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Martinez: McCain gets an "incomplete"

Florida Sen. Mel Martinez endorsed John McCain and is credited with helping him win the Florida primary.

But that didn't stop the former HUD chief from criticizing McCain's stance on the mortgage meltdown.

Appearing on CNN's Late Edition, Martinez said he'd give McCain an "incomplete" for saying that it's "not the duty of government to bail out and reward those who act irresponsibly whether they're big banks or small borrowers."

"He stated the obvious, which is that we cannot rescue those who made poor investments and poor decisions," Martinez said. "However where I think he fell short, and where I think he will agree with me, is that we need to do some things that can help families, that can help people."

"There are some things that need to be done that we can do without a bailout of investors who made bad investments, that are focused on families," Martinez said.

The Republican senator, who appeared with his Democratic counterpart, Sen. Bill Nelson, said he agrees with Nelson that the parties need to overhaul the presidential primary process. Florida Republicans were also sanctioned for holding an early primary in violation of national party rules, though the party lost only half its delegates.

"I agree with Bill that we have to go ahead and reform the primary system, but I'm not ready to junk the electoral college," Martinez said. "I think the balance we've had in our nation, which has been so wise for centuries, two centuries, of having small and large states participate in the election of our president, I think ought to be preserved.

"But I totally agree with Bill that we need to redo the primary," he said. "We need to regionalize them and come up with a sequential way of doing them that takes out the kind of nonsense we've had this year."

Read the full transcript in comments.

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lesley clark

BLITZER: The presidential campaign remaining at a boiling point this past week as the Democrats battle for the nomination, and Senator John McCain turned his attention to November.

Let's discuss this and more with two guests. Joining us now, senators from the same state but with very different points of view. The former chairman of the Republican National Committee, Senator Mel Martinez, is joining us from Orlando, and in Jacksonville, Democratic Senator Bill Nelson. He's endorsed Hillary Clinton. Senator Nelson also this week issued a major proposal to try to completely restructure the primary campaigns and to actually do away with the electoral college system in the general election.
We'll discuss all of that, senators, in a moment. But I want to talk about Iraq, what's happening right now, and play for you a rather upbeat assessment we heard earlier in the week from President Bush on -- coinciding, in effect, with the fifth anniversary of the start of the war.

(BEGIN VIDEO CLIP)

BUSH: The surge is doing what it was designed to do. It's helping Iraqis reclaim security and restart political and economic life. It is bringing America closer to a key strategic victory in the war against these extremists and radicals.

(END VIDEO CLIP)

BLITZER: Is he right, Senator Nelson?

NELSON: Our military, you give them a job, they're going to do it, and they're going to do it well. But that doesn't solve the problem in Iraq. You've got to get political reconciliation between the Sunnis and the Shiites. And within the Shiites, there are several warring factions, and we're seeing that played out in Basra as we speak.
So, the fact is, the president put way too much a rosy picture because he just focused on the military. Military's doing their job very well.

BLITZER: We heard earlier, Senator Martinez, Republican Senator Chuck Hagel basically say this is a fairy tale, "Alice in Wonderland" assessment from the president, what's up is down. He's very gloomy. As you know, he's been a severe critic of the president's strategy for the past few years.
How worried are you, Senator Martinez, that right now this is a turning point, a potential pivotal point, as the president himself says, and it could go either way?

MARTINEZ: Well, clearly, Wolf, this is a critical point. The Shia militias cannot be allowed to go unfettered all throughout Iraq. And so, when President or Prime Minister Maliki decided to take them on in Basra, this is a sign of progress. This is a sign that the Iraqi military feels sufficiently confident that they can take the fight to the enemy, that they in fact have pacified now the Sunni insurgency, and they're moving now towards the Shia militias.
It is critical to know now whether they can in fact succeed militarily. But in addition to that, today there are also some signs that maybe this is leading to a political reconciliation, which is long overdue. If we can create the kind of political reconciliation among Shia militants that we have done with the Sunnis, we'll be well on our way to the kind of political reconciliation that I know President Bush as well as Senator Nelson has said is in fact what needs to take place.
It isn't just a military solution. It's critical that political reconciliation take place. However, you cannot do that when there are militias that are even out of the control of the very radical Muqtada al-Sadr.

BLITZER: All right. Let's -- unless you want to respond to that, Senator Nelson? Otherwise, I want to move on to the economy.

NELSON: No. You can move on.

BLITZER: Let's talk about what's happening in the economy right now. John McCain offered this assessment in terms of a general philosophy in dealing with the mortgage meltdown, the subprime crisis, and I want to play it for you. Listen to this.

(BEGIN VIDEO CLIP)

MCCAIN: I've always been committed to the principle that it's not the duty of government to bail out and reward those who act irresponsibly, whether they're big banks or small borrowers.

(END VIDEO CLIP)

BLITZER: Is he right?

NELSON: Are you asking me?

BLITZER: Senator Nelson.

NELSON: Well, he's right until you get to a point where the economy starts into a meltdown. And then the question is, is there going to be government rescue?
If the government didn't do anything in the 1930s, we would have been in a heck of a fix. And we're in that kind of situation today. You're seeing how these banks and these investment banks are overextended, and now we see how this is playing out in the private marketplace where people are hurting.
They can't afford these adjustable-rate mortgages. They can't make their mortgage payments. And so the question is, is the government going to get in and give them some assistance? And I think clearly the answer to that has to be yes.

