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The Situation Room

Obama Turns Down Millions; President Bush in the Flood Zone; Interview With Congressman James Clyburn

Aired June 19, 2008 - 16:00   ET

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

WOLF BLITZER, CNN ANCHOR: Happening now, Barack Obama's historic new cash advantage. He's opting out of public financing for his small campaign. The McCain campaign now portraying Obama as a politician who will doing anything to win.
Plus, new nightmares out in the flood zone. We're going to show you how the crisis in the Midwest is now getting worse and worse by the hour. The victims also get a visit from President Bush and John McCain.

And Cindy McCain insists she and Michelle Obama are not fair game in this election. In a new interview, Mrs. McCain opens up about political attacks and whether they get under her skin.

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

Barack Obama says it wasn't an easy decision to turn down about $85 million in public funding for his fall campaign. But his record- breaking ability to raise political cash certainly made it a little bit easier.

Here's a big catch for Barack Obama. He's a abandoning an earlier commitment to accept public funding, and the McCain camp is jumping on that big-time.

Let's bring in our senior political correspondent, Candy Crowley. She's watching this story for us.

I don't remember when a major candidate has opted out of public funding for a general campaign.

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: It has never happened before. So while it may have been an easy decision, and it may have been expected, it certainly is history-making.

(BEGIN VIDEOTAPE)

CROWLEY (voice-over): If you raised more than a quarter billion dollars in the primary season, would you limit yourself to $85 million in the fall campaign? Duh!

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: Hi, this is Barack Obama. I have an important announcement and I wanted all of you, the people who built this movement from the bottom up, to hear it first. We've made the decision not to participate in the public financing system for the general election. CROWLEY: In a Web video announcement which includes a handy donate link, Barack Obama made history. He will become the first presidential nominee to refuse public financing in a general campaign. Legal and expected, all would be OK except for the video trail of this kind of thing, dateline New Hampshire, April 2007.

OBAMA: I have been a public supporter of public financing since I got into politics.

CROWLEY: And in late November, Obama responded to, and then signed, a questionnaire stating, "I will aggressively pursue an agreement with the Republican nominee to preserve a publicly financed general election."

John McCain is the decided underdog in the money chase, but his campaign is hoping he does have a political issue. Aides helpfully provided a timeline of Obama's evolution on the subject, while the Republican National Committee reproduced quotes from Hillary Clinton from February when it was clear Obama would opt out of the campaign finance system. "Now we're seeing," she said, "how the words don't even mean what we thought they meant." McCain, working his way through a day which ends at a fund-raiser channeled Clinton and said pretty much the same thing.

Lawyers for both campaigns have different versions of whether any agreement was aggressively pursued, but the bottom line is this: Barack Obama will be able to spend as much money as he can get a hold of. It will help a lot as he tries to define himself to a public still learning about him. The first ad of his campaign goes up Friday.

OBAMA: And if I have the honor of taking oath of office as president, it will be with a deep and abiding faith in the country I love.

CROWLEY: John McCain says he's reevaluating whether he'll accept public funding. If he does, his spending will be limited to $85 million.

(END VIDEOTAPE)

CROWLEY: For McCain's side, of course, he has the Republican National Committee, which can be of big help to his campaign. And right now, Wolf, they are out fund-raising the Democratic National Committee about two to one for the cycle.

BLITZER: And as you say, Obama makes the point that the whole system is broken right now. That's why he's going to get out this previous indication that he was going to accept it.

Candy, thanks very much.

Let's get some more now of what happens when you check that "yes" box on your federal income tax returns. About 33 million Americans did that each of the last five years, putting three of their tax dollars into the presidential campaign fund. The Federal Election Commission says the $3 comes from taxes you already owe. Checking "yes" does not add to your tax bill, or decrease your tax refund. The system began in 1976 to reform campaign financing after the Watergate scandal. Back then, each major party nominee receives almost $22 million.

By 1992, that amount grew to a little more than $55 million. Now it's up to about $85 million.

We'll stay on top of this story for you. But let's get to the flooding right now that's happening out in the Midwest.

President Bush is heading back to Washington after visiting drenched and devastated Iowa. He's sending a message that the federal government is ready and able to help flood victims and that the Hurricane Katrina debacle won't happen again.

Let's go to our White House correspondent, Elaine Quijano. She's watching this story for us.

Elaine, the president still facing a lot of skepticism out there from many Americans, given what happened in the aftermath of Katrina.

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Well, that's right, Wolf. And you'll recall that after Hurricane Katrina, President Bush did take responsibility for the government's sluggish response. Well, today he very much wanted to send the message that those same mistakes will not be repeated.

