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THE SITUATION ROOM

Passenger Ferry Sinks In Persian Gulf; Senate And House Debating Immigration Reform; Immigration Issues Top Of Agenda At North American Summit; 25th Anniversary Of Reagan Shooting; John McCain Interview

Aired March 30, 2006 - 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: To our viewers, you're in THE SITUATION ROOM, where new information and pictures are arriving all the time. Standing by, CNN reporters across the United States and around the world to bring you today's top stories.
Happening now, a passenger ferry sinks in the Persian Gulf. Some Western tourists are on board. We're going to have a live report from the Pentagon. The U.S. Navy involved in rescue efforts right now.

Plus, two fronts, two fights in the immigration wars. It's 3:00 p.m. in Cancun, Mexico, where President Bush is now feeling the heat.

Back here in Washington, the Senate is debating a controversial bill and whether it amounts to amnesty for illegal immigrants.

Also this hour, a major figure in the immigration debate, Senator John McCain, joins us live. I'll ask him about border security, his latest trip to Iraq and his own presidential ambitions.

And protecting the president 25 years after Ronald Reagan was shot. It's 4:00 p.m. here in Washington. We'll look back at what happened then and how presidents are guarded now.

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

Up first, the developing story we're watching off the coast of Bahrain in the Persian Gulf. U.S. Navy divers and helicopters heading to the scene of a ship accident in the Persian Gulf. A senior Bahrainian official says a passenger ferry sank with about 150 people onboard, including some Western tourists.

Our Pentagon correspondent Barbara Starr is following this story. She's got the latest from the Pentagon.

What do we know, Barbara?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Wolf, at this hour, the story is still unfolding. But the U.S. Navy now joining with Bahraini authorities in this rescue effort off the coast of Bahrain in the Persian Gulf.

According to official news agency reports, this ship, which was carrying tourists, apparently overturned less than a mile off the coastline of Bahrain. And at this hour, U.S. Navy officials are confirming they are sending a number of divers, small boats and helicopters to the scene to join with Bahrainian authorities in a rescue effort.

Darkness, of course, has fallen and they are moving as quickly as they can to try and rescue anyone who may be in the water. These initial reports are very sketchy. The officials that we have spoken to out in Bahrain in the last few minutes say they are still trying to make a determination as to what exactly they are dealing with.

But the U.S. Navy, which is headquartered in Bahrain in the Persian Gulf, now rushing all of its available assets to the accident site, to work with the Bahrainis to try and rescue whoever may be in the water -- Wolf.

BLITZER: Do we know where this ferry was going, where it was heading?

STARR: According to agency -- news agency reports, Wolf, this was a tourist boat, essentially. It was on an evening cruise. Now, of course, these waters off of Bahrain are very busy waters. It is a large fishing area. There are a number of those fishing dhows that move through these waters, cargo ships, military ships, and indeed tourist ships.

Bahrain is a place -- a very relaxed, open country in the Persian Gulf where there are a number of international visitors who come to visit. And by all accounts this was a tourist evening cruise, if you will. Not clear what, of course, what made the boat overturn, whether it possibly ran into something or had an accident or what. That is what officials are trying to determine, of course. But they are moving to the accident scene at this hour just as quickly as they possibly can.

BLITZER: Bahrain, the home of the U.S. Navy's Fifth Fleet in the Persian Gulf. Barbara, we'll get back to you as soon as we get some more details. Thanks very much.

On Capitol Hill right now, a fierce debate underway in the Senate. And the stakes are huge for America's security and for the fate of millions of illegal immigrants and for election year politics, as well. President Bush, meantime, is in Mexico meeting with his counterparts from north and south of the border. He's under serious pressure to try to convince Congress to let more Mexicans work legally in the United States.

Our White House correspondent Elaine Quijano is traveling with the president. She's standing by. But first let's go to Andrea Koppel. She's standing by on Capitol Hill, where there have been some important developments, potentially at least, today -- Andrea.

ANDREA KOPPEL, CNN STATE DEPARTMENT CORRESPONDENT: Wolf, I just ran into Senator John McCain, Republican from Arizona, one of the border states, who is also one of the sponsors of the bill that's being debated right now on the floor of the this Senate. And he said to me what is going on right now is transcendent. Senator Edward Kennedy, another sponsor of this legislation, a Democrat, said that he believes it is one of the most important moments in the history of the United States.

You get a sense there, Wolf, of the amount of emotions that are involved on this on both sides of the aisle. We've heard heartfelt statements by senators, many of whom shared stories of how their grandparents had come to this country and how they were immigrants and said it's something that hits close to home.

But the way you have things right now, it's shaping up into two camps. On one side, you have the majority leader, Bill Frist, who's saying that essentially to lay out a path to citizenship, to the 11 to 12 million illegal immigrants in this country, is tantamount to amnesty. On the other side, you have many Republicans and Democrats who are saying if you don't lay out that path, if you don't offer them a way out, what do you do?

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: I've yet to hear a single proponent at this point to offer one realistic proposal for locating, apprehending and returning to their countries of origin over 11 million people. How do we do that?

