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The Situation Room
White House Ally Backs Bush Tax Cuts; Stimulus In Disguise?; Dems in GOP Districts Face Trouble; U.S. Soldiers Targeted in Two Attacks
Aired September 07, 2010 - 17:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
WOLF BLITZER, HOST: Thanks very much, Rick.
Happening now, it's a major break from President Obama. Just weeks after leaving his post, the former White House budget director now arguing for a temporary extension of the controversial Bush era tax cuts for the wealthy.
Plus, as Ohio goes so goes the nation?
The phrase rings true, as Democrats struggling right now to hold onto critical seats in time for November's mid-term election. The best political team on television is in Ohio right now live with the CNN Election Express. I'll speak also with the chairman of the Democratic Party.
And heightened warnings from top U.S. military officials in Afghanistan as a Florida pastor pushes ahead with plans to burn Qurans on the September 11 anniversary this Saturday.
I'm Wolf Blitzer.
And you're in THE SITUATION ROOM.
The economy is spelling new trouble for President Obama and Democrats on the national stage. Nowhere is that more evident than in Ohio, a state that helped decide the fate of all but two presidential races in the last 100 years. Now with only 56 days left before what's expected to be a highly contentious mid-term election, Ohio's staggering 10.3 unemployment rate is toughening the battle for Democrats already clinging to stay in power. This hour, we're on the ground in Ohio with the best political team on television. They'll be live from the CNN Election Express.
But first, let's go live to the White House, where President Obama's efforts to jump-start the ailing economy are hitting new roadblocks.
A CNN/Opinion Research Corporation poll now shows that more Americans -- 46 percent -- think Republicans can do a better job handling what voters consider to be issue number one, while 43 percent say Democrats. This comes amid new concerns about the administration's proposed plans to end Bush tax cuts for the wealthy from someone who just recently was one of the president's closest economic advisers. The former White House Budget Director, Peter Orszag, writing in "The New York Times" today -- and let me quote -- "No one wants to make an already stagnating jobs market worse over the next year or two, which is exactly what would happen if the cuts expire as planned." We're breaking it all down with our White House correspondent, Dan Lothian, and our chief business correspondent, Ali Velshi.
He's at the CNN Center.
Let's go to the White House first to get reaction.
What are officials saying about Peter Orszag's proposals -- Dan?
DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, White House Spokesman Robert Gibbs today saying that he thinks that Peter Orszag was wearing his Congressional relations hat. In other words, he was laying out a compromise whereby lawmakers might have to do something to help the wealthiest of Americans in order to get a deal done up on Capitol Hill.
Orszag writing, quote, "Higher taxes now would crimp consumer spending, further depressing the already inadequate demand for what firms are capable of producing at full tilt."
Though the bottom line here at the White House is that despite what he has written in that "New York Times" opinion piece, it does not change the president's thinking about tax cuts for the rich.
(BEGIN VIDEO CLIP)
ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: Our viewpoint on this is that -- that we should and must pass legislation that extends the tax cuts for the middle class families. But we cannot afford, in this environment, to -- in our budgetary and fiscal environment -- to extend the tax cuts for those that make more than $250,000 a year.
(END VIDEO CLIP)
LOTHIAN: What's clear here at the White House, though, according to top aides is that they won't say whether they're concerned that this message from Orszag today will give ammunition to Republicans, especially during this critical mid-term election season.
What we do know, though, is that they were apparently caught off guard by that opinion piece, Robert Gibbs saying that as far as he's aware, no one here at the White House got an early read before it was released -- Wolf.
BLITZER: I know the president tomorrow, around this time, is going to be in Cleveland, Ohio, speaking about the economy, about jobs. He's got more initiatives, more proposals he's about to -- to lay out.
Give us a little preview.
LOTHIAN: That's right. This is just yet another prong of this big push by the White House to try and turn the ailing economy around. The president will be rolling out $200 billion in tax cuts for businesses to buy new equipment. All told, between that, some other proposals, including infrastructure -- $50 billion in infrastructure -- we talked about that yesterday -- will total about $350 billion that the president is proposing. The White House says it's much less than that because there will be offsets and they'll be closing some loopholes.
But what they are trying to show here is that the president is very much engaged in trying to get the economy back on track.
You can call it a lot of things, but do not call it a secul -- second stimulus. While some may argue that's exactly what it looks like, the White House is staying away from that. The big challenge, though, is will they be able to get all these proposals through up on Capitol Hill.
Right now, it's uncertain they'll be able to do that -- Wolf.
BLITZER: Uncertain, you say. A lot of experts are saying between now and November 2nd and the mid-term elections, it's impossible to get this $350 billion package through.
LOTHIAN: That's right. And that's why, you know, today at the press briefing, someone asked Robert Gibbs if it pretty much seems uncertain or impossible to get this done, then why is the White House moving forward with this?