(BEGIN VIDEOTAPE)

QUIJANO (voice-over): The financial devastation from the multi- state Midwest floods may invite comparisons to Katrina, but President Bush wants those comparisons, especially at the federal government's response, to stop there.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Obviously to the extent that we can help immediately, we want to help.

QUIJANO: From the air, the president surveyed hard-hit Cedar Rapids and Iowa City, Iowa. And on the ground, mindful of past criticisms for appearing out of touch during Katrina, the president explained why he was there.

BUSH: Just to listen to what you've got on your mind.

QUIJANO: The lessons from Katrina were also evident during the president's trip to Europe last week, when he made a point of mentioning the Midwest flooding unprompted at a news conference in Rome.

BUSH: Throughout the trip I've been updated on the devastation.

QUIJANO: Now in Iowa, the president's message, that unlike the faulty Federal Emergency Management Agency of the past, the FEMA of today stands poised to help. BUSH: There are 600 FEMA people moving around the state. And that ought to help the people in the smaller communities know that somebody's there to listen to them and care about them.

(END VIDEOTAPE)

QUIJANO: Now, also in the works on Capitol Hill, more than $2.5 billion in federal disaster assistance to help the flood victims -- Wolf.

BLITZER: Elaine, thank you.

John McCain also getting a firsthand look at the flooding in Iowa today. And some are wondering why the Republican would go there on the same day as President Bush.

Let's get some answers from our Dana Bash. She's watching this story for us.

So, why did Senator McCain decide to go precisely on the same day that the president was going? And I take it their paths did not cross?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: No, they didn't cross, Wolf. But to answer your first question, look, this is a no- brainer for presidential hopefuls. It's a chance for them in any kind of natural disaster -- it's happened many years in the past -- the chance for them to go and look presidential, a chance for them to go and make it seem.

And the reality is John McCain did actually talk to victims. He talked to local sheriffs, mayors and so forth, to make it seem like he knows how to do the job. Especially in a state like Iowa, where it is a battleground state. This is very important for Senator McCain to do, just like he did -- just like Senator Obama did very briefly over the weekend.

BLITZER: I assume they knew that the president was going to be there today as well, Dana. That obviously is public information.

BASH: Well, that's right, they did know that President Bush was planning to go there when the McCain campaign planned for the senator to be there on the same day. They knew very well that that meant that the images of both of them there would be up on the screen simultaneously, much like we have done during this show.

And it is a bit ironic, given the fact that you remember, exactly two months ago today, you heard Elaine Quijano talking about President Bush and Katrina. John McCain stood in New Orleans and made clear that he thinks -- understands that the mismanagement of President Bush's administration was pretty much one of the biggest problems of the administration, and it was one of the ways that he tried the hardest to separate himself from the unpopular president, saying that the response was disgraceful.

So, in the end, it really was interesting to see these two images. Although they were about 60 miles apart from one another at the very same time in Iowa, it was interesting to see these images. On the one hand, you saw President Bush trying to show that he learned a lesson from Katrina, and John McCain pretty much doing the same thing, saying, I understand that I will be a different kind of president than the current Republican president.

BLITZER: Dana, thanks very much.

Later we're going to talk about this with James Carville and Bill Bennett, this delicate dance that John McCain is doing, distancing himself from the president, but at the same time reaching out to him from time to time as well. They're coming up later.

Jack Cafferty has the day off today, but right now there's a lot of buzz out there about Barack Obama's decision to opt out of the public campaign financing system. Are fellow Democrats cheering him on our raising eyebrows?

I'll speak about it with the House majority whip, the number three Democrat in the House, James Clyburn. We'll talk about that. I'll ask him if he thinks Obama is going back on his word.

Plus, Cindy McCain, she talks about an emotional issue that puts her at odds with her husband. Stand by. Our own John King interviewed the would-be first lady in Vietnam today. You're going to want to see this interview.

And the political power of men in this election year. Our Bill Schneider will explain why he thinks male voters are behaving strangely right now.

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

(COMMERCIAL BREAK)

BLITZER: Let's get back to our top story this hour, new questions being raised by Republicans about Barack Obama's money and his integrity now that he's officially decided to opt out of the public campaign financing system.

Let's discuss this and more with the House majority whip, the number three Democrat in the House of Representatives, James Clyburn of South Carolina.

Congressman, thanks very much for joining us.

REP. JAMES CLYBURN (D), SOUTH CAROLINA: Well, thank you so much for having me.

BLITZER: Did he make the right decision?

CLYBURN: Oh, I think so. I was hoping that he would do that.

You see, Wolf, I have been going home on weekends and listening to people who have been going on the Internet, sending $5, $10 and $15 into his campaign. A million and a half across this country have bought into this campaign. And to shut them out, as he would have had to do if he accepted the limits of the federal financing, would not be right.

