a chunk of your profits right now and give it back to the American people. John McCain opposes that, as you know. So, I assume you would like to see John McCain elected president?

O'REILLY: Well, I would like to see no windfall profit tax. And I will tell you why.

First of all, we are already heavily taxed as an industry. Our tax rates last year were at 45 percent, compared to in the 30s for the average of all industry. Secondly, as I mentioned earlier, we're investing the money. If you take the money away, it will reduce investment, reduce supply, and have exactly the opposite effect of helping the problem that you have referred to.

And, thirdly, we have done it before. We have had windfall profit taxes. Congress has studied them about 30 years ago. And what happened under those circumstances is, supplies dropped domestically, and we became even more dependent on imported oil. You don't want to do that today.

BLITZER: Here's how Senator Obama put it. Listen to this.


OBAMA: Senator McCain wants to give billions of dollars in tax breaks to big oil and opposes a windfall profits tax on oil companies like Exxon to help families struggling with high energy costs. I think that is exactly why we need to change Washington.


BLITZER: So, I guess, given the stark difference when it comes to big oil between Obama and McCain -- let me rephrase the question -- do you want McCain to be elected?

O'REILLY: I want someone to be elected who will help resolve our energy crisis. And I don't know enough about Senator Obama's position or Senator McCain's position to pass judgment on either one of them.

What I do know, though, is that, if we want to solve this problem of high energy prices, we're going to have to work not only in the demand side, as Congress has done with CAFE standards and alternatives, but we're going to have to work on the supply as well.

BLITZER: Do you want offshore drilling to be approved on both coasts and in the Gulf, which Senator McCain now says is a good idea?

O'REILLY: I do think that's a good idea.

Today, our shores, except for the Gulf off Texas and Mississippi and so forth, are off limits today. So, look, Europeans who are very environmentally conscious, the British, the Norwegians, the Danes, the Dutch, they can allow sensible offshore production from their oceans. Why can't we?

Since we have -- over the last 20 years, domestic production has steadily declined, and we have been more and more dependent on imports. We definitely need to do something about it. We don't know yet how much oil is under there, but we should at least be given the opportunity to look.

BLITZER: We invited our viewers to ask you a question, and some of the I-Reports came in.

Turn around...


BLITZER: ... and listen to this one.


UNIDENTIFIED MALE: If you would had told me a year ago that gas prices were going to reach about $4 a gallon, I wouldn't have doubted you. And if you had told me the year before that that they would reach $3 a gallon, I still wouldn't have doubted you.

So, what should Americans expect in terms of pricing of gas in the future?


BLITZER: That was Jermaine Fletcher (ph) of Tallahassee, Florida.

What do you think?

O'REILLY: Very good question. I mean, $4 gasoline is a reality today because...

BLITZER: In some parts of the country, it's approaching $5.

O'REILLY: Well, 75 percent of that is the price of crude oil. And that is the crude oil that we have been talking about here that's driving the current crude oil -- energy market.

BLITZER: So, how high is it going to go?

O'REILLY: Well, if crude oil prices come down, I think those prices could moderate. But it's a big if. Crude oil prices have to come down. We need to send a very strong signal to the market that we're serious about increasing supplies in this country.

BLITZER: Do you think manipulators, stock manipulators, are paying -- are doing things to cause this spiral?

O'REILLY: I don't know enough about the financial markets. We're a physical player. But I think most of the price that we see today is because of concern about physical long-term supply.

BLITZER: Just because of the huge demand in India and China, also?

O'REILLY: Huge demand around the globe, including here in the United States.

BLITZER: Here's another question from Willie (ph) in Boise, Idaho.


UNIDENTIFIED MALE: Have we reached peak oil supply? And, if not, when do you expect that we will? And, once we do, when do you expect that the prices of gas will go down to a reasonable level?


O'REILLY: You know, peak oil is a big question today, and it's a very good question.