(END VIDEO CLIP)

KOPPEL: Now, over in the House today -- as you know, the House already passed its legislation -- very tough border enforcement, but nothing to do with what many people refer to as a guest worker program. One of the leading proponents of the House legislation is Tom Tancredo, Republican of Colorado, who stood before an enormous banner with an X going through the word "amnesty." He said that according to recent polls, Americans are not in favor of legalizing those illegal aliens.

(BEGIN VIDEO CLIP)

SEN. TOM TANCREDO (R), COLORADO: John Q. Citizen doesn't want it. They don't want the Senate plan. What they want is clear and simple. They want to secure the border. And they want to go after the people who are hiring people who are here illegally. They want us to begin to control this problem.

(END VIDEO CLIP)

KOPPEL: As things stand right now, we're expecting debate to continue through next week. Wolf, we're hearing from Arlen Specter, the chairman of the Judiciary Committee, that he wants a vote by the end of the week. But it's really a tall order as things stand right now -- Wolf.

BLITZER: Andrea Koppel, thank you very much.

Let's move on to President Bush. He's in Mexico for that North American summit. Immigration issues at the top of the agenda.

Our White House correspondent Elaine Quijano is joining us now live from Cancun. What happened today, Elaine?

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Well, good afternoon to you, Wolf.

That first bilateral meeting is scheduled to take place this afternoon. In fact, within the hour is when we expect President Bush to sit down face to face with Mexico's President Vicente Fox as part of this two-day summit. And, of course, immigration the issue that will be front and center, expected to be certainly as emotional here in Mexico as it is in the United States.

Now, earlier today, the three leaders -- Presidents Bush and Fox as well as the Canadian Prime Minister Stephen Harper -- took a tour of the nearby Mayan ruins at Chichen Itza. Afterwards, President Fox acknowledged to reporters that the immigration issue was largely out of his and President Bush's hands, saying it was essentially up to the United States Congress.

And here in Mexico, of course, there are huge concerns about this, the proposals floated by some lawmakers that would make illegal immigration a crime because there are an estimated six million illegal immigrants from Mexico living in the United States.

Also on the agenda as part of this trilateral summit, of course, trade and economic issues. But really, Wolf, immigration continues to be at the top of the list, as people here in Mexico watch that debate in Congress very closely -- Wolf.

BLITZER: They're going to be having a news conference, the three of them, tomorrow. Is that right, Elaine?

QUIJANO: That's correct. And, in fact, there is the opportunity, as well, after these bilateral meetings, for them to make comments. Unclear whether or not they'll take questions, but certainly there is that scheduled time for a news conference tomorrow.

BLITZER: Elaine, thank you very much. Elaine Quijano on the scene in Cancun.

There's another demonstration today of outrage about a potential crackdown on immigrants like the one approved by the House. More than 500 high school students took to the streets in Arlington, Virginia -- that's outside Washington -- for a third day in a row, most of them Latino. And many chanted in Spanish, "We are not criminals."

We'll have much more coming up on the battle over the borders. I'll speak live this hour with Senator John McCain. He's a leading Republican advocate of allowing illegal immigrants to work toward some legal status in this country.

And immigration politics under the microscope. That's coming up as well, this hour in our "Strategy Session."

Our other top story today, the release of the American hostage Jill Carroll from captivity in Iraq. Let's bring in our Zain Verjee. She's joining us from the CNN Global Headquarters with more on this story -- Zain.

ZAIN VERJEE, CNN ANCHOR: Wolf, after nearly three months in captivity, Jill Carroll says that she's happy to be free and just wants to be reunited with her family. The American journalist was freed today in Iraq. Just after her release, Carroll was interviewed at the headquarters of the Iraqi Islamic Party in Baghdad. She said that her captors treated her well, never threatened her with harm and that she had nice furniture and she was given some clothing as well. She also had this to say about her time in captivity.

(BEGIN VIDEO CLIP)

JILL CARROLL, FREE JOURNALIST: They didn't tell me what was going on. They would come, bring me my food. I would eat. It was fine. I would go to the bathroom. But I was not allowed to...

UNIDENTIFIED MALE: You felt that you were quite distant from Baghdad?

JILL CARROLL: I really don't know where I was. The room had a window but the glass -- you can't see and its curtains. And you couldn't hear any sound. So I would sit in the room. If I had to take a shower, I walk two feet to next door, take a shower, go to the bathroom, come back. That's all. So I don't know what -- where I was or what was going on.

(END VIDEO CLIP)

VERJEE: Earlier today Carroll's father reacted to the good news.

(BEGIN VIDEO CLIP)

JIM CARROLL, FATHER OF JILL CARROLL: It was a fantastic conversation, obviously. We're feeling ecstatic. It's been a long haul and we're done with it now. And want to make sure all of us thank the people who helped and also make sure all of you and the media particularly don't forget the other American hostages and other hostages of all nationalities still being held in Iraq.

(END VIDEO CLIP)

VERJEE: And it's important to remember that point he made. One of our reporters in Baghdad said that there are so many Iraqi hostages still being held this day and they don't get the kind of attention that someone like Jill Carroll does -- Wolf.

