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The Situation Room

Anthrax Attacks News Conference; McCain Walks Political Tightrope; Obama Gets People Talking: Campaigns With Indiana Senator Evan Bayh

Aired August 06, 2008 - 16:00   ET


QUESTION: Dr. Hatfill was never established to have access in the bacteriology division or possession, obviously, of anthrax, yet his residence was searched in June of 2002. Further searches of his property were conducted throughout that year and beyond. Yet it took until, if I'm reading your documents correctly, late 2007 before you ever sought to search Bruce Ivins' vehicle or his residence.

Can you just speak to that gap? And did you determine whether Dr. Ivins...


We're continuing the breaking news coverage. The Justice Department outlining its case against Dr. Bruce Ivins, who committed suicide the other day. He's accused of being the anthrax killer.

Let's listen in.


JEFFREY TAYLOR, U.S. ATTORNEY FOR DISTRICT OF COLUMBIA: ... potentially had access to this substance. We had to go through this laborious process to ferret out or exclude those who were not involved.

With respect to the other individual you mentioned, we were able to determine that at no time could that individual be put in the presence of that flask from which these spores came.

QUESTION: Jeff, did you find any handwriting samples or hair samples that would have matched Dr. Ivins to the envelopes where the hair samples were found in the mailbox?

TAYLOR: Do you want to take that?

JOSEPH PERISCHINI JR., ASST. DIR. IN CHARGE, FBI WASHINGTON FIELD OFFICE: We did not find any handwriting analysis or hair samples in the mailbox. So there was no forensics for that part.

QUESTION: Did you take handwriting samples from Dr. Ivins?

PERISCHINI: We examined handwriting samples, but then there was no comparison made or a specification identification of the handwriting. And it appears that if the analysts would look at it, that there was an attempt to disguise the handwriting. So he was unable to make a comparison.

TAYLOR: With respect to handwriting samples, we did have indications from individuals with whom we spoke that there appeared to be some similarities in handwriting that were apparent. That said, we did not have a scientifically valid conclusion that we thought would lead us to be able to admit that in evidence.

QUESTION: Could you speak a little bit about what he said in the e-mail a couple of days before the letters went out regarding al Qaeda having some kind of biological weapons or sarin gas or anthrax to this quality? There was some mention in the affidavits about it, and then compared to the letters.

TAYLOR: That's correct. There was an e-mail at the time that mentioned that factor. And we put it in to suggest, among other things, some possible connection between what he was describing about "Death to Israel, Death to America," and what was found in the letters that had been mailed in the attacks.

QUESTION: Is that a strong connection, do you think?

TAYLOR: It's circumstantial evidence.


QUESTION: Do you think there's a connection between Ivins and what was known at the time as the Quantico letter? That was the letter sent in September of 2001 identifying an Arab-American scientist at Fort Detrick as a bioterrorist. The letter also threatened a bioterror attack, and also "Death to Israel."

Were you ever satisfied that you were able to run down that letter and the author of that letter?

TAYLOR: Not aware of any connection. To my knowledge, there's no evidence linking the two.


QUESTION: In your affidavits, there's a footnote that notes -- indicates you searched, you had probable cause to search "other individuals," more than one. Can you talk about the scope of the number of people you searched that you had probable cause on?

TAYLOR: I'm not going to get into the details of other investigative techniques that were handled -- that were used in this case with the other individuals. We're here today to say, based on all that investigation, we stand here today firmly convinced that we have the person who committed those attacks, and we are confident that had this gone to trial, we would have proved him guilty beyond a reasonable doubt -- Mark.

QUESTION: Could you elaborate a little bit on what you think is the motive behind this, which doesn't seem to be apparent, other than mental deficiency or imbalance? And also, the evidence in the documents seems to suggest that maybe he was already in a frame of mind to do this and was acting strangely before 9/11.

So is there a connection with 9/11? Did 9/11 accelerate it in some way?

And finally, you mentioned in your statements earlier something about contacting his lawyers recently and talking with them, proving reasonable doubt. Have you got a target letter? In other words, how close had you informed him that (INAUDIBLE)?

TAYLOR: Let me take those in reverse order and hope I can remember all three.

There had been scheduled last week a meeting with his lawyer, what we call a reverse proffer, where we were going to sit down with him and lay our cards on the table: here's what we have, here's where this investigation is going. Based on the evidence that's in the affidavits and other information, it seems clear that Dr. Ivins was aware that the government was proceeding in that direction towards bringing charges.

Help me with number two, Mark.

QUESTION: The question was, before 9/11, some of the evidence in your chain of evidence about his increasingly feverish activities suggests that it starts in August or whatever.


TAYLOR: Remember, from the information you have, Dr. Ivins is a troubled individual. Particularly so at that time.

He's very concerned, according to the evidence, that this vaccination program he's been working on may come to an end. He's also very concerned that some have been criticizing and blaming that vaccination program in connection with illnesses suffered by soldiers from I think the first Gulf War. So that was what was going on, according to the evidence, in his mind at that particular time.

With respect to motive, I'll point again to -- with respect to motive, the troubled nature of Dr. Ivins and possible motive is his concern about the end of the vaccination program, and the concerns had been raised. And one theory is that by launching these attacks, he creates a situation, a scenario where people all of a sudden realize the need to have this vaccine.

QUESTION: In the context of 9/11 -- in other words, do you think 9/11 precipitated this?

TAYLOR: I don't want to speculate on it. I don't know.

In the back.

