As Dave and Matt Ortega debate Immigration as a wedge issue, Hillary Clinton feels the fallout of the driver’s-license-for-illegals controversy:

WASHINGTON – Hillary Rodham Clinton’s once-commanding lead in New Hampshire has been slashed – a sign that the simmering driver’s-license controversy may have bled into the critical first-primary state, a new poll shows.

Clinton leads top Democratic rival Barack Obama by only 10 percentage points – 34 to 24 – in the latest Rasmussen Reports poll, her smallest edge of the season. John Edwards comes in third, at 15 percent.

A month ago, Clinton had a 23-point lead in the same survey.

Republicans are not alone in their opposition to government benefits for illegal aliens.* A recent poll conducted by Rasmussen Reports found that 68% of Democrats and 75% of Independents disapprove of the government issuing driver’s licenses to illegal aliens. 56% of New Yorkers were found to oppose Gov. Spitzer’s action in this regard.

Why the disconnect?

“She lives in a liberal echo chamber,” said New York Congressman Peter King in a interview conducted with myself late last week. “Everyone she knows feels the same way that she does. These are the circles that she runs in.”

If New York’s junior Senator is unable to provide leadership on a policy in which 56% of her fellow New Yorkers disapprove, Congressman King has a suggestion for someone who can: “Rudy Giuliani is adamantly opposed to driver’s licenses for illegal aliens.”

So much so, that Giuliani has proposed federal legislation to ban the practice to Rep. King and Texas Congressman Pete Sessions:

Rudy Giuliani on Wednesday called on Congress to prohibit states from giving driver’s licenses or similar forms of identification to illegal immigrants …

After accepting an endorsement in Washington , D.C. , from Christian conservative Pat Robertson, Giuliani said he called Republican Reps. Pete Sessions of Texas and Peter King of New York that morning to propose the legislation. …

“There seems to be … a loophole that allows states not (to) give a license that would be a real ID but some other form of a license. That would make things hopelessly confusing for the immigration service,” Giuliani said.

The Republican frontrunner added that Democratic candidate Hillary Clinton’s proposal to allow states to decide whether to grant the licenses could obstruct the ability of the federal government to secure the borders. …

Giuliani said … that federalism is not the answer on this issue.

“The idea is the federal government is supposed to secure the borders, the federal government is supposed to regulate immigration. If we had 50 different regulations for immigration in the United States , it would become the picture that we have right now, which is a very, very confusing picture.”

Giuliani had more to say on the Mike Gallagher show:

MIKE GALLAGHER: “Democrat Hillary Rodham Clinton has again changed her position apparently on whether she supports granting driver’s licenses to illegals. Yesterday she said now it depends on the state.”

MAYOR GIULIANI: “Hillary, welcome to the Federalist Society. … I mean, I have never heard Hillary ever express a position about you know states’ discretion, federalism and she happens to pick the one area that is actually a core responsibility of the federal government. If there [is] one area in which–look, you want to talk about voting, you want to talk about guns, you talk to about things like that, federalism, you know, is there and it’s a very important part of it. But this is a core responsibility of federal government, preventing illegal immigration, securing our borders. …”

GALLAGHER: I mean Mayor, I’ve got to read for our listeners exactly what she said. … Here’s the quote. Her answer, and I quote, ‘It depends upon what state they’re in. It depends upon what they think the risks are. A governor of New York that has a lot of immigrants, many of whom we know are not there legally, has to worry about security. A governor of another state where that’s not a problem doesn’t.’ So you know it’s state to state. It’s going-let’s just flip a coin, you know?”

MAYOR GIULIANI: “And who ever said that immigration is a core responsibility of a governor, a state legislature? It’s the federal government. I called Pete King and Pete Sessions today, who are two friends of mine in Congress and supporters of mine, and I asked them to consider introducing legislation that would basically prohibit a state from giving a driver’s license or an official identification of any kind to an illegal immigrant. And it seems to me that they’re relying on a loophole in the legislation that was passed a year or so ago regarding identification and they’re saying ‘Oh you know, if they don’t want to have a REAL ID they can give out any form of identification they want.’ This would totally obstruct the enforcement of the federal immigration laws.”

GALLAGHER: “It’s a nightmare.”

MAYOR GIULIANI: “And therefore I think it is a very legitimate area for Congress to legislate.”

GALLAGHER: “Right. Absolutely.” …

MAYOR GIULIANI: “[Y]ou can’t be giving out things that look official to illegal immigrants; otherwise we can’t do employer verification. How can we penalize an employer if there are 50 different states giving out all kinds of identification to illegal immigrants? Every employer would have a right to say how can you come after me? How do I know who’s legal?”

GALLAGHER: “Yeah, ‘I’m looking. I’m trying to do the right thing here. How can you punish me?’ I mean again the irony of the nightmare that Hillary Clinton has found herself in, and this is a mess. I mean this poor woman is flipping a coin I think on a daily basis over this issue, but she represents a state as a U.S. Senator where the Democratic governor, Eliot Spitzer started this whole quagmire and I think Eliot Spitzer is finding in your state, Mr. Mayor, in New York , just a tidal wave of resistance. Is he not?”

MAYOR GIULIANI: “He is and that’s remarkable. I mean New York is generally regarded as a Democratic and liberal state right? I think the disapproval of this is 78 percent. … Ok, this is not liberal or conservative.”

GALLAGHER: “No, this is right or wrong.”

MAYOR GIULIANI: “But this is just, honestly Mike this is common sense. Whatever your views on immigration legal or illegal, it makes no sense to give out identification to people who are here illegally when you’re trying regulate other forms of what goes on with … employment, travel …”

GALLAGHER: “So where does Eliot Spitzer go from here as the governor of this thing?”

MAYOR GIULIANI: “He’s got to back off. I don’t think he has the Democratic votes to pass it. Republicans just won big races in upstate New York , I mean big ones. I mean this guy won upstate New York , he did really well, he had a high approval rating. Republicans just won in Onondaga County and Erie County .”

GALLAGHER: “Right.”

MAYOR GIULIANI: “I think he’s going to back off. I think Congress should do an up or down vote on prohibiting governors in states from giving out licenses and other forms of identification [to illegal immigrants].”

More to come on the proposed legislation soon. _____________________________________________________________________________________

*It’s not just driver’s licenses either. 73% of Americans believe that people who are pulled over for a traffic violations should be routinely checked to see if they are in the country legally by the police officer who is making the stop. That figure includes 67% of Democrats and 69% of Independents. 56% of Democrats believe that illegals found in this manner should be deported. That figures climbs to 62% for Independents and 70% of Republicans.