BLITZER: Our heart goes out to all of them, Zain, thank you very much.

Let's get some more though on Jill Carroll's release. Let's bring in our Internet reporter, Abbi Tatton.

ABBI TATTON, CNN INTERNET REPORTER: Yes, Wolf, from the Web site of the "Christian Science Monitor," this is the newspaper for which Jill Carroll was freelancing at the time of her abduction. Since earlier this morning, they've been posting updates every 15 minutes or half an hour, news of the release and also statements from the family. Also, the editor of the newspaper, Richard Bergenheim, said the newspaper was absolutely thrilled at this news. Back to you, Wolf.

BLITZER: Quick question. Have they said anything on that Web site from the "Christian Science Monitor" about whether that newspaper paid any ransom, paid any money for the release of Jill?

TATTON: At this point it seems unclear, sticking to the statements from the family, from the editor, and also the board of directors, Wolf.

BLITZER: All right, Abbi, thank you very much.

Time for Jack Cafferty. That means we go to New York and "The Cafferty File." Once again, Hi Jack.

JACK CAFFERTY, CNN ANCHOR: We begin with a quote, Wolf. "I'll let the geniuses in Washington figure all that out." That was California Governor Arnold Schwarzenegger, when he was asked what should be done about the millions of illegal aliens living in California.

The governor later offered more details. He wrote in the "Los Angeles Times" that the first thing the federal government should do is secure our borders. There's a good idea. He said he supports a guest worker program and argued against criminalizing immigrants for coming here, although he said making citizens out of all illegal immigrants would be anarchy, his word.

A new poll out shows that illegal immigration is the No. 1 concern for Republicans in California and the second most important issue for all of the people polled. So the question is this, what do you think Governor Schwarzenegger meant when he said, "I'll let the geniuses in Washington figure all that out," when it comes to illegal immigrants in California? E-mail your thoughts to CaffertyFile@CNN.com or go to CNN.com/CaffertyFile.

BLITZER: Geniuses. It shows he's got a great respect for all the people in Washington. Isn't that right, Jack?

CAFFERTY: Obviously. Or of course, everything is relative. You've got to remember, it's Arnold.

BLITZER: Thanks, Jack, get back to you soon.

Coming up, a major decision today concerning gay marriage and a possible top contender for the White House finds himself smack in the middle of the debate.

And they're both up for reelection this November. So how are they doing? We'll take a closer look at the latest polls on Hillary Clinton and Arnold Schwarzenegger.

Plus, remembering an event that shocked the nation, shocked the world 25 years ago to the day after Ronald Reagan was shot. We'll speak with a top adviser to the president, who was by his side that day. Stay with us.

(COMMERCIAL BREAK)

BLITZER: The culture wars and presidential politics colliding on our "Political Radar." The Massachusetts high court ruled today same sex couples from other states cannot legally marry in the Bay State.

A ruling by that same court three years ago made Massachusetts the first state to legalize gay marriage. Republican Governor Mitt Romney ordered local officials to uphold a century-old state law barring non-residents from Massachusetts.

Eight gay couples challenged the law accusing Romney of discriminating against same-sex couples but the state high court ruled in favor of the possible presidential contender. Listen to this.

(BEGIN VIDEO CLIP)

GOV. MITT ROMNEY (R), MASSACHUSETTS: I feel that this is an important victory for those of us who wanted to preserve traditional marriage and to make sure the mistake of Massachusetts doesn't become the mistake of the entire country. We did not want Massachusetts to be the Las Vegas of same sex marriage and that 1913 law was essential to preserve marriage in the other 49 states.

(END VIDEO CLIP)

BLITZER: We're going to have a full report on this story, coming up 7:00 p.m. Eastern here in THE SITUATION ROOM, our Mary Snow is covering this story for us.

Another presidential prospect is holding on to a huge lead in her Senate re-election campaign. A new Quinnipiac poll of New York state voters shows Hillary Clinton with at least a 30 point advantage over the major Republican candidates for her job, K.T. McFarland and John Spencer.

And the Senate Majority Leader Bill Frist, says his current job is, and I'm quoting now, "a terrible, terrible, terrible, terrible post for launching a run for the White House." That was a quote. Frist has been at the center of some tough and some losing political battles lately.

Frist says voters will be are better able to judge him on his own merits once he retires from the Senate next year, another clear sign he potentially intends to run for president. Frist, by the way, is going to be guest on "LATE EDITION" this Sunday, 11:00 a.m. Eastern. "LATE EDITION," the last word in Sunday talk.

In California, a new poll shows Governor Arnold Schwarzenegger with a solid lead over the two Democrats vying to run against him in this fall. The PPIC poll gives Schwarzenegger an eight-point lead over state controller, Steve Westly and a 12-point lead over the state treasurer, Phil Angelides. About 30 percent of likely voters are undecided and pollsters predict the November match-up will be very close. We'll watch every step of the way.

