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Senator Ted Stevens Guilty on All Counts; Obama's Closing Argument; 'Spreading the Wealth' Attack

Aired October 27, 2008 - 16:00   ET


WOLF BLITZER, CNN ANCHOR: There are guilty verdicts that are just coming in right now for Senator Ted Stevens of Alaska only eight days before his bid for re-election. This is breaking news we're following. Stand by. Just coming in right now, two guilty verdicts at least.
Also coming up, Barack Obama tries to close the deal with voters. He's jabbing at John McCain's weak spots in two must-win states for the Republican.

Plus, McCain finds a new way to accuse Barack Obama of preaching socialism. This, as McCain's aides grumble that Sarah Palin is a diva who's watching her own back instead of McCain's.

And Catholics divided and undecided, in Ohio right now, and under the radar campaign to win over a crucial group of voters.

I'm Wolf Blitzer at the CNN Election Center. You're in THE SITUATION ROOM.

But we begin with the verdict of Senator Ted Stevens of Alaska. He's the longest serving Republican in the Senate. Guilty on all counts. That just coming in right now.

Let's get the specific details. Our justice correspondent, Kelli Arena, is in Washington. She's been watching this trial.

Kelli, the stakes for the Republicans pretty significant, because if he loses his bid for re-election, that's one more Democratic seat atop that Democratic majority. But tell us what these jurors decided.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Well, Wolf, it was unanimous, guilty on all seven counts. As you know, the senator was accused of not -- of lying basically on disclosure forms, Senate financial disclosure forms, about gifts and home renovations that he received and did not pay for.

This has been quite a saga, Wolf, as you know. The jury has had some struggles here.

First, they wanted one of the jury members dismissed, saying that she was being disruptive and she was -- violent outbursts and so on. Another juror, her father died during deliberations. So they had to start all over again with an alternate juror today. But it didn't take long for them all to unanimously decide that this senator who has served 40 years in the Senate, the longest-serving Republican, guilty on all counts, Wolf.

And I have to point out that he's not -- there was nothing in this indictment about money for favors or anything like that, no quid pro quo. This is all about not putting down gifts and other services that he received on Senate financial disclosure forms, which as you know are mandatory.

BLITZER: The specific charges included some $250,000 in home renovations and other gifts that he received back in 2001. Let's go through these counts.

On the first, making false statements, you can see right there he was found guilty of count one. That's a specific charge.

Count two, more false statements on that 2001 Senate financial disclosure form where he didn't release the specific gifts that were provided, including a complete tool chest, for example, in his garage and significant electrical work at that home.

Count three and count four, more false statements on that Senate financial disclosure form in 2003, 2004 and 2005. You can see guilty on those forms.

Finally, count seven, 2006, making false statements on those financial disclosure forms.

ARENA: Right.

BLITZER: Presumably -- I don't know what the sentencing guidelines are for conviction on all these charges, but I suspect there's going to be a significant fine, if not jail.

ARENA: Well, Wolf, we do know that each of those charges carried a five-year sentence. It's not likely that the senator would face 35 years in prison. You know, sentencing guidelines allow for much less than that. You know, so we do have to wait and see, you know, what sentencing brings.

And it doesn't necessarily mean that he's out of the Senate either. I mean, he would have to be expelled from the Senate.

Let's say he does win re-election. I mean, of course he's been languishing in this courtroom and not out there campaigning. It's a very, very tight race, as you know, in Alaska. But if he does win re- election, it would be up to the Senate to expel him from that seat. It just doesn't happen automatically.

BLITZER: And presumably at some point, we'll see what this race in Alaska is like. All right. We're going to stay on top of this story, Kelli. Thanks very much.

On all seven counts, all seven counts, found guilty. That would be Ted Stevens, the longest serving Republican in the Senate. We'll get back to that story. But let's move on now.

Only eight days until America votes, and John McCain and Barack Obama are describing their differences in the starkest of terms and crisscrossing two big battleground states. Both candidates began the day in Ohio. McCain stopping in Cleveland and Dayton, Obama in Canton. Then they both hightailed it had to Pennsylvania.

We're standing by for a McCain event in Pottsville and an Obama rally in Pittsburgh. The Democrat is trying to tie his Republican rival to President Bush to the bitter end. Listen to this.


SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: After 21 months and three debates, Senator McCain still has not been able to tell the American people a single major thing he would do differently from George Bush when it comes to the economy. Not one thing.


Senator McCain says we can't spend the next four years waiting for our luck to change, but you understand that the biggest gamble we can take is to embrace the same old Bush/McCain policies that have failed us for the last eight years.


BLITZER: All right. Let's bring in our Suzanne Malveaux. She's in Canton, Ohio, watching the Obama campaign.