BLITZER: Let me read to you what his spokesman said back in March of last year, 2007.

Bill Burton saying, "If Senator Obama is the nominee, he will aggressively pursue an agreement with the Republican nominee to preserve a publicly financed general election."

It's never happened before that a major presidential candidate has opted out of the public financing system, going back to 1976. And the McCain camp and a lot of Republicans are saying he's now a hypocrite.

CLYBURN: Well, I don't think so. That was then, this is now.

What I think is that this campaign is so unique in so many ways. Some are very obvious.

Never before have you seen this many people, very nearly eking out a living, buying into this campaign, wanting to be a part of this history-making effort. And I think it will be a shame to lock them out. So I'm very glad that he opted to go this way so he can continue to get this $5, $10 and $15 contributions. And I'm looking forward to him hitting the two million mark with the people contributing.

BLITZER: The Democratic presidential candidate has been spending a lot of time today on Capitol Hill. He's trying to unify the Democratic Party on the Hill, specifically meeting with union leaders, meeting with the Congressional Black Caucus, meeting with women leaders out there as well. He's got a tough road ahead of him.

You met with him today. What was his basic message?

CLYBURN: His basic message was threefold. Thanking everybody for their efforts, even those who may not have been with him for their participation in the Democratic primary, helping to make this a history-setting primary season.

And then he, secondly, wanted everybody to know that the primary campaign is now behind us, and all of us are now working on the same accord.

And thirdly, he wanted to seek their advice on what he needed to do going forward in order to be successful in November. It was a very good session. Everybody had an opportunity to ask questions. And he answered them, I think, very forthrightly. And I think it was a good meeting.

BLITZER: You're the Democratic whip. Your job is to count votes out there among the majority, all the Democratic members of the House of Representatives.

Give me a ballpark, how many Democratic congressmen do you believe won't endorse Barack Obama? Because some have already come forward, including Congressman Boren of Oklahoma, for example.

CLYBURN: Well, I think that most Democrats in the United States Congress are going to be very supportive of this campaign. A lot of them are going to look at their congressional districts and see how the congressional district voted. And they will be holding back, waiting to get some signal from their constituents as to how they ought to conduct themselves.

And that's how it should be, Wolf. It is one thing for us to have a big tent party. But it's also another thing for these candidates to stay in close touch with their constituents. And I understand that.

BLITZER: Because they want to get themselves reelected, obviously, as well.

Are you surprised that we haven't yet heard from Bill Clinton? We heard from Hillary Clinton, enthusiastically endorse Barack Obama. But he so far, at least, has been silent. What do you think?

CLYBURN: Oh, I don't know. I suspect that all of us have to come to positions in our own time and in our own way. And I think that President Clinton will come to this campaign when he thinks it's best for him to do so. But I expect him to be very supportive of the Democratic ticket.

BLITZER: I write about it on my blog post today at CNNPolitics.com, raised some other questions in that little blog post as well.

Congressman, thanks very much for coming in.

CLYBURN: Well, thank you so much for having me.

BLITZER: James Clyburn is the majority whip in the House of Representatives.

Many communities along the Mississippi River are under water right now. Do people living downstream now need to worry that the floods will hit them next?

We'll be joined by Chad Myers from the CNN weather center. He's standing by live.

And tough questions from a top Democrat on Capitol Hill today. Is one of the nation's largest lenders giving lower mortgage rates to members of Congress? We'll have details of that and a lot more coming up right here in THE SITUATION ROOM.

(NEWSBREAK)

(COMMERCIAL BREAK)

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

Happening now, mortgage meltdown arrests. Federal agents are conducting nationwide sweeps. Hundreds of people face charges.

Could your mortgage broker be one of them? We're going to have a full report. Stand by for that.

Also, expanding oil production in Iraq. Some of the world's biggest oil companies are now champing at the bit. We're going to tell you who's in line and what's holding them up.

And Barack Obama and the Internet. A wildly popular viral video titled "Yes We Can" wins an Emmy. What does its success say about the campaign?

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

It's back to the future in the 2008 presidential race. Move over, soccer moms. Men -- yes, men -- now are poised to play a crucial role in choosing the next commander in chief.

Let's bring in our senior political analyst, Bill Schneider. He's looking at this story for us.

Bill, could men be the deciding factor in this upcoming election?

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Well, yes. Men are behaving strangely.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): After the long, bruising primary battle with Hillary Clinton, a lot of Democrats were concerned that Barack Obama would have a problem getting support from women. Does he? Not really. Obama has a 9-point lead among women.

The big surprise is that Obama is running nearly even with McCain among men. McCain, the war hero? Mr. Victory in Iraq?

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: And by the way, I will never surrender in Iraq, my friends. I will never surrender in Iraq.