Coming up here in THE SITUATION ROOM, he's just back from Baghdad. I'll speak with Senator John McCain over the battle in Iraq, the battle over immigration, his own presidential ambitions. He's going to join us live right here in THE SITUATION ROOM.

But up next, it was 25 years ago today the assassination attempt on President Ronald Reagan. One of the president's top aides from that momentous day, speaks out. Stay with us, you're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: There's an important developing story we're following. A passenger ferry sank off the coast of Bahrain a little while ago in the Persian Gulf, carrying about 150 people, including an unknown number of westerners, mostly tourists.

Tom Foreman is here in THE SITUATION ROOM. First of all, show our viewers where this occurred.

TOM FOREMAN, CNN CORRESPONDENT: This occurred just in this area here, Saudi Arabia over here, Iran over here, Iraq up there. This is where Bahrain is. If you move in here off the Persian Gulf to the Gulf of Bahrain, you see it's a small country, about 700,000 people.

This is one of the principal areas of sea commerce here. This sounds like a tourist ferry, something that works around there, evening cruises, that sort of thing. They do have some tourist industry there. There are big ferries that go from here all the way over to Iraq. If you go to those position -- or to Iran. Excuse me.

If you go across here, you're going quite a distance, about 150 miles. It can take 16 hours. It doesn't sound like it was one of those ferries, but we do know this. Today, the high temperature there was about 80 degrees, low about 70, so the water temperature would be relatively good for people who had to be in the water quite a while, to sustain life.

Nonetheless, we're not sure what caused this accident. There was no wind today, bright, sunshiny day. We do know that just on the other side of Saudi Arabia two months ago, we had that terrible ferry accident over here where we ended up having close to 1,000 people die in that accident. So a terrible time for that region right now.

BLITZER: We know in Bahrain right now U.S. Navy divers, U.S. Navy ships, helicopters, choppers are on the scene. They're trying to get involved in that rescue operation. Bahrain is the home of the U.S. Navy's Fifth Fleet in the Persian Gulf. We'll get back to you, Tom. Thank you very much.

Other news, it happened 25 years ago today. John Hinckley fired shots that struck President Ronald Reagan and three others outside a hotel here in Washington, D.C. Ronald Reagan was nearly killed that day, and his Press Secretary James Brady was permanently disabled. It was just 70 days into Ronald Reagan's presidency. How well many of us remember that day. Here's how that stunning news first broke here on CNN.

(BEGIN VIDEO CLIP)

BERNARD SHAW, FORMER CNN ANCHOR: Details are very sketchy at this moment. We don't know precisely what happened. We don't know the sequence. First of all, the president is safe.

We're told that shots were fired at his party as he left the hotel. The District of Columbia Metropolitan Police report that at least one police officer and one Secret Service agent have been injured. They were shot down. Their condition we do not know. We are checking both with the Secret Service and with people up at the hotel.

We can report that shots were fired as President Reagan left the Washington Hilton hotel following that address we carried live here on CNN.

(END VIDEO CLIP)

BLITZER: Bernard Shaw, our principal anchor, reporting that news that day, 1981, 25 years ago today.

The attempted assassination of President Ronald Reagan had a huge impact on the White House, indeed on the entire nation.

Our White House correspondent Ed Henry has been talking to some of Ronald Reagan's closest friends and advisers 25 years later, and he's joining us now from the White House -- Ed.

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Wolf, two Reaganites, Lyn Nofziger and Caspar Weinberger both died this week, right on the eve of today's 25th anniversary of the Reagan shooting. Making this week particularly emotional for the tight-knit group of Reagan alumni, especially Michael Deaver, the late president's right-hand man.

(BEGIN VIDEOTAPE)

HENRY (voice-over): The first of the six shots whizzed right past Mike Deaver's right-hand shoulder.

MICHAEL DEAVER, FORMER REAGAN AIDE: The pop, pop, pop of it didn't register for a split second. But then I realized, because of the pandemonium.

HENRY: Press Secretary Jim Brady was hit bad.

DEAVER: There was Jim laying on the ground in a pool of blood.

HENRY: President Reagan appeared safe and was headed to the White House until ...

DEAVER: I said, what the hell? What are we doing? HENRY: Spitting up blood, the president was rushed to the hospital. A bullet in his lung, he was near death.

RONALD REAGAN, FORMER PRESIDENT OF THE UNITED STATES: I had also lost more than half the blood in my body.

HENRY: A terrible surprise for Nancy Reagan.

DEAVER: She turned to me and said, I thought you said he hadn't been shot. And I said, well, that's what I had been told.

HENRY: This was 1981. No cell phones or e-mail. Confusion reigned.

UNIDENTIFIED MALE: As of now, I am in control here.

HENRY: On a random phone, he commandeered at the hospital. Deaver kept an open line to the White House. He had visions of the Kennedy assassination.

DEAVER: What ran through my head when we were in that emergency room was Dallas, what it must have been like.

HENRY: But the tension was alleviated as the president cracked jokes such as telling the first lady, "honey, I forgot to duck." Those iconic moments remind Deaver he's grateful that Reagan survived the shooting just two months into his presidency, and was able to serve two full terms.