QUESTION: Does it follow any thoughts as to why Senator Leahy, Senator Daschle and the publication in Florida, the publication in New York...

TAYLOR: Well, I'll refer you to the documents and the affidavits. There's some speculation concerning -- or some indications, some evidence, ideas, concerning Senator Leahy and Senator Daschle. Also, there's an e-mail in one of the documents talking about "The National Enquirer," and the site in Florida was the publication of "The National Enquirer."

QUESTION: Could you address the reports today that the family had been confronted at a mall in Frederick, Maryland, at one point by investigators?

TAYLOR: That's categorically false. The notion that somehow these people were coerced or abused by the agents or the lawyers is categorically false.

These agents handled themselves professionally, responsibly, and with great respect for Mr. Ivins and for his family. And I would say the same thing about the prosecutors in this case. They're pros, and they handled themselves the right way.

Joe, do you want to say anything about that?

QUESTION: Can you say anything about the family?

QUESTION: Can you tell us how Dr. Ivins was able to get the anthrax out of the lab and he did not get sick himself?

Also, were you able to place him at the mailboxes in Princeton?

TAYLOR: With respect to your first question about getting the anthrax out of the site, Dr. Ivins -- and correct me if I'm wrong, Ken -- had vaccinated himself against anthrax.

With respect to the mailbox, as I laid out before, there is ample evidence in this case pointing to Dr. Ivins as the individual who drove to Princeton to mail those letters. He had the hours in the hot suite (ph) during the relevant times. We looked at the records when he was at work and when he would have had time to drive to Princeton, New Jersey, and it's clear from those records that he had time on the relevant occasions to drive to Princeton, mail the envelopes, and come back. There's also evidence I'll refer you to in the affidavits concerning where that mailbox was located in Princeton, New Jersey, in relation to some obsessive conduct on his part with regard to a sorority.

Again, it's a chain of evidentiary items that, assembled together, leads to one reasonable conclusion, and that is Dr. Ivins mailed that anthrax in those envelopes from that mailbox in Princeton.


QUESTION: (OFF-MIKE) a gas receipt or that shows he was there? I mean, actually proves that he was in that area?

TAYLOR: We don't have that piece of direct evidence you mentioned.


QUESTION: Sir, two questions. Is there any evidence at all that Dr. Ivins, based on his knowledge of his co-worker, somehow framed or set up Dr. Hatfill?

And secondly, given the fact that this guy had mental problems going back to 2000, how is it possible that a guy in his state of mind could have tricked the FBI for so long in thinking it was somebody else? Or at least not him?

The first question...

TAYLOR: There's no evidence to indicate anything like that.

With respect to the second question, no. As I said, the evidence was followed by the FBI, they conducted an exhaustive investigation, narrowing the universe. Eventually, as I said, the key breakthrough was the science that then focused their attention laser-like on to that flask and the person who had control of that flask, and the person who made spores in that flask.

And then furthermore, as the investigation continues, we learned we can exclude others. We learned about the (INAUDIBLE) and his expertise in using that, and how that could have been used to dry those spores.

QUESTION: But you make the case that he was coming on the edge. How could a guy in his fragile state, as you describe it in these papers, for years, you know, alcoholism, mental problems, paranoid, delusional, things they describe, how could he get away with this for so long?

TAYLOR: Well, I'm not going to speculate on how. I can't get in his mind.

I think what you're asking sort of answers the question itself. He had been this way for a number of years, going back for quite a number of years, and still able to carry on his professional life at (INAUDIBLE).


MICKEY MCCARTER, "HOMELAND SECURITY TODAY": Sir, Mickey McCarter, "Homeland Security Today."

The scientific breakthroughs that we're discussing here, what will they mean for future investigations into sort of a similar situation, anthrax or bioterror?


PERISCHINI: Well, I think first. as we displayed in this case, the ability to use DNA to track this spore or the anthrax that was used is significant. Now, we do have yet -- the FBI lab has to come out with publications. We were prepared to use this analysis if we went to trial. So this is a major development, it's a significant development.

And we talk about the time frame that has taken to develop that DNA. But when you think about the universe of samples and the testing and the procedures and the verification that was done, this is a huge development, not just for the FBI, but all of us in law enforcement.

Again, we faced a weapon which we had never, ever faced before in our life. And an inability to trace that evidence such as we do with either DNA or firearms or fingerprints. This is, I think, a significant development, and kudos to the lab folks that helped.

QUESTION: When will the new research be published?

PERISCHINI: I'm not going to comment on when the publications and the process will come out, but the FBI lab will do that accordingly.

QUESTION: Mr. Secretary, could you talk a little more about meeting with the families today? Just a little bit about the meeting with the families?

TAYLOR: Let me add something on the science.

It's important that the science was developed, but also, it's been validated. That it's something that's scientifically approved that can be used going forward in investigations to bring cases. And while the breakthrough came in 2005, there was an additional piece of validation regarding another assay that didn't take place until 2007.

Now, yes, sir?

QUESTION: Can you just talk a little more about the meeting with the families? I think this was the first time that they all came from across the country and (INAUDIBLE) the FBI. Can you just talk a little bit more about -- the meeting went over two hours. Did they seem satisfied with the explanation?

And then what's the follow-up? Because some of them are saying they still have more questions, and they're not quite knowing that this one person could do all these things to all these -- so what assurance did you have for some of the families who could not come to watch (INAUDIBLE)?

PERISCHINI: Well, I think as we started this conference today, the primary mission for us was to sit with the families. And FBI Director Mueller personally provided them the briefing, was there for about two hours.