Of course, cynics would argue that at least there's a public relations side to this -- the White House can show Americans that this is what they're doing to turn the economy around and Republicans are putting up roadblocks.
BLITZER: Dan Lothian is over at the White House.
Let's dig deeper right now on these proposed tax cuts with our chief business correspondent, Ali Velshi -- all right, Ali, assuming that the president's plans do get off the ground, explain what we're talking about right now.
ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: All right. Well, part of the reason why they want to do this even if it doesn't get off the ground is because of that $350 billion that Dan was just talking about, $300 billion of those are essentially tax credits. So for an administration that has been called unfriendly to business, $200 billion of that is going to be announced tomorrow. And that is for expansions of plant or to buy equipment for businesses. The idea is that businesses are not spending their money and not expanding. If they start expanding plant building, that creates jobs. If they buy equipment, that will create jobs. That's the -- the $200 billion.
I want to switch this over and -- and show you what else that the White House is talking about. There's the $100 billion -- well, let's start here. There's the $50 billion that the president announced when he was in Milwaukee. This is for rapid transit -- high-speed rail, new runways at airports and air traffic control upgrades and new roads. That's traditional stimulus, Wolf.
Then you've got the $100 billion. Those are for extensions of a credit -- a tax credit that already exists for companies who develop and -- and create new inventions -- one of the things that a lot of people say will be the -- the heart of economic growth in America. And, finally, the $20 billion that Dan was just talking about, which is designed to get companies to build, plant and buy equipment.
So the -- it is a stimulus. The idea is it's supposed to stimulate the economy. The problem, Wolf, is that we -- we've made stimulus into a bad word in this country. And that's why the White House doesn't want us using that expression for this kind of stuff. But, ultimately, it is designed to stimulate and it is designed to go through businesses to do that. Many of those businesses will be small business. You and I have discussed many times, Wolf, that small business is typically the engine of job creation in this country, not big businesses. Right now, that's not happening.
BLITZER: Let's talk about it. If, in fact, Congress were to approve all of this $350 billion package, it would take a while, Ali, for any new jobs --
VELSHI: Yes.
BLITZER: -- really to emerge as a result of this. These aren't going to be creating new jobs within a week or month or -- or very quickly.
VELSHI: Completely right. But we are at a point in this recession, Wolf, where we shouldn't have to depend on increased government expenditure into the economy to be creating jobs. We should be looking at the private sector to do so.
So what I think we're trying to deal with right now is confidence. As we've discussed, consumers are keeping their money in their pocket because the unemployment rate continues to be high. Jobs continue to be lost, so they're worried about losing homes. You don't want to spend money if you think you won't be able to pay for -- pay for that a year from now.
Businesses are not stepping up and hiring people because they're waiting to see consumers step in.
So this is more meant to -- to provide confidence that this is not an anti-business administration and that things are going to get good, so we're going to give you an incentive to start spending now.
The recovery has to come from consumers and businesses. It can't continue to rely on government inputs.
So, you're right, it's not going to create any jobs immediately. It is meant to get businesses to step in and say, look, there's some incentive for us to get back in the game and put some of the money we've been stashing on the side into the economy.
BLITZER: Ali Velshi, thanks very much. Good analysis.
Shifting political opinions -- a new poll shows many Americans are losing confidence in Democrats' ability to handle the economy.
Will that translate into real problems come election day?
And Chicago Mayor Richard Daley announcing he will not seek reelection.
Will the White House chief of staff, Rahm Emanuel, try to take his spot?
Stay with us.
You're in THE SITUATION ROOM.
(COMMERCIAL BREAK)
BLITZER: Jack Cafferty is here.
He has The Cafferty File -- Jack.
JACK CAFFERTY, CNN CONTRIBUTOR: A story of a real bright idea. General David Petraeus, the top commander in Afghanistan, is condemning a Florida church's plan to burn Qurans on September 11th. Petraeus says the burning of Islam's holy books could endanger American troops overseas and the overall effort in Afghanistan.
There are about 120,000 U.S. and NATO troops fighting Al Qaeda and the Taliban there. Petraeus says even the rumor that the Quran burning might happen has sparked protests in the Muslim world. We have some footage of hundreds of Afghans who demonstrated yesterday in Kabul, chanting "Death To America" and calling on the U.S. to withdraw its troops. Thousands of Indonesians gathered outside the U.S. Embassy in Jakarta over the weekend.
Protesters say the Quran burning is an insult to Muslims all around the world -- and it is.
Meanwhile, the pastor of the Dove World Outreach Church, membership about 50, in Gainesville, Florida, told CNN his congregation plans to go through with it. Terry Jones says they've firmly made up their minds, but are praying about what they're about to do. Jones says the congregation knows this is offensive, but he says he's offended when Muslims burn the American flag or the bible. He claims their message is not one of hate and not meant for moderate Muslims, but rather a warning to radical Muslims.
