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Romney Holds Firm on Controversial Remarks; New Presidential Poll Numbers; Gun Scandal Rocks Justice Department; In Depth: Changing Medicaid; The Message In The Romney Tapes; Obama: "All Of Us Make Mistakes"

Aired September 19, 2012 - 16:00   ET

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

WOLF BLITZER, CNN ANCHOR: Happening now: Mitt Romney goes all- in, instead of backing away remarks that Democrats and even some Republicans feel was a major mistake. Romney is accusing President Obama of making Americans dependent on government.

Also, given a chance to hit back, President Obama holds his fire. We're digging into what his strategy might be.

And just off the assembly line, our brand-new poll from one of the states that potentially could decide the presidential election. John King is on the ground in Michigan with the latest numbers.

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

We begin with the brand-new counteroffensive Mitt Romney's launching only 48 days before the presidential election. Instead of trying to explain away his secretly videotaped complaint that the 47 percent of U.S. voters who support President Obama are dependent on government, Romney's trying to turn the controversy to his political advantage.

Our national political correspondent, Jim Acosta, is covering Romney's latest stop in Atlanta.

(BEGIN VIDEOTAPE)

JIM ACOSTA, CNN NATIONAL POLITICAL CORRESPONDENT: Wolf, Mitt Romney is now owning his message that too many Americans are dependent on the government. And he's trying to parlay a gift he received from The Drudge Report into a new counteroffensive.

(voice-over): Mitt Romney is not running from what he said in those hidden camera videos. He's embracing it.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: This is how America works. It does not work by a government saying become dependent on government.

ACOSTA: The GOP nominee is now weaving his controversial riff on government dependency into his campaign speeches, like the one he gave at this fund-raiser in Atlanta.

ROMNEY: There are 47 percent of the people who will vote for the president no matter what.

All right, there are 47 percent who are with him who are dependent upon government, who believe that they are victims.

ACOSTA: Less than two days after explaining his remarks in this secret footage leak to "Mother Jones" as inelegant, Romney published an op-ed in "USA Today" saying, "Under President Obama, we have a stagnant economy that fosters government dependency."

Add to that the comments made by then-state Senator Obama in 1998 leaked to The Drudge Report.

BARACK OBAMA (D), THEN-ILLINOIS STATE SENATOR: Because I actually believe in redistribution.

ACOSTA: And the GOP is trying to get back in business.

Take the new Web video tying the remarks to what the Romney campaign considers to be a history of anti-business rhetoric from the president and new lines of attack from the top.

ROMNEY: This idea of redistribution follows from the idea that if you have a business, you didn't build it. Someone else did that. It's the same concept.

ACOSTA: And bottom of the ticket.

REP. PAUL RYAN (R-WI), VICE PRESIDENTIAL CANDIDATE: President Obama said that he believes in redistribution.

(BOOING)

RYAN: Mitt Romney and I are not running to redistribute the wealth. Mitt Romney and I are running to help Americans create wealth.

(CHEERING AND APPLAUSE)

ROMNEY: If we win on November 6...

ACOSTA: The Romney campaign had been all over the map on the hidden camera video. In local TV interviews, Paul Ryan seemed to say Romney used a poor choice of words.

RYAN: He was obviously inarticulate in making this points. And the point we're trying to make here is under the Obama economy, government dependency is up and economic stagnation is up.

ACOSTA: Still, some in the GOP are piling on.

In "The Wall Street Journal," columnist Peggy Noonan wrote, "There is a broad and growing feeling now among Republicans that this thing is slipping out of Romney's hands."

Democratic leaders took to the Senate floor in the hopes of making the tape stick. SEN. RICHARD DURBIN (D-IL), MAJORITY WHIP: We remember the highlights. "Corporations are people, my friend," he said. "I like being able to fire people."

ACOSTA (on camera): And Romney has more damage control to do after saying in that hidden camera video that he might have an easier time being elected president as a Latino. He's campaigning in Florida, where he will be reaching out to, who else, but Hispanic voters -- Wolf.

(END VIDEOTAPE)

ACOSTA: Jim Acosta, thank you.

And we have new information just coming into THE SITUATION ROOM. A brand-new CNN/ORC poll shows President Obama opening up a 52 percent to 44 percent lead in Michigan. That's an eight-point margin for the president in the state where Mitt Romney grew up.

Our chief national correspondent John King is in Michigan. He's been talking with Michigan voters. He's joining us now from the Detroit suburb of Sterling Heights.