He said basically this new speech he delivered today was his closing argument in this, approaching the final week of this campaign. How significantly different was it, Suzanne, from when he began the campaign in Springfield, Illinois, some 20 months or so ago? What was the major difference or differences that he was stressing today as opposed to then?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, they said it was a closing argument, but it was really remarkably similar to what we've seen and what we've heard the last two years. He has been incredibly consistent, if you will, that he is painting himself as the candidate of change, who we heard 18 months, 21 months ago saying, "Yes, we can."

Well, he's twisted it just a bit. He is telling voters what they can do in the week to come.

He is making it very specific and very clear. He is also very much so linking John McCain to George Bush, failed policies, specifically, when it comes to the economy. Take a listen, Wolf.


OBAMA: In one week's time, we can choose an economy that rewards work and creates new jobs and fuels prosperity from the bottom up. In one week, we can choose to invest in health care for our families and education for our kids and renewable energy for our future. In one week, we can choose hope over fear and unity over division, the promise of change over the power of the status quo. (END VIDEO CLIP)

MALVEAUX: And Wolf, one of the things that we are hearing Barack Obama do now in the final week that he was very successful doing about 18, 21 months ago is essentially painting this as a movement, if you will. He says this is not just about a campaign, but it is a common cause, a common purpose, a higher purpose.

It is one of the things that new voters and those who feel disenfranchised have really attached themselves to. It resonates for theme, and it has generated a lot of excitement among those particular groups. And that is the theme that he is really hearkening back on that we have seen in the last year or so, and that is what he is saying is his closing argument going to the final days -- Wolf.

BLITZER: And we're going to be hearing live from him later here in THE SITUATION ROOM. He's got a rally coming up, as you know, in the next hour. We'll go there live. Suzanne, thank you.

By the way, this Friday here in THE SITUATION ROOM, I'll have a one-on-one interview with Senator Barack Obama and you could be part of it. Send us your video questions for Senator Obama at

Last week, I interviewed Senator McCain. This week, Senator Obama on Friday.

Let's get to John McCain right now. He's scrambling to try to narrow Obama's lead in some of those crucial battleground states by hammering him on taxes. McCain also is trying to play up fears that Obama's intent on "spreading the wealth" of middle class voters.

CNN's Ed Henry traveling with McCain in Dayton, Ohio.


ED HENRY, CNN WHITE HOUSE CORRESPONDENT (on-camera): Wolf, no Republican has won the White House without carrying Ohio. So John McCain is trying to claw his way back here with an economic message that he hopes resonates in a state devastated by the financial crisis.

(voice-over): After meeting with his economic advisers in the critical battleground of Ohio, John McCain lashed out at Barack Obama with a final week pitch on taxes that seems to be helping McCain chip away at Obama's lead in key states.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: My approach is to get spending under control and cut taxes and encourage individuals to invest in our markets or buy a home, and to encourage businesses to hire more workers. Senator Obama's approach is to radically increase spending and then raise taxes to pay for it.

HENRY: With Democratic chances of a filibuster-proof Senate increasing, McCain is ramping up his effort to get Republicans to the polls by warning about the dangerous of one party controlling the entire government. MCCAIN: Now, this election comes down to how you want your hard- earned money spent. Do you want to keep it and invest it in your future, or have it taken by the most liberal person to ever run for the presidency, and the Democratic leaders, the most liberal, who have been running Congress for the past two years, Nancy Pelosi and Harry Reid? You know, my friends, this is a dangerous threesome.

HENRY: McCain is also pouncing on a 2001 radio interview in which Obama seemed to express regret that the civil rights movement had not gone further by redistributing wealth in America.

UNIDENTIFIED MALE: The Supreme Court never ventured into the issues of redistribution of wealth and sort of more basic issues of political and economic justice in this society.

HENRY: Fodder for the McCain camp's repeated attack that Obama is preaching socialism.

MCCAIN: That's what change means for the Obama administration, the redistributor. It means taking your money and giving it to someone else.

HENRY (on camera): The Obama camp insists that his comments are being misinterpreted, that he was only talking about redistribution in a narrow legal context, about whether the high court can create a right to an education, for example, or whether that's better for legislatures to handle. But the McCain camp's not buying that explanation, and they plan to continue this message hard -- Wolf.


BLITZER: Ed Henry reporting for us. Thank you. Ed Henry working the story.

Let's check in with Jack. He's got "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Wolf, some of John McCain's own advisers are not happy that his running mate, Governor Sarah Palin, is making a habit now of going off script, off message, off the reservation with some of her comments. Most recently this weekend, when she was talking about that infamous wardrobe thing down there in Florida. The Republicans really don't want to talk about that wardrobe deal. So let's play a little "What if?" here.

