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CNN WOLF BLITZER REPORTS

Bush Warns Iran; Will Hillary Clinton Run for White House in 2008?; Dozens Hurt from Car Bomb in Madrid; Baltimore Mayor Faces Fire over Comments about Bush policies

Aired February 9, 2005 - 17:00   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. He asked questions of President Bush, now there are questions circling over this one-time White House reporter.
Stand by for hard news on WOLF BLITZER REPORTS.

(BEGIN VIDEOTAPE)

BLITZER (voice-over): A warning to Iran.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Don't develop a nuclear weapon.

BLITZER: What happens if diplomacy fails?

A new CNN poll picks her as a favorite for president. Will she run in 2008? I'll speak with Hillary Rodham Clinton.

(on camera): Are you saying you want to be senator from New York State forever or are you ruling out a presidential...

SEN. HILLARY RODHAM CLINTON (D), NEW YORK: You are good. You are so good.

BLITZER (voice-over): Car bomb chaos.

UNIDENTIFIED MALE: I saw the women with blood on their faces, streaming down the side of their faces.

BLITZER: Dozens hurt in Madrid. Has an old foe opened a new campaign of terror?

The mayor's mess. He says he was wronged by rumors of an affair.

UNIDENTIFIED MALE: These are despicable lies. These are falsehoods.

BLITZER: But should he take back what he said about the president's policies?

ANNOUNCER: This is WOLF BLITZER REPORTS for Wednesday, February 9th, 2005.

(END VIDEOTAPE) BLITZER: The Bush administration says it's not planning on another war, but in Europe today and here in Washington, it was turning up the diplomatic heat on Iran and Iran's nuclear program.

(BEGIN VIDEO CLIP)

BUSH: Iran with a nuclear weapon would be a very destabilizing force in the world.

BLITZER (voice-over): A blunt warning from President Bush to the government of Iran. It came as Secretary of State Condoleezza Rice neared the end of her European tour where she's been asking allies to get behind efforts to halt Iran's nuclear program.

CONDOLEEZZA RICE, SECRETARY OF STATE: Iran should not use the cover of civilian nuclear power development to sustain a program that could lead to a nuclear weapon.

BLITZER: Iran, which insists its nuclear program is intended only for energy production, has refused to halt its activities. The Bush administration is pushing diplomacy as the way to get Iran to reconsider.

BUSH: The Iranians just need to know that the free world is working together to send a very clear message. Don't develop a nuclear weapon.

BLITZER: British Prime Minister Tony Blair says the world is united in its message to Iran's leaders.

TONY BLAIR, BRITISH PRIME MINISTER: They cannot breach the rules of the atomic energy authority and they cannot develop nuclear weapons capability. That is the very clear wish of the entire international community.

BLITZER: Despite the tough rhetoric, Secretary Rice said she could envision no circumstances in which the U.S. would attack Iran during President Bush's second term.

RICE: The question is simply not on the agenda at this point in time. No. We have diplomatic means to do this.

BLITZER: Some critics are skeptical. They say the administration's statements on Iran sound disturbingly similar to its statements leading up to the war in Iraq.

DAVID KAY, FMR. U.S. WEAPONS INSPECTOR: A sense of the Yogi Berra's term, "it's deja vu all over again." You have the secretary of defense talking about problems of a nuclear-armed Iraq -- Iran, pardon me. You have the vice president warning about a nuclear-armed Iran and terrorism. You have Condoleezza Rice saying force is not on the agenda yet.

(END VIDEOTAPE)

BLITZER: In Iraq today, insurgents ambushed an American convoy north of Baghdad, killing one soldier and wounding another. In the capital, a blunder led to a bloody gun battle when a car drove into the wrong neighborhood.

Our senior international correspondent Nic Robertson has the story from Baghdad.

(BEGIN VIDEOTAPE)

NIC ROBERTSON, CNN SR. INTL. CORRESPONDENT: That vehicle was being driven by members of the Patriotic Union of Kurdistan party, the PUK Kurdish political party. Apparently they took a wrong turn, driving down Haifa Street close to the center of Baghdad. This street is known to have a high level of insurgent activity.

Some areas on that street, the street is lined by high apartment buildings where insurgents were able to dominate the territory, able to shoot down vehicles on the road. U.S. troops have passed through that area often come under fire. Insurgents use that area to fire mortars at the Green Zone on occasion.

What happened when this group of Kurdish officials drove down this street? They came under insurgent gunfire. There was a gun battle. The gun battle lasted at least half an hour. Three of the Kurdish officials were killed. A plume of black smoke was seen coming up from the area, apparently from when their vehicle was burned at the end of attack.

Earlier in the day, an interior ministry official was kidnapped. This time the interior ministry say they do not know where he is. They say he was a very senior official. They don't know which insurgent group is holding him that the time. Their investigations are ongoing.