DEAVER: To me, it's the grace of the man. Even from the back, you can see how graceful he was.

(END VIDEOTAPE)

HENRY: Deaver notes that the shooting drastically changed White House security forever, especially tighter restrictions on the media, because the shooter, John Hinckley, was able to exploit the media access to get close to Reagan, so it's pushed the media further back from the president even today.

The shooter, John Hinckley, has been in a mental hospital in the Washington, D.C. area for now 25 years. A judge recently decided that he can get overnight visits with his parents. James Brady, as you noted, Wolf, still alive and one of the nation's most passionate advocates for gun control -- Wolf.

BLITZER: Ed Henry, good piece. It brought back a lot of memories for me and I'm sure for a lot of our viewers. Thank you very much, Ed Henry at the White House.

Coming up, the battle over immigration. It's being fought right now on the floor of the U.S. Senate, and it's going to be fought right here in THE SITUATION ROOM as well. That's coming up next in today's "Strategy Session."

Plus, John McCain here in THE SITUATION ROOM. The senior senator from Arizona joins us live to talk about the immigration wars, the conflict in Iraq, and lots more. Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Welcome back. In our "Strategy Session" today, the immigration debate heating up here in Washington on Capitol Hill. Could this be the issue that gives Democrats a chance to gain control of Congress in November?

Joining us, our guests, the Democratic analyst and radio talk show host Bill Press and Terry Jeffrey, the editor of "Human Events." Guys, thanks very much for joining us. Listen to what Tom Tancredo, Republican congressman from Colorado, says about this immigration debate. He's fiercely opposed to anything involving guest workers.

(BEGIN VIDEO CLIP)

TANCREDO: John Q. Citizen doesn't want it. They don't want the Senate plan. What they want is clear and simple. They want to secure the border, and they want to go after the people who are hiring people who are here illegally. They want us to begin to control this problem.

(END VIDEO CLIP)

BLITZER: How huge of an issue for Republicans, Terry, is this immigration battle underway right now?

TERRY JEFFREY, EDITOR, HUMAN EVENTS ONLINE: It's huge. It's clearly the most consequential domestic issue this year. Could be the most controversial of Bush's second term.

The irony is, Wolf, if Bush actually succeeds in getting what he wants, signing a bill that would turn 11 million or more illegal aliens into the United States into legal residents of this country without making them go to their home countries first, he could lose both houses of Congress in November.

BLITZER: Why do you say that?

JEFFREY: Because what matters in the midterm is getting your vote out, getting your base vote out. And when the Republicans alienated their base vote in 1998, the midterm election, they lost seats. They didn't lose control of the House.

This time, I think if they alienate their base with something their people are so worried as about the security of our border and our immigration laws, they could lose the House and the Senate.

BLITZER: The Republican base would sit, basically, on their hands and not vote.

BILL PRESS, RADIO TALK SHOW HOST: First of all, you're never going to hear me say this again, probably. I think George Bush is right on this issue. President Bush is right... BLITZER: Senator Kennedy said that the other day in THE SITUATION ROOM as well.

PRESS: There you go. Look for lightning to strike. But, you know, I've seen this movie before, and I hope Tom Tancredo wins. Because I was Democratic state chair in 1994 when Pete Wilson came in with that Proposition 107, a direct assault on the Latino community on the issue of immigration, just like Tom Tancredo and James Sensenbrenner are doing in the House and some senators are doing.

We were having a hard time as Democrats getting the Latino vote. After Pete Wilson did that, they came out in droves, millions had registered to vote, and the Republican Party lost the Latino for at least ten years, if they ever get it back.

BLITZER: Grover Norquist, who's a Republican, said this yesterday in "The New York Times." He said, "There is a danger that if the face of the Republican Party is Tancredo, that we could be weaker with Hispanics for generations. If the face of the Republican Party is George Bush or Ronald Reagan, we win. This is up for grabs."

JEFFREY: Yes, well, I think it's ridiculous for anybody to talk about the security of our borders and the enforcement of our laws in terms of dividing the country up into ethnic voting blocs. The fact of the matter is, America is a multiethnic country. We have people who have come from all over the world, who have assimilated into our culture.

We are a great nation because of that. But the question in this legislation is number one, are we going to secure or borders? More than four years after September 11th, an all-Republican government hasn't secured our southern borders. That's an outrage.

Secondly, the question is, the establishment of both parties. Harry Reid and Bill Frist, Dennis Hastert and the president and Nancy Pelosi, are going to say, "We are going to let 11 million people breaking the law get away with it."

PRESS: It's a great speech, totally avoids the issue. Everybody wants to secure the borders. They should be secure. It's a disgrace that they're not. Everybody wants to enforce the laws. They should be enforced. They're not. That's a disgrace on Republicans and Democrats.

The issue is, what to do about the 12 million Latinos who are here illegally now? That's the whole state of Ohio, Wolf. You can't send them all back to Mexico. There has to be a track to citizenship and, if I may finish, some guest worker program.