What if John McCain had not picked Sarah Palin to be his running mate? Well, for one thing, the Republicans wouldn't have to keep answering questions about spending $150,000 buying clothes for her.

Seriously, what if McCain had picked somebody like, say, Mitt Romney, self-made man, has plenty of his own clothes, has a knowledge of the economy, something currently that the ticket is lacking, sorely lacking? And while Romney probably can't see Russia from his state, he could probably name at least one newspaper that he reads every day. And if he won, he probably wouldn't go trotting off to Washington in January thinking that he was suddenly in charge of the Senate. Or what about Tom Ridge, former Pennsylvania governor, secretary of Homeland Security? The key to victory for McCain or Obama might be in Pennsylvania, where Obama holds a double-digit lead heading into next Tuesday. You think Tom Ridge might have helped McCain with his Pennsylvania problem?

Besides, how much fun would it be if McCain wins to watch Ridge wrap the entire White House in clear plastic sheeting and Duct tape? That would be worth watching.

But McCain chose Sarah Palin, who immediately became a national joke to everybody, except the conservative base of the Republican Party. Even some Republicans are convinced the Palin selection showed a total lack of judgment on McCain's part.

Oh, what about Florida Governor Charlie Crist? Would winning Florida help John McCain? You get the idea here.

Here's the question: Was it a mistake for John McCain to pick Sarah Palin as his running mate?

You can go to Post a comment on my blog -- Wolf.

BLITZER: You're going to get a lot of e-mail, Jack

CAFFERTY: Already have.

BLITZER: Get ready for a lot more. All right. Thank you.

There are certainly some tensions we're hearing within the McCain/Palin camp, and they're spilling over in public. McCain allies are accusing Governor Palin of being a "diva," and worse. We're following up on what appears to be a bitter feud.

Plus, where the presidential race may be heading in the next eight days. There are new polls and new trends on our radar. We'll share them with you.

And a massive new push to court Catholic voters, it's going beyond the traditional debate about abortion to include concerns about racism and a lot more.

Stay with us. Lots of news happening today, right here in THE SITUATION ROOM.


BLITZER: Only eight days to go until the election, and John McCain seemingly has an uphill climb if he's to win the White House.

Our senior Political Analyst Bill Schneider is looking at the brand-new poll numbers that are just coming in.

Bill, are we seeing some late shifts in our so-called Poll of Polls, which are the average of the major polls out there nationally, as well as in the battleground states?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Not really, but we have seen a big shift since the conventions.


SCHNEIDER (voice-over): Our latest Poll of Polls for the national campaign has Barack Obama leading John McCain by eight points. Obama 51 percent, McCain 43, with 6 percent still undecided. About the same as it's been for the last two weeks.

The national Poll of Polls every week since the conventions shows a clear trend. After the conventions, McCain had a very slight lead nationally. By mid-September, Obama had pulled ahead by a few points.

In mid-September, Lehman Brothers failed and the financial crisis began. Obama's lead began to grow.

At the end of September, the market crashed. As the crisis spread, Obama's lead grew bigger.

Since mid-October, his lead has held steady at 8 percentage points. Obama is trying not to sit on that lead --

OBAMA: I feel like we've got a righteous wind in our backs here. But we're going to have to work, we're going to have to struggle.

SCHNEIDER: -- while McCain is not intimidated by it.

MCCAIN: Let me give you the state of the race today. There's 10 days to go and we're a few points down. The pundits have written us off, just like they've done several times before.

SCHNEIDER: We also have polls of polls in several battleground states. They show a similar trend.

In Virginia, McCain was leading in late September. Week by week, Obama gained support. The latest Poll of Polls in Virginia, Obama up seven points.

Ohio? McCain had a small lead in September. By mid-October, Obama had a lead in the low single digits in Ohio, where it has remained.


SCHNEIDER: The financial crisis seems to have moved a lot of voters to make up their minds for Obama. And they haven't changed their minds -- Wolf.

BLITZER: Bill Schneider looking at all the numbers, as he always does. Thank you, Bill.

Let's talk a little bit more about these polls and what they suggest. Senator McCain clearly having very much of an uphill battle. Joining us now, our CNN political contributor, the Republican consultant Alex Castellanos. Alex, thanks very much.

First of all, you've studied polls your whole professional life. How reliable are all of these polls? And I guess there are polls and there are polls. Some presumably more reliable than others. Give us your assessment.

ALEX CASTELLANOS, CNN CONTRIBUTOR: This year, probably less than usual, because this year, we have a changing electorate. The composition of the electorate is something we've never quite seen before.

Polls are based on the last experience. They weight the votes so that you have the same percentage of young people, old people, men, women, et cetera. But this year we're looking at a new composition.