I think it was an outstanding opportunity for us to put forth the documents, to have the ability to show them what we believe to be the evidence. And as I said earlier, it has been a long time, seven years. And because of our rules, because of the investigative steps, we could not disclose them, that evidence. So, I'm not going to characterize how it was received or the mood of these individuals. I think it was important for all of us, and the investigative team was all there present. I think I'd clarify it as a moving day for all of us, very important in this investigation to bring closure.

QUESTION: Yes. I have a two-part question.

TAYLOR: Yes, in the back.

QUESTION: Yes. One...

BLITZER: So there you see the U.S. government making the case against Dr. Bruce Ivins, the biological weapons researcher who committed suicide last week. The U.S. government now saying that he was solely responsible for killing five people in those 2001 anthrax attacks, attacks that also sickened more than a dozen other people and terrified the nation, as a lot of us, of course, remember.

Six points they're referring to. Specifically, that he had genetically unique material involved in this anthrax attack; that Ivins had the knowledge to create the anthrax spores that were used; that Ivins worked long and odd hours in the days before the attacks; that Ivins made statements suggesting his own guilt; that he had a history of mental health problems; and that he frequently mailed packages under assumed names,; among other pieces of the evidence they say that point the finger directly at Dr. Bruce Ivins.

Jeanne Meserve, our homeland security correspondent, has been listening, has been watching, as has Jeff Toobin, our senior legal analyst.

Jeanne, first to you.

It's a circumstantial case. They themselves acknowledge this, but they say they're convinced he would have been found guilty of these murders if it had gone to trial.

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: That's right. They say they have compelling evidence here. They point out that circumstantial evidence is often used in a courtroom to win a case, and they stated the opinion that had they been able to present this evidence to a jury, they would have won the case.

You ticked off some of the principal points that they made. There are even more details in some of the paperwork they released today.

They called it a "chain of evidentiary items that lead to one conclusion." That conclusion is that Dr. Bruce Ivins was the one who mailed these anthrax letters.

We're waiting to hear from Ivins' lawyers, family members and others to see if there is still some skepticism about this case.

BLITZER: There has been, at least going into today, Jeanne, as you know.

Jeff Toobin, what do you think? You're a former U.S. attorney yourself. So you know something about circumstantial evidence.

JEFFREY TOOBIN, CNN SR. LEGAL ANALYST: Well, there's certainly nothing wrong with circumstantial evidence, and the jails are full of people convicted on circumstantial evidence. However, you know, this is not an open and shut case.

He very well may be, Dr. Ivins, the guilty party. But if I can just summarize the evidence, there is evidence of access to this very unusual material, this particular kind of anthrax. And there is evidence of eccentric behavior. Those may add up to guilt, but I would certainly want to hear a defense attorney attack this evidence.

This special test that narrowed down the anthrax to the anthrax that Ivins had access to, that's never been used in a courtroom before, as I understand it. That was invented solely for the purpose of this investigation. That needs to be tested on how reliable it is. So, Ivins may well be guilty, but this is not, I don't think, an open and shut case, and it wouldn't have been in court.

BLITZER: And what's raising even further concerns, as you know, Jeff, is the fact that another scientist at that same weapons lab, Dr. Steven Hatfill, was publicly identified as a person of interest in this investigation, and only within the past few weeks did they give him basically almost $6 million to settle this case and to make it go away after they acknowledged that he had nothing to do with it.

TOOBIN: Which certainly raises questions about the quality of this investigation and whether the government did a good job.

I think it's important to emphasize just how rare it is for the government to give $6 million to a suspect in a criminal case, essentially apologizing for a false accusation. That is something that virtually never happens in the legal system.

So this was a damaged investigation from the very beginning. Again, that doesn't mean that they didn't finally get the right guy. And we are never going to have a trial of Ivins where both sides test the evidence. That's going to be a source of frustration to people who want a final answer in the legal system, because we're just not going to get one.

BLITZER: Good point. All right, Jeff. Stand by.

Jeanne, stand by as well, because we're going to continue our coverage on this.

I want to check in though with Jack Cafferty. He's got "The Cafferty File" today.

It was a sensational, sensational case, Jack. And you know there are going to be questions out there for a long time.

JACK CAFFERTY, CNN ANCHOR: Well, if he was the right guy, at least maybe there won't be any more of those anthrax attacks.

Will the Internet become John McCain's grocery store scanner moment? Remember how the first President Bush was awestruck by a grocery score scanner, that little gizmo that tells you the price of your Cheese Whiz? The president of the United States, with cameras rolling, was simply beside himself.

You would think one episode like that would be enough. Now we have a guy who wants to be president that doesn't know how to use a computer.

Two years ago, John McCain expressed amazement that his wife could order movie tickets online, something people have been doing for years. He called her a wizard at the time and admitted he was a Neanderthal, his word, when it comes to computers.

Dear Senator McCain: Computer technology and the Internet have changed the world. And the fact that you don't know much about either one suggests you're in some sort of a time warp. Translate that, old.

Sensing the risk of being perceived as a fossil, McCain recently told the "San Francisco Chronicle" he understands the importance of the computer and blogs, that he's using the computer more and more every day. McCain says that doesn't mean he has to e-mail people though. He reads e-mails, he says. His staff is constantly showing him e-mails during the day.

Grocery store scanners, computers, and the Internet, these are the ingredients of everyday life for the overwhelming majority of Americans. For a man who wants to be president to admit that he's pretty much clueless about some of these things feeds into the perception that old, rich, white Republicans are out of touch. They have no idea what the average American's life is like.