And in the south of the country, in the southern city of Basra, an Iraqi journalist working for a U.S.-funded Arabic language station, the Alhurra channel, was killed. He was leaving his house in the morning, getting ready to go to work, getting ready to get into his car outside his house. As he did that his two bodyguards went back into the house, just when they left him, the gunmen drove up, sprayed him with bullets, killing not only him, but his 3-year-old son who was with him at the time.

Nic Robertson, CNN, Baghdad.

(END VIDEOTAPE)

BLITZER: We'll have more on the situation in Iraq, including when U.S. troops may withdraw, plus new warnings to Iran to halt its nuclear program. I'll speak about both subjects and more with Senators Hillary Clinton and Lindsey Graham. That's coming up this hour. That's an interview you'll see only here on CNN.

On edge since last year's devastating railway bombing, Spain got a fresh taste of terror earlier today. A car bomb blew up in Madrid shortly before Spain's royal couple and the visiting Mexican president were to open an international art fair. Forty-three people were hurt. As our Madrid bureau chief Al Goodman reports, it could have been worse.

(BEGIN VIDEOTAPE)

AL GOODMAN, CNN MADRID BUREAU CHIEF (voice-over): Explosives were packed into a stolen car left near a convention center that the king and queen of Spain were due to visit. The blast injured several dozen workers inside an office building.

TOM LYONS, WITNESS: There was a lot of crying. A lot of women were crying. There was blood on people -- on these floors, a lot of women had -- I saw the women with blood on their face, streaming down the side of their faces.

GOODMAN: Officials blamed the Basque separatist group ETA. An ETA warning call about half an hour before the blast alerted authorities and police were trying to seal off the area when the bomb exploded.

This Irishman works in the building hit by the blast.

LYONS: I looked around the corner. I could see smoke from what I thought was coming out of the building. I thought the building had been hit. I just legged it. I just left. I just got out of there. I told everyone, get out!

GOODMAN (on camera): With the car bombing, ETA appears to have blasted its way back into the center of Spain's national political debate where it has often been during more than three decades of violence.

(voice-over): Police last autumn arrested ETA's suspected top leaders and seized weapon, but this blast has ended recent talk of a possible cease-fire by the group. The Spanish interior minister says it's a timely reminder.

JOSE ANTONIO ALONSO, SPANISH INTERIOR MINISTER (through translator): The understanding is that the terrorist group ETA has weakened. It hasn't a political or social future, but it has, as I've said in the past, operational capability.

GOODMAN: for those close to the scene, relief and a sense of what might have been.

LYONS: I walk by here every day. If I came to work -- I arrived at work today at about 10 to 9:00, and if I had arrived 10 minutes earlier or 10 minutes later or 20 minutes later, you know, you start to think, oh, God. You know?

GOODMAN: Al Goodman, CNN, Madrid.

(END VIDEOTAPE)

BLITZER: Let's take a look at some other news making headlines around the world. (BEGIN VIDEOTAPE)

BLITZER (voice-over): America's Cardinal James Stafford celebrated Ash Wednesday Mass at St. Peter's Basilica, substituting for Pope John Paul II. The Pope, still recovering from the flu, led a small Mass in his hospital room.

Chinese New Year. China marked the arrival of the lunar new year with fireworks, incense, drums and bells. Some children celebrated the new year, Year of the Rooster, by doing a chicken dance.

And forget about Spongebob Squarepants. What about Germany's gay penguins? The penguins at Germany's Bremerton Zoo were mating but they weren't producing baby penguins. Finally zookeepers figured out why. Twelve of the 13 penguins are males. Now they're bringing in some female penguins in an attempt, shall we say, to straighten things out.

And that's our look around the world.

(END VIDEOTAPE)

BLITZER: When we come back, a big city mayor's mess. First allegations about his personal life, now foot in mouth. We'll show you how he's fighting back.

Also this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: All of the claimants should take a DNA test, he says, if the test proves the child belongs to someone else, I'll commit suicide.

(END VIDEO CLIP)

BLITZER: One baby, nine families claiming him. Heartbreaking fallout from December's tsunami.

And is there something fishy in the White House press room? One reporter quits and there are allegations flying all around. We'll tell you what's going on.

(COMMERCIAL BREAK)

BLITZER: An up and coming mayor may have gotten himself out of one jam today but quickly finds himself caught up in another jam. His troubles have to do with what people are saying about him and what he's saying about the president of the United States. Let's get some details. CNN's Brian Todd joining us now live -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Wolf, Baltimore Mayor Martin O'Malley is considered a rising star in the Democratic party but he's now coming off a very rough news cycle in which his judgment has come into question.

(BEGIN VIDEOTAPE)

(voice-over): A classic political spectacle, a young ambitious mayor addresses rumors of an extramarital affair.