Lots of people think this is a terrible idea.
The U.S. Embassy in Kabul says that the U.S. government condemns the, quote, "offensive messages and disrespect against Islam." And various religious groups are also opposing this Quran burning. The National Association of Evangelicals is calling on the church to cancel the event. Christian, Muslim, Jewish and Hindu leaders in Gainesville have organized a gathering for peace to be held the same night before the scheduled burning.
So here's the question -- a Florida church is planning to burn Qurans on September 11th as a warning to Muslim extremists.
Is this a good idea?
Here's a hint -- no.
Go to CNN.com/CaffertyFile and post a comment on my blog.
One of the things that goes with all the freedoms that we have in this country, Wolf, is the freedom to be stupid.
BLITZER: Yes, it certainly is. And I know that, you know, U.S. military personnel -- not just General Petraeus -- they are deeply worried that this event, if it happens on Saturday, could cause injury or even death to --
CAFFERTY: Well, and it will.
BLITZER: -- the young men and women who are serving in the United States military.
CAFFERTY: Remember what happened when they published a -- a cartoon drawing of Muhammad --
BLITZER: Right.
CAFFERTY: -- in a Danish newspaper?
They tore half of Western Europe off its foundations.
BLITZER: Yes.
CAFFERTY: This is a terrible idea.
BLITZER: I know. Let's hope it doesn't happen.
All right, Jack.
Thanks very much.
The White House press secretary, Robert Gibbs, was asked to give the president's reaction to that Florida church's plans to burn the Quran. Here's what Gibbs said.
(BEGIN VIDEO CLIP)
ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: It puts our troops in harm's way, and obviously that -- any type of activity like that would be -- that puts our troops in harm's way would be of concern to this administration.
(END VIDEO CLIP)
BLITZER: The attorney general, Eric Holder, is meeting with top religious leaders to address what they call a rising tide of anti- Muslim bigotry in the United States.
Muslim, Christian and Jewish faiths were all represented during a news conference over at the National Press Club. The leaders argued anti-Islamic sentiment is a betrayal of traditional American principles. Cardinal Theodore McCarrick was there and he voiced this concern.
(BEGIN VIDEO CLIP)
CARDINAL THEODORE MCCARRICK, ARCHBISHOP EMERITUS OF WASHINGTON: I have a great fear that the story of bigotry, the story of hatred, the story of animosity to others is going to be taken by some to be the story of the real America, and it's not.
This is not America. This is not our country. And we have to make sure that our country is known around the world as a place where liberty of religion, where respect for your neighbor, where love for your neighbor, where these things are the most prominent in our society.
(END VIDEO CLIP)
BLITZER: The secretary of state, Hillary Clinton, may be weighing in on this debate later tonight. She is over at a Ramadan celebration at the State Department, is scheduled to speak. We'll have that for you. That's here in THE SITUATION ROOM.
Let's get back to our top story right now, the economy and jobs. New polling numbers could mean serious trouble for Democrats on November 2nd. Let's discuss with our senior political analyst, David Gergen, he is here in THE SITUATION ROOM.
You saw the poll numbers. The Republicans now are deemed to be better at dealing with the economy than the Democrats. It's a major reversal than what it was only a few months ago. Why all of a sudden do Americans have greater trust in the Republicans dealing with the economy than the Democrats?
DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Sixteen straight months of unemployment over 9 percent, that'll do it to you. You know if you're a president sitting there, I don't care who you are, Ronald Reagan had high unemployment, his number went down. That's why he lost a lot of seats in the midterm of '82.
But this 16 months, I think people felt when Barack Obama came in, look, you're inheriting a terrible mess, your predecessor and the people around him did a terrible thing here leaving us with this, but they expected him to clean it up. That was the promise of the campaign.
And here we are, you know, these 16 months later, with this thing stubbornly high up and the president is coming forward and proposing these new stimulus programs you just talked about with Ali Velshi --
BLITZER: Which they don't want to call a stimulus.
GERGEN: But they are and they've been talking about these at the White House for a long time, they just don't want to put them all out in one package and call it, you know, Stimulus Two, but that's the sequel.
BLITZER: You know, as worrisome as it is for the Democrats that the Republicans have greater confidence right now than Democrats, look at the number among independents because there's a huge gap, 19 points. Which party can do a better job with the economy? We asked independent voters, 51 percent said Republicans, 32 percent said Democrats. And that's the swing vote right there.
GERGEN: That's a huge swing, Wolf. You know that's -- and that's why everybody thinks this is going to be a wave. It's hard to get those independents back.
We 're only going to have one more unemployment number between now and the elections. I don't think there is much hope of -- I think basically the Democrats have lost the national argument. What they're trying to do now is localize the races and try to keep, save as many individual Democrats as they can.
BLITZER: And start planning on how they'll deal with potentially a republican majority in the house and maybe even in the senate.