BLITZER: Here's what Senator Clinton, Senator Martinez, said about McCain's philosophy, McCain's approach, as he expressed it this week in his economic speech: "It sounds remarkably like Herbert Hoover, and I don't think that's good economic policy. The government has a number of tools at its disposal. I think that inaction has contributed to the problems we face today, and I believe further inaction would exacerbate those problems." What do you think?

MARTINEZ: Well, I don't think her solution is a good one either. I have to say that for her to simply freeze foreclosures, which is a nice though, just wouldn't work. But I would give Senator McCain an incomplete. He stated the obvious, which is that we cannot rescue those who made poor investments and poor decisions.
However, where I think he fell short, and I think you will agree with me, is the fact that we need to do some things that can help families, that can help people. I believe that to modernize the FHA, which is long overdue, is something that would have a good and strong impact without it being a bailout of bad investments.
So, I would hope that tomorrow, when we go back after our Easter recess, that we will work across partisan lines, Republicans and Democrats, to come together with a package of solutions that are realistic about those things which can be done. There are some things that need to be done that we can do without a bailout of investors who made bad investments, that are focused on families, focused on solutions that we can do through FHA and other mechanisms.

BLITZER: And Henry Paulson, the Treasury secretary, Senator Nelson, he says it is time for the government to step in. He's got some new initiatives that he wants to push through, but they're long term.
He said this the other day. He said on Thursday, "This latest episode has highlighted that the world has changed, as has the role of other non-backed financial institutions and the interconnectedness among all financial institutions. These changes require us all to think more broadly about the regulatory and supervisory framework."
It's a more assertive involvement, more regulation if you will. You're on board with that, I assume.

NELSON: Yes, sir. And that's an important clue that the Bush administration is realizing that the private marketplace isn't going to handle this on its own. Paulson is calling for greater regulation. And if some of those regulatory agencies hadn't been asleep at the switch, we might not be in as bad a shape as we are now.

BLITZER: Do you believe, Senator Martinez, as someone who supports John McCain, that if the economy in November is as rough as it is right now, and maybe it could even get worse for all we know, that the normal tradition is that the power -- the party in power in the White House pays the price at the ballot box and not only McCain would suffer but Republican candidates in the House and Senate would go down as well?

MARTINEZ: Wolf, there's also a divided government. The Democrats are in control of the Congress, and there is a great deal that Congress can do. I believe that Secretary Paulson is just correct in what he says.
We have regulation occurring at about four different places. These institutions have evolved tremendously in a world marketplace since the days of the Great Depression when these institutions were put in place. We need greater regulation over all financial institutions, that Congress can act.
We need to regulate Fannie and Freddie, two giants in the industry that are not well-regulated today. I put a lot of responsibility on the Congressional leadership in the hands of the Democrats to get some things done to reach across party lines to reach to us Republicans that want to work with them. I look forward to working with Senator Dodd and others on the Banking Committee so that we can move these ideas forward.

BLITZER: All right.

MARTINEZ: It is time to act.

NELSON: Wolf?

BLITZER: Yeah.

NELSON: Where we are right now is an example that the Bush administration has paid more attention to Wall Street instead of Main Street. And you know, it's time to start changing, and I think Paulson at least has given some indication we're going to change.

BLITZER: All right. Let me get both of you to weigh in on Senator Nelson's sweeping proposal for electoral reform, not only in the primary system but to basically do away, to abolish the electoral college. . You say it's unfair. There should simply be a popular vote, Senator Nelson, who should be elected president of the United States.
As you know, that would require a constitutional amendment, which would have to be ratified by three-fourths of the state legislatures. That's virtually impossible to conceive, given the small states, their interest in prolonging, keeping the electoral college alive. Otherwise, these presidential candidates are not going to pay much attention to them. Ho you do you get over that hurdle?

NELSON: Well, you have to start somewhere, and I don't think anybody in America is satisfied with the mess that we're in now. And the proposal that I put out has many, many things. Mel and I live in a state where it's a lot easier to vote now because of some of the troubles that we've had.
Things like early voting for two weeks before the election, absentee ballots on demand. Let's restructure this crazy primary system that has penalized our state and where states were jumping ahead of each other. And if you keep doing it we'll have the first primaries in Halloween. You know, it's time for reform on the principle of one person, one vote. Let the ballot count.

BLITZER: All right. I'm going to quickly let Senator Martinez, former chairman of the Republican Party, respond.

MARTINEZ: Well, I first can't let Senator Nelson's cheap shot at the president stand. I really don't think that the president has only worried about Wall Street. I think he's also worried about Main Street. A lot of the proposals he put forward on reform for the housing industry and on the mortgage crisis reflect that.
But let me say on the situation, I agree with Bill that we have got to go ahead and reform the primary system, but I'm not ready to junk the electoral college. I think the balance we've had in our nation, which has been so wise for centuries, two centuries, of having small and large states participate in the election of our president, I think ought to be preserved.
But I totally agree with Bill that we need to redo the primary. We need to regionalize them and come up with a sequential way of doing them that takes out the kind of nonsense we've had this year.

BLITZER: All right, senators, thanks to both of you for coming in. Senator Martinez, Senator Nelson, always good to have both of you on "Late Edition."

NELSON: Thanks, Wolf.

MARTINEZ: Thank you.

Joefucious

Great coverage.

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