Are we going to have a larger black turnout than usual? Are we going to have more young people voting than usual? No one knows.

And then on top of that this year, it's harder to reach voters with a regular landline telephone than ever. So survey firms are trying to figure out, well, we need to do Internet polling, we need to call people on wireless phones, and we need to call on landlines. The fact is, we have a little bit of a mess this year, and we're going to know much more after the elections about how good the polls were.

BLITZER: But the polls were -- I think in looking back at all those primaries, especially the Democratic primaries, you know, they were pretty much on target. Maybe New Hampshire was a surprise when Hillary Clinton won, but pretty much they were pretty accurate, weren't they?

CASTELLANOS: Just the close elections were the ones that were hard to call. Yes, the primary polls are usually more accurate.

Primary voters are more habitual animals. But a general election, you get a flood of voters that you haven't seen in primaries. Where do they come from? Which groups will turn out more? How effective will the Obama turnout operation be?

One of the things we're seeing, some of these states like Colorado and North Carolina, is that the Obama turnout operation is incredibly powerful. But it seems to be turning out voters that are going to vote anyway. It doesn't seem to be adding a lot to the mix.

We're seeing almost as many Republicans who are intense about voting against Obama as we're seeing Democrats who are intense about voting for him. The intensity is not coming from pro-McCain voters. It's just all about Obama.

MCCAIN: You heard Jack Cafferty's question this hour, was it a mistake for Senator McCain to pick Governor Palin as his running mate? You're a conservative. What do you think? Was it a mistake?

CASTELLANOS: When you're behind eight points in the polls like this and you've got a week to go, there's no decision that was a good decision. And every choice you made was a bad one. It's hard to argue that Sarah Palin was a bad choice. If there hadn't been an economic meltdown, it might have been a genius pick. And I think that's what Bill was just commenting on, that that's what changed this election. So, Sarah Palin did something for McCain that he couldn't do for himself, gave him a message.

You would have thought that in this election John McCain could have captured the mantle of the Washington outsider, the guy who's going to change Washington and get this country going again. It actually took his vice presidential nominee to do that for him.

So, yes, she's eroded since the Katie Couric interview. She's lost support with Independents. She's really just coalescing the base and not reaching across the 50-yard line. In that sense, it has not achieved what I think the campaign hoped she would.

BLITZER: Alex, thanks very much.

Alex Castellanos, he's teaching this year at Harvard at the Kennedy School in Cambridge, Massachusetts.

Private tensions inside the McCain campaign are spilling out into the public. One of Senator McCain's own aides accusing Sarah Palin of being a "diva." So what's going on? We'll find out.

And disorder in the court. A suspected attacker finds himself attacked by a man whose brother is dead. It was all caught on videotape. We'll share it with you. There you see some of it.



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

Happening now, Senator Joe Biden facing an uncomfortable moment on local television. His campaign says the candidate was asked an absurd question by an anchor from that Florida station. We're going to show you part of that interview and assess what happened.

Outrage in Syria. An official says the U.S. carried out what it calls a successful attack inside that country near the Iraqi border. So who was the target and what's the Syrian government saying about this U.S. incursion?

And the actress Jennifer Hudson deals with a family tragedy. We're going to tell you what police now know about the shooting death of three close members of her family.

I'm Wolf Blitzer at the CNN Election Center. You're in THE SITUATION ROOM.

Apparently, some things are not all fine inside John McCain's campaign. We're hearing revelations of infighting over some things Sarah Palin is doing and saying.

Let's go to Dana Bash. She's in Pottsville, Pennsylvania, working the story for us.

We all heard about the $150,000 wardrobe that the Republican National Committee financed for -- from her, but the story has been revived over the weekend. What happened?


Well, Elisabeth Hasselbeck of "The View" was with Sarah Palin yesterday, and they began talking about that story. And, you know, it led to the issue that we were talking about over the weekend, which is the fact of the matter is, the last thing in the world the McCain campaign wants is strain between Sarah Palin and some of McCain's top aides to spill into the public, but it has.

And, Wolf, some of the language that our sources are using with us is exceptional.


BASH (voice-over): In critically important Virginia, Sarah Palin was back on message.

GOV. SARAH PALIN (R-AK), VICE PRESIDENTIAL CANDIDATE: Senator Obama has an ideological commitment to higher taxes.

BASH: That after a weekend where some top McCain aides questioned her judgment and loyalty. Tension had already spilled into the open when she went off script Sunday about $150,000 the Republican National Committee spent to accessorize Palin and her family.

PALIN: Those clothes, they are not my property. Just like the lighting and the staging that everything else that the RNC purchased, I'm not taking them with me. I'm back to wearing my own clothes from my favorite consignment shop in Anchorage, Alaska.