MAYOR MARTIN O'MALLEY (D), BALTIMORE, MARYLAND: These are despicable lies. These are falsehoods. I have always been faithful to my wife from our first date until this date.

TODD: His wife, a Baltimore judge, tells how the stories have affected their 7-year-old son who recently needed his report card signed.

CATHERINE O'MALLEY, MAYOR'S WIFE: ...And I signed it and put it back in his folder and he pulled it back out and said, "no, no, daddy has to sign it, too." And I said, "Daddy doesn't have to sign it, William, put it back in there," and I started to get a little frustrated with him because he was insisting that Martin sign the report card. And then he said to me, "if daddy doesn't sign it then they're going to think that we're in a divorce." And I just looked at him and my heart broke.

TODD: Rumors about Baltimore Mayor Martin O'Malley have been rampant for more than a year. His prospective opponent for Maryland governor next year incumbent Robert Ehrlich just fired an aide accused of spreading allegations over the Internet.

GOV. ROBERT EHRLICH (R), MARYLAND: Inappropriate behavior in an inappropriate venue. We don't put up with it. He should have known it.

TODD: Back in Baltimore, Wednesday's news conference could have taken the heat off O'Malley if it hadn't come a day after this remark about President Bush's budget cuts.

O'MALLEY: Back on September 11, terrorists attacked our metropolitan course, two of America's great cities. They did that because they knew that that was where they could do the most damage and weaken us the most. Years later, we are given a budget proposal by our commander-in-chief, the president of the United States, and with a budget axe. He is attacking America cities.

TODD: That wasn't even the first statement of its kind from O'Malley. Last summer he said the Bush administration worried him more than al Qaeda.

Contacted by CNN, an O'Malley aide said in both instances he was trying to make the point that America's cities need to be strengthened and he never meant to compare the president to terrorists.

A White House spokesman responded to Tuesday's comments with a statement. Quote, "the president has tripled funding for homeland security since 9/11 for fighting the war on terror, and I'm sure the mayor would rather have phrased that in a different way."

(END VIDEOTAPE) TODD (on camera): A spokesman for Mayor O'Malley tells us he knows how to deal with tough news cycles. His office is also handling reports about the city's rising homicide rate. When I asked him if his boss might make any future implications about President Bush and terrorists. He said I don't know, I doubt it.

BLITZER: Is he still thinking of running for governor? Is that still out there, Brian?

TODD: He's going to run for governor. His aides tell me that he's laid the foundation. He is thinking very strongly about it. He's a rising star and it will probably happen. He'll challenge the governor Ehrlich.

BLITZER: We'll see what happens. Thanks very much, Brian Todd reporting.

A new push to improve benefits from members of the National Guard and Reserves. Senators Hillary Clinton and Lindsey Graham join me to talk about their efforts to help the troops. This is an interview you'll see only here on CNN.

Plus, looking ahead to 2008. Does Senator Clinton have her eyes on the Democratic presidential nomination? I'll ask her.

And later...

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Takes a little chutzpah. Takes a little cash and it takes a lot of talent.

(END VIDEO CLIP)

BLITZER: Fashion elite, major star power and shows that will make or break a designer. Our Mary Snow takes us behind the scenes of New York's fashion week. Stay with us.

(COMMERCIAL BREAK)

BLITZER: She's a former first lady, northeast senator and Democrat. He's an Air Force veteran, southern senator and Republican. He also helped lead the fight in the U.S. House of Representatives to impeach her husband. But this political odd couple is now coming together to fight for benefits for the National Guard and Reserves. I spoke about that and much more with Senators Hillary Clinton and Lindsey Graham earlier today.

(BEGIN VIDEOTAPE)

BLITZER: Senator Clinton, Senator Graham, thanks very much for joining us here in the Russell Rotunda. Let's talk a little bit about the second class citizenship that you feel is now in effect for U.S. military personnel who are National Guard and Reserve troops.

SEN. HILLARY CLINTON (D), NEW YORK: Well, Wolf, about two years ago, Lindsey and I teamed up to try to do something about the conditions confronting a lot of our Guard and reserve members. We were concerned because so many of them didn't have health insurance so that when they showed up after being activated, they were not ready to be deployed because of health problems.

That the extra tempo requirements of service for our Guard and Reserve was putting a lot of strain and stress on them and their families. And so they were actually doing much more active duty work but the retirement age hadn't been adjusted.

So we've been making progress on that. And we're going to continue to push -- to try to make it a fairer situation for Guard and reserve members.

BLITZER: So Senator Graham, what specifically do you want, because a lot people hear the words "health care," "Hillary," "Senator Graham," and they're saying, what's going on over here?

(LAUGHTER)

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: Well, I think Senator Clinton and myself want to make sure those who are fighting for this country are taken care of in a very reasonable, efficient manner. If you're a member of the Guard or the reserve, most Americans don't know this, you have absolutely no access to military health care.