For the last 26 years, John McCain has lived inside the cocoon of the United States Senate and his wife's money.

Here's the question: How important is it for the next president to understand computer technology? Go to You can post a comment on my blog -- Wolf.

BLITZER: Jack, thank you. We'll check back with you shortly.

John McCain ally Rudy Giuliani has a new line of criticism against Barack Obama. Giuliani says Obama, not McCain, is prepared to take America back to the past. Stand by for my one-on one interview with the former New York City mayor.

And there's a verdict today against Osama bin Laden's former driver accused of helping al Qaeda.

And in their own words. Both Senators Obama and McCain on the pocketbook issues voters care about the most.

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


BLITZER: Supporters of John McCain and Barack Obama say the other candidate will bring political and economic gloom and doom if elected. But who do you think is really risky?

Our brand new CNN/Opinion Research Corporation poll shows many of you think they'd both be risky. Fifty-seven percent for Obama, 54 percent for McCain. But McCain's campaign would surely like those numbers to change in McCain's favor.

Let's go to CNN's Ed Henry. He has more -- Ed.

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Wolf, while Barack Obama has tried to bill himself as the candidate of change, John McCain is trying to seize that mantle back.


HENRY (voice over): A new one-two punch from John McCain.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: The cost of everything is going up. And in the face of this, Washington is on vacation.

HENRY: First, McCain is on the attack, charging government is broken and Barack Obama is too inexperienced to fix it.

MCCAIN: My opponent, Senator Obama, opposes both storage and reprocessing of spent nuclear fuel. He opposes offshore drilling immediately. And he's out of touch.

HENRY: At the same time, McCain is trying to present a positive agenda, making the case he has better plans to improve the economy and solve the energy problem.

MCCAIN: We need to crack down on those who have abused our credit market and caused this housing decline. And we need to take action to support American businesses so that we can stop jobs from going overseas.

HENRY: A tricky balancing act for McCain, who may come across as too negative. He's walking that same fine line in a new ad that again charges Obama is a celebrity, but with a forward-looking twist.


CROWD: Obama! Obama! Obama!

NARRATOR: Is the biggest celebrity in the world ready to help your family? The real Obama promises higher taxes, more government spending. So, fewer jobs.

Renewable energy to transform our economy, create jobs and energy independence, that's John McCain.

(END VIDEO CLIP) HENRY: This ad is toned down. No images of Paris Hilton that were in last week's ad and prompted so much outrage in the Obama camp. Nevertheless, the previous celebrity ad has sparked a humorous response from none other than Paris Hilton.

PARIS HILTON, SOCIALITE: Hey, America, I'm Paris Hilton, and I'm a celebrity, too. Only I'm not from the olden days, and I'm not promising change like that other guy. I'm just hot.


HENRY: Trying to go positive and negative at the same time may be a tough balancing act for McCain. Whenever he attacks Washington, Obama reminds audiences that Senator McCain has been in Washington for 26 years. The challenge for McCain is to restore his old reputation as a maverick, not an insider -- Wolf.

BLITZER: All right, Ed. Thank you.

Ed Henry covering the McCain campaign for us.

Barack Obama did something today that has a lot of people buzzing. He campaigned with the Indiana senator, Evan Bayh, a possible Obama running mate.

Let's get more from our Senior Political Correspondent Candy Crowley. She was there.

You're watching the story from Chicago now, Candy. What are we hearing about all this VP buzz?

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Well, and that's exactly what it is at this point. As one Obama adviser said to me, listen, the people who actually know what's going on aren't saying anything.

But you are right. I mean, today in Indiana, the papers were full of talk about Obama-Bayh as a possible ticket.

Bayh, Evan Bayh, of course, a very famous name in Indiana. Not just Evan Bayh who is also a former governor and a senator, but his father, who was a long-time senator. So that is a very big name in Indiana.

He wouldn't bite, of course, today, when I asked him several times whether he was being vetted, whether he thought he would be on the ticket. I finally said to him, "Well, do you think in very Republican Indiana, an Indianan on the ticket would help Barack Obama?" And here's what he said.


SEN. EVAN BAYH (D), INDIANA: Well, I would like to think that kind of thing wouldn't hurt his chances. But on his own, without any help from a native son or daughter, he is competitive in Indiana, and it's because of what he stands for, who he is, and the desperate need for change and a better direction in Washington, rather than four more years of the same old thing.


CROWLEY: So, very much on target, Evan Bayh, which is always a good thing if you're looking for a vice presidential candidate. But as you well know, Wolf, this conversation moves from day to day.

Last week, we were talking about Virginia Governor Tim Kaine. So, today the flavor of the day obviously is Evan Bayh. But now Barack Obama has moved on. We'll see who else he campaigns with.

BLITZER: And we'll probably get some more names in the coming days as well.

Candy, thanks very much.

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

Happening now, you likely have not seen the small cells for detaining Iraqi prisoners until now. CNN obtains pictures of these boxes so small that some people demand to know how anyone stuffed inside could be treated humanely.

Stand by for this story.

He's said to be on Barack Obama's vice presidential short list, but the Virginia governor, Tim Kaine, is short on some foreign policy, national security experience. I'll ask him which country he thinks is the biggest threat to the United States right now.

And some Mexican drug cartels are using illegal immigrants to grow marijuana far away from civilization, but right on public land in California.