John, walk us through what you're finding out as well as more on this poll.

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Wolf, as you noted, Mitt Romney was born here. He went to high school in the next county.

During the Republican primaries, he told all the Republicans across the country he was more electable, A., because of his business experience, but, B., he said he could put reliably blue states in play like he said Michigan. He believed he could put the president on defense in this big state, 16 Electoral College votes.

But our brand-new CNN poll numbers suggest Governor Romney might have to look elsewhere.

(BEGIN VIDEOTAPE)

KING (voice-over): It is the defining question and a statement Romney was counting on as a fall battleground.

UNIDENTIFIED MALE: Who do you think would do a better job of improving the economy, the Republicans or Democrats?

KING: Romney was born and raised here and his father was governor and an auto industry CEO. But so far, all signs point to Michigan and its 16 electoral votes staying blue, in the president's column.

A new CNN/ORC International poll shows the president with an eight-point lead statewide among likely voters and a 13-point edge in the critical Detroit suburbs of Macomb and Oakland counties.

BARBARA VANSYCKEL, MACOMB COUNTY GOP CHAIRWOMAN: He's pretty down to earth when you meet him. I don't think he comes across as much that way when you see him on television.

KING: Macomb County GOP Chairwoman Barbara VanSyckel still holds out hope, but concedes time is getting tight.

VANSYCKEL: The philosophies are different enough, but people also want to vote for someone they like. For some reason, they don't seem to connect with Romney the way they do with Obama.

KING: It's not that Michigan is booming. Hardly. The unemployment rate is 9 percent, but that's down from 11.3 percent when President Obama took office. And again, while hardly gangbusters, manufacturing employment is up 57,500 jobs during the Obama presidency, 34,000 of those in the auto industry.

JOE CEFALI, UNION CHRYSLER WORKER: You feel rejuvenated. You feel, yes, we have a future.

KING: Joe Cefali was laid off in 2009 as Chrysler teetered on the work of collapse. He was looking for work in Texas and Tennessee when help came from Washington.

(on camera): You think that you're working today because of President Obama?

CEFALI: Yes. If he didn't come through and give that vote, say, hey, yes, we have got to save Chrysler, we have got to save GM, we have got to do this, all of Sterling Heights would have been gone, would have been dead.

KING (voice-over): A pro-Romney super PAC this week is making one more push here. But the Romney campaign isn't spending any money. And the candidate himself hasn't visited in a month.

ROMNEY: I love being home.

KING: Barring some sudden shift, even top Romney allies here expect the focus to be elsewhere.

(END VIDEOTAPE)

KING: If you look deep into our new poll numbers, Wolf, the two candidates, Governor Romney and President Obama, they're splitting the suburbs statewide. They're splitting those who describe themselves as independents statewide.

So why then is the president winning big? A narrow lead among men, a big lead among women and a 13-point lead among union households, some evidence there that his support for the auto bailout is helping him in this blue-collar state, Wolf.

BLITZER: Indeed.

If it's not going to be Michigan for Romney, where else should he be looking?

KING: Well, that is the big challenge because Governor Romney first thought he could put Pennsylvania in play. Nobody thinks that's possible right now. They still say they will make a late run at Michigan. A lot of Republicans here we have spoken to are quite skeptical.

So where next? They say the Midwest is critical. That's one reason for the Paul Ryan pick. They thought they could put Wisconsin in play. Two new polls though in the last 24 hours though show the president opening a lead in Wisconsin as well. When you look at the map and you try to find Governor Romney's path to 270, we know he has to win Florida, we know he has to win Ohio. Where can he put the president on defense? Hard to find those states at the moment.

BLITZER: Key words, at the moment. We will see what happens. Those debates, three presidential debates obviously could be really, really important. I'm sure they will be. John, thanks very much.

The Michigan results are just one of many new swing state polls showing the president pulling ahead of Mitt Romney.

We're joined now by our chief political analyst, Gloria Borger.

You have been looking, you have been studying these polls. I have as well. What caught your eye specifically?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: The first thing that caught my eye in the NBC/"Wall Street Journal" report, and it's about an increasing level of optimism in this country, which really plays to the president.

Take a look at this. The question was asked, will the nation's economy get better in a year? Now 42 percent, that's still not half. But, look, just over a year ago, 22 percent. So more than double, almost double the amount believe that the economy is getting better. That's very good for the president.

What's also good for the president and important to the president -- and we saw this a little bit in John King's piece -- is that people believe he understands their problems, he feels their pain, as Bill Clinton would say. Take a look at this. On a Pew poll that just came out today, which candidate connects well with ordinary Americans?