GERGEN: Maybe so. And maybe a new chief of staff at the White House now that Richard Daley is stepping down.
BLITZER: We'll have more on that. Rahm Emanuel -- he's going to have to make a decision very soon whether he leaves the White House and runs for mayor of his hometown of Chicago.
GERGEN: I think he will and by the way, I think he should. You know, he gave up his dream to be speaker of the House, to succeed Nancy Pelosi one day down the road in order to come help the president, but this is his other dream and you know, bless him for it.
And also, as you know, Wolf, that chief of staff job is a killer job. It's a two-year job.
BLITZER: A tough job.
GERGEN: Very hard.
BLITZER: And the elections are next February, so that's coming up not that far away in Chicago.
GERGEN: We'll see.
BLITZER: We'll watch Rahm, we'll watch you. Thanks very much.
GERGEN: OK, thank you.
BLITZER: New warnings about products your children could be playing with. Could they contain illegal amounts of lead?
Plus, many tourists planning to visit the United States might just have to pay a new fee. We'll have details, coming up.
(COMMERCIAL BREAK)
BLITZER: Kate Bolduan is monitoring some of the other top stories in THE SITUATION ROOM right now.
Hi, Kate. What's going on?
KATE BOLDUAN, CNN CORRESPONDENT: Hey there, Wolf.
First to Colorado where a state of emergency has just been declared and a fleet of airplanes is battling a fast moving wildfire near Boulder. They're dropping fire retardant to attack flames that were whipped into a frenzy by 40-mile-an-hour winds yesterday. More than 7,000 acres have been scorched and thousands of residents evacuated. Officials say some structures have burned, but didn't release any details on that.
Children's products on store shelves right now may contain, quote, "worrisome levels of potentially dangerous metals," that's according to "Consumer Reports" magazine. It says tests showed legal amounts of lead in a clover-shaped cell phone charm sold at Claire's and also says older makes of Kidorable BumbleMe (ph) raincoats had too much lead as well and a Revlon barrette contained high levels of the metal cadmium.
And starting today, tourists from 36 countries, including France, Britain and Japan will be a $14 fee as part of the visa waiver program that allows visitors to travel to the U.S. without a visa. Why the fee now? Well, a little thing called U.S. tourism is down and almost the entire fee will go toward promoting the U.S. as a tourist destination.
Of course it's a tourist destination. It is the home of one Wolf Blitzer.
BLITZER: They can come and be tourists here in THE SITUATION ROOM. We wouldn't charge $14.
BOLDUAN: Not too much, maybe just a little fee.
BLITZER: If they can come to the United States, they can afford a $14 fee.
BOLDUAN: I agree.
BLITZER: That's right. Thank you.
Ohio Democrats in a bruising battle to hold on to their seats. Is the critical issue of the Economy and jobs pushing voters into the arms of Republicans? The Best Political Team on Television straight ahead. And an Iraqi soldier opens up fire on U.S. troops in Iraq, the first deadly attacks since the U.S. combat mission officially ended. We're going to Baghdad.
Stay with us. You're in THE SITUATION ROOM.
(COMMERCIAL BREAK)
BLITZER: Many House Democrats who sailed to victory on the Obama wave of 2008 despite coming from conservative districts are now in very serious trouble. After siding with the president on controversial issues like health care reform, their jobs are in serious jeopardy.
One of those Democrats is Congressman John Boccieri in Ohio's 16th District. The district went for John McCain, not Barack Obama in that big election year.
Our senior congressional correspondent Dana Bash spent some time there.
(BEGIN VIDEOTAPE)
DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: This shuttered plant really helps illustrate the mood here at eastern Ohio and that is frustration and despair. Hercules Engines, this was a booming plant for generations but it shut down about a decade ago, and that means that all of the jobs in this building are lost.
Well, a few years ago there was actually a plan to breathe new life here, $178 million project for shops in here, apartments, but the credit market dried up after the financial system collapsed and all of this stopped.
REP. JOHN BOCCIERI (D), OHIO: When I see that shuttered factory, I'm reminded of our trade deals that allowed that to happen. That didn't happen in 20 months. That happened over years and decades of lack of focus on the American worker and American businesses.
BASH (voice-over): At the Stark County Fair, first-term democratic Congressman John Boccieri pleads for patience.
BOCCIERI: It is very clear that the economic solutions and the investments that we've made are going to take time to recover.
BASH (on camera): This Ohio district was in Republican hands for 60 years before democrat John Boccieri won it in 2008, and representing this conservative area makes him one of the most endangered Democrats in the House.
Follow the Congressman around like we are, he is back there talking to voters, he's hearing some serious passion and frustration.
UNIDENTIFIED MALE: Getting tired of the namby pamby crap that's going on between the Republicans and the Democrats. It's our country. It's not Democrat and Republican, it's our country and we're losing. BOCCIERI: Amen.