A temporary employee working in our office has access to federal health care. Every part time employee of the federal government has access to federal health care except Guard and reserve members. Twenty percent of the Guard and reserve has no health care in the private sector. So what happens when you activate these people, a lot of them are unable to be deployed because they're not medically fit.

So we're saying allow Guard and reserve members to sign up for military health care. Let them pay a premium when they're in reserve and Guard status, like a retiree, so when they're called to active duty, they'll be ready to go to the fight.

And number two, to help these families, these families have suffered a lot for our country. And to provide them year-round health care I think would be the least we could do.

BLITZER: You have a bipartisan group of cosponsors, a wide spectrum. But does the Pentagon -- does the Bush administration support this, let's ask Senator Graham.

GRAHAM: They have actually come around, but they have followed us. They are worried about personnel cost, and we all should be worried about personnel cost. But let me tell you this. You can't do this war on the cheap.

If you're a Guard or reserve member working in the private sector and you're called up for a year or two years, your income goes down more times that not. You have two health care systems. Your family would be in one health care system. You're called to active duty, they're bounced to another. Let's stop this bouncing around, give them access to full time health care. It would help recruiting and retention. And I hope the Bush administration will come on board for full time access to military health care for the Guard and reserve.

BLITZER: Like Senator Graham, you're a member of the Armed Services Committee. What else do you think needs to be done to make sure the National Guard troops, the reserve troops, 40 percent of the U.S. troops in Iraq right now are from the National Guard and the reserve, what else do you believe needs to be done to make sure they are not second class citizens in the U.S. military?

CLINTON: Well, there is a lot. And one of the other aspects of the legislation we originally introduced was to lower the retirement age so that there was more credit gained toward retirement by Guard and reserve members.

We also have to make sure they have the same top flight equipment and training, especially because now they are on the front lines.

BLITZER: You don't think they do?

CLINTON: Well, originally they did not. In many instances, I had a lot of complaints, not only from New York but from elsewhere in the country, where some of the Guard and reserve units that were being called up had not been given the kind of equipment and training that active duty military forces...

BLITZER: Were they rummaging through the junkyards in Kuwait, looking for armor?

CLINTON: I don't have any personal knowledge of that. We all remember the very pointed question that Secretary Rumsfeld was asked. You know, we've made progress on these fronts. But I think it's clear, we have some big questions in front of us as to what we're going to do with the size of our military, particularly the Army, how we're going to utilize Guard and reserve units.

We made a decision at the end of the Cold War to kind of move certain functions into Guard and reserve. And they were thought to be kind of non-combat, supportive functions, things like civil affairs and military police and the like. And we have found out that those people are essential in the kinds of wars that we fight today.

BLITZER: Are you satisfied with the role that has been carved out for the Guard and the reserve as part of a fighting force for the U.S. military?

GRAHAM: It's being over-utilized and underserved. The Guard and reserve is an indispensable part of the war on terror, 40 percent of the people, as Senator Clinton said. By the end of the year, there will be Guard and reservists in Afghanistan and Iraq. Every member serving in Bosnia -- and we're still in Bosnia, for a reason, is a member of the Guard.

So we're going to break the back of our Guard and reserve forces. We have some people in specialties like she has described that are in Iraq on their second tour. Some are going to go back for the third time. It makes it very hard to maintain a civilian job.

A lot of times when you're called to active duty, you have a pay cut. We really don't address that issue. You can't retire until you're 60 as a member of the Guard or reserve. What we're saying is if you'll serve the 30, retire at 55, for every two years you serve past 20, you can retire a year earlier, to keep the best and the brightest in the system.

I'm still a member of the reserves. And I can tell you anecdotally I hear more complaints than I've ever heard. These are the most patriotic people in the world. Their health care network is not working so that they'll be ready to go to the fight. If you want to recruit and retain these people, you need to sweeten the pot. And that's where Republicans and Democrats should find some common ground.

(END VIDEOTAPE)

BLITZER: We'll have more of the interview with Senators Clinton and Graham. That's coming up just ahead including talk of a White House run in 2008. Does the senator from New York State have presidential ambitions? I'll ask her.

Plus, an infant without an identity in the aftermath of the tsunami. DNA tests taken to find the true parents of Baby 81.

And later, controversy surrounding a former White House reporter and the questions he recently asked President Bush.

(COMMERCIAL BREAK)

ANNOUNCER: From our studios in Washington again, Wolf Blitzer.

BLITZER: Welcome back. Who will be the Democratic front runner in 2008? A new CNN/USA Today/Gallup poll has just been released and Senator Hillary Clinton weighs in on the results. That's coming up.

First, though, a quick check of other stories "Now in the News."