I mean, about 3-1, Wolf, Obama vs. Romney. You see that there. And, of course, after Mitt Romney's 47 percent remark, now infamous, that doesn't help him with middle-class voters believing that he understands their problems or understands the issue of government dependency or victimization. So, two bad numbers for Mitt Romney.

BLITZER: Any good numbers that you're seeing in any of these polls?

BORGER: There are. There are.

BLITZER: For Romney, I'm talking about.

BORGER: There are. And, again, it's in the "Wall Street Journal" poll, because the question was asked of voters who are the most interested in this election, we asked them -- they asked them, who will you vote for, for president?

Take a look at this. Among most interested voters, 49 percent to 46 percent. So what the Romney campaign is hoping that the people who are the most interested, Wolf, will translate into the most enthusiastic voters, because an advantage in turnout of one, two or three points could make all the difference in the key battleground states that John King was just talking about.

And so that would be huge for the Romney campaign. So, again, they're hoping that interested voters turn out to be enthusiastic for their candidate.

BLITZER: John mentioned this, Michigan not looking very good for Romney right now.

BORGER: No.

BLITZER: Wisconsin also, even though Paul Ryan, a son of Wisconsin, is on the ticket. Two new polls in Wisconsin have Romney losing to Obama by six points in one poll, by 14 points in another poll.

So the key question is, how does Romney change this dynamic, which at least in the last week or two, hasn't been good for him?

BORGER: Well, I have spent a lot of my day making calls to Republicans about that. As you can guess, there's no shortage of advice from Republicans sitting outside the campaign who say Romney has to do something.

It's not good enough to just depend on changing the dynamic two weeks from now in a presidential debate. They believe there's a window now in the next two weeks when he can actually give a couple of serious speeches on foreign policy. The president's numbers on foreign policy by the way have declined by a handful of points recently.

They believe there's an opening on foreign policy. And, of course, they want him to put more meat on the bones on the question of what he would do on domestic policy. In particular, he has an advantage on who's going to fix the deficit.

Well, tell people how you're going to do it. Tell them exactly how you want to reform the tax code. Tell them exactly whose taxes you're going to cut, how you're going to help the middle class, which is by the way skeptical about you right now.

So they think this is an opportunity for Romney to lay out his vision. And they believe he should not leave it all to a presidential debate because then you're setting up such high expectations for Romney's performance that it could be a real problem.

BLITZER: Yes. Remember, the presidential debates, you're limited to how long your answers could be, a minute, minute-and-a- half, two minutes, a lot of substance not necessarily going to come through in that relatively small amount of time.

BORGER: Right. So I think there's internal debate going on now within the campaign and also from their advisers outside the campaign about whether Romney should do this now before the moment of the debates.

BLITZER: Yes.

He's got to do something if he's going to turn things around. We will see what he does.

Thanks very much, Gloria, for that.

Jack Cafferty's been listening to the tape of President Barack Obama's 1998 comments about redistribution. He has some thoughts, wants to weigh in. That happens next.

(COMMERCIAL BREAK)

BLITZER: Some of President Obama's comments from many, many years ago are making some news today. Jack Cafferty's following this part of the story. He's got "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: His critics call him a socialist. They say he wants to redistribute the wealth of the nation from the haves to the have-nots. Now a newly surfaced 1998 clip of then- Illinois State Senator Barack Obama would seem to support those allegations. Republicans are pushing the audio clip which they say was recorded at Loyola University.

In it, the future president talks about what he calls a propaganda campaign against government-funded programs. Obama said he wants to resuscitate the idea that we're all in this together, leave nobody behind. And then Obama goes onto say this.

(BEGIN AUDIO CLIP)

BARACK OBAMA, THEN-ILLINOIS STATE SENATOR: The trick is figuring out how do we structure government systems that pool resources and hence facilitate some redistribution because I actually believe in redistribution, at least at a certain level to make sure that everybody's got a shot.

(END VIDEO CLIP)

CAFFERTY: Obama's critics say the idea of redistributing wealth is socialism. They're linking these 1998 comments to more recent remarks Obama's made. Things like you didn't build that.

Back in 2008, John McCain and Sarah Palin went after Mr. Obama when he said that when you spread the wealth around it's good for everybody. That's an Obama quote. More recently the president has said he wants people to feel like they're getting a fair shot.