JIM RENACCI, OHIO REPUBLICAN SENATORIAL CANDIDATE: How you doing? I'm running for Congress.
BASH: That is Jim Renacci right there, he's the Republican challenger and if you listen to his arguments there, it's classic GOP playbook this year against the democratic leadership in Washington.
RENACCI: John Boccieri votes lockstep with Nancy Pelosi. It's an issue. He can say he doesn't but he does. And this district is being represented by Nancy Pelosi right now.
BOCCIERI: I'm not ashamed of any votes we've taken. I've campaigned on reforming our health care system, I've campaigned on finding a national energy policy.
At the end of the day, the people voted for me to be their congressman not some congresswoman in California or the president.
BASH (voice-over): His republican challenger is a local businessman and former mayor.
(on camera): Why do you think you would be a better congressman than John Boccieri?
RENACCI: Twenty-seven years experience in business. I've been, created over 1500 jobs, employed over 3,000 people.
UNIDENTIFIED MALE: This is a tough political environment to run in. There are still a lot of folks out there who are trying to find a job.
BASH: You even feel that at this festive fair. Economic pain and political peril for Democrats.
UNIDENTIFIED FEMALE: The fair is feeling it. We have to inflate our prices to meet with the prices of our products, and people have a hard time spending money on a sandwich that costs $5.
BASH: Did you vote for President Obama?
UNIDENTIFIED FEMALE: Yes.
BASH: How do you feel about that vote now?
UNIDENTIFIED FEMALE: It's only been two years, and I'm hoping he keeps doing a better job as time goes on. I'm a Democrat and, you know, it's just, who's right, who's wrong? I don't know, but everybody needs to focus on the big picture.
(END VIDEOTAPE)
BLITZER: Dana is joining us now live.
Dana, is Congressman Boccieri going to go to Cleveland tomorrow? It's not far from his district where the president of the United States will be delivering a major speech on the economy?
BASH: Well, Wolf, the source close to the Congressman Boccieri says that he hasn't decided yet. He has gotten a formal invitation from the White House to be with the president at that big economic speech.
It's only about an hour from his district, but you saw and you heard the sentiment in his district and specifically the argument that his Republican opponent is making trying to tie him to the president who is not very popular in this district, didn't even win in 2008 during -- when the president did very well elsewhere in this state.
So, what I'm told is that he already has some event scheduled with local officials. He is going to study the president's economic plan and see if it's something that he wants to sign on to. That doesn't sound very positive about his chances for going. I will tell you, though, Wolf, that the candidate for Senate here, Democratic candidate for Senate, the Democratic candidate for governor, they will go with the president to that event.
It is a very tough call for these candidates who are trying to really distance themselves and play it sort of down the middle and be their own person and not be tied too closely to the president -- Wolf.
BLITZER: It's a sensitive issue. Who would have thought a year, year and a half ago, that it would be so sensitive for some of these Democrats to show up when the president of the United States comes to basically their home state or their district. All right. Dana, thanks very much.
Let's dig a little bit deeper right now with our senior political analyst, Gloria Borger. She is also on the ground in Ohio with the CNN Election Express. She's been talking to democratic voters trying to gauge their enthusiasm, whether they're really paying attention to these races that are out there. Let's go to Gloria right now. All right. Gloria, what are you finding out as you speak to real voters in Ohio?
GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: You know, Wolf, I found out that while there are lots of Democrats around here in Columbus who are really willing to give this president the benefit of the doubt. They're willing to give him more time on the economy.
When I talk to these democratic voters, it's clear that the White House and their candidates have a problem. So, I did a little bit of Jay Leno, man on the street kind of thing, asking the question about what's the Democratic message? Take a listen to their answers.
(BEGIN VIDEO CLIP))
BORGER: Do the Democrats have a clear message that's going to rally their base of supporters to get them out and vote in big numbers in this midterm election?
UNIDENTIFIED MALE: In a word or -- no. No, they don't. Sorry. That's the way I feel about it. I don't think they've had a clear message yet.
BORGER: In this midterm election, the message from the Democrat is --
UNIDENTIFIED FEMALE: I think it's a little muddled. I don't really -- I'm not really hearing from them exactly what they want to do. I think they know, but I think that it's being so cautious not to offend anybody.
BORGER: And have you heard a clear message from the Republicans?
UNIDENTIFIED FEMALE: Yes. Everything's bad. Everything's horrible.
(END VIDEO CLIP)
BORGER: So, Wolf, you know, that's really the problem in a nutshell. The Democrats don't have a clear message, but everybody, including the Democrats, are hearing the Republican message, which is things are terrible. It's time for a change. So, that message seems to be getting across.
BLITZER: Gloria Borger doing a little jaywalking in Ohio for us. All right. Gloria, thanks very much. We'll check back with you tomorrow.