One of the issues that we face has been addressed -- around people -- has been addressed to the National Petroleum Council study, which was issued last year by the secretary of energy. It is a very important study. What it really says is, there's enough oil and gas in the ground, but the access is what's impeding production. So, we could have a squeeze in the years ahead if we don't get after increasing our supplies, not only here in the U.S., but creating a global environment which permits access around the globe and free trade around the globe as far as oil is concerned.

BLITZER: Dave O'Reilly is the chairman and CEO of Chevron.

Thanks very much for coming in.

O'REILLY: Thank you, Wolf. Glad to be with you.


BLITZER: Fears that entire towns could become underwater. There's a race right now under way to stop rising waters from topping or bursting walls intended to hold them back. We will have the latest on this desperate effort against the clock out in the Midwest.

And your pictures are being sent in via our I-Reporters. Stay tuned.

Barack Obama says something about fighting terrorists. The McCain camp pounces, saying Obama has a -- quote -- "naive and dangerous approach toward terrorism." Now Senator Obama is fighting back.

Stay with us. You're in THE SITUATION ROOM.



GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I have been briefed by Secretary Chertoff and Secretary Schafer and Director Paulison about the response.

First task at hand is to deal with the flood waters, to anticipate where the flooding may next occur and to work with the state and local authorities to deal with their response.


BLITZER: President Bush mapping out how he plans to deal with this worst natural disaster to hit the United States since Hurricane Katrina.

In Iowa, Illinois, and Missouri, water could top about two dozen levees, unleashing even more catastrophe on areas already devastated. Cedar Rapids, for example, is eight feed above flood stage. Waters are receding to a certain degree. Along the Mississippi River is where the most urgent danger, though, lies, places like Clarksville, Missouri, where floodwaters are 10 feet above flood stage and could crest to 13 feet above flood stage.

Further along the river in St. Louis right now, the waters are six feet above flood stage and could crest to 10 feet above flood stage this weekend.

In those places and other places, people are using equipment and their bare hands in a race against time to shore up those levees with sandbags. One near Gulfport, Illinois, has already broken.

Let's turn to CNN's Sean Callebs. He's in Burlington, Iowa, with the latest for us.

I know you're standing in a lot of water that is not supposed to be there. It's not a river or a lake where you are, is it, Sean?


This is part of the Mississippi that jumped its banks last night. You talk about that levee break in Gulfport, Illinois. We have a couple of cameras set up. If you look across this big brown river, right across there is where the levee gave way near Gulfport, Illinois. What that allowed to happen, the river basically began gushing through that breach in the levee.

Now, that has done a couple of things. One, it has flooded thousands of acres of chiefly farmland in Illinois. Secondly, let's come back here to where we are in Iowa. It's been a hint of good news for people here, because it has kept the floodwaters pretty stable. Authorities had expected it would continue to crest throughout the day, move upward. It simply hasn't done that.

It has stayed pretty stable, Wolf, and that is the agonizing part here. Tonight's going to be a very difficult night, Wolf, and people are going to keep an eye on the levees throughout the evening -- Wolf.

BLITZER: As I said, it's a race against time, Sean. Thank you.

And many of our viewers are sending us pictures of exactly what you're seeing through our I-Reports.

Let's bring in our Internet reporter, Abbi Tatton.

It's pretty dramatic stuff.

ABBI TATTON, CNN INTERNET REPORTER: Wolf, for days now, we have been getting pictures like this one in from Davenport, Iowa.

But let's take a look now at the areas downriver, the residents sending in their pictures from communities along the Mississippi River.

Going to Canton, Missouri here, where city officials have been appealing urgently for volunteers to help with their sandbagging efforts.

And Johnnie Walker sends in this picture, saying that an area of that city already under a voluntary evacuation order.

And if we go just a little bit south from there now to LaGrange, tiny community, population 1,000 people, the city administrator telling me this afternoon that already some parts are under water, and they're just exhausted with the efforts there to prevent the rising waters, two more feet expected, and a levee south of town there already breached.

Further down, we're going now to Quincy. This is an area that the National Weather Service said is at risk for major flooding.