You're looking at a live picture in Florida. A massive manhunt under way for a suspected cop killer is over. A police dispatcher says 29-year-old Jason Wheeler is in police custody. Our affiliate WFTV tell us the police you're seeing in this picture down below have him in custody. Officials say he shot three Lake County sheriff deputies earlier this morning when he responded to what was described as a domestic violence call. One of the deputies died from his injuries.

The Food and Drug administration is backing off its tough warning that antidepressants can cause suicidal actions among children. The FDA now says short-term studies indicate antidepressants such as Zoloft, Paxil and Prozac increase the risk of suicidal thinking and behavior in children with depression and other psychiatric disorders.

Media organizations are asking an appeals court to end some of the secrecy surrounding the Michael Jackson child molestation case. Some key aspects remain hidden by gag orders, including the grand jury indictment describing Jackson's alleged crimes.

Let's get back to our interview now with Democratic Senator and Republican Senator Lindsey Graham. This political odd couple is working together on benefits for the National Guard and Reserves. We also talked to them about Iran, Iraq and when U.S. troops might be coming home.

(BEGIN VIDEOTAPE)

BLITZER: Let's talk about the situation in Iraq for a moment. You've been there.

And I assume you've been there as well, Senator Graham?

GRAHAM: Yes, I have, twice.

BLITZER: Are you encouraged by the aftermath of the elections?

CLINTON: Well, I was very encouraged by the elections. I put out a statement the Friday before the elections because I thought it was important that all Americans be united behind this experiment in democracy and that we wish the Iraqi people well.

The elections did go off, I think, surprisingly well. But there are still so many problems. I mean, the election is the beginning. It's not the end of anything. And...

BLITZER: Are you concerned that this election could result in an Islamist theocracy emerging democratically in Iraq?

CLINTON: Of course I am.

I'm concerned about it both for the people of Iraq, particularly the women of Iraq. And I'm concerned about the role that Iran might play in such a government. And I'm concerned about the ongoing relationship then that a new government in Iraq would have, not just with the United States, but with the rest of the world. So, I have a lot of concerns.

And I think it comes down to the quality of the leadership, the Shiite leadership in Iraq that will emerge from this election. Will they be open-minded and statesmanlike to reach out to the Sunnis? Will they continue to give the Kurds the kind of autonomy that the Kurds deserve to have? Will they recognize that civil authority is separate from religious authority? These are the big questions. And I think all of us are sort of holding our breath hoping that this works out well.

BLITZER: Some of your fellow Republicans, including Senator McCain, a man that you supported, you like a lot, have expressed a lack of confidence in Secretary of Defense Rumsfeld.

GRAHAM: Well, rather than being -- have personal differences, here's what I think is a fair criticism.

The elections were a sea change in the Mideast. It was a turning point. But look what we did to secure the elections. We added troops. We focused on security like we have never focused on security before. We made sure the resource were there to make the election successful. If we think we've turned the corner, this is a misreading of what happened.

The attacks are going to continue. The constitution will be written this year. The theocracy side of the story could unfold. We need more resources, not less. We need not to consider that this fight is over. An American footprint in Iraq is going to be significant for a long time to come, because the challenges of this country are significant.

I think it's fair to say that, in the past, we underestimated the insurgency. We didn't have the right skill mix. We've overrelied on the Guard and Reserves. We've adjusted for the election. That adjustment needs to continue. It's a long way before we can come home with honor.

BLITZER: So reducing the number from 150,000 right now, as they're planning on doing, to around 135,000, at least for the balance of the year, you think that's a mistake?

GRAHAM: The theory is that Iraqis will replace those 15,000 troops. I believe in the Powell doctrine. I would rather have an overwhelming presence during these tenuous times than try to bring one person home too early, because the constitution hasn't been written. There's two more elections to come.

It's very -- we are a long way from a stable Iraq. So, rather than trying to come home early, stay there with force, just like we did for the election, so that we can win this thing. Please do not underestimate what the Iraqi people face.

BLITZER: It sounds, though -- and you're a member of the Armed Services Committee -- as if the U.S. military is already overstretched. If you want to add troops to the situation in Iraq, it looks like it is going to be a difficult ordeal for the Pentagon.

GRAHAM: Right.

CLINTON: Well, that's absolutely true.

And I have so many questions and disagreements with the way that the administration, particularly the Pentagon, has pursued the mission in Iraq. And there are no easy answers. And what I worry about, to echo some of what Lindsey said, is that we can't act as though this election is some kind of determining point. It isn't. It is a beginning.

And, obviously, we are now going to be there at the pleasure of the Iraqi government. I think it makes sense for the United States to do everything possible to expedite the military training of the Iraqis. But we have to stay with enough presence to try to not only to stabilize the security situation, but to continue to demonstrate to those Iraqis taking authority the kind of government that is in the long-term interest of the Iraqi people. BLITZER: Let's stay in the region briefly. We don't have a lot of time.