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

An eye-opening new report about cash pouring into Iraq. The government -- the General Accounting Office says $32 billion of America's dollars have been spent on reconstruction in Iraq over the past five years. That's out of the $48 billion approved by Congress to date.

But at the same time, Iraq is now raking in huge, huge oil profits, tens of billions of dollars. And many people in this country say that's an outrage, that the Iraqis are not paying for much of their own reconstruction, that Uncle Sam is still paying for almost everything.

Let's go to Brianna Keilar. She's working the story for us.

The high price of oil generating a lot of revenue for the Iraqis, but they're sitting on it. They've got the money in a bank, and Uncle Sam is still paying the bills -- Brianna.

BRIANNA KEILAR, CNN CORRESPONDENT: Yes, Wolf. And before the U.S. invaded Iraq, the Bush administration said that Iraq would pay for its reconstruction with oil revenue. Obviously that hasn't happened.

The U.S. has approved $48 billion to spend on reconstruction in Iraq since 2003. But now with the skyrocketing price of oil, Iraq is taking in right now billions of dollars in oil revenue. And, according to this new government report, Iraq could rack up a surplus of up to $80 billion by the end of this year.

So, why, then, is the U.S. contributing still to reconstruction in Iraq? Well, members of Congress, like Senator Carl Levin, who is chairman of the Senate Armed Services Committee, is outraged over that.


SEN. CARL LEVIN (D-MI), ARMED SERVICES COMMITTEE CHAIRMAN: This is not rocket science. They have got tens of billions of dollars of surplus in banks around the world, $10 billion in American banks alone. They wrote a check to get that money into the bank. They could write a check to reimburse us for these reconstruction costs.


KEILAR: Levin wants to include a provision to end U.S. funding of reconstruction for the most part in a defense bill. But that bill is currently stalled in the Senate.

Spokesman Tony Fratto from the White House responded to this new government report, saying -- quote -- "Iraqis should and will be spending a whole lot more of their money, and we will be spending a whole lot less U.S. money going forward." Fratto says that Iraq is shouldering quite a good burden now when it comes to reconstruction costs, spending $10 for every U.S. dollar for reconstruction this year -- Wolf.

BLITZER: Well, what about what Senator Levin wants and a lot of other people want, Brianna, for the Iraqis to start reimbursing American taxpayers for the billions, hundreds of billions, of dollars that we have already spent?

KEILAR: Well, Wolf, I posed that question to Tony Fratto. He said, basically, he doesn't think that it's appropriate. That's the White House perspective. It's not appropriate to deal ask for -- appropriate way to deal with Iraq to ask for a reimbursement. He said the best reimbursement is to have a strong ally in the region to ensure the safety of American people -- Wolf.

BLITZER: All right, Brianna, thank you.

John McCain is sharpening his focus on the economy, on high gas prices. But the Iraq war and McCain's support for the military surge remains central issues for his campaign.


BLITZER: And joining us now, the former mayor of New York, Rudy Giuliani, himself a former presidential candidate and strong supporter of Senator McCain right now.

Thanks for coming in.


BLITZER: A shocking General Accounting Office report that just came out, how much money the Iraqis are taking in, thanks to the large -- the high price of oil.

I want you to listen to Senator Obama speaking about this today.


SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: You know, if you need one more example of what's wrong with our energy policy or George Bush's policies in general, there's a new report today some of you may have read in the newspaper. Iraq has been getting a windfall because of rising oil prices. They have a $79 billion budget surplus.


BLITZER: And the GAO says, that money is in the bank. They're spending a tiny, tiny bit of it. The United States is still spending about $12 billion a month.

Here's the question. Are American taxpayers right now being played for suckers?

GIULIANI: Well, I think the reality is that that's an opportunity. It's an opportunity for us to work with Iraq to get them to use that money, or more of that money, for their own infrastructure, to kind of push them in that direction.

It's kind of silly, though, for Barack Obama to suggest that that's the cause of our energy crisis.


GIULIANI: I mean, the reality is...


BLITZER: ... a lot of oil. And they could make that oil available to the United States at a discount price.

GIULIANI: Well, that would be very nice, and that would help. It would also help if Barack Obama would support offshore drilling. It would also help if he would support nuclear power. It would help if he had a really comprehensive program, instead of saying no to basically everything.

BLITZER: But you know what? People hear -- people hear that the Iraqis...

GIULIANI: So, it's kind of -- it's kind of like -- it's kind of like deflecting. And I think... BLITZER: But you're -- you're a politician. People hear the Iraqis have, what, $80 billion simply lying around. They're making a windfall on all this oil that they're exporting.


BLITZER: And the United States is still footing the bill, basically, for everything they need.

GIULIANI: Great opportunity -- great opportunity for us to lean on them more to foot more of the bill.

BLITZER: Should they start paying us back?

GIULIANI: Sure. No, they should start paying for more of the costs.

BLITZER: Should they start paying the United States back, the $700 billion the United States taxpayers have spent...

GIULIANI: Personal...

BLITZER: ... since the war started.

GIULIANI: ... I think the better way to handle this is for them to take over a much larger percentage of the expenses that are taking place right now.

I think that would be a very sensible thing to do. There's a good opportunity for rearrangement of that. It doesn't make sense, though...


BLITZER: But, even these so-called Sons of Iraq, these Sunni former insurgents, about 90,000 of them...


BLITZER: ... they're now on the U.S. government payroll. We're paying them every month, according to General Petraeus, about $200 million a year. The United States is paying them to be quiet, to be supportive. Why aren't the Iraqis paying them?