And Pam Thurman sending in these pictures. You can see the city parks along the river already gradually getting under water there. She was one of hundreds of people that went out to volunteer this afternoon. And many more pictures all the way down the river we're getting in at

BLITZER: Our heart goes out to all those people.

Thanks, Abbi, very much.

Coming up, in the battle between Barack Obama and John McCain, one group of voters could crash the parties. Does Obama or McCain have an edge with the Independent voters right now? We will give you an answer. That's coming up.

And Barack Obama on the defensive from gas prices to the war on terror. The best political team on television is standing by to assess any campaign damage.

And John McCain's reversals on energy. Did he have a true change of heart or an election-year conversion?

Stay with us. You're in THE SITUATION ROOM.


BLITZER: To our viewers, you're in THE SITUATION ROOM.

Happening now, the battle for Independents. Democrat Barack Obama and Republican John McCain, they're both courting the voting bloc that could tip the scales of this presidential election. So, who has the upper hand? And what does each need to do to get it?

The clash over security -- McCain slamming Obama for being naive about security and having what he calls a September 10 mind-set.

And the back-and-forth over oil and other key issues. Who's setting the agenda for this debate in the presidential race? All this coming up, plus the best political team on television.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

In the presidential fight right now between Barack Obama and John McCain, every vote is crucial. Some groups have the potential to tilt the final outcome one way or another.

Let's go straight to our senior political analyst, Bill Schneider. He's watching this battle for Independent voters.

Bill, who's winning this battle?



SCHNEIDER (voice-over): Independents hold the key to victory. Both contenders know it.

J. MCCAIN: I don't know if you would call it a maverick, but I certainly have issues that I think can attract Independents.

OBAMA: As important as it is for Democrats to be unified, it's also important that we reach out to Independents.

SCHNEIDER: Who's got the edge with Independents?

Two new polls give the same answer -- neither candidate. The "Washington Post"/ABC News poll finds Independents split. So does the CNN poll by the Opinion Research Corporation, 45 percent for Barack Obama, 45 percent for John McCain.

Independents, remember, have no brand name loyalties. Bizarre as it may sound, they actually look at the candidates and the issues and then make up their minds.

So what do they think of the candidates? Do they hate them both?

Actually, they like them both, McCain somewhat more than Obama. On the issues, however, Independents are not happy at all. Seventy- eight percent think the economy is lousy. Seventy-two percent oppose the war in Iraq, which explains why Independents are so down on the Republican Party. Only 33 percent have a favorable opinion of Republicans. Fifty- three percent like the Democrats -- big difference. Obama's trying to sell change, which Independents clearly want.

OBAMA: You're Democrats who are tired of being divided, but you're also Republicans who no longer recognize the party that runs Washington and Independents who are hungry for change.


SCHNEIDER: If Independents are so down on Republicans, why do so many of them support McCain?

Because most Independents think McCain will be different from Bush. Otherwise, McCain wouldn't have a chance.


SCHNEIDER: Independents don't like the Republican brand, but they do like McCain. For Independents, the brand comes second. For partisans, the brand comes first.

You know, a reporter once asked Harry Truman, "Do you vote for the man or for the party?" And Truman answered: "I always vote for the best man. He is the Democrat." -- Wolf.

BLITZER: Thanks very much, Bill, for that.

Let's discuss this and more with our senior political analyst, Gloria Borger. She's here in Washington. And joining us from New York, our own Jack Cafferty, and our senior analyst, Jeff Toobin. They're all part of the best political team on television.

Whoever wins a majority, a big chunk of these Independent voters, Jack, is going to be well-positioned to be the next president of the United States.

CAFFERTY: True enough. But I think, at least the way things stand right now, John McCain is going to need more of them than Barack Obama does. There are more Democrats registered, more Democrats voting. And by a margin of about 3-1, according to the latest ABC News/"Washington Post" polls, the Obama supporters are more wildly enthusiastic about their candidate than McCain's supporters are, 54 to 17 percent, a 3-1 margin. So there are more Democrats and they're more excited about Obama.