BORGER: Sure.
BLITZER: The mayor of Chicago announcing he won't run for re- election. Could he be paving the way for one of President Obama's key advisers to perhaps become the next mayor of Chicago? We're talking about that in our "Strategy Session." That's coming up.
(COMMERCIAL BREAK)
BLITZER: Let's get right to our "Strategy Session", Joining us are Democratic strategist, Donna Brazile, and our Republican strategist, Mary Matalin. They're both CNN political contributors. You know, Donna, we keep seeing the president and his economic policies hammered by Republicans and conservatives from the right, but also from time to time hammered by those on the left.
Robert Reich a former Clinton Labor secretary writing today the economy needs two whopping corporate tax cuts right now as much as someone with a serious heart condition needs Botox. He's blasting these proposals from the president to give big corporations new tax breaks.
DONNA BRAZILE, DEMOCRATIC STRATEGIST: What Mr. Reich and perhaps some others are worried about is that will these corporations actually spend this money and go out and hire new workers or will they just utilize some of the tax credits to essentially get (ph) more equipment and not allow it to really bring these workers back to their plants or to their manufacturing centers.
I understand what he's saying, but I think the president, what he's trying to do is to get corporations. They're sitting on trillions of dollars in profits, Wolf. He's trying to get them off the sidelines and back into the playing field, so they can help with stimulating the economy.
BLITZER: A lot of the Democrats are saying the Republicans, Mary, they're being hypocritical right now because Republican economists and conservatives, they like these corporate tax breaks that the president, at least, some of them that the president is proposing, but the Republicans are just saying no, no, no.
MARY MATALIN, REPUBLICAN STRATEGIST: What Republicans don't like and why Secretary Reich is right. He's right on two counts, one, the president's just doing this to be political. He's just trying to put Republicans in a bind. It's just political. It doesn't fit into an overall economic framework. And this particular text, I agree with Secretary Reich, no matter what Republicans may think, it doesn't scratch the itch which is uncertainty for future planning. It's only a year long.
Secondly, it's central planning. Donna is right, too. They have money. They know where to put their R&D money. This will only serve to accelerate those write-offs, and if they want to invest in their own thing, they know how to do that. Let the market and the profit motive determine that not some central planner. So, I don't really like this text because the best thing and what small businesses and large businesses and all economists seem to favor is an extension or permanence of the existing tax rates and then cut spending.
And if the president would say something like that or something akin to it instead of playing politics, the Republicans would be with him.
BLITZER: Speaking of politics, let me get both of you to weigh in on Mayor Richard Daley in Chicago. He announced today he is not going to run for re-election, the election coming up in February of next year. A lot of speculation already, Donna, as you know, that Rahm Emanuel, the White House chief of staff, will run in his hometown of Chicago.
Rahm Emanuel issuing a statement while Mayor Daley surprised me today with the decision to not run for re-election. I have never been surprised by his leadership, dedication, and tireless work on behalf of the city and the people of Chicago. He was thunderously silent whether he's going to run, but do you think he will?
BRAZILE: You know, Wolf, deadline is November 22nd, and I could tell you knowing just a little bit about Chicago politics, that will be a tough race. Rahm is well known in Chicago, so he doesn't have a name, a problem name I.D. He could raise the money, but I'm telling you, in terms of some of the progressives that he's alienated, I don't know if they are willing to embrace Rahm Emanuel, but good luck.
And thank you, Mayor Daley for 21 years of service as mayor of one of America's finest cities and 40 years of public service.
BLITZER: Chicago is your hometown, Mary. What do you think? MATALIN: I think Rahm would be terrific. I don't think it's that kind of progressive Democrats that we grew up with. Daley is very fond of them, as (INAUDIBLE) as I am, particularly fond of Mrs. Daley. Rahm, my conservative friends don't like to hear this. Believe it, but he's not really an ideologist (ph). He's practical. He is tough. He's the kind of mayor Chicago could use and need.
It's a tough city to run and that's why the Daleys have done as well for as long as they have. I agree with Donna. Thank you for saying that, Donna. Public service is a noble calling, and I hope Rahm does it. I like guys who get in the arena. Good luck, Rahm. It just makes me nervous you're the only sensible one in the White House left.
(LAUGHING)
BLITZER: All right. Guys, thanks very much.
BRAZILE: I know a couple of friends in the White House who are sensible too. They can replace Rahm.
MATALIN: The ones that talk to you, Donna, are the sensible ones.
BLITZER: Strong endorsement from Mary Matalin.
MATALIN: Thank you.
BLITZER: I don't know if it's going to help Rahm Emanuel, but we'll see. All right. Mary, thanks. Donna, thanks to you as well.
Coming up, we'll speak with the chairman of the Democratic party, the former Virginia governor, Tim Kaine. He got some thoughts on what's going on. Stay with us. You're in the SITUATION ROOM.