In a December interview with "60 Minutes", President Obama talked about inequality and people like teachers and small business owners who are working hard but feel like they're just treading water. In response to the 1998 comments you just heard here, the Obama campaign says Mr. Obama was making an argument for more efficient and effective government. They say the president believes that there are, quote, "Steps we can take to promote opportunity."

Here's the question, is the redistribution of wealth, President Obama's answer to America's problems?

Go to CNN.com/CaffertyFile, post a comment on the blog. Or go to our post on THE SITUATION ROOM's Facebook page -- Wolf.

BLITZER: All right, Jack. Get ready for a ton, ton of e-mail coming in, reaction. Thank you.

Meanwhile, new developments today in a major scandal involving the Obama Justice Department. One high level official has now resigned and another has abruptly retired all because of a just- released report on a program called Fast and Furious. It was supposed to trace weapons smuggling but ended up helping Mexican drug cartels acquire guns from the United States. And one of those guns was found at the scene of a murdered U.S. border patrol agent.

Our crime and justice correspondent Joe Johns has been going through this lengthy report getting a lot of reaction.

Joe, what are you finding out?

JOE JOHNS, CNN CRIME AND JUSTICE CORRESPONDENT: Wolf, it's the closest thing so far I would say to a definitive account of the investigation that everybody agrees was a terrible idea, allowing firearms to slip south of the border to try to catch the cartels that were doing the gun running in Mexico.

The Justice Department's inspector general said Operation Fast and Furious involved a series of misguided strategies, tactics, errors in judgment and management failures that permeated ATF headquarters all the way to the Justice Department. And the near total disregard for public safety.

Congressional investigators had suggested there had been a cover-up in the Justice Department. But the report said federal officials actually ignored red flags, failed to ask questions, failed to send information up the chain of command. The report referred 14 people for possible disciplinary action, but it did not recommend anyone for criminal prosecution. And almost within the hour the report was released, two of the highest ranking individuals whose names came up in the report were out. Former Bureau of Alcohol, Tobacco and Firearms director Kenneth Melson announced his retirement. And Jason Weinstein, who was the deputy assistant attorney general in the criminal division, turned in his resignation. It was accepted by Attorney General Eric Holder.

Holder also put out a statement of his own, Wolf, saying, in part, "unfortunate that some were so quick to make baseless accusations, accusations turned out to be without foundation and caused a great deal of unnecessary harm and confusion." He says he "hopes today's report acts as a reminder the dangers of adopting as fact unsubstantiated conclusions."

So, that gives you a sense that the politics that occurred before this report came out are certainly continuing in Washington on operation fast and furious.

BLITZER: No wrong doing on his part, specifically, Eric Holder.

So what's been the reaction from the Republican critics of the Holder Justice Department?

JOHNS: Well, they say they're vindicated because they raised a bunch of questions about this saying a lot of things went wrong in this operation. They say this report confirms their suspicions. They also say they're going to continue to try to press for information that they say Eric Holder and the Justice Department withheld from them, these are the things, of course, Eric Holder was held in contempt of Congress.

BLITZER: Joe Johns, doing a good job. Thanks for filling in for me as well. Always do a good job for me in that anchor chair.

JOHNS: Wolf, you got a hard job. Appreciate the chance to do it.

BLITZER: You just found that out now, Joe?

JOHNS: I did.

BLITZER: Where have you been in the last 23 --

JOHNS: I know.

(LAUGHTER)

BLITZER: Thanks, Joe.

JOHNS: Thanks.

BLITZER: It's an amazing site. One of the rarest phenomena in nature all captured on video. We're taking a look.

(COMMERCIAL BREAK)

BLITZER: Myanmar's pro-democracy leader Aung San Suu Kyi is set to meet with President Obama.

Lisa Sylvester is monitoring that and some of the other top stories in THE SITUATION ROOM right now.

This is an important moment.

LISA SYLVESTER, CNN CORRESPONDENT: I know a lot of folks have been watching this, wolf. It is the Nobel laureate's first visit to the United States in decades. She just received the congressional medal. It was awarded to her while she was still under house arrest and she couldn't receive. Myanmar is transitioning from years of military ruling. Suu Kyi is scheduled to meet with President Obama in the Oval Office in the next hour.

The housing industry is showing more signs of recovery. Existing home sales jump by nearly 8 percent in August. According to the National Association of Realtors, that is the highest level in more than two years. And the Census Bureau reports housing starts in August rose 2.3 percent over July.