(CROSSTALK)

JEFFREY: ... there crooked employers who right now are hiring illegal aliens and filing bad paperwork for the IRS and Social Security. Those people deserve to be held accountable. You do that, they'll shut off the jobs wagon (ph). People who want jobs will go home. PRESS: Enforce the law. Enforce the law.

BLITZER: Terry and Bill, unfortunately, we've got to leave it there. We'll continue this discussion. Thanks to both of you.

Coming up, we're going to go to John McCain. He's got lots to say on this. But I want to check in with CNN's Zain Verjee. She's following a developing story at the CNN Center.

Zain, what do you have?

VERJEE: We have information coming out from an incident in the West Bank, Wolf. Three Israelis have been killed by a Palestinian suicide bomber. Israeli police say that a car bomb exploded in the Kedumim Junction. That's in Samaria. That's near the West Bank.

Israeli police are also telling CNN that according to their investigation, it definitely was a suicide bomber. But they're also investigating the possibility that the three Israelis were members of a family that had given the Palestinian a ride in their car.

It's not clear all the details and what they are at this junction. But that's what we have for you. Four people are dead, three Israelis, and one Palestinian suicide bomber -- Wolf.

BLITZER: Zain, we'll check out this story, get more information for our viewers. Thank you very much.

Coming up here in THE SITUATION ROOM, Senator John McCain on his latest trip to Iraq and the state of the U.S. mission there. Also, is there any daylight between McCain's assessment of Iraq and the president? We'll also speak about immigration. That's a hot subject right now. Stay with us.

(COMMERCIAL BREAK)

BLITZER: Right now, Senator John McCain finds himself at the center of the debate over two of the most divisive issues in American politics: Iraq and immigration. The Arizona Republican and possible presidential candidate in 2008 is just back from an important visit to Iraq. And he's plunged himself also into this battle over border security.

McCain has championed a proposal now being debated in the Senate that would allow undocumented immigrants to work toward legal status in this country. Senator McCain is joining us now live from Capitol Hill. Welcome to THE SITUATION ROOM, Senator.

SEN. JOHN MCCAIN (R), ARIZONA: Thank you, Wolf.

BLITZER: Good to have you back from Iraq. We'll get to that in a moment. I want to talk, first of all, about immigration. Your leader, Senator Bill Frist, the Republican leader, is being very forceful in disagreeing with you and Senator Kennedy and others on this whole issue of guest workers. Listen to what Senator Frist says.

(BEGIN VIDEO CLIP)

SEN. BILL FRIST (R-TN), SENATE MAJORITY LEADER: The committee bill, by contrast, I believe, goes too far in granting illegal immigrants with what most Americans will see as amnesty.

I disagree with this approach, not just as a matter of principle, but the cost granting amnesty now will only encourage future and further disrespect for the law. It will undermine our efforts to secure our homeland.

(END VIDEO CLIP)

BLITZER: He basically says your proposal calling for guest worker status is amnesty.

MCCAIN: Well, Wolf, I have great respect for Senator Frist, and I appreciate the fact that he's bringing this issue to the floor so we can debate and vote on it. Let me just say that the definition of amnesty, as I read it in the dictionary, is forgiveness for crime, sin, et cetera.

This is a tough, tough row to hoe for anyone who has violated our laws by coming to this country illegally. There's 11 or 12 million of them. We require them to pay back taxes, criminal background checks, $2,000 fine, work for six years before you're eligible for a green card.

We're talking about 11 years or more in order to obtain citizenship. On the flip side of that is, they are here, Wolf. They are here. And as George Will said, it would take 200,000 busses from San Diego to Alaska to transport them back.

How would you possibly go about sending people back to the country that they came from? Our proposal is to make them earn citizenship, and through a very tough, rigorous procedure, which we don't believe is amnesty, nor by any definition of the word.

BLITZER: You know, it's interesting that you, Senator Kennedy, a lot of moderate Republicans, independent Republicans, a lot of Democrats, are basically on the same page, as the president of the United States is, when it comes to this issue of guest workers.

But the base, as they say, of the Republican Party, a lot of conservatives, strongly oppose. Listen to Republican Congressman Dana Rohrabacher, what he says about you. Listen to this.

(BEGIN VIDEO CLIP)

REP. DANA ROHRABACHER (R), CALIFORNIA: Those people in the Senate who are basically watching out for the interest of somebody else other than the American people will have to pay the political price. And I'm sure Senator McCain, when he runs for president, will find that out.

(END VIDEO CLIP)

BLITZER: Pretty strong words from a fellow Republican, Senator.

MCCAIN: Well, unfortunately, this is a very emotionally charged issue. I would remind my friends from California that it was Prop 187, in the view of every political observer, that gave the appearance -- and I emphasize appearance -- that Republicans were anti-Hispanic. That cost us dearly politically in the largest state in America.

I'd like to debate this issue in a respectful fashion. I'm not concerned about political repercussions. I have to do what I think is right. Wolf, my state is devastated by illegal immigration. Our borders are broken. We have hundreds of millions of dollars in uncompensated healthcare costs, law enforcement costs, wildlife refuges being destroyed.