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BLITZER: Democrats are planning a major event to kick off the fall midterm election campaign. The chairman of the Democratic Party, Tim Kaine, is planning a national address over at the University of Pennsylvania in Philadelphia. He is joining us now to talk about that and a lot more.
Governor, thanks very much for coming in.
TIM KAINE, CHAIRMAN, DNC: You bet, Wolf. Good to be back with you.
BLITZER: You have got your hands full right now. I was reading Mike Allen's column in Politico today, "New Polls Point to Tsunami," that's the headline; the lead paragraph, "With just two months to go before the November elections, pollsters and political scientists are predicting a blow-out loss for Democrats that could rival the Republican Revolution of 1994."
Do you believe that's going to happen? KAINE: I don't. I don't, Wolf. And you know it's good to have been in this business for a while, because I remember when a lot of pundits were saying that about my own race for governor in 2005.
Is the climate tough? Sure it is, because too many people are hurting. But we think as the voters start to make their decisions about who they're going to vote for they're making a choice and it's a choice between the Democratic Party, which has done heavy lifting to take an economy that was shrinking and get it back to growing, not as fast as we want but we have to keep climbing and we can't afford to go back and put the keys back in the hands of the party that ran us into this horrible recession in the last decade. I think voters will understand that.
BLITZER: How did it happen in the past year and a half that the situation, at least in the polls, has deteriorated so badly for the Democrats?
KAINE: Well, you know, there are a lot of features, but I think the simple version is a lot of people supported the Democrats in 2008 because they were hurting. 2008 saw the start of 22 months in a row of private sector job loss. We were losing 750,000 jobs a month on Inauguration Day. People came to us and they said, look, we're hurting, we want you to help. And we would all say, we're not yet where we want to be.
But the good news is is instead of a shrinking economy it's growing again. The auto industry is adding workers, manufacturing is now showing some strength in coming back. We have a long way to go but we'll only get there if we keep doing the right thing and investing in small businesses, investing in middle-class success. We're not going to get there by going back to the policies that John Boehner and others say they're going to go back to if they get the majority in the House.
BLITZER: Here is a phenomenon that's developing and I think it must be very worrisome to you as leader of the Democratic Party. We're finding, we're seeing democratic Congressmen seeking re-election now running away from the president, the speaker, the majority leader.
Listen to this ad. Jason Altmire, democratic candidate -- democratic congressman from Pennsylvania who wants to be reelected. Watch and listen.
(BEGIN VIDEO CLIP, YOUTUBE.COM ALTMIRE AD)
UNIDENTIFIED MALE: Too many people in Congress just vote the party line.
UNIDENTIFIED FEMALE: But Jason Altmire is not like that.
UNIDENTIFIED MALE: Jason is independent. No doubt about.
UNIDENTIFIED FEMALE: You saw when he voted against health care.
UNIDENTIFIED FEMALE: When Jason opposed the wall street bailout --
UNIDENTIFIED MALE: I like that Jason is not afraid to stand up to the president.
UNIDENTIFIED FEMALE: And Nancy Pelosi.
(END VIDEO CLIP)
BLITZER: Wow. That's pretty amazing, a democratic congressman running a commercial saying he is not afraid to stand up to the president of the United States and the speaker of the House.
You remember when that has happened before?
KAINE: Well, look, read Truman's biography, it definitely happened during the Truman era as the president was saving Europe and creating a strong American economy after World War II.
You know, here is what I think about these generally. Democrats who have been in Congress have every right to be proud of the heavy lifting they have done. Four million more American kids have health insurance today because of what they've done. Women are entitled to equal pay for equal work. We've saved the auto industry, stabilized the financial sector, and as I've said, an economy that was shrinking is now growing.
People ought to be proud of those accomplishments, but I also understand that folks have particular districts, especially with, you know, gerrymander district. They have to speak mostly to their constituents' concerns especially in district races and you have to give latitude to candidates to run the way they want to run.
But any Democrat can feel good about hard work that they've done to get this nation on the right track.
BLITZER: So when a democratic incumbent says, does a commercial like this, basically saying I'm not with the president, I'm not with the speaker, does the chairman of the party, namely you, do you call them up and say, hey, Congressman, what are you doing here. Why are you saying these things? Why are you doing these things? Or you just sort of leaving it alone?
KAINE: Well, look, there are too many races for me to spend time on all the races, so I prioritize where I'm going to be and where I think I can be helpful.
And you know, you won't be surprised, Wolf, to know I tend to be a little more helpful to those who are energetically and enthusiastically telling about the good things the party has done.
But I've been, as you know, I was in elected office for 16 years and I know about running in tough districts. Folks have to decide --
BLITZER: So here's the question -- Will the DNC cutoff funding for Jason Altmire and other Democrats who are seeking reelection and go after or criticize the president of the United States? KAINE: Wolf, I'm not prepared to say that. And in fact, you know this is true, the Democrats are a big tent. It's the other side that tends to throw people out if they don't have the right position on taxes or choice.