SCHNEIDER: Support from men has become crucial for Republicans. Men elected George W. Bush in 2000 and reelected him in 2004. Most women voted for Al Gore and John Kerry.

In fact, in the last nine presidential elections going back to 1972, men have voted for the Democrat only twice. For Jimmy Carter, in 1976, when the economy was bad and a Republican was in the White House, and for Bill Clinton in 1992, when the economy was bad and a Republican was in the White House.

Well, guess what? It's 2008. The economy is bad and a Republican is in the White House. For men, the economy is clearly issue #1.

Obama feels their pain.

OBAMA: George Bush and Washington may not have noticed, but manufacturing jobs have been leaving here for decades now.

SCHNEIDER: McCain feels it, too, but he sounds more defensive.

MCCAIN: I have a great belief that the fundamentals of our economy are very strong. Very strong.

SCHNEIDER: The economy is giving Obama a foothold with male voters. Among the nearly half of men who say their top concern is the economy, Obama has a seven-point lead.

(END VIDEOTAPE)

SCHNEIDER: Now, that's the thing about the gender gap. It's usually taken to mean women vote Democratic. But it also means men vote Republican. At least it used to -- Wolf.

BLITZER: Bill Schneider, thank you for that.

John McCain's wife Cindy is visiting Vietnam right now to promote one of her favorite charitable causes. We'll explain what that cause is. That's coming up.

But even overseas, she's very aware of the political pressure she's facing right here in the United States. Pressure shared by her rival for the first lady's job, Michelle Obama.

Our chief national correspondent, John King, is also traveling in Vietnam. He caught up with Mrs. McCain. They sat down for a one-on- one interview.

(BEGIN VIDEOTAPE)

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Let's talk about the role of the spouses in the campaigns. Let me just start with the threshold question. Where is the line in your view? What's in and what's out?

As you know, there's been a debate about the spouses, things that you have said and done, things that Mrs. Obama has said and done. Where is the line in your view?

CINDY MCCAIN, JOHN MCCAIN'S WIFE: Well, I do not think that spouses and family members -- I'll broaden it out -- are fair game. And I'm not saying that because of either treatment on either side. I just think that politics, there has to be some decorum left in politics and in American journalism as well.

And our husbands are the candidates. And they -- and what we are looking at are two vastly different sides of issues, two vastly different approaches to how we govern our country.

It's a very -- people have a very clear choice. The choice is not whether -- who is going to be the best first lady or the first -- this is about our husbands. And this is far too important to muddle it up with -- with things like that. KING: And, yet, under steady pressure from the Democrats, your husband had said adamantly for a long time your financial life was separate from his; you wouldn't release your taxes.

And you were forced, under political pressure, to release the summary.

C. MCCAIN: It wasn't the...

KING: Did you not like that?

C. MCCAIN: It wasn't the Democrats that forced it.

I felt that, if it was that important to the American people, and there was discussion, well, then, OK, I will. I mean, sure I said no. But the American people said, you know, we really are -- we really think we should see. And I -- and I said, OK. That's fine. I didn't have to -- you know, I'm not always right.

(LAUGHTER)

KING: And now the Democrats are raising a stink about your husband's use of your family jet at a time his campaign was short on -- short on money. Is that a relevant question or is that silly season?

C. MCCAIN: It's a relevant question. The rules are very clear, actually. And, if you notice today, there was a discussion from three or four different attorneys backing up our -- our discussion and our understanding of the law.

It's -- you know, we'll see. We'll see where this takes us. But our understanding -- and from what our attorneys have said -- the law was clear, and our use of it was very appropriate.

KING: You say spouses should not be the issue; the candidates are the ones who would be president.

You did step forward at one point in the campaign, when Mrs. Obama had said for the first time that she was proud of her country, you did step forward and say, "Well, I've always been proud of my country."

You saw a reason to say that, didn't you, some political opening?

C. MCCAIN: No, it wasn't a political opening. There was nothing planned. It wasn't -- I'm just -- I'm an emotional woman when it comes to service to our country.

I have watched many people's children leave and go serve. This is something that is the fiber of the McCain family. It was nothing more than me just saying, look, I believe in this country so strongly. That's all it was. It was an emotional -- an emotional -- an emotional outpouring on my part.

KING: It was taken as, you know, as somehow trying to -- a comment on your part that was trying to say you are more patriotic or her family is more patriotic.

C. MCCAIN: No.

KING: Your family is more patriotic.

C. MCCAIN: No. No. No.

KING: No?

C. MCCAIN: I -- I -- that is not how I meant it. And that is not, I believe, how it was represented.

I think she's a fine woman. She's a good mother. And, you know, we're -- we both are in an interesting line of work right now.

(LAUGHTER)

KING: That's a good way to put.