And we think we've got to address this issue. And we think -- and I think it's certainly in the majority in the Senate now that we need a guest worker program that works and also a way to earn citizenship for the 11 million people that are here. But first and foremost, enforcement of our borders.

BLITZER: We saw some dramatic pictures in Phoenix the other day. Thousands, tens of thousands, of people in Phoenix marching to oppose your colleague, Senator Jon Kyl and his stance, which is very different than your stance. I take it you were with the protesters as opposed to being with Senator Kyl on this issue.

MCCAIN: First, I have to mention -- I forgot to early on -- I'm very grateful for the president's statements on this issue. He understands it. He was governor of the state of Texas. And I think his statements have been very reasoned and mature on this issue.

You know, one of the things that's interesting about those protesters, Wolf, is that so many of them, as you'll notice from the pictures, were young. And that's because many of them, parents and grandparents came here illegally. They are citizens.

They have all the rights of a citizen, because they were born here. But they're very concerned about their parents or their grandparents being sent back to the country and place that they came from. That's very disturbing to them. And when you look at it from their point of view, it's understandable.

BLITZER: Bottom line, will there be legislation passed by the Senate and the House that allows these illegal immigrants to become guest workers and work their way over a number of years toward citizenship?

MCCAIN: I think we will allow a guest worker program that's viable, with a tamper-proof visa. And I think we will work out a way that these 11 million or 12 million people can earn their way to citizenship.

And I would remind you, we have increased border enforcement, increased funding, increased border patrol each year. And the number of illegal immigrants has gone up, too, which argues that this has to be a comprehensive approach. BLITZER: You just came back from Iraq, Senator. Glad you're back safe and sound from there. Your friend and colleague, Senator Chuck Hagel said the other day -- and he's always outspoken, Republican from Nebraska, "I don't think," he said, "Iraq's going to get better. I think it will get worse." You were just there. What do you think?

MCCAIN: May I say that I have great respect and appreciation for Chuck Hagel, who is one of the smartest men in the Senate. I think things are getting better. I think they are progressing. I think that the Iraqi military is improving. I think the Iraqi police training is improving, but much more slowly.

I think that when the Golden Mosque was blown up that they walked to the edge of the abyss and decided to step back. I think it's long and hard and tough, and one of the messages that we had to the Iraqi leaders was, "You've got to form this unity government." Our ambassador is doing a great job urging that. And the president is personally involved.

But these Iraqi leaders have to understand they have to form a government because they had an election. And the people of Iraq have the right to do that. Long, hard, tough. Can we do it? Yes. Will we do it? I'm confident we will. But it's -- the risks of failure are immense.

BLITZER: Do you believe the U.S. already has enough troops on the ground? Because one of your big criticisms over these three years, the U.S. went in sort of on the cheap, didn't bring in enough troops to get the job done from the beginning, and that's why the military is paying the price it's paying today.

In fact, a U.S. retired general Paul Eaton wrote in "The New York Times" about a week or two ago. He said, "In sum," referring to the defense secretary, Donald Rumsfeld, "he has shown himself incompetent, strategically, operationally, and tactically, and is far more than anyone else responsible for what has happened to our important mission in Iraq. Mr. Rumsfeld must step down." I know you're no huge fan of Donald Rumsfeld, but do you agree with General Eaton?

MCCAIN: I do not, because I believe that Secretary Rumsfeld serves at the pleasure of the president. The president decides who he wants on his team. I have been very concerned about the lack of troops from the beginning when I was told by literally everybody over there that we didn't have enough troops. And there's books being written now in retrospect that bears that out.

Of course, I would, quote, like to see more troops. It isn't going to happen. So I have to face reality. I am of the belief that it's going to be more difficult, but the training of the Iraqi military becomes that much more important because we don't have sufficient troops there to do everything we want to do.

There have been some great success stories. In Tal Afar, with Colonel McMasters' work there. Fallujah is much better. The north is better. The south is better. Baghdad is still bad. The Sunni triangle and Ramadi in particular are tough. This is a tough slot. We must win. We will win. And the consequences of failure, as I said, are catastrophic.

BLITZER: Let's talk a little bit about presidential politics. And to do that, I'm going to remind you of what you said in February 28th, 2000. Listen to this clip that we dug out. I want to play it because it's relevant to something we learned about today. Listen to this, Senator.

(BEGIN VIDEO CLIP)

MCCAIN: I am a pro-life, pro-family, fiscal conservative and advocate of a strong defense. And, yet, Pat Robertson, Jerry Falwell and a few Washington leaders of the pro-life movement call me an unacceptable presidential candidate. They distort my pro-life positions and smear the reputations of my supporters.

(END VIDEO CLIP)

BLITZER: That was February 2000. Now we learn -- and correct us if we're wrong -- that you're going to giving the commencement address at Liberty University, Jerry Falwell's University, on May 13th. Is that right?

MCCAIN: That's correct. I speak to between three and five colleges and universities around the country commencement every year. The same message this year. I'm speaking at a new school in New York and Ohio State University, as well.