GIULIANI: Maybe they should. And maybe this is a good opportunity to move that over to their side of the ledger and have them pick up more of the expenses.

In a way, it shows that things are working in Iraq.

BLITZER: Should...


GIULIANI: And let's take advantage of that.


GIULIANI: But the point that I'm making it, it really is a demagoguery to try to make that the cause of our energy...


BLITZER: Well, he's not making it the cause, but he's saying it's one issue that could certainly help the U.S., if the Iraqis made that oil available, either for free or at a discount.


GIULIANI: It kind of gets him off the hook, though, for the bigger issues, where he's basically been obstructionist, offshore drilling and -- and nuclear power.

BLITZER: Should Senator McCain -- should Senator McCain be -- should Senator McCain -- he spoke out about on this GAO report today. Should Senator McCain be speaking out and telling the Iraqis, you know what, this is simply unacceptable?

GIULIANI: I think it's something that should be -- become part of the dealings between us and Iraq. I think Iraq should take over more of the responsibility for this.

But, as I said before, I think it's really insulting the intelligence of the American people to kind of make it part of our energy crisis, when there are far bigger issues involved.

BLITZER: Here's another issue that Senator Obama raised today, criticizing Senator McCain.

Listen to this.


OBAMA: Senator McCain's energy plan reads like an early Christmas list for oil and gas lobbyists. It's no wonder, because many of his top advisers are former oil and gas lobbyists.


BLITZER: All right, you want to respond to that charge?

OBAMA: Sure. The guy who voted for the big subsidies for the oil companies was Barack Obama. John McCain voted against it, when they had a chance to vote.

So, I think this is, again, part of the sort of feint strategy, to sort of push things off...

BLITZER: You're referring to the 2006 legislation, which President Bush pushed for, McCain opposed. Obama supported it because it did have what he called some environmentally sound proposals in it to...


GIULIANI: Look, John -- John McCain was in favor of environmental -- an environmental approach to oil and gas before Barack Obama was, I think, in the state legislature, I mean, going back in the 1990s. So, this is an issue on which I think John McCain wins the battle.

I think he's winning it on energy in general, which is why I think Barack Obama is doing this kind of demagoguery.

BLITZER: I guess the -- one of the biggest criticisms that Obama is making of McCain is, this -- the system is broken right now. The energy -- there's been no serious effort over the past 30 years to find -- to make America energy-independent, to wean the addiction from Middle East oil off.


BLITZER: And he says, of those past 30 years, McCain has been in Washington for 26. And he says McCain has done nothing to -- to ease this problem on the United States.

GIULIANI: Well, actually, he's the one that's opposing the things that would -- that would, in fact, give us some degree of energy diversity, energy independence.

It's true. For the last 30 years, we haven't licensed a nuclear power plant. France is 80 percent nuclear. China is building 40 nuclear power plants. McCain proposes to bring 45 nuclear power plants. Obama is still thinking about it.

He is the one who actually wants to take us back to the past. McCain has talked about opening up offshore drilling. Obama opposes that. He's the one who would keep us exactly where we are now. And John has shown the independence to disagree with the president, when he disagrees, and agree with him when he does.

So, I think, actually, on this issue, this is the reason why I think the polls are so close, and McCain is gaining. I think John McCain is outlining a -- a -- an energy policy that would break us from the past. And I think Obama is talking about the same old thing, basically, Dr. No.

BLITZER: I will ask you the same question I asked Mitt Romney, yesterday.

Is there anything over the 26 years he's been in Washington that you can point to, Senator McCain, that has taken the lead in trying to achieve energy independence?

GIULIANI: Sure. He made the -- he made the -- certainly, the first Republican, one of the first senators to be in favor of cap-and- trade, going back to the 1990s. Along with Senator Lieberman, he helped to craft the legislation that's been proposed several times.

I mean, John has -- has taken the lead in energy over and over again, again, before Barack Obama I think, was in the state legislature.

BLITZER: At least you had an answer for that one. When I asked Mitt Romney, yesterday, he says, he's not a historian, and he's unfamiliar...

GIULIANI: Maybe I watched -- maybe I watched your show today.

BLITZER: Maybe you...



BLITZER: ... at least have a good answer.

Mayor, thanks for coming in.

GIULIANI: Thank you. Thank you. Good to see you, Wolf.


BLITZER: Michelle Obama talks to military families today. That's ahead in our "Strategy Session."

Also, every American with a credit card or a debit card should be worried right now -- details on one of the biggest I.D. thefts in the country -- 41 million card numbers have been stolen.

And people around the world have followed the case of the missing Madeleine McCann. Now there's something that happened that the girls' parents consider -- and I'm quoting now -- "one of the scandals of this whole case."

We will update you -- right here in THE SITUATION ROOM.


BLITZER: Carol Costello is off today. Fredricka Whitfield is monitoring many other important stories incoming to THE SITUATION ROOM right now.

Hi, Fred. What is going on?

FREDRICKA WHITFIELD, CNN CORRESPONDENT: Hello to you, Wolf, and everybody.

Osama bin Laden's former driver found guilty -- a military jury at Guantanamo Bay convicted Salim Hamdan of supporting al Qaeda in the 9/11 attacks. But the jury found him not guilty of conspiring to help al Qaeda plan the attacks. The White House says it is pleased with the verdict. Hamdan now faces the possibility of life in prison.

Every American with a credit or debit card should be worried. Officials say they have busted up what they believe to be the largest hacking and identity theft case ever prosecuted by the Justice Department. An international group of hackers allegedly broke into nine retailers' computer networks and stole more than 40 million credit and debit card numbers.