The Dems are a big tent. We've always been a big tent. That is one of the strengths of our party. It can create some challenges in time but overall, we don't want to be the party that throws folks over the side, you know, because they run an ad we don't like or they cast a vote that we don't like.
BLITZER: So the DNC, the DCCC, they could still pump in some cash to help a guy like Altmire?
KAINE: Well, the DCCC is going to make their own decisions. What I do know is this, the DNC has been heavily investing generally in Pennsylvania. We think that there are a whole number of races in Pennsylvania that are very important, especially the race for senator with Joe Sestak and the race for governor with Dan Onorato.
Pennsylvania is very important to us. We think we've got really good candidates there and, you know, we're going to go forward.
But my advice to Democrats everywhere is you put a D after your name, hey, be proud of it.
BLITZER: Yes, I don't think that Altmire is going to be invited to the White House if he gets reelected that quickly, but that's another matter.
Unfortunately, we just lost that signal over at the DNC, but we had wrapped up the interview. I want to thank the former governor of Virginia, Tim Kaine, he's the chairman of the Democratic Party.
A Florida church is planning to burn the Qurans on September 11, that's the Saturday, as a warning to Muslim extremists. Is that a good idea? Jack Cafferty with your e-mail when we come back.
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BLITZER: Jack Cafferty is back with "The Cafferty File" -- Jack.
CAFFERTY: Well, Florida church -- question this hour, a Florida church is planning to burn Qurans on September 11th as a warning to Muslim extremists. Is this a good idea? Sounds like that Geico commercial.
Ann in South Carolina, burning the Muslim's holy book is definitely not a good idea. It's an act of disrespect and ignorance. The Quran is sacred to all Muslims, and by burning it, all Muslims will be offended, not just the radical Muslims. The Pastor Terry Jones claims he's offended when Muslims burn the American flag or the bible. As this preacher not ever heard of turning the other cheek, does he think that two wrongs make a right? I think he's looking for publicity without regard for the consequences of his actions. I find everything about his plan offensive.
Bud in Jacksonville, Florida, this Quran burning does recognize a growing awareness that America will soon be in trouble just like many other countries and communities if the impact of Islam is not soon understood by us all. As the Muslim population in each host country grows, so does the conflict between Muslim laws, aims and goals and those of a secular Democratic and free society like the United States. The two cannot, in the long run, coexist peacefully.
Sylvia in San Diego, clearly, disrespecting religion or religious symbols is bad behavior, and it's something I would not do. However, we live in a country of laws and the law allows the right to free speech, and this pastor is exercising his right to free speech in a way that he thinks will be appropriate and effective.
Gary, Sarasota, Florida, I supposed it's a good idea if you want to attract national attention to yourself and don't care to look like a complete jackass doing it.
Brandon in Florida, it's rude and insensitive, but they have the legal right to burn Qurans that they own, much like the Muslims have the legal right to build a mosque at Ground Zero, but to do so would be rude and insensitive.
And Jeff writes, all books are sacred, even Daniel Steele. Burning books is the sign of a closed and frightened mind.
Do you want to read more on the subject? A lot of e-mail. It's a controversial topic. Go to my blog, CNN.com/CaffertyFile. If I had to make a bet, I bet it doesn't happen, but we'll see.
BLITZER: We'll see. Saturday, 9/11 anniversary. Jack, thank you.
For the first time since the U.S. officially ended its combat mission in Iraq, U.S. troops are targeted to the deadly attack. We're going to tell you the unusual circumstances surrounding the shootings today. That's coming up.
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BLITZER: In Iraq, U.S. soldiers came under fire today in two attacks, one of them deadly. CNN's Arwa Damon is in Baghdad -- Arwa.
ARWA DAMON, CNN CORRESPONDENT: Wolf, a week after the U.S. military officially ended its combat role in Iraq, at least two U.S. soldiers were killed and other ten wounded in two separate attacks both in the same province, the deadliest and more disturbing happening on an Iraqi army military base where a U.S. captain had a meeting. The soldiers escorting him were waiting outside when they got into some sort of argument with an Iraqi army soldier. That's according to the spokesman for Iraq's minister of defense. The soldier pulled out his weapons and shot at the soldiers killing at least two Americans and wounding another nine. The other incident happening in Tikrit at the center of the city where a convoy came under grenade attack. The U.S. says that they shot and killed the attacker, but that one U.S. soldier was wounded and another three civilians were wounded as well when one of those grenades exploded.
This is very much a reminder that even though operation Iraqi freedom, the combat mission may have come to an end, we may be entering the era of "Operation New Dawn" that is supposed to be seeing the Americans in a non-combat role, Iraq still very much remains a deadly battleground -- Wolf.