Add in the fact that 84 percent of Americans are unhappy with the direction this country is headed in and I think that it's incumbent on John McCain -- he's going to have to get the lion's share, a big share of the Independents, if he's got a chance to win. Obama doesn't need as many of them.

BLITZER: Because more of these voters are saying that they like the Democrats than the Republicans.

Gloria, what do you think?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well, I agree with Jack on that. There are a couple of interesting things. First of all, we don't know what terrain this election is going to be fought on. And if you look at these polls, if it gets fought on domestic issues, on the economy, you have to give Obama the edge. However, if it's fought on national security, defense policy, you know, you might have to give McCain the edge.

But an interesting number to me -- you know, McCain is trying to portray Obama as risky. And he's trying to say I am the safe candidate. Yet when you look at these Independent voters, it's almost tied about who's the safer candidate. McCain is slightly ahead, I think 56 to 52. So Obama is not considered unsafe. So McCain has not yet made that point, or at least connected it with Independent voters.


JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST, "NEW YORKER" MAGAZINE COLUMNIST: Well, I think there's a paradox here, which is that McCain has always been a politician who really has been about the issues, about his stands on campaign finance, immigration, whatever he happens to be identified with at that moment. But the way to beat Barack Obama is not on the issues, because the issues support him. He's the one who has the majority support for the issues he cares about.

The way to attack Obama is to attack him personally, to tear him down, make him seem risky, different, just too unusual a person to be president. That's McCain's challenge if he wants to do it. It's not something he's done before. We'll see if he takes it on this time.

BLITZER: If he doesn't do it, there will be plenty of groups out there, unaffiliated with the campaign, that will be more than happy to do it, right, Jack?

CAFFERTY: Well, yes, I would assume that they will. But you have to be a little careful with some of this stuff, because Barack Obama is a very popular fellow among the average middle class folks in this country. And, again, I go back to that 84 percent who think the country is on the wrong track. McCain is identified as part of the Washington establishment. He's been there for 26 years. And the way he flip-flops around on the issues, I'm not sure up you can even talk about him being a maverick anymore. It seems that he's much more politically expedient than maybe used to be.

So I think you've got to be a little careful about just coming out and just bashing Barack Obama for the sake of doing it. It could backfire.

TOOBIN: I'm not sure. You know, we often think it's going to backfire. But going into the last election, who would have thought that John Kerry, the war hero, the Bronze Star winner, could have been attacked on his military record?

That seemed like the one area he was completely bullet-proof. But of course we know about the swift boat attacks. Negative attacks work and it's something that I think if the Republicans want to win, that's what they're going to have to do.

BORGER: Unless -- unless you fight back immediately. And what we've been seeing from the Obama campaign, whether it's on the Internet or whether their surrogates, I mean, it takes John McCain a nanosecond. He says something or a surrogate says something, and they've already got a rapid response. So I think they have clearly learned the John Kerry lesson.

BLITZER: Good point, Gloria.

Guys, stand by for a moment.

The politics of oil -- you're going to find out the impact record high gas prices are having on this presidential campaign and what John McCain is proposing. We'll discuss.

And is Barack Obama on the defensive when it comes to setting the campaign agenda?

The best political team on television right here in THE SITUATION ROOM, when we come back.

(COMMERCIAL BREAK) BLITZER: We're just getting word of a new letter going out from Hillary Clinton's campaign urging -- urging Clinton supporters to come to Washington and do something for Barack Obama. Stay tuned. We'll have details when we come back.


BLITZER: We're just getting this into THE SITUATION ROOM.

The national finance director of the Hillary Clinton campaign is urging all Hillary Clinton supporters to come to Washington on June 26 for a meeting with Hillary Clinton and Barack Obama and to start giving money big time to Barack Obama. They want this meeting to go forward June 26th at the Mayflower Hotel here in Washington.

Let's discuss what this means, Gloria, because it's clearly an effort to try to get both of these wings of the Democratic Party on the same page.