My message, as always, the same. Serve a cause greater than yourself. Serve your country and the virtues of good character and great performance. I put the campaign of 2000 behind me a long time ago. I don't look back in anger. I don't hold any resentment.

The greatest honor of my life was to be able to run for the president of the United States, a guy that stood fifth from the bottom of his class at the naval academy. I move forward and not back.

And I certainly absolutely don't think there's any point in holding any grudges. Americans don't like sore losers and I want to. I'll be glad to speak to young people just about any place in America where they want to hear from me.

BLITZER: Lindsey Graham, your supporter and friend, senator from South Carolina, he says this. He says, "McCain is trying to social and economic conservatives feel comfortable with who he is and what he believes. John knows for him to be a viable candidate, he has to have the support, trust, and faith of a significant group of social and economic conservatives and elected officials." I guess the question is, have you and Jerry Falwell made up?

MCCAIN: The Reverend Falwell came to see me. We had a good conversation. There are areas we're in agreement on, and I'm sure there are areas that we're in disagreement on. And he asked me to speak at his commencement. I was glad to do it, as I was glad to speak at other colleges and universities. And I continue to state -- by the way, Lindsey Graham is right. Any candidate who wants to be successful has to have the support of the majority of all parts of their party, including, in my case, the Republican Party. So I hold no grudges. I move on.

I'm pleased to have the opportunity to serve the people of Arizona and in the United States Senate. And for me to look back in anger at anything would not be serving my constituents and the state of Arizona very well.

BLITZER: Senator McCain, as usual, thanks very much for joining us. Good to have you in THE SITUATION ROOM.

MCCAIN: Thank you, Wolf.

BLITZER: Senator John McCain joining us today.

And coming up next, the Iran nuclear standoff and other matters dividing Tehran and Washington. I'll speak with the Iranian ambassador to the United Nations. That's coming up in our next hour. Stay with us.

(COMMERCIAL BREAK)

BLITZER: We're following a breaking story off the coast of Bahrain. A ferry believed to be carrying about 150 people, including some western tourists, has apparently gone down. Rescue operations underway. Tariq Hassan is the interior minister of Bahrain, ministry spokesperson in Bahrain. He's joining us on the phone.

Mr. Hassan, tell our viewers what we know right now about this incident.

TARIQ HASSAN, INTERIOR MINISTRY SPOKESMAN: Well, it's a dhow that had a number of passengers on board and got turned over. We received a phone call from some witnesses. Accordingly, the Coast Guard has initiated their emergency plans and commenced rescue operations.

They have the support of all other concerned authorities. The rescue mission is still underway. Around 52 passengers have been rescued so far. Forty-four bodies have been also recovered, unfortunately.

His excellency, the minister of interior, has already established an investigating committee to conduct an investigation. And a number has been released for any relatives who wants to call or loved ones who wants to ask about their relatives or loved ones. The number is 177-00-000. Yes, please.

BLITZER: Quick question. Were there westerners, Americans specifically, onboard, as far as you know?

HASSAN: I'm sorry. I can't hear you.

BLITZER: Were there any Americans onboard? HASSAN: I'm sorry. We're still not really sure about the nationalities. All we know is that it's from different nationalities. So there are experts, and they're from different countries. But I can't give any specific information yet upon nationalities.

BLITZER: Well, good luck to you. And good luck to all the rescue workers out there. Tariq Hassan joining us from Bahrain. We'll check back with you. We're going to have much more on this story coming up at the top of the hour here in THE SITUATION ROOM.

Also still to come, did Arnold Schwarzenegger tell it like it is? Your views on the California Governor's red-hot comments on immigration reform. Jack Cafferty is standing by.

(COMMERCIAL BREAK)

BLITZER: Let's check in with Jack in New York -- Jack.

CAFFERTY: When asked what should be done about the millions of illegal aliens in California, Governor Schwarzenegger said, "I'll let the geniuses in Washington figure all that out." The question this hour is, what do you think he meant by that?

William in Benicia, California says, "It means his handlers haven't told him what his opinion is, yet."

Robin in Florida: "Arnold's an actor and a politician. Ergo, nothing he says has any real meaning. Just like all politicians, he's shirking his responsibility to lead and advocating his responsibility to do something concrete to help save his state from financial ruin."

Patrick in California: "As a California citizen who has watched our state turn into a northern suburb of Tijuana, our K-12 schools and universities turning out graduates with an IQ just a couple of points higher than plant life, a state government that thinks it's solved our fiscal crisis by selling zillions of dollars worth of bonds, and a business community that you have to communicate with in English, what do you expect from him?"

Sean in Kennesaw, Georgia: "Governor Arnold's a smart man. He knows his roots, acknowledges had he not been given a chance in this country as an immigrant, legal or otherwise, he would not be where he is today. He's sympathetic to the illegal alien situation, but he doesn't want to come out of the closet." Are those two separate issues? No, probably not.

Marc in San Marco, Texas: "I suppose in Arnold's mind, everybody seems something of a genius" -- Wolf.

BLITZER: Jack, thank you very much.

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