BASH: Palin's aides said she was trying to get the truth out, that she's frugal, not fancy. But some McCain aides told CNN her off- the-cuff comments were unwelcome, because it helps keep the wardrobe story alive, fueling frustration among some McCain advisers that Palin is now looking out more for herself.

"She is a diva," a McCain adviser told CNN this weekend, "playing for her own future, and sees herself as the next leader of the party."

One Palin aide told CNN she may be trying to bust free after a mishandled rollout, limiting her initial press access to high-profile interviews that did not go well.

But, in a sign of the dramatic tension, another source with direct knowledge of Palin's preparation told CNN they had no choice, saying at "Her lack of fundamental understanding of some key issues was dramatic."

Now, dissension inside a presidential ticket is hardly new. To varying degrees, there's been infighting over the years in both parties.

KIKI MCLEAN, FORMER SENIOR CLINTON CAMPAIGN ADVISER: When a campaign's winning, there's less to point fingers and blame about. And when a campaign is losing, it can get pretty ugly.


BASH: Now, Palin aides insist her only agenda is getting elected on November 4. And one senior McCain aide I talked to, Wolf, said that this is what happens when campaigns are behind, finger-pointing and scapegoating -- Wolf.

BLITZER: Dana, thanks very much. We will check back with you shortly.

As we mentioned, both McCain and Obama are visiting Ohio and Pennsylvania today. Those are both key battleground states. So, where else are they spending their time and their money?

Our Internet reporter, Abbi Tatton, is looking at all of this online. What are you seeing, Abbi?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, this is's election tracker. This is going to tell how the candidates are polling in each state, where are they getting money from, where are they spending it, and where are they spending their time.

Let's start with the that, the candidate visits. Here's the map of the states where they have been spending, both of them combined. You're going to see it filling in. The darker the orange, the more visits these two candidates have made to each state.

You will see Ohio, Pennsylvania, Virginia, Missouri, these battleground states populating in this map as the candidates visit them more and more. But it's not just the face time that they're spending in those states. How much time, how much viewers, are they seeing of these candidates when they turn on their television, that's tracked also here as well, the ad spending.

This is John McCain's ad spending. The darker green are the states where he has spent more than $10 million. Pennsylvania is one. Ohio is another. Now, here's where you're going to see the big contrasts. Compare that to Barack Obama's map, and you will see it darken, Obama with his massive war chest spending so much more money in these states on ads. In states like North Carolina, he's outspending him 5-1 -- Wolf.

BLITZER: Abbi, thank you.

The road to the White House certainly winds through Ohio. As we like to say -- and which happens to be true as well -- no Republican has ever won the presidency without winning Ohio. That's why John McCain and Barack Obama are now fighting over every vote, especially those of one key bloc. Our own Mary Snow is in Youngstown, Ohio.

(BEGIN VIDEOTAPE) MARY SNOW, CNN CORRESPONDENT: Wolf, it's estimated that had one out of four voters in Ohio is Catholic. And, here in Youngstown, that number is even higher. Their vote is seen as critical, and there's an intense battle for it.

(voice-over): At Saint Luke Catholic Church, they are united in faith --

UNIDENTIFIED MALE: May the peace of Christ be with you.


SNOW: -- divided on politics, some still deciding how they will vote.

TED RUSSELL, OHIO CATHOLIC VOTER: I am probably on the fence, but I'm leaning towards McCain.

MARY ANN DULAY, OHIO CATHOLIC VOTER: I am a registered Republican, but I haven't always voted straight Republican. And I don't know that I will vote Republican this time either.

SNOW: For voters like Mary Ann Dulay, Youngstown's struggling economy has been an issue ever since the local steel industry died decades ago. Her Catholic faith also plays a role. She takes seriously the church's staunch opposition to abortion, but she's grappling with candidates' stands on other teachings, such as the church's anti-war stance and fighting poverty.

Father Joe Fata says he's gotten more calls now than in the last 20 years from parishioners conflicted about who to vote for. He says, most of the callers are older.

REVEREND JOE FATA, SAINT LUKE CATHOLIC CHURCH: Mostly older. And the question is -- is always, for them, almost about the abortion issue. You know, am I forbidden to vote for so and so, or do I have to vote for so and so?

SNOW: While churches can't endorse candidates, Ohio Catholic groups have traditionally supported broadcasts of anti-abortion ads, like this one. Some Catholic groups take a broader view, aggressively focusing on issues beyond abortion, such as this cable ad showing a priest addressing racism, which is seen as a factor in Ohio.


UNIDENTIFIED MALE: Let us make sure that we vote for our candidates on the basis of their policies, and not for their race.


SNOW: Professor John Green, who studies religion and politics, says, there's an intense under-the-radar campaign, through mail and phone calls, to court Catholics.