BORGER: Yes, absolutely. And one way to do it is, of course, to bring them all together with both Obama and Clinton. As Jessica Yellin and Candy Crowley report, there are meetings going on at high levels between top Hillary Clinton supporters and top people on the Obama staff to try and bring this all together in a very, very public way which is, of course, the first step to healing and, I might add, to getting those women that Barack Obama needs.

BLITZER: Jeff, they write this in the letter, Jonathan Mantz: "As part of her effort, we are encouraging our supporters to demonstrate our collective support and strength by writing a check up to $2,300 to his primary campaign."

So they're moving forward, the Hillary Clinton people.

TOOBIN: You know, this is really in both Obama and Hillary Clinton's interests. It's, of course, in Obama's interests because he needs the support. But it's also in Hillary Clinton's interests, because she does not want to be blamed if Barack Obama somehow loses this election. And, also, you know, I'm not so cynical to think that Hillary Clinton doesn't care about the issues at stake in this election. And, clearly, she's much more in sync with Obama than she is with John McCain.

BLITZER: You know, Jack, this comes at a time when it seems that John McCain, almost daily, is going on the offensive, putting Barack Obama on the defensive. Today, on this issue of the war on terror, going after Obama for having a pre-9/11 mentality on law and order, dealing with terror suspects.

I'm going to play a little clip of how Obama responded today.

Listen to this.


OBAMA: So I want to do everything we can to capture terrorists, incapacitate terrorists, kill them where that is the best approach that we can take. But I see no need for us to create a situation in which we've undermined our own ideals and our own institutions in a way that actually strengthens the ability of terrorists to recruit and engage in propaganda against the United States.


BLITZER: All right what do you think?

CAFFERTY: How was he on the defensive there?

BLITZER: Well, because it seems every day McCain goes and makes some attack and that forces Obama to respond.

CAFFERTY: Well, Obama's suggesting that after three rulings by the U.S. Supreme Court that our handling of the detainees is illegal, that perhaps we should revisit that. But he points out that with the '93 terrorist attacks against the World Trade Center, the perpetrators were apprehended, tried and sentenced to prison, where they are currently rotting until they die, which is where they belong. They're not threatening or bothering anyone.

We have ruined our reputation abroad by running rendition prisons and little joints like Abu Ghraib and Gitmo, where we can engage in waterboarding and other forms of torture out of the prying eyes of people like the Supreme Court justices, who have suggested that that's not in keeping with our tradition.

Now how that puts Barack Obama on the defensive when it comes to the war on terror...

BLITZER: I guess the...

CAFFERTY: an absolute mystery to me.

BLITZER: I guess the question is, who's setting the agenda right now, Gloria? Is it John McCain or Barack Obama?

BORGER: Well, let's just say that John McCain is getting very aggressive about trying to set the agenda. And what we saw today in McCain's surrogates' response to Obama, saying that he supported the Supreme Court decision, was really trying to shift the agenda away from those domestic policy issues that those Independent voters really support Obama on to the national security issues, which is McCain's terra firma.

So that's what he's trying to do. And he's going to keep going at Obama, keep trying to convince the American public that he's the risky guy and that McCain is the safe guy.

So that's what's going on here. And so far, they have not missed one opportunity to try and do this.

TOOBIN: Well, you know, we talk about the agenda and who's setting the agenda as if it's something not under the control of the news media, to a certain extent. (LAUGHTER)

TOOBIN: You know, they both give speeches every day. They both talk about each other every day.

BORGER: Right. Sure.

TOOBIN: And we choose which points to emphasize. So I think, to a certain extent, we are simply just chroniclers, but we also decide which what parts to cover and what not.

BLITZER: All right...

TOOBIN: And I think that's a significant part of this story, too.

BLITZER: That's a fair point.

BORGER: Right. But when you...

BLITZER: All right, guys. That's a fair point. We're going to leave it on that excellent point that Jeff Toobin just made because we're...

BORGER: I was just going to disagree with you.

BLITZER: ...we're out of time.

Don't disagree until tomorrow.