A new report says children should only eat light tuna and no more than twice a month. The Mercury Policy Project says that is the only way to keep children's mercury intake at a safe level. White Albacore tuna should be avoided all together because it was found to have triple the amount of mercury as lite tuna. Mercury has been linked to cognitive decline in infants.

And take a look at this one. You've got to look hat this. This is one of nature's rarest events. It is a fire tornado. And they're caused when a warm column of air rotates and rises picking up a bush fire. This twister was sucking fire up off the ground in Curtin Springs, Australia.

And the filmmaker who captured the images says this lasted up to 40 minutes and it sounded -- I think you can hear it there a little bit, sounded like a jet fighter, which is pretty amazing. Spectacular.

BLITZER: Let's listen for a second.

SYLVESTER: And also the images. It's just not something you se everyday. Amazing stuff there, Wolf.

BLITZER: (INAUDIBLE)

SYLVESTER: I know, I think a lot of people are saying the same thing.

BLITZER: That's one thing we love about our show. We learn something everyday. Before the show we have a certain body of knowledge, after the show we'll be a little smarter, just got a little smarter today.

SYLVESTER: Yes. Best job being a journalist. Like going to school everyday, right, Wolf?

BLITZER: You get paid everyday to learn. Thank you.

Mitt Romney's remarks about government dependency have some conservatives cringing, others cheering. We're going to see whether David Frum agrees with this view by CNN contributor Mary Matalin. This is what she told us this yesterday.

(BEGIN VIDEO CLIP)

MARY MATALIN, REPUBLICAN STRATEGIST: Well, I don't think it was damaging. I think it's great. Many of us have been waiting for Mitt Romney to say this clearly and loudly. There are makers and takers. There are producers and there are parasites.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: In an op-ed piece for "USA Today," Mitt Romney is blaming President Obama for, quote, "a stagnant economy that fosters government dependency."

One of the Republicans most controversial proposals to reduce the federal government's role in people's lives involves changing Medicaid. That's the program that provides medical coverage to poor people and also pays for the coverage of millions of children as well as the elderly.

CNN's Lisa Sylvester has an in-depth look at how this could change.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Evan, Jacob and Brayden playing like any other boys in Ames, Iowa. They are the sons of Amanda and Adam Byersdorfer.

If you look closely though, you will see a difference between 2-1/2 year old, Brayden and his twin, Jacob. Brayden is on a ventilator, one he has been on since birth.

AMANDA BRYERSDORFER: The type of skeletal dysplasia he has is a called campomelic dysplasia. It's a pretty rare form of dwarfism that effects cartilage and bone development.

SYLVESTER: When Brayden and Jacob were born, Jacob was fine, but Brayden's illness was so severe, he spent 291 days in the neonatal intensive care.

Their insurance company would continue to pay the bills as long as Brayden was in the hospital, but wouldn't cover home health care. The family was told Brayden might have to be hospitalized for life.

BRYERSDORFER: Hearing that he would possibly be institutionalized, that broke my heart.

SYLVESTER: But then the family found out Brayden's disability qualified him for Medicaid. Brayden is one of 62 million people on the federal health insurance program for people who are low income, disabled or an eligible senior.

ADAM BYERSDORFER: The Medicaid program was our only option to get that nursing coverage that we need right away covered. So it was night and day between the ability to bring Brayden home or whether he prolongs his stay in a hospital or any sort of institution.

SYLVESTER: But the Medicaid program could undergo a major overhaul. Families like Byersdorfers worry they'll lose coverage. Mitt Romney and Paul Ryan have proposed changing the existing open- ended program into fixed allotments for each state known as block grants.

Currently as long as people qualify they will receive coverage. Under the GOP plan, states would have the flexibility of redefining who is covered. Democrats say that would translate into major future cuts.

BILL CLINTON, FORMER U.S. PRESIDENT: They also want to block grant Medicaid and cut it by a third over the coming 10 years.

SYLVESTER: According to the Center on Budget and Policy Priorities, what's known as the Ryan plan would curb Medicaid spending by $810 billion over 10 years. Federal funding could be cut by 34 percent over the same period.

But fiscal conservatives say that is precisely the point, to reign-in federal Medicaid spending that will only continue to go up under the Obama health care plan, placing more of a burden on taxpayers.

UNIDENTIFIED FEMALE: I think the first step is to kind of set a budget. And then from there let's start talking about what policy changes, working with the states say how can you run your program better?

SYLVESTER: And the Romney campaign in a statement saying, quote, "as a former governor, Mitt Romney understands that states, not the federal government, are best positioned to help their residence in need."