JOHN GREEN, PROFESSOR OF POLITICAL SCIENCE, UNIVERSITY OF AKRON: The Republicans have been emphasizing the life issues, questions like abortion and stem cell research. The Democratic mail and contact has stressed social welfare issues, immigration, the need to end the war in Iraq.

SNOW: Because Catholics are torn, Green says it isn't unusual for them to be undecided until the end. And it is that swing vote that is critical.

GREEN: And whichever candidate wins a majority of the white Catholic vote is very likely to carry Ohio.

SNOW (on camera): The latest poll from the Pew Research Center shows that, nationwide, among white Catholics, not including Hispanic, Obama has an edge over McCain, 49 percent to 41 percent -- Wolf.


BLITZER: Mary Snow, in Ohio for us, thank you.

Another day of wild swings out there on the financial markets, but it was far worse overseas. Do investors in this country see glimmers of hope ahead?

And coming up in our "Strategy Session," McCain aides pointing fingers at Sarah Palin. Are they planting seeds of blame for a possible defeat?

And there are new tensions, serious ones, in the Middle East, after a dare -- daring cross-border raid by U.S. forces. We will tell you what's going on -- right here in THE SITUATION ROOM.


BLITZER: We're standing by. We're waiting to hear from Senator Barack Obama and Senator John McCain. They're both getting ready to speak at rallies. We will go there live once they start talking.

But, meantime, another wild ride on Wall Street today, after a massive sell-off in Asian markets, the Dow Jones industrials closing down about 200 points just a short while ago. But investors are -- are grasping for some hopeful stands.

Let's bring in Allan Chernoff. He's tracking the market for us. Allan, it wasn't as bad on Wall Street as it was overseas, even though it went down about 203 points.

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: That's looking at the bright side, certainly, which may be important these days. Certainly, the financial meltdown started here in the U.S. and quickly spread overseas, where it is now far worse.


CHERNOFF (voice-over): The latest wave of frenzied selling sent Asian markets tumbling again. Hong Kong's Hang Seng Index sank nearly 13 percent, Tokyo's benchmark Nikkei index down more than 6 percent, to a 26-year low. The sell-off spread to Europe, where stocks suffered more losses.


CHERNOFF: And that set the Dow industrials for another decline at the opening bell. A few minutes into trading, the index was off 170 points.

But some glimmers of hope emerged. New home sales rose in September, as prices declined. And inventories of new homes fell, essential for the housing market to bottom out. About a dozen regional banks, including KeyCorp and Capital One Financial, they would receive billions of dollars from the U.S. Treasury as part of the bailout program that's sending billions more to the nation's biggest banks.

MICHAEL HOLLAND, HOLLAND AND COMPANY: The U.S. is -- is further along in the problems. It's further along in addressing issues. I think that, both in Asia and in Europe, the regulators there are -- are stepping up to the plate. But they're a little bit behind us.

CHERNOFF: By midday, the Dow was up more than 200 points. But, as the afternoon wore on, the Dow trimmed its gains, an indication of how tough it can be to hold onto a rally when the stock market is in a severe bear market.

PETER BOOCKVAR, EQUITY STRATEGIST, MILLER TABAK: It's baked in a recession. I don't necessarily think it's baked in a fully bad recession. That's where I think that the next -- in 2009, the market is vulnerable to more losses.

CHERNOFF: Indeed, another possible bailout is looming. The White House confirmed it has talked with U.S. automakers about providing them with financial help through the Treasury Department's $700 billion bailout program.


CHERNOFF: While the bailout is intended to help financial firms, all of the automakers have financial divisions. So, that's where the Treasury could funnel billions of dollars -- Wolf.

BLITZER: We will see what happens. Allan, thanks very much.

A lot of second-guessing, meanwhile, inside the McCain team in these, the closing days of this presidential campaign. In our "Strategy Session": questions whether McCain's aides are stepping on the candidate's message by venting their complaints about Sarah Palin.

Plus, is McCain wasting his time in states where Obama is way up in the polls?

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


BLITZER: Most of the presidential candidates are in Pennsylvania right now, getting ready to address crowds. We're going to go there live. We're standing by to hear from Senators Barack Obama and John McCain. We will be right back.


BLITZER: As we just mentioned, we're hearing about some infighting in the McCain campaign regarding Sarah Palin, one McCain aide calling her -- and I'm quoting now -- "a diva," and another criticizing her understanding of the major issues.

Let's discuss in our "Strategy Session." Joining us our CNN political contributor the Democratic strategist James Carville, and conservative commentator Terry Jeffrey. He's editor in chief of the Cybercast News Service.

How unusual, James, is it for this kind of finger-pointing at this late date in a campaign?