All right, guys, stand by.

Jack's got "The Cafferty File" coming up.

Also coming up, a special honor for Tim Russert here in Washington.

Plus, Michelle Obama's high fashion dinner. We're going to have details right here in THE SITUATION ROOM.


BLITZER: Lou is getting ready for his show that begins at the top of the hour. He's standing by with a little preview.

What are you working on -- Lou?

LOU DOBBS, HOST, "LOU DOBBS TONIGHT": Wolf, the big show coming up next is on a small success to battle secure borders. There's new evidence those illegal aliens who are actually caught are being prosecuted more often. There are not many of them, but they're getting prosecuted more often. Not much discussion about what happens to those illegal employers, however.

The U.S. and Communist China kicking off economic meetings in Annapolis. The massive trade deficit on the table, but an aggressive China blasting U.S. policies for the dollar's decline and our credit crisis. I'll be joined by three leading authorities from Communist China here tonight.

And we will be also talking with three of the country's best radio talk show hosts.

Join us for all of that, all the day's news with an Independent perspective -- Wolf, back to you.

BLITZER: Thanks. We'll see you soon Lou. Thank you.

Let's go back to Jack. He's got "The Cafferty File" -- Jack.

CAFFERTY: The question this hour: Are all three branches in the federal government near historic low approval ratings.

What will that mean for the upcoming election?

Anna in Missouri writes: "It means Obama will win by a landslide. The Senate will get 60 Democratic senators needed to get something done. We, the people, are going to take back our government."

Adam in New York writes: "Nothing. Congress rarely has a high approval rating. The 2004 election showed a president with a low approval rating can still be reelected. The Supreme Court is appointed, not elected. The public is used to being disappointed with government. Just because we're slightly more unhappy than usual does not have any implications for this election campaign."

Ben in Chicago: "It means the average person will vote against the candidate in the incumbent party. It's too bad most people don't remember that that's the reason why the incumbent party got to be the incumbent party in the first place -- dissatisfaction with the other party. Maybe someday there'll be a party consistently worth voting for instead of the party people feel they need to vote against."

Mitzie writes: "Hi, Jack. It would seem we vote the bums out. But statistics show that while the American public is fed up with our Congress, we tend to believe that they are all bad, with that one exception -- the congressman from our own district. So with wisdom and forethought, we'll probably vote them right back into office and then we'll have the same question asked during the next election campaign."

Tony writes: "I think the country is on the precipice of a big shift. My guess is the next president will not win by the margin of one state's electoral votes. Rather, it will be a landslide. Right now, it looks like Obama will take it. Hopefully, the idea of good government will trump the more pedestrian party parsing."

Marcus writes: "If things don't change soon, I'm going to start a new organization called Don't Vote Incumbent -- DVI. I don't care if you're a Republican or a Democrat, just don't vote incumbent. A new crop can only do better."

If you didn't see your e-mail here, you can go to my blog at and look for yours there among hundreds of others -- Wolf.

BLITZER: Jack, thank you.

On our Political Ticker today, tributes coming in for the late Tim Russert. A wake for the "Meet The Press" host continuing this hour right here in Washington. And just a short while ago, the House of Representatives passed a resolution honoring Tim Russert's life and career. It was introduced by a Congressman from Russert's beloved hometown of Buffalo. Tim Russert died of a heart attack on Friday. He was 58 years old.

Obama allies are trying to keep pressure on John McCain over past remarks by a campaign fundraiser. Some top Democratic women in Texas held a conference call today to blast McCain for refusing to denounce Clayton Williams for remarks he made during the 1990 governor's race in the state. They say Williams' comments, including a comparison of bad weather to rape, were offensive and misogynist. McCain has said that his campaign was not aware of Williams' past remarks.

The legendary fashion designer, Calvin Klein, is hosting a dinner for Michelle Obama at his New York home tonight. "Vogue" editor-in- chief Anna Wintour is also a co-host. For those not invited to the stylish private dinner, there's a cocktail party beforehand at the -- at a New York art gallery.