(LAUGHTER)

KING: You mentioned your emotion about this. This is -- there is one issue in the family where you and your husband do disagree sometimes, in the sense of...

C. MCCAIN: Only one?

KING: ... you are proud -- well, you can list them all if you would like.

(LAUGHTER)

KING: But you are very proud and effusive sometimes about your sons' service now, one of whom is recently back from Iraq, another who is at the Naval Academy that you mentioned.

The senator, perhaps because of his own service, and perhaps because of his own history as a POW, doesn't like to talk about that publicly. When you do, is that something that makes him mad?

C. MCCAIN: No, not at all. No, he's -- we don't talk about our sons, particularly our Marine Corps son, for obvious reasons, particularly at the time, when he was deployed.

I am just like every other mother out there. If you want to listen, I'll tell you all about him. I'm very proud of him. but there is a time and a place. And every mother is proud of their sons. And every child that is either serving or not serving or trying to live a decent life, going to school and doing things to make -- to make their own family proud and living a good life, I mean, we're all proud of that.

So, I'm like no -- I'm no different from any other mom.

(CROSSTALK)

C. MCCAIN: I'm proud of all four of my children.

KING: I want to ask you a little bit about where we are.

But you said that you think spouses should be out of bounds. Yet, you've been involved in a discussion about your taxes, about the plane, about what you meant about Mrs. Obama.

Is this new to you, troubling to you, or is this just part of the sorting out of every campaign?

C. MCCAIN: Oh, I will tell you, I've seen a difference since 2000, sure. I've seen a difference in how the media approaches everything.

But, listen, it's not -- this race isn't about media. It's not about, you know, who said what to whom. This is about two men that have clear differences in what their vision is for America and who will be the better leader. And, of course, in my opinion, my husband would be a better leader, a better person for the job. He has more experience. He has the kind of life story that -- that enables someone to -- to look at an issue and really make a hard judgment, because you've lived a certain way and lived a life that has given him a compass that takes him the right direction.

He's a wonderful man. And I can't -- I'd be so proud if we were so lucky to be able to do this, because he's just a remarkable person.

KING: Does it get under your skin when you see the press releases? Why won't McCain release his taxes? Why is the senator flying on her plane?

C. MCCAIN: Right.

You know, to be honest, I really don't read it.

(LAUGHTER)

C. MCCAIN: The staff keeps me up on this stuff. But I'm with my kids, my family. I'm busy running from here to there. I'm here and doing things like to do. And they'll let me know if something's going on. But I don't really pay attention to it.

(END VIDEOTAPE)

BLITZER: Cindy McCain, by the way, is in Vietnam to promote Operation Smile. It's a group of medical volunteers who repair the cleft lips and palates of children around the world. The McCains have a daughter who was born with a cleft palate themselves.

Is one of the nation's top lenders giving preferential treatment to members of Congress? That was the discussion on Capitol Hill today.

Let's go to Brianna Keilar. She's watching this story for us.

A lot of allegations back and forth. What's going on, Brianna? BRIANNA KEILAR, CNN CORRESPONDENT: Well, now there's a housing bill before the Senate, Wolf. And it sure didn't get far before a group of Republicans pushed back.

(BEGIN VIDEOTAPE)

KEILAR (voice-over): Debate on housing legislation meant to ease the mortgage crisis had just kicked off in the Senate. Republicans asked to pull the bill from the floor, amid questions about loans two Democratic lawmakers received from Countrywide Financial.

SEN. JIM DEMINT (R), SOUTH CAROLINA: Make sure the American people can look in on us and know that we have had a very open and transparent process.

KEILAR: "Portfolio" magazine reported that Countrywide gave discounts on mortgages to Senators Christopher Dodd and Kent Conrad. Both Democrats say they were unaware of any preferential treatment and flatly deny any wrongdoing.

SEN. CHRISTOPHER DODD (D), CONNECTICUT: The idea of asking or seeking any kind of financial preference, whether it's in home mortgages or anything else, is something I completely reject.

SEN. KENT CONRAD (D), NORTH DAKOTA: You can try to make it into something. You can try. It's not there. I didn't do anything wrong.

KEILAR: Dodd and Conrad are on committees instrumental in drafting the housing legislation that would help borrowers, but also mortgage lenders, including Countrywide.

SEN. TOM COBURN (R), OKLAHOMA: If you have poor judgment, then you certainly shouldn't be influencing something that would -- that might benefit that poor judgment.

KEILAR: Nine Republican senators have asked Majority Leader Harry Reid to put off the bill until they can figure out how much it will benefit Countrywide. So far, Reid has refused.

House Republicans are calling for an investigation as well.