Under the Romney proposal states will have the flexibility to use federal funding to develop innovative solutions that better serve their Medicaid populations including children like Brayden.

With the nation's debt crisis, lawmakers are facing pressure to cut spending. But talk of cuts to the Medicaid program could have political repercussions. The liberal group, "Families USA," say the changing could hurt one group in a big way.

RON POLLACK, FAMILIES USA: You're going to have seniors who need long-term care who may have dementia or some other significant long- term set of disabilities. They're not going to get the care they need.

SYLVESTER: Back at the Byersdorfer's, Brayden has been thriving since coming home, reunited with his twin and his 4-year-old brother. The family says what made all the difference, the Medicaid program.

(END VIDEOTAPE)

SYLVESTER: So in many ways it's a philosophical question. Who should make the decisions about Medicaid, states or the federal government? And what's more of a priority, curbing the deficit or expanding health coverage -- Wolf. BLITZER: It's really a good piece and a good explanation, Lisa. Thanks very much for doing that. We're going to be going in depth on a lot of these substantive issues over these next 48 days until election. Appreciate it very much.

Mitt Romney's remarks about government dependency have some conservatives cringing and others cheering. David Frum, Donna Brazile, they are standing by to weigh in.

(COMMERCIAL BREAK)

BLITZER: Let's get right to our "Strategy Session." Lots to discuss with CNN contributor and Democratic strategist, Donna Brazile and also David Frum, he is contributing editor at the "Daily Beast" and "Newsweek." Guys, thanks very much for coming in.

Let me start with you, David. Mary Matalin, the Republican strategist, a CNN contributor was here in THE SITUATION ROOM yesterday reacting to the controversy surrounding Mitt Romney's 47 percent comments, the uproar that has developed. And she said this.

(BEGIN VIDEO CLIP)

MARY MATALIN, CNN POLITICAL CONTRIBUTOR: There are makers and takers. There are producers and there are parasites. And people -- Americans can distinguish between those who have produced paid in through no fault of their own because Obama's horrible policies, cannot get a job or underemployed, that's what the campaign is about.

(END VIDEO CLIP)

BLITZER: All right, she's among those Republicans saying go, Mitt, go. Don't back down. What you said was perfectly correct. A lot of other Republicans not so sure, where do you stand?

DAVID FRUM, CNN CONTRIBUTOR: I think that particular remark is somewhere between unfortunate and deplorable. You know, it's right --

BLITZER: You're talking about Mary Matalin.

FRUM: Right. The president's economic policies have not generated the growth we need. And Republicans are offering an alternative. I hope it's a better alternative. And that's the case for the out party when the in party is presiding over slow growth like this.

But in the middle of the worst recession, the economy since the 1930s to offer people out of work insults, to try to chop up and say you are good and you are not and to talk -- to use the language of parasite, parasites are microbes not people.

Although scientist friend tell me they can be bigger than microbes. I think this is a destructive way to think. Mitt Romney should be running to be president of the whole country. If you don't run to be president of all the country, you won't be elected president of any of it.

BLITZER: But you know there are a lot of Republicans out there who are saying exactly what Romney said, get -- designed to get out the base. Get out those loyal Republican voters, energize them.

Make sure they show up in Ohio, Virginia, Florida, on Election Day or if there's early elections to make sure they vote, and what he said will energize that base.

DONNA BRAZILE, CNN POLITICAL CONTRIBUTOR: Well, if they find out that they're part of the 47 percent, Wolf, it will not energize people. It will not energize retirees who believe they've earned the opportunity to have a better life and retire.

It will not energize veterans. It will not energize low income working Americans. I don't think Mitt Romney should be applauded for saying something that insults 47 percent of the American people. What he said was deplorable, reprehensible and it was shocking.

BLITZER: I'm not surprise today hear you say that. But I am surprised to a certain degree, David, basically you agree with Donna.

FRUM: I'm not going to -- candidates make a lot of mistakes under the pressure of the moment. And I think we need a lot of charity for what people say. They are recorded all the time. I can't get through a single day without saying something stupid.

And Mitt Romney is expected to get through an entire two- year campaign without saying anything stupid. That said, let's remember if the 47 percent are people who don't pay income tax, a lot of those people are Republicans.

The single -- a fifth of them are retirees, one of the strongest Republican constituencies in the country. And they don't pay income tax because Social Security is not taxed. They pay income tax through their lives.