Remember, for the latest political news any time, you can always check out The Ticker is now the number one political news blog on the Web. That's also where you can read my latest blog post. I posted one just a little while ago.

So what's a presidential race without a scandal or two?

There's a new one involving Cindy McCain and charges of kitchen plagiarism.

CNN's Jeanne Moos investigates what's being called the great cookie caper.

Stay with us. You're in THE SITUATION ROOM.


BLITZER: It's a standing tradition of the past four presidential elections. That would be a cookie contest. And each time it seems there's also a cookie controversy. This election year, no different.

CNN's Jeanne Moos examines this Moost Unusual, but rather tasty scandal.


JEANNE MOOS, CNN CORRESPONDENT (voice-over): John McCain's wife Cindy is getting battered over a cookie contest.

(on camera): There's a scandal every year.

UNIDENTIFIED FEMALE: Yes, it's cookie mania.

MOOS (voice-over): Serial recipe thief, reheat offender -- "Cindy bakes another whopper," screamed The Huffington Post.

UNIDENTIFIED FEMALE: All right, well, we're going to pop these into a 370 degree oven.

MOOS: Both Cindy McCain and Bill Clinton are feeling the heat -- accused of recipe plagiarism. Every year "Family Circle" magazine holds a presidential cookie bake-off. The candidates' spouses submit their favorite recipes. And may the best cookie win.


MOOS: Readers are supposed to try the recipes then vote.

UNIDENTIFIED FEMALE: That's kind of bland. It needs a little umph.

MOOS: That was Bill Clinton's oatmeal cookie. Michelle Obama submitted a recipe for a shortbread cookie that looks like pizza, while Cindy McCain submitted an oatmeal butterscotch recipe she says she got from a good friend. But The Huffington Post turned up the same recipe at


MOOS: The recipes are pretty identical...

(on camera): Brown sugar, brown sugar. Two eggs, two eggs. Vanilla extract -- I mean they're even in the same order.

(voice-over): No comment from Mrs. McCain. This is the second time she's taken lumps for supposedly passing off recipes. Last time, the recipes for dishes like passion fruit mousse were described as family recipes on the McCain Web site, then discovered elsewhere. That time, Cindy McCain blamed a campaign intern for posting the recipe.

CINDY MCCAIN, WIFE OF SEN. JOHN MCCAIN: The intern is now, I'm happy to say, at the Betty Crocker boot camp.

MOOS: Bill Clinton has likewise been fingered for saying his recipe came...

UNIDENTIFIED FEMALE: From his chef, his personal chef in -- when he was in the White House.

MOOS (on camera): But here it is in Betty Crocker's cookbook.

UNIDENTIFIED FEMALE: Once again, it's a favorite. It's not necessarily an original for Bill.

MOOS (voice-over): No one has complained yet about the origin of Michelle Obama's shortbread recipe, which she says comes from the godmother of the Obama's two daughters.

UNIDENTIFIED FEMALE: This one looks a little scary. I'm not going to lie.

What's the green thing on it?

MOOS (on camera): So it's sort of an elitist cookie.

UNIDENTIFIED FEMALE: I wouldn't necessarily say that.

MOOS: Look at these orange things. That's elitist.


MOOS: Well, I know. That's what I mean, elitist.

(voice-over): As for the taste test, those we asked were pretty much evenly split.

(on camera): So you guys like Michelle Obama's.


UNIDENTIFIED FEMALE: Oh. Oh, what do you know?

MOOS: And you guys like Cindy McCain's.



MOOS (voice-over): That's the way the cookie crumbles.

(on camera): Well, they smell good. They smell like plagiarism.

(voice-over): Jeanne Moos, CNN, New York.


BLITZER: I just like cookies. I'm like the cookie monster. All right, for the latest political news any time, you can go to And you can get our new political screensaver at room.

Thanks very much for joining us.

I'm Wolf Blitzer in THE SITUATION ROOM.

Up next, "LOU DOBBS TONIGHT" -- Lou.