Iran. Based on what you know, is there a viable military option, precision strikes to take out Iran's nuclear facilities, if diplomacy fails?

GRAHAM: The honest answer is, I don't know the military portfolio, what it would take to engage Iran. I hope diplomatic means work.

But back to the question she just asked. If we do not dramatically increase the number of troops in the Army and the Marine Corps, we will have made a mistake, because the stress on the current active force over time is unbearable. Let's increase the number of men and women in uniform. That takes pressure off the Guard and Reserves.

The one thing I want us to learn from this war is the commitments that we have throughout the world cannot be maintained with this number of people doing this many deployments.

(END VIDEOTAPE)

BLITZER: A new CNN/"USA Today"/Gallup poll is certain to renew speculation about a run for the White House for Hillary Clinton. Among Democrats, 40 percent said they would support Senator Clinton for the Democratic presidential nomination in 2008. That's well ahead at this stage, well ahead of John Kerry and John Edwards.

I asked Senator Clinton about this earlier today. Here's what she had to say.

(BEGIN VIDEOTAPE)

CLINTON: Well, Wolf, I'm running for reelection to the Senate.

I have more than I can say grace over right now. There's just so much work to be done. And I just have to say that this budget debate is not just about numbers. It's about values. It's about weather it's more important for us to continue cutting taxes and even to continue to make some of these tax cuts permanent or to try to keep all children who are in working families without insurance covered for their health needs, whether we are going to eliminate support for important programs in the environment, in housing and so much else.

And that's what I'm focused on right now.

BLITZER: So between now and 2006 -- and you're up for reelection in 2006.

CLINTON: Yes, I am.

BLITZER: Will you take any steps, beginning steps, to look at 2008?

(LAUGHTER)

CLINTON: I am focused on 2006. Well, actually, I'm focused on today and tomorrow. I have a very simple idea that I get up, I try to do the best I can every day, and get up and do the next day as well.

BLITZER: But you remember, the last time we did a major interview at the State University of New York at Buffalo, when you were running...

CLINTON: Oh, my goodness. I was.

BLITZER: And, at that time, you ruled out running for president. You wanted to be senator from New York state. Remember that?

CLINTON: Right.

BLITZER: What about now? Are you saying you want to be senator from New York state forever? Or are you ruling out a presidential run?

CLINTON: You are good. You are so good.

BLITZER: Well, go ahead.

CLINTON: That's because you're from Buffalo.

BLITZER: That's right.

CLINTON: You're a Buffalonian.

BLITZER: I remember that day.

CLINTON: And I know how to filibuster, too.

BLITZER: But you don't rule out, rule in...

CLINTON: I'll tell you what. I am running for reelection. I want everybody to know that. I'm focused on it. That's what I'm working on. That's what I care about. I'm doing the best I can to earn the votes of a majority of New Yorkers.

(END VIDEOTAPE)

BLITZER: And much more coming up on the interview with Senators Clinton and Graham tomorrow, including their comments on President Bush's budget cuts. Senator Clinton, by the way, will also clarify her recent comments, somewhat controversial, on abortion rights for women. That's coming up on this program tomorrow, more of the interview.

One of the smallest tsunami survivors, but whose baby is he? Why the answer may soon be revealed.

Also, there's buzz about one White House reporter, at least a former White House reporter. Details of the controversy, why he quit his job. Our Howard Kurtz has been investigating. Plus, make-or-break time in New York, why Fashion Week is more than just clothes. CNN's Mary Snow, she'll join us live from New York with details.

(COMMERCIAL BREAK)

BLITZER: One baby and no fewer than nine families claiming him. It's one of the thousands of heart-wrenching stories to come out of the December tsunami that hit South Asia, but this one is about to reach a climax.

Zain Verjee is joining us now from the CNN Center with details -- Zain.

ZAIN VERJEE, CNN CORRESPONDENT: Wolf, a DNA test was conducted in Sri Lanka today to determine the identity of a 3-month-old infant.

(BEGIN VIDEOTAPE)

VERJEE (voice-over): Caked in mud, wrenched from his parents in an instant, now alone. To the hospital staff, this is baby No. 81, given a number because no one knew his name the day the tsunami casualties started pouring in. A month and a half later the baby's identity still unknown amid the tragedy, confusion.

Nine different women claimed him as their son. But only one couple, the Jeyarajahs, went to court to press their claim. They say this is what's left of the baby's home, no family records to speak of. But hospital officials say they can't release the baby until they're sure about his identity.

DR. K. MUHUNTHAN, KALMUNAI BASE HOSPITAL: We don't want the baby to be bonded with someone before it is proved that this is their real baby.