JAMES CARVILLE, CNN POLITICAL ANALYST: Well, sometimes in campaigns that are behind, but, you know, my colleague, Mr. Begala and I, wrote a piece in "The Huffington Post" on October 20, and we called on the finger-pointing to begin.

And, boy, has it begun. And people better get out there early. They're starting to blame Palin now. And it's time for the Palin people to get in this game. It's -- already, you have got Bill Kristol pointing fingers. You have got David Brooks. Everybody is out there pointing fingers early, because you need to do that, so blame is assessed.

I think, Terry -- Terry, your people need to get out and set the record straight.

BLITZER: Well, go ahead, Terry. Set the record straight.

TERRY JEFFREY, EDITOR IN CHIEF, CYBERCAST NEWS SERVICE: Hey, Wolf, you know, there's a lot of different types of people that work in a presidential campaign, but I think there's one neat dividing line.

On one side, you have people who are basically loyal to the candidate himself and loyal to the cause. On the other side, you have people who basically work for presidential campaigns the way some lawyers pick clients. You're building a professional resume. You're trying to some make money. The bottom line is, they're mercenaries.

James Carville was famously a guy who was very loyal to Bill Clinton. He would not have leaked this story you guys got of the McCain people going after Palin.

These people were mercenaries. Basically, they're looking out for themselves. They're hurting the cause of the McCain campaign. They're hurting McCain as a candidate. But they're looking out for their own future political careers here.

CARVILLE: Terry is -- Terry is right. But the truth of the matter is, is that the Republicans started this finger-pointing thing. And what happens is, is that everybody's trying to off the blame. And, of course, they always want to blame the campaign staff, which is -- which is really unfair.

But the point is, is, Terry, they're starting to blame the social conservatives. Some fellow by the name of Egan was all over "The New York Times," saying all -- all the educated people are moving away. Then, you have David Brooks. You have David Frum.

I'm just saying, they're -- they're -- these guys are starting to -- starting -- the eggheads are starting to beat up on you guys. And, at some point, there has to be some kind of accountability.

BLITZER: Yes. There's one -- one -- some commentator said -- I don't know remember who, Terry -- he said, this is a war going on inside the McCain campaign, inside the Republican conservative movement, between the eggheads vs. the dittoheads.


JEFFREY: Well, you know, as a -- as a Princeton graduate, I'm not one of the eggheads, I have to say. I side with those Middle American, traditionalist, Ronald Reagan conservatives.

I think there's no doubt about it, that there are -- some people anticipate that McCain will be defeated, and they want to redefine the conservative movement or the Republican Party. Basically, they want to redefine the conservative movement not to be conservative.

And, also, they want to claim as if there's some kind of intellectual superiority to those people who reject fundamental conservative values.

No doubt, one way or another, after the election, there will be intellectual inside the Republican Party and the conservative movement, Wolf.

BLITZER: I believe -- I believe, James, you were that commentator I was referring to.

CARVILLE: I think I was, yes.

BLITZER: And let's talk...

CARVILLE: I think you were.

BLITZER: ... about strategy in these final eight days. They have to make major decisions, specifically John McCain right now, which states he focuses in on -- in on.

And I think he's looking still at New Hampshire, Pennsylvania and -- and Iowa. New Hampshire right now, in our latest poll of polls, the average of the major polls in Pennsylvania, we have Obama up by 10 points, 52-42, in -- in New Hampshire.

In Pennsylvania, same thing, up by 10 points, 51-41, and, in Iowa, up by 13 points, 52-39.

Why bother at this point going to those three states, when you should really be spending your time in Florida, Ohio, Virginia, North Carolina, states where you might have a better chance, where it's much closer?

CARVILLE: Well, they need the electoral votes. I'm sure that they are not there for -- whatever it is, they probably can't -- figure that they can't win without getting Pennsylvania, if you will.

You know, when you're behind in these things -- I have got to -- I have got to say, I have got a great deal of sympathy and admiration for people like Terry and for people who are hanging in there in that campaign.

And I'm being a little mischievous when is I say let the finger- pointing begin, but, you know, all of us in this business have been on the wrong end of a bad cycle. And, you know, you're right. We can second-guess their strategy, but I guess they can't get to 270 without Pennsylvania, because they probably figure that -- you know, that they're way behind in Virginia or Colorado or New Mexico or Nevada or states like that.

So, I mean, they're trying the best they can to get to 270. It's a pretty dismal situation that they're faced with.

BLITZER: What do you think, Terry?

JEFFREY: Well, I basically agree with James.

One way or the other, it's an uphill climb for John McCain to get that Electoral College majority. But if you look at the states where he's been going, Wolf, they do fall into a general sort of -- there's -- New Mexico and Iowa, where he's been, those are states that Bush one time lost. I know they're both very lose, won Iowa by only 10,000 votes.