They allegedly then sold that information. Eleven people have been indicted. The stores include T.J. Maxx, B.J.'s Wholesale, OfficeMax, Barnes & Noble, and Sports Authority.

And you're not welcome here. That's what China tells an American Olympic gold medalist -- 2006 medalist Joey Cheek was set to go to the Beijing Olympics to push for China to help make peace in Sudan's Darfur. But China has revoked his visa without explanation.

And a spokesman for missing Madeleine McCann's parents called it a scandal. They say they have only recently learned of a possible sighting of the child just after she disappeared from a Portuguese resort back in 2007. A Dutch woman says she saw a little girl in Amsterdam who called herself Maddie and said she was snatched from her mother. The family is not clear if the Portuguese police actually pursued that tip friend

BLITZER: Fred, thanks very much.

And Michelle Obama is visiting with military wives today. In our "Strategy Session," we will talk about that, how the troops may view her husband if he becomes commander in chief.

Plus, a veteran journalist's shocking allegations about the president's justification for war in Iraq. Ron Suskind says his book contains some explosive information -- it certainly does -- that he says could prove to be worse than Watergate. Stand by for my one--one interview with Ron Suskind. That's coming up.

And a dream come true for some dog owners -- you can now pay to have a carbon copy of the pet you lost. It's a reality right now.

Stay with us.


BLITZER: Today, Barack Obama's wife did something that involved both compassion and strategy. She spent part of the day with U.S. military families. Michelle Obama listened to the burdens they face as their spouses and loved ones serve in Iraq and Afghanistan.

Here's part of what she said.


MICHELLE OBAMA, WIFE OF SENATOR BARACK OBAMA: You're not asking for government to solve all your problems. You're just asking for a Washington that understands what's happening to our military families and the variety of challenges that you face as part of your extraordinary commitment to this country. That's all you're asking for.

My husband, Barack Obama, does understand, in a very deep way. And the commitment America must make to our military families, he knows that, because, without that kind of commitment, he knows that he might not even be here today.


BLITZER: Michelle Obama's courting of military families stops today's "Strategy Session."

Joining us, our CNN political contributor Paul Begala -- he's a Democratic strategist -- and Republican strategist Alex Castellanos.

Guys, thanks very much.

It's a pretty smart strategy, for her to go out to Norfolk and meet with these military families.

PAUL BEGALA, CNN POLITICAL ANALYST: I love seeing Michelle Obama there. It shows respect to the culture of military families. I married into one. My wife's dad was a career Army officer.

And, you know, you don't have to agree with folks on every issue to show respect for the highest form of patriotism that those families show their country. I think it's wonderful that Michelle is doing that. And it's not -- it's not even necessarily a political thing. I mean, it's a values thing.

BLITZER: Because a lot of people just assume that John McCain, a decorated war hero, a former POW, he's going to do incredibly well with military, military families, and Barack Obama, who never served in the military family, won't.

ALEX CASTELLANOS, CNN POLITICAL CONTRIBUTOR: Score it as a plus, I think, for -- for the Obama campaign.

You know, they don't hit many false notes in their campaign. It's been going great. One of the few was when they scheduled a visit to see the wounded soldiers in Europe, and then canceled that visit. This kind of thing makes up for it. I think it's -- it's a plus for them.

BLITZER: He was very well received, though, in Iraq and Afghanistan, the pictures we saw and all the pool reports we saw when he was meeting with soldiers and Marines on the battlefield. He was pretty well received.


CASTELLANOS: Yes. But you know how it is, Wolf. It's a -- good news is not news, only the bad news. It's only when he skipped that hospital visit did he make news.

And I think today is a step trying to rehabilitate that, and a productive one.

BEGALA: The myth of him blowing off the troops at Landstuhl...

BLITZER: In Germany.

BEGALA: ... the hospital in Germany is just that, a myth. It's been set straight. Responsible journalists have looked at it.

And, of course, his campaign was told this would be treated like a political event. Please don't politicize our hospital.


CASTELLANOS: But it was a campaign misstep to schedule it, and then cancel it, and from a campaign.


CASTELLANOS: Yes, from a campaign that, frankly, hasn't made that many mistakes.

BEGALA: But I...


BLITZER: And what he's saying, which is a fair point, that the advance people -- if there was a problem with the military about the political plane coming in, they should have never scheduled it to begin with. Then they would have never had to cancel it.

BEGALA: Right.

But what I think Michelle Obama is saying today is a very powerful message. You know, people won't vote for you if they haven't met you, right? So, she's going to into this community.

BLITZER: It's a smart strategy.

BEGALA: And his record, by the way -- Barack's record on military benefits, education, this G.I. bill of rights that -- that Senator Webb passed, is better than McCain's.

BLITZER: Alex, you -- you just wrote a piece, a very tough piece, on Senator Obama. Among other things, you said that he has no core.

What do you mean by that?


CASTELLANOS: Well, we certainly don't know what it is. He's got a problem, that he's young, he's inexperienced. And, so, we don't really know what he would do.

You want to know what he believes in, because in an uncertain world in which we live, you want to know, if a test comes, if a critical moment,what would a president do. John McCain has an advantage. He's been around a long time. I think Paul's writing a book about this.

And, so -- and we have seen him tested. So, in a moment of stress for the country, when you need presidential leadership, you have a sense, hey, I know this guy. And that's why McCain can change positions on an issue and say, you know, well, we still know who this guy is. Barack Obama is a little bit like that -- you know, the bright, shiny packaging on a Christmas present. We get all excited at first, but, eventually, you want to know what's inside. And we still don't.