I don't think this way of breaking out virtuous and un-virtuous parts of the country is helpful. There are more people on Wall Street who pay a lot of income tax who have yet managed to do more damage to the finances of the United States by bad financial decisions than they will ever repay if they earn a billion dollars a year.

BLITZER: And those people who are on Medicare, the elderly or Social Security, they paid into it. They paid premiums for 30 or 40 years while they were working so they would get that benefit once they retire. This isn't a freebee.

They paid into that system. It's a government-run health care system or a government-run insurance system but people, Donna, paid into that. So if they're living 65 and older and getting Social Security and Medicare, they earned that. They paid for it.

BRAZILE: I just want you to know, if President Obama were to say that, I would criticize him as well. I feel very strongly. I think any American should feel strongly you have somebody running for the president of the United States of America that's all of us regardless of party affiliation.

And he goes out and insults and then he doubles down on it. He acts as if the rest of us, the 47 percent or the 50 or 80, 90 percent don't care about our neighbor whether they're working or not working, they were struggling in this economy, probably struggle next year, that's why we're all in this together.

FRUM: I don't want to personalize this to Mitt Romney. Mitt Romney is really a pragmatic practical problem solver who brought in the country's first universal health care program. He would make an excellent president.

What happened to him in that crowd was he began to channel the talk of the conservative world. And what has been happening in the past 48 hours is conservatives all over the country who launch this 53 percent versus 47 percent who have taken such a radical point of view, who have reshaped Romney away from his own instincts into someone who can be their robot or repeat their things.

They are now going to attack him and criticize him for getting into trouble for saying the lines they fed to him. If there's going to be a responsibility here, Mitt Romney is a capable person, he would be a good president, blame the people who launched this whole line of attack. It was a terrible mistake.

BRAZILE: That's good advice, David.

BLITZER: Peggy Noonan had this advice. Peggy Noonan, a former speechwriter for Ronald Reagan as a lot of us remembered. She advised Mitt Romney this. I'll put it up on the screen.

Be serious and fight. If you're going to lose, lose honorably. If you're going to win, do it with meaning. She basically said the headline was it's time for an intervention. What do you think of that advice?

BRAZILE: Well, look, I totally agree with Peggy Noonan. I sent her an e-mail this morning. I said, Peggy, you know, you and I come from working class backgrounds. This is about everybody, the American dream. I thought she was spot-on in that article.

FRUM: You know, this whole talk of fighting that when you're in trouble as a candidate, your partisans, Republican or Democrat will tell you fight harder, tell people more how you hate President Bush or President Obama.

But Americans as a whole do not want the person who puts his or her finger on the nuclear button to be angry, divisive and jumping. What they are looking for in a president is somebody stable, calm, capable, reassuring.

The way to run for president is to start by being the president. Act the way the president should act and presidents are strong, but they are not argumentative. They uphold their beliefs. They are not fighters.

BLITZER: All right, guys, standby. We have much more to talk about.

Despite the political firestorm that Mitt Romney's secretly taped remarks have sparked, the president's reaction is not as harsh as you might imagine in this hotly contested race. We're going to examine his strategy when we come back.

(COMMERCIAL BREAK)

BLITZER: We're back with CNN contributor and Democratic strategist Donna Brazile and David Frum, the contributing editor of "Daily Beast" and "Newsweek."

Here's the president's reaction, he was on with David Letterman last night to this whole uproar involving Mitt Romney and the so-called 47 percent.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: When you run for president, you are under the microscope all the time. All of us make mistakes. All of us say the wrong thing once in a while.

That incident in 2008 where, you know, what I said I immediately said and I regret this because I think it sent the wrong message to the country. So people understand, I think, that you're going to make mistakes on the campaign trail.

What I think people want to make sure of though, is that you're not writing off a big chunk of the country. Because the way our democracy works, this is a big country and people disagree a lot.

(END VIDEO CLIP)

BLITZER: He was afraid of the comments at the fundraiser in San Francisco when he spoke I guess derisively of people who cling to their guns and their religion. He later backtracked obviously, but he got a lot of grief from that incident.

You got to be careful what you say at fundraising events obviously if you're running for president. But is he throwing Mitt Romney a lifeline there or indirectly criticizing him for not coming out the next day and sort of apologizing and saying here's what I really meant to say?

FRUM: Well, I don't think the president intends to help Mitt Romney and he also understands sometimes when your opponent is in trouble, the right thing to do is stand back.

For example, after the attack on the Benghazi consulate that the right thing to do is you say nothing because when an American ambassador is killed, that probably indicates that some serious mistake happened.