VERJEE: After a bumpy nine-hour ride in an ambulance the boy arrived at a laboratory in Columbia for a DNA test. Lab officials say the results of the test will determine who the baby's parents are with a 99.9 percent certainty.

MURUGUPILLAI JEYARAJAH, CLAIMANT: If the test proves the child belongs to someone else, I'll commit suicide.

VERJEE: It will take at least two days to get those results and it will take two or three additional days to get those results to a judge. For now, the Jeyarajahs wait and hope.

GEOFF KEELE, UNICEF: This is a family that has lost everything, their home, their furniture. They've lost everything that they have. And whether or not they are the actual parents of this child, it's important to remember that they've been through an incredible amount of trauma.

(END VIDEOTAPE)

VERJEE: The Jeyarajahs had DNA tests today as well in an effort to prove that they have genetic links to the baby -- Wolf.

BLITZER: Zain Verjee reporting for us. We'll be watching this story, what a heartbreaking story, indeed. Thanks, Zain, very much.

A White House reporter controversy. Was one reporter asking easy questions to divert attention from tough questions being asked by other reporters? There's a bit of a scandal going to, and our Howard Kurtz standing by with details.

Plus, do you know what's going to be in style next year? Our Mary Snow does. She's live from Manhattan as Fashion Week wraps up in New York City.

(COMMERCIAL BREAK)

BLITZER: High drama, high prices and high fashion are converging this week in New York City, where the semi-annual Fashion Week is now under way. And it's high stakes for up-and-coming designers.

CNN's Mary Snow is joining us now live from Manhattan. She has the story -- Mary.

MARY SNOW, CNN CORRESPONDENT: Hi there, Wolf. And long lines. You might be able to see behind me that people are lining up for tonight's shows. There are about 70 designers showing their designs throughout this week here in New York. One of the themes is luxury for the fall lineup.

And no matter who's on the label, one thing that designers want to see on that label, that their designs are very hot.

(BEGIN VIDEOTAPE)

SNOW (voice-over): From Hollywood chic to political elite, they line the catwalks. With them comes the paparazzi, the fans and the clout to make or break a designer.

FERN MALLIS, EXECUTIVE DIRECTOR, "7TH ON SIXTH": This is your moment in the sun. This is your 20 minutes.

SNOW: For an upcoming designer like Derek Lam, New York's Fashion Week is a rite of passage.

DEREK LAM, DESIGNER: What Fashion Week means to me is really high school graduation. It's everything, you know, for designers.

SNOW: Everything means getting noticed.

(on camera): What does it take to get a show here?

MALLIS: It takes a little chutzpah. It takes a little cash. And it takes a lot of talent.

SNOW (voice-over): From backstage to front, it takes more than just a little cash to model your latest threads, such as the new Bill Blass collection. UNIDENTIFIED MALE: We'll spend $500,000 in 15 minutes.

SNOW: And that's about all the time you get on the runway from well-known names like Oscar de la Renta.

OSCAR DE LA RENTA, DESIGNER: What is exciting to me about fashion, as you know, is that there is no frontier. There is no limit.

SNOW: To lessen-known ones like Yigal Azrouel, who worked for months to get from the showroom.

YIGAL AZROUEL, DESIGNER: I want to see one more time walking.

SNOW: To this audience.

AZROUEL: Everything was the way that I wanted it to look like. All the girl looks very rich, very decadent, very modern. So...

SNOW: Decadence, a theme for the next season, even with the formerly controversial fur making a comeback, with designers hoping to make their mark on an audience ranging from fashionista reporters to Wall Street bankers and a growing number of celebrities, designers hoping their moment in the sun will attract financing, celebrities and fame to get from the runway to the red carpet.

TOM JULIAN, TREND ANALYST: The red carpet is the perfect opportunity for that fashion designer to dress a celebrity and keep their story going. And thanks to the Oscar world today, that red carpet has really become the Super Bowl of fashion.

SNOW: And a first for this year's finale, Sweet Face from singer, actress and now fashionista Jennifer Lopez.

(END VIDEOTAPE)

SNOW: And a lot of buzz about the J.Lo show that will wrap things up here on Friday. And, in the meantime, Wolf, I'm just trying to avoid being arrested by the fashion police -- back to you.

BLITZER: I don't think you're going to be arrested in that. There is a huge amount of money involved this week in New York as well. Is there some sort of estimate, how much money this means for New York, for the fashion industry?

SNOW: Well, you know, it's certainly in the millions. And it is a very big draw for the economy, because so many people come here. This is an event that happens twice a year. So, you have people flocking here to New York. That's helping the economy.

And also for the designers, this is a big economic boost. They're trying to get financing from the people in that audience, including Wall Street types, who do come here to these shows to scope things out.

BLITZER: Mary Snow reporting from Fashion Week in New York City -- Mary, thanks very much.