BEGALA: Yes, I think we know what's inside of Barack Obama. It's a heart built for service.

This is a guy, the first African-American president of "The Harvard Law Review," could have made millions on Wall Street or in a legal practice. He went in as a community organizer.

Now, if I was Barack Obama, though, not only would I try to tell that story, but I think his campaign, more importantly, has to show the core of John McCain. Alex is right. McCain has a core. It's called George W. Bush. At his core, McCain is a third term of Bush.

If Obama's campaign will do more to define that core of McCain as Bush, then I think he's got a better chance of winning the election.

BLITZER: Even though he's disagreed with Bush on a lot of substantive issues?

BEGALA: Not a lot, 91 percent of the time over the Bush presidency, 91 percent of the time. Now, if a guy bats right-handed 91 percent of the time, do we call him a left-handed hitter? No. He's -- 91 percent of the time. I mean, come on. I don't agree with my wife 91 percent of the time. Shoot, I'm wrong more than that.

BLITZER: That's -- that's one of the main arguments of the Obama campaign. If you like eight years of Bush, vote for McCain.

CASTELLANOS: And, sure, they would much rather run against George Bush than John McCain, because John McCain's hard to beat.

Look, there recently was a survey in which they tested Barack Obama running against George Bush, and Barack Obama running against John McCain. You know what? John McCain was in a much -- a dead heat in that race against Obama. Bush was losing by 20 points. Why? Because the American people understand, John McCain's a maverick. He's different. He speaks his own mind.


CASTELLANOS: And that's the difference.

BLITZER: Do you agree the Republicans lucked out that McCain is the nominee?

BEGALA: He's by far their strongest nominee. But this is why it's all the more important for the Obama campaign to define McCain. If this campaign becomes only a referendum on Barack Obama, that's bad for Barack.



BEGALA: He needs to make it a referendum on John McCain and George Bush.

BLITZER: All right. We have got to leave it there, guys.

CASTELLANOS: Good to see you.

BLITZER: Good work. Thank you.

The competition during the Olympics isn't all about sports. There will be some big-time ad wars between the presidential candidates -- that story coming up.

And he's on the short list for vice president -- coming up, the Virginia governor, Tim Kaine. He's live. He's standing by to join us right here in THE SITUATION ROOM.

And five puppies all genetically identical. A California woman has her favorite pet cloned. But it wasn't cheap.


BLITZER: On our "Political Ticker" today: new evidence the economy is issue number one for the voters by a wide margin.

Our brand-new CNN/Opinion Research Corporation poll shows, 48 percent of registered voters say the economy is the most important issue in choosing a president. The Iraq war is a distant second at 18 percent. In November of 2007, Iraq was almost as important to voters as the economy, trailing by just one percentage point.

Stay tuned for an unusual competition when the Beijing Olympic Games get under way Friday, an ad race between John McCain and Barack Obama. The McCain camp says it's planning to run $6 million worth of TV ads on NBC broadcasts and cable channels during the Summer Games. The Obama camp signaled a few weeks ago it would buy some $5 million worth of airtime during the Olympics.

Remember, for the latest political news any time, you can always check out That's also where you can download our new political screen saver. Might like to do that.

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

CAFFERTY, CNN ANCHOR: The question this hour is: How important is it for the next president to understand computer technology?

Maggie writes: "Knowing how to use a computer is no more important than knowing where the Iraq and Afghanistan borders are, or the difference between a Shiite and a Sunni, or what can be gained by vetoing beer. When you consider all these factors, along with some of the childish ads being run by John McCain, Americans must be real excited about the possibility of where they might be headed in the next four years." Jamie in Florida writes: "A man who doesn't know about the Internet doesn't have a basis upon which to form a position on issues like 'Net neutrality or electronic surveillance in the digital world. We force doctors to keep learning about new techniques in medicine. Shouldn't we force our leaders to know a little about life in America?"

Rudy in New York writes: "No, that's what advisers are for. But it is important for the president not to brag about being computer illiterate. Advisers are supposed to tell him that, too."

Lou writes: "It scares me to think our young and vibrant country may be run by a guy whose only expertise is military training. Our president should be a great leader and a symbol for America. If he can't keep up with basic technology that a second-grader can master, what does that say about us?"

Donna in Colorado Springs: "Of course it's important. Everything is tied to computers. And, if you can't use them, you're pretty much lost. Lost is the operative word, lost and out of touch. Does that sound like anybody we know? Does the name McCain ring a bell?"

Kelly writes: "Ugh, this makes me sick. Although I have other, more significant issues with McCain, this is just a joke. Come on, McCain. My 84-year-old grandmother can use e-mail."

And Will in Maryland writes: "McCain is a Republican. His entire party is pretty happy being stuck in the 1800s."

If you didn't see your e-mail here, you can go to my blog at Look for yours there -- Wolf.

BLITZER: Jack, thank you.

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

Happening now: The federal government lays out its case against the scientist it blames for the anthrax attacks, while friends allege it was FBI harassment that drove him to suicide.

Also, a key front in the battle for the White House -- we're going to talk about Iraq and much more with Barack Obama supporter and possible vice presidential running mate, the Virginia governor, Tim Kaine. He is standing by live.

And he accuses the Bush White House of impeachable offenses. The Pulitzer Prize-winning journalist Ron Suskind, he is here to defend his explosive new book.

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