That's a good moment to say nothing and to wait for facts to emerge. This president has a record that is difficult to defend in a lot of respects, job creation, bad, economic growth, too slow.

And his foreign policy initiative looks like it is going up in flames. That's the place where Mitt Romney should go. And of course, President Obama and his team wake up every morning and say how can we make today be about anything other than that? Unfortunately, so far they're doing pretty well.

BRAZILE: You know, I think this president has a tremendous record to go out there and tell the American people. Stabilizing the economy, 30 months of consecutive job growth, Bin Laden dead, Gadhafi gone, al Qaeda weakened.

Look, we shouldn't run this election on the Republican terms nor should President Obama have to respond every time Mitt Romney makes a mistake and try to prop him up. Mitt Romney has been running for president for well over seven years.

He understands what's at stake. He has chosen to use the language of the most extreme wing of the Republican Party. For that he's getting in trouble with the majority of American who are not part of the extreme wing of the Republican Party.

BLITZER: You see, what I thought Romney should have said is here's what I meant to say, Obama's going to get 45 percent or 47 percent of the vote, that's pretty obvious. I'm going to get 45 percent or 47 percent of the vote. That's pretty obvious.

We're both fighting for that 8 percent or 10 percent undecided or switchable vote in a few key battleground states. That's what I really meant to say, but it didn't come out that way.

FRUM: Right. Well, the identification of the people who are going to vote for President Obama with the people who don't -- who are unable to pay income tax if they don't earn enough, it's just intellectually wrong.

That's not who -- those two different categories that each happen to number about 47 percent happen to be. He made a mistake. But if he were right now running the kind of campaign that he needs to run, he could shake off the mistake.

Candidates make mistakes all the time. His mistakes tend not to matter although they seem to matter on cable TV and for the day. If you've got a universal message, a real message of economic hope, you can survive anything.

BLITZER: He still has three presidential debates coming up beginning October 3rd. One-on-one 90 minutes against the president of the United States.

BRAZILE: Look, I wish this election was over with. Wolf, I can't wait to get back in my kitchen and cook. We have 48 more days for debates including the vice presidential one.

But you know what? Mitt Romney's problem, Peggy Noonan is absolutely right. He's running such a small campaign. He's appealing to the base, not appealing to the majority of Americans. Therefore, he might be limited to the base he's singing to and not the choir he wants to sing to.

BLITZER: He's definitely trying to get the base out and show up on Election Day. As the president is trying to get his base out, energize them, both of these guy haves to energize their respective bases if they want elected. Thanks, guys, thanks very much.

The French government is closing embassies embracing for real trouble. You'll find out how a satirical magazine is provoking the Muslim world.

(COMMERCIAL BREAK)

BLITZER: Jack's back with the "Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Question this hour, Wolf, is the redistribution of wealth President Obama's answer to America's problems?

Rich writes from Texas, "Only if you're Robin Hood. Look, Jack, most people work hard for their money. They don't want the government taking more of it away from them to give to someone the government deems is more worthy of it. If politicians were so good at managing other people's money, we wouldn't be in debt up to our eyeballs right now."

Lou writes, "I wish we lived in the country where everybody did well enough to take care of themselves all the time. But the painful truth is we live in a country where the Kardashians have become millionaires by releasing a sex tape while some of our elderly veterans go hungry.

Can we at least help feed the elderly, poor children and the disabled so we don't look like coming off like total jerks to the rest of the world?"

David in Mississippi writes, "It's not a redistribution of wealth, it's the devaluation of our currency. The fed is printing money out of thin air, backed by nothing more than the word of lying, cheating politicians."

Steve writes, "No, Jack, the redistribution of wealth isn't the answer to our problems, money should not be redistributed, it should be earned. If money is to be effectively redistributed, then it's by better job training for the poor so they can earn money rather than having it handed to them."

Tee writes, "If redistribution means paying down the national debt then I'm all for it." And Richard in Pennsylvania writes, "Sure, why not. It's worked so well in Russia and China, not. This is the typical socialist mantra spewed by Obama and his leftist allies.

Redistribution would stifle innovation and the desire to constantly improve ourselves. Why establish goals if it will benefit from government handouts no matter what you do and whether or not you succeed? This is and always will be a bad idea."

If you want to read more on this, go to the blog, cnn.com/caffertyfile or through our post on THE SITUATION ROOM's Facebook page -- Wolf.

BLITZER: Jack, thanks very much.