We'll take a quick break. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: Welcome back.

There's growing buzz here in Washington, as well as over on the Internet, about a White House reporter some say was acting on behalf of a conservative group.

Howard Kurtz of CNN's "RELIABLE SOURCES" and "The Washington Post" joining us from "The Washington Post" newsroom.

What's going on here, Howie?

HOWARD KURTZ, "RELIABLE SOURCES": Well, Jeff Gannon is his name. At least that's the name he uses professionally. It's not his real name.

And he's a reporter for a couple of online sites. He's a self- described conservative journalist. One of the Web sites his work appears on is called GOPUSA. And he pretty much operated below the radar until he got the chance to ask President Bush a question two weeks ago. Let's take a look at that.

(BEGIN VIDEO CLIP)

QUESTION: Senate Democratic leaders have painted a very bleak picture of the U.S. economy. Harry Reid was talking about soup lines, and Hillary Clinton was talking about the economy being on the verge of collapse. Yet, in the same breath, they say that Social Security is rock-solid and there's no crisis there. How are you going to work -- you said you're going to reach out to these people -- how are you going to work with people who seem to have divorced themselves from reality?

(END VIDEO CLIP)

KURTZ: Now, that question, Wolf, kind of put a target on Jeff Gannon's back. A lot of liberal bloggers began digging into his background. In the last 24 hours, they've exposed his real name. They've raised questions about some sexually provocative Web addresses that he registered on one of his companies, but never actually did anything with.

And Gannon has now resigned from the two Web sites that he was writing for.

BLITZER: Is there any evidence that there's a connection, that the White House put him up to this to throw these kind of questions whether to Scott McClellan or to the president? Any evidence of wrongdoing, first of all, on the part of the White House?

KURTZ: No evidence whatsoever. I talked to Scott McClellan about this today, the White House spokesman. He said, first of all, President Bush didn't know who Jeff Gannon was when he called on him at that news conference.

But McClellan knows who he is. He calls on him at White House briefings from time to time. He says that there are a lot of people in the White House press room who have strong opinions and sometimes put them into their questions and it's not his job as the press secretary to be deciding who can get into the White House and who can't based on their political views.

Gannon, by the way, says, sure, he's very conservative. He makes no bones about that. But he thinks that a lot of the reporters in the White House press room are liberal, and he provides some balance.

BLITZER: What's the name of the organization, the news organization, he reported for. And what political connections did you discover may or may not exist to that news organization?

KURTZ: Well, he writes for a site called Talon News, which appears to be kind of a straight news site. But all of the stories that he writes also appear on a site that's called GOPUSA, which, as you might expect, is a conservative site. In fact, it's motto is: We're bringing the conservative message to America.

And both of those sites are owned by a man named Bobby Eberle, who is a Texas Republican activist in the state of Texas. So the issue here isn't really Jeff Gannon's ideology. He's the first to tell you that he comes at journalism from a conservative perspective. The issue I think is, should some of his liberal critics, these liberal bloggers, have started investigating his personal life in an effort to discredit him?

It's fine to disagree with his politics, but did they go too far, I think a lot of people are asking, in dragging in some of this personal stuff?

BLITZER: I used to be a White House correspondent for many years, sat through numerous briefings. There are plenty of journalists that wear their politics on their sleeve, liberals, conservatives. What's wrong with journalists having these kind of views, being advocacy journalists, if you will?

KURTZ: I personally don't think there's anything wrong with it, as long as they make clear what their views are, as Jeff Gannon clearly did.

A lot of people are questioning, well, why does this guy have White House press credentials? Because he doesn't write for a newspaper or magazine. Everything he writes is simply online. But in the age of blogging, that's hardly unusual. And he doesn't have a permanent -- what's called a hard pass. He just gets cleared into the White House on a day-to-day basis, which is a privilege that is pretty much open to any journalist.

So I think it's absolutely fair game to critique his stories, to argue with what he writes, to question his views. And he does that to other members of the press as well. But what precipitated his resignation is that he says that on behalf -- out of concern for his family -- and he told me last week that he had been threatened, that he had been stalked -- this has gotten so personal that he felt he needed to step down as the White House correspondent for Talon News.

BLITZER: And it does come within the context of some of the other embarrassments, Armstrong Williams and some other issues, which we won't get into right now.

But Howard Kurtz doing some digging, doing some reporting for us -- thanks very much, Howard Kurtz.

KURTZ: Thank you.

BLITZER: Writes for "The Washington Post." He's also the host of CNN's "RELIABLE SOURCES." That airs every Sunday morning here on CNN, 11:30 a.m. Eastern.

A reminder, we'll be back tomorrow, 5:00 p.m. Eastern, as well as noon Eastern.

I'm Wolf Blitzer in Washington. "LOU DOBBS TONIGHT" starts right now.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com


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