REP. JOHN BOEHNER (R-OH), HOUSE MINORITY LEADER: These are serious allegations. And to think that we're going to move a housing bill with these questions looming, I think, is irresponsible.

(END VIDEOTAPE)

KEILAR: But House Speaker Nancy Pelosi says she doesn't think hearings are necessary.

Meanwhile, the White House is threatening to veto the housing bill in its current form -- Wolf.

BLITZER: Brianna, thank you.

Our I-Reporters are offering some desperate personal accounts from the flood zones out there. We're going to bring you some of their pictures, their stories. That's coming up.

And Barack Obama's possible Cabinet -- would it be a smart move to tap a Republican, or two, or three? Our "Strategy Session" will discuss.

And Bill Clinton is conspicuously quiet, at least for a few days, now that his wife is out of the presidential race. Where is he? Why hasn't he endorsed Barack Obama yet? I will ask Clinton insider James Carville. He's coming up later -- right here in "THE SITUATION ROOM."

(COMMERCIAL BREAK)

BLITZER: Many parts of the Midwest are under water. In some areas, the waters are still rising.

Let's go to our meteorologist Chad Myers. He's standing by to explain what's going on.

It looks like these levees, they're being -- they're being damaged, breached, if you will. It's causing a lot of problems out there, Chad.

CHAD MYERS, CNN METEOROLOGIST: Causing a lot of problems for agricultural areas so far, not for cities. And it's almost designed that way, Wolf, where, obviously, the cities are better protected than, let's say, the farmland.

Let's back you up two weeks and figure out, how did this all start? Where did this all happen, and why? It started with something called an omega block. An omega block a big blocking high-pressure system, eastern part of the United States. It makes it looks like -- kind of like the letter omega. You don't see the other side of it because it's in the Atlantic Ocean.

But a front stalled through the Midwest, and it rained and rained and rained. And then it got very hot in the East. You might remember when it was 100 degrees in D.C. That's when it was raining in the Midwest. That's how it happened. Now, what has happened?

We will take you to the big picture. How did it start? Is started out June 3 and 4, heavy flooding rain southern Indiana and Illinois. They had floods there. Hadn't talked about them much, but they certainly did.

Then the first round of heavy rain happened in Iowa. That was June 5. June 7, flooding rainfall all across Wisconsin. And then Lake Delton failed. Remember when that loss over -- went over its banks, and that whole lake basically went away? The next night, what happened? We lost four Boy Scouts in western Iowa, as that tornado outbreak -- 64 tornadoes -- happened that night.

So, here's where we are now, all of these red and purple dots, rivers out of their banks. We will zoom in to one spot that has actually helped by these levee breaches, Saint Louis. Now, you say, how can that be? How can somebody be helped by a levee break? Well, because we will take a look at this. This is what has happened. The blue line, that's where the water has been. The green line, that's where the water is going. Three days ago, Wolf, that water was forecast to be five, almost five feet higher than you see right there. Why?

Because this is the Missouri River at Canton, Missouri. Look what happens when a levee breaks. The water is going up, up, up. Then, the levee breaks, and it goes down. If you fix that or the water goes over the top, it goes up again, another levee breaks, and it goes down and down and down.

Just in the past 48 hours, the Mississippi River right there at Canton has dropped one, two, three, four, five, six feet. It has dropped six feet just because of the levee breaks. And that happens because the Mississippi River is no longer a mile wide. When a levee breaks, the Mississippi River gets to be six miles wide. And a six- mile-wide river obviously isn't as high as a one-mile-wide river.

BLITZER: Good point, Chad.

All right, stand by. We're going to be coming back to you. We are going to stay on top of this story.

Our I-Reporters are sending in their stories and their pictures, some of them very dramatic, of the flooding out in the Midwest.

Abbi is here looking at these pictures. And it's pretty awful.

ABBI TATTON, CNN INTERNET REPORTER: And, Wolf, we're actually going right back to that area that Chad Myers was just talking about around Canton, Missouri.

We're about 10 miles north here. This is Gregory Landing, the levee. And if we can pull up that first picture, you will see there that this is the water rushing over it. But the person that took that, Lucy Scott, who is 10 miles downriver in Canton, she was telling me just a few minutes ago that the water there has dropped.

This is the scene, though, just a bit further north. She says this is an area that is pretty much all farmland north of them. And it's pretty much all flooded.

We can look also at an area where the water is receding now. We're going to back up north to Davenport, Iowa, these pictures here sent in by Phil Reges. This is the downtown area around the river. And I just talked to the local business association there, who are saying that they have not been as dramatically affected there in Davenport as other cities in Iowa.

But they said they still had a foot, foot and a half of water from the Mississippi River. And that requires a 24/7 cleanup operation right now.

