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THE SITUATION ROOM

Shiite Bloc in Iraq Picks New Prime Minister Candidate; Problems at the Pump; CIA Leak Firing; President Hu's Heckler; Iraq War Documentaries Debuting At Tribeca Film Festival; Schumer Calls Investigation Of Possible Oil Price Manipulation

Aired April 21, 2006 - 19:00   ET

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


WOLF BLITZER, CNN ANCHOR: And to our viewers, you're in THE SITUATION ROOM, where new pictures and information are arriving all the time.
Standing by, CNN reporters across the United States and around the world to bring you tonight's top stories.

Happening now, a major new development in Iraq that potentially could affect the future of the U.S. military mission there.

It's 3:00 a.m. Saturday in Baghdad, where the parliament soon will vote on a new candidate for prime minister. Will this jump-start Iraq's long-stalled political process and help bring American troops home?

Also this hour, eye-popping gas prices and even some shortages. How high will prices go? And when will the well run dry? Will it?

It's 7:00 p.m. here in Washington. We'll have a live update on the pain at the pumps.

And a crime or an act of civil disobedience? A Chinese protester who created a diplomatic stir at the White House speaks out. I'll speak with her live here in THE SITUATION ROOM in an exclusive interview.

I'm Wolf Blitzer, and you're in THE SITUATION ROOM.

It's a very busy night. We're following three developing stories.

First, Iraq. It may be on the verge of a major breakthrough.

Just hours from now, the Iraqi parliament set to meet and consider a new candidate for prime minister. This could finally lead to a long-awaited national unity government, and that could be very, very important news for the United States, hoping to reduce the number of U.S. forces in Iraq.

Also today, Shiite legislators chose Jawad al-Maliki as the candidate for prime minister, replacing Ibrahim al-Jaafari. This new development could probe to be a major step toward stabilizing the security situation and bringing U.S. troops home, but there are still enormous pitfalls. 2,381 U.S. troops and military civilians have died in Iraq since 2003.

Our senior Pentagon correspondent, Jamie McIntyre, is standing by, but Elaine Quijano, our White House correspondent, is traveling with the president. She's getting reaction to these developments in Iraq -- Elaine.

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Good evening to you, Wolf.

And a senior administration official tells CNN that this is good news, that hopefully this means the Iraqi government will move forward. Still, though, the reaction can best be described as cautiously optimistic. Nevertheless, this official saying that this is an encouraging sign because of the fact that the nomination of Ibrahim al-Jaafari was so problematic for Sunni and Kurdish leaders.

The White House hope that is as soon as this weekend, possibly, the foundation, if you will, of the Iraqi unity government will be formed by the filling of several key posts. But this, of course, coming at a time when President Bush has tried to turn around public opinion on Iraq, the single issue that continues to weigh down his approval ratings -- Wolf.

BLITZER: Elaine, thanks very much.

Let's bring in Jamie McIntyre. He's over at the Pentagon.

Clearly, officials there, Jamie, are watching very, very carefully. Presumably, if there's a new government that can effectively control the Iraqi military, that might, might enable the U.S. to start withdrawing some of its forces.

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT: Very cautious optimism over here at the Pentagon, Wolf. Obviously, they see this as a positive development. There's been frustration here expressed both publicly and privately about the lack of unity government in Iraq up to this point.

You may recall, Wolf, that the U.S. dispatched a small number of additional troops to Baghdad in conjunction with the formation of this government. And probably the first thing that would happen, if things began to stabilize and a new government was established, is that small number of troops, about 600, 650 troops, would probably be brought back out. But nobody is talking yet about the kind of significant troop reductions that the Pentagon hopes will be possible later this year.

They insist that they have to see how this plays out. But again, they see this as a small step in the right direction, but they want to see some bigger steps in the days and months to come -- Wolf.

BLITZER: We really don't know much about Jawad al-Maliki, the new designated prime minister. But we do know this, he spent a lot of time in exile in Iran. And like Ibrahim al-Jaafari, he's close to the Iranians.

How concerned are officials -- and you've been speaking with them privately over these past several months -- that this new government in Iraq might align itself or become even closer with Iran?

MCINTYRE: Well, there are -- there is great concern about that. But also, there's a limited number of choices.

You know, Maliki was also part of the de-Baathification process that took place right after the U.S. invasion. And there's been a lot of criticism now in hindsight going back, saying that, in doing that, they took back too many of the secular leaders in Iraq.

So, it is a concern, it's something the U.S. is watching. But it's going to be ultimately up to the Iraqi people to determine what kind of government they have.

BLITZER: We'll be watching all of this Jamie. Thanks.

Surging prices, scattered shortages, and the cost of a barrel of crude hits our new record high. It's all happening now. From coast to coast, Americans are having serious problems at the pump, and it may only get worse.

CNN's Chris Lawrence joining us now with more on this story.

I see those numbers behind you, Chris. And they're not very encouraging.

CHRIS LAWRENCE, CNN CORRESPONDENT: Yes, you're not going to like it if you've got to fill up on the way home, Wolf. You know, last year, when the prices were rising, you could at least say, well, there was all that hurricane damage in the Gulf of Mexico. Now it's a lot harder to have one simple answer for all this outrage.

(BEGIN VIDEOTAPE)

LAWRENCE (voice-over): High gas prices we've had, but more than 3 bucks a gallon?

UNIDENTIFIED MALE: It feels like a punch in the gut. It really does.

UNIDENTIFIED FEMALE: I think it's painful. It's really painful.

LAWRENCE: Tanks are full, wallets are empty.

UNIDENTIFIED MALE: I haven't been able to really fill it up that much because it pisses me off.

LAWRENCE: Can simply supply and demand account for all this?