He's got to hold Florida and Ohio. Wisconsin and Pennsylvania, where they have been campaigning, those are states where Bush made a real play to win, almost did it. Who knows. If -- if something dramatic happens, maybe he could pull off a victory in Pennsylvania. But he's got to fight for those states if he's going to get an Electoral College majority.

CARVILLE: You have to put yourself in a place to, if there's a miracle, that you can get it. But, as you know, after the second debate, I said this race was over. I think I was correct then.

But I don't blame people for trying. You have to fight right to the end. And that's the only way that -- that real professionals know how to do this. And, inside the McCain campaign, they're still struggling to try it to figure a way, if something -- if lightning strikes, they want to have the bottle out there to catch it. And the only way they can catch it is be in places like Pennsylvania and New Hampshire. BLITZER: All right, guys, we have got to leave it right there, good discussion. James Carville, Terry Jeffrey, we will continue this discussion throughout these remaining eight days.

One of the presidential hopefuls is claiming to have a -- have shattered a record. Stand by for a clue about who might be the most long-winded in the race for the White House.

Plus, an eye-popping sort of local TV interview with Joe Biden -- the question that left the stunned Democrat asking, "Are you joking?"

And Sarah Palin reaches out to what one McCain adviser has called the real Virginia. Does she have reach beyond the Republican base?

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


BLITZER: On our "Political Ticker": Barack Obama picked up more than 30 newspaper endorsements over the weekend, including several in the battleground states of Florida, Pennsylvania, Ohio, and New Hampshire. He even nabbed the endorsement of "The Anchorage Daily News" in Sarah Palin's home state of Alaska.

John McCain's latest newspaper endorsements include "The Arizona Republic" in his home state. He also won "The Richmond Times- Dispatch"'s support in the battleground state of Virginia and the endorsement of "The Elko Daily Free Press" in the tossup state of Nevada.

Independent presidential candidate Ralph Nader is claiming to hold a world record for giving the most campaign speeches in a single day. Nader says he spoke for at least 255 minutes in 21 Massachusetts towns this past weekend.

This Friday, by the way, in THE SITUATION ROOM, I will have a one-on-one interview with Senator Barack Obama. And you can be part of it. Send us your video questions for Senator Obama at We will try to ask some of your questions to Senator Obama on Friday.

And, remember, for the latest political news any time, you can always check out

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

CAFFERTY: Three-fourths of Massachusetts still asleep --


CAFFERTY: -- from the Nader marathon.

BLITZER: He's a pretty good speaker, Ralph Nader.


BLITZER: Yes. CAFFERTY: You think so?

BLITZER: I think he's a good speaker, yes.



The question this hour is as follows: Was it a mistake for John McCain to pick Sarah Palin as his running mate?

Anj in California: "It was not putting country first, when a 72 year-old with a history of cancer picks as his successor someone so obviously unqualified for national office. News flash: Competence matters. Quite frankly, selecting Palin is emblematic of every sellout and shoot-from-the-hip-just-like-Bush decision McCain has made since securing his nomination. I don't know how he can even look at himself in the mirror."

Kyle in Washington writes: "Jack, not at all. The mistake was trying to force her into a stereotypical number-two role and placing a muzzle on her. Had the McCain camp let her be Sarah Palin from the start, I think we might be asking this question about big-mouth Biden."

Frank in Columbus, Ohio: "For the brain-dead base of his party, it was the right choice. For the moderate Republican and conservative-leaning independent, it was not. McCain, the gambler, held a decent hand, but he folded to the base. He lost the election the day he announced this preposterous choice as his running mate. At the end of the day, the decision will be seen as the turning point of his campaign. Bad for him, good for America."

Paul writes: "All those other choices" that we had mentioned during the intro "would have been bad for McCain. He needed to excite the base of his party. And she did that. It's all Monday-morning quarterbacking anyway. The truth is that it wouldn't have mattered who McCain picked. His goose in the general was cooked when the financial crisis hit last month. Had that not happened, this would have been a much closer race."

Elliott writes: "Yes, choosing Sarah Palin was a mistake. But it's not because of her lack of experience, her lack of knowledge or her lack of transparency. The biggest problem with the selection of Sarah Palin is that it was extremely polarizing."

And Brendan from in Antonio, Texas writes, "She makes Quayle look like Einstein, and I didn't think that was possible."

If you didn't see your e-mail here, you can go to my blog,

Got a lot of mail. Every time we do a Sarah Palin message, get a lot of mail.

You might find yours there. There are hundreds of them posted -- Wolf.

BLITZER: All right, Jack, thank you.

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