BLITZER: And we're bracing to see what happens downstream in the Mississippi as the next few days unfolds. Abbi, thank you.

We will have more on this story coming up in the next hour as well.

President Bush belittles Barack Obama's plan for Iraq.

(BEGIN VIDEO CLIP)

BUSH: The other side talks a lot about hope. And that sums up their Iraq policy pretty well.

(END VIDEO CLIP)

BLITZER: But is President Bush a helpful surrogate for the McCain camp?

Plus, Obama has words of praise for President George H.W. Bush's Cabinet, the first President Bush. But would he really name any Republicans to his Cabinet? We will discuss this and more. Donna Brazile and Kevin Madden, they are standing by for our "Strategy Session."

(COMMERCIAL BREAK)

BLITZER: Lots to discuss.

Let's get right to our "Strategy Session."

Joining us our CNN contributor the Democratic strategist Donna Brazile -- she runs a Washington-based consulting firm -- and Republican strategist Kevin Madden of the Glover Park Group. He's the former press secretary for Mitt Romney's presidential campaign.

Guys, thanks very much for coming in.

Congratulations on the new job to you, Kevin.

KEVIN MADDEN, FORMER ROMNEY CAMPAIGN NATIONAL PRESS SECRETARY: Thank you very much.

BLITZER: All right, let's talk a little bit about what Barack Obama might do if he were president. He says this to the new issue of "TIME" magazine, very intriguing, Donna. Listen to this.

"I really admire the way the elder Bush negotiated the end of the Cold War, with discipline, tough diplomacy, and restraint. And I would be very interested in having those sorts of Republicans in my administration, especially people who can expedite a responsible and orderly conclusion to the Iraq war and who know how to keep the hammer down on al Qaeda."

What do you think about reaching out to Republicans, bringing them in to a Barack Obama Cabinet?

DONNA BRAZILE, CNN POLITICAL ANALYST: I think it's a smart strategy.

Throughout the primary season, Senator Obama signaled to Republicans who were showing up at the polls to support him that he would be open to having Republicans in his Cabinet. He's mentioned Chuck Hagel, the senator from Nebraska. He's also mentioned Richard Lugar, the senator from Indiana, as possible Cabinet members.

And, of course, at one point, he mentioned Arnold Schwarzenegger, the governor of California. I think it's intriguing that he would bring Republicans into his Cabinet, like President Bush brought a Democrat. And President Clinton also brought a Republican.

BLITZER: Is it just talk, though?

MADDEN: Oh, I think this is a big race to the middle. And, right now, it's talk. I would wonder how it would work in a possible Obama administration.

But I think, right now, that you're seeing John McCain try to do the same thing with Joe Lieberman. Every time he's on the campaign trail and he's trying to appeal to these independents and Democrat voters, he's got Joe Lieberman near his side.

But I think the big problem for Barack Obama is whether or not the liberal left really starts to push back on the idea of having Republicans, whether they're Chuck Hagel or anybody else, in a possible Obama Cabinet.

BLITZER: Because we did discuss this the other day. A guy like Chuck Hagel, who is very outspoken against the war in Iraq, but on many of the social issues, whether abortion or gay rights and some of the other issues, he's a very traditional conservative.

BRAZILE: But Senator Obama, as president, would clearly set the agenda. And anyone who is part of the Cabinet would have to promote that agenda and promote that vision.

BLITZER: But the point that Kevin is making, the far left, would they be able to accept that?

BRAZILE: I think that, once Senator Obama is elected president, and he decides to put Republicans in his Cabinet, and we look at the great diversity, some people will not be happy. Others will be pleased with the choices.

MADDEN: At end of the day, it's going to be about their record. And I think John McCain has a better record. He has a record for accomplishment as a bipartisan senator, vs. Barack Obama, who has only talked about it and doesn't really have a long record at all.

BLITZER: Because you have got to admit -- I'm sure you have got to admit as well -- that John McCain have worked with Russ Feingold on campaign finance reform, with a guy like Joe Lieberman on global warming, with Ted Kennedy on immigration. So, he has worked with Democrats.

BRAZILE: If you have been in Washington, D.C., as long as John McCain, God knows you have worked with everyone.

And I'm not -- I have worked with John McCain on campaign finance reform. But that doesn't mean I'm supporting John McCain in his effort to become president.

BLITZER: Let's talk a little bit about this sound bite from President Bush last night, going after Barack Obama when it comes to the war in Iraq.

(BEGIN VIDEO CLIP)

BUSH: The other side talks a lot about hope. And that sums up their Iraq policy pretty well. They want to retreat from Iraq and hope nothing bad happens. But wishful thinking is no way to fight a war and to protect the American people.

(APPLAUSE)

(END VIDEO CLIP)

BLITZER: I guess the question, given his unpopularity, when he goes out there and rails against Barack Obama, even in a relatively mild way, like that, does it help or hurt John McCain?

MADDEN: Well, here -- I think there's two problems here, actually.

The first is that you're running a negative against a positive. When you're running against hope, people -- you want to hear somebody talk about hopeful rhetoric. They want to hear inspiration. So, when you run against it, it's always bad.

But I also think that John McCain needs this to be a two-man race. He doesn't need this to be a three-man race. So, every time that the president goes out there and takes a shot, whether it's implicit or explicit, against Barack Obama and the Democrats, he injects himself into the race. And it's no longer the head-to-head matchup that John McCain wants. So, it does hurt him.

BLITZER: What do you think?

BRAZILE: I also think it reminds voters out there who are clearly ready to see our troops come home -- they have done their job -- that this is the president who sent them into the battlefield without an exit plan.

So, it helps Senator Obama to have George Bush out there criticizing him about hope, when George Bush hasn't shown that he has an exit strategy for our troops.

BLITZER: You spoke earlier you supported McCain on campaign finance reform. Did Barack Obama do the right thing today in rejecting public funding for the general election?

BRAZILE: You know, Wolf, I have taken a look at some of the things that Senator Obama and his advisers said. They looked at this situation. It was a risky choice.

But, after speaking with the McCain people -- and I haven't talked to the McCain people -- they decided to opt out of the system. Clearly, I support the system, but the system is broken. And Senator Obama believed that, in order to level the playing field, he needs to opt out of the system.

BLITZER: Because his argument, as you know, is that the Republicans will raise a lot of money in these 527s, these unaffiliated groups.

MADDEN: What Republican 527s? There are none out there. I mean, I think...

BLITZER: Well, there -- presumably, there will be some out there.

MADDEN: Right. But, I mean -- yes, they're talking about...

(CROSSTALK)

MADDEN: They're talking about stuff that -- that hasn't actually materialized. So, they have set up a straw man argument.

But the bottom line is that, when voters look at Barack Obama's past insistence that he would stay in it, there's only one judgment that they're going to render on today's decision, which is that he went back on his word. Barack Obama said he was going to be part of the system. Now he's not.

BRAZILE: Well, John McCain said he would accept public matching funds. And because there's not a quorum at the FEC, he's backed away.

Look, the truth is, the system is broken. And, yes, there are 527s out there. Look at the two special elections in the South. Those organizations ran ads with Barack Obama and Reverend Wright to try to distort the record of Senator Obama. And that's why he's decided to fight this with the money that he can raise from ordinary people.

MADDEN: Well...

BLITZER: But you have got to admit...

MADDEN: Yes.

BLITZER: ... from a strategic point of view -- forget about...

MADDEN: I was going to say, yes.

BLITZER: ... you know, the morality or anything like that -- he can raise a lot more than $85 million.

MADDEN: Cold-hearted analysis here?

BLITZER: Yes. MADDEN: If he didn't do it, he would have been crazy. He has an ability to raise a lot of money very quickly with the click and send of a mouse. And it gives him an enormous strategic advantage to force John McCain to play in states that he ordinarily wouldn't have to play, just for the simple fact that the dollars and resources are going there.

BLITZER: And if the past is a predictor of what's going to happen down the road, forget about $200 million. He could raise a whole lot more than that in the general campaign.

We will see what happens. Guys, thanks for coming in.

BRAZILE: Thank you.

MADDEN: Great to be with you.

BLITZER: It's been a while since we have heard from Hillary Clinton, even longer since we have heard from her husband. So, what's the former president up to? Why hasn't he officially, publicly, enthusiastically endorsed Barack Obama yet? I'll speak about that and more with a Clinton insider, James Carville. He's here in THE SITUATION ROOM. That's going to be coming up.

And a major crackdown: Hundreds of people are arrested in connection with the mortgage meltdown -- the charges, the suspects, and what comes next.

Plus: a high-tech weapon that hunts out enemies without having to see them, how it works, whether it's worth the $10 million price tag per weapon.

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

(COMMERCIAL BREAK)

BLITZER: On our "Political Radar," the Texas Republican Party is banning a vendor who sold what it calls a racist button at its weekend convention. The button asked -- and I'm quoting now -- "If Obama is president, will we still call it the White House?"

The man who sold the button says he was trying to be funny. And he may even, he says, wind up voting for Obama himself. But the Texas GOP says there's nothing funny about the button and that the party won't tolerate or profit from bigotry.

Remember, for the latest political news any time, check out our ticker at CNNPolitics.com. That's where you can also download our new political screen-saver, where you can check out my latest blog posts. Wrote one before the show about Bill and Hillary Clinton.

And, to our viewers, you're in THE SITUATION ROOM.