DAVID SANDALOW, BROOKINGS INSTITUTION: Supply and the demand really operates globally when it comes to oil. So, if we've got tight markets in Asia, that's going to affect the price here.

LAWRENCE: So it's China's fault for driving more cars? Not entirely.

SANDALOW: Then you combine that with what's happening in Nigeria and Iran right now, and the markets are a bit spooked.

LAWRENCE: So, instability in those countries takes oil off the market.

JOHN TOWNSEND, AAA: The truth of the matter is, Nigeria accounts for five percent of the crude that comes to the United States. But does that factor into the 65-cent increase we've seen?

LAWRENCE: AAA's John Townsend says the real problem is speculators who keep telling us how much worse it's going to get. Think of the housing market. If all you hear is, home prices will continue to skyrocket, sellers can force buyers to pay more.

TOWNSEND: Well, if I say the gasoline prices are going to $4 a gallon, like we've heard this morning on some networks, then buyers say, that's the new hot commodity. And so, where real estate was the hot commodity a year ago, or two years ago, now it's gasoline.

(END VIDEOTAPE)

LAWRENCE: Yes, at least two congressmen are calling on the Federal Trade Commission to investigate the major oil companies. Senators Dorgan and Schumer both want to make sure that the companies aren't intentionally keeping refinery capacity low in order to keep prices high. Some of those companies say they are still recovering from last year's hurricanes -- Wolf.

BLITZER: All right, Chris. Get out of the rain.

Chris Lawrence reporting for us.

We're following another important story tonight here in Washington. The CIA fires one of its own officers for allegedly leaking classified information to the news media.

Our nation security correspondent, David Ensor, is joining us from the newsroom with details -- David.

DAVID ENSOR, CNN NATIONAL SECURITY CORRESPONDENT: Wolf, the CIA has no comment at all, it will not name the individual involved. However, there is one network reporting, another network, saying that the individual is Mary O. McCarthy (ph), a longtime CIA officer who most recently worked in the Inspector General's Office at the CIA.

(BEGIN VIDEOTAPE)

ENSOR (voice-over): The individual was fired Thursday, a CIA spokesman says, for leaking classified operational information to a journalist. Sources say Dana Priest of "The Washington Post" had more than 13 contacts with the individual while working on a story about secret prisons. Government officials say the Justice Department is initiating an investigation into whether the accused leaker should also face criminal charges. JOHN MCLAUGHLIN, CNN NATIONAL SECURITY ADVISER: It is unusual for someone to be fired for leaking, but it is illegal to leak information. That's what you sign up to when you join an intelligence service. And so, in this case, I think the reaction is proportional to the crime.

ENSOR: The firing came after the person failed a polygraph test being given to a wide range of intelligence officials and then confessed. It came as U.S. intelligence and law enforcement tried to figure out who leaked two major stories, stories for which only days ago the journalists who wrote them won Pulitzer Prizes.

In "The Washington Post," Dana Priest reported that the CIA used secret prisons in Europe to hold and interrogate top al Qaeda prisoners, people like Khalid Shaikh Mohammed, the mastermind of 9/11. CIA officials say the leak investigation and another into a "New York Times" story about domestic surveillance are just beginning.

In recent testimony, CIA Director Porter Goss said he also wants to force reporters to name all their sources.

PORTER GOSS, CIA DIRECTOR: It is my aim and it is my hope that we will witness a grand jury investigation with reporters present, being asked to reveal who is leaking this information.

ENSOR: Another reporter, Judy Miller, formerly of "The New York Times," spent 62 days in prison trying to avoid identifying her source to prosecutors investigating another CIA-related leak.

(END VIDEOTAPE)

ENSOR: Such a move against the reporters who reported these two major stories could have a major chilling effect on the amount of information that Americans would be getting in the future, both about the intelligence community and perhaps about other activities of the government -- Wolf.

BLITZER: It's going to cause chills among a lot of journalists out there, David. Thank you very much for that.

Jack Cafferty is joining us from New York with "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Wolf, it's as predictable as the swallows returning to Capistrano.

When gasoline prices reach a certain level and consumers start squealing, we start hearing from the politicians. "Price gouging!" they yell. "There should be an investigation. We need price controls. It's OPEC's fault."

Blah, blah, blah, blah.

It's a way for the politicians to look like they care and they're actually going to do something. But the fact of the matter is, nothing will be done. It never is. The only two times I remember the government actually doing anything about the high cost of gasoline was, one, when Richard Nixon instituted price controls in 1971, and, two, when President Carter imposed a windfall profits tax in 1980.

Besides, the oil companies are making a fortune. Exxon took in $36 billion last year, and they contribute part of that fortune to the politicians just to make sure they don't get any silly ideas about interrupting the flow of profits.

So here's the question: Do you really expect the government to do anything about high gasoline prices?

E-mail your thoughts to caffertyfile@CNN.com or go to CNN.com/caffertyfile.

You know, those swallows always come back to Capistrano, Wolf, every year.

BLITZER: There was a -- there was a song about that at one point that I seem to remember.

Jack, thanks very much.

CAFFERTY: All right.

BLITZER: Coming up, Democratic Senator Chuck Schumer of New York suggests the oil companies are gouging you. Schumer wants the federal government to do something about it.

I'll go one on one with Senator Schumer. That's coming up live here in THE SITUATION ROOM.

And you heard her scream at two of the most powerful men in the world. In a few moments, she'll tell us what she said and why she said it. My interview with the White House heckler, that's coming up. It's a CNN exclusive.

And Hollywood's at it again, this time spoofing President Bush, who is already suffering from low public opinion. We're going to show you what two new movies coming out right now are serving up, what they're saying this time.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: In THE SITUATION ROOM right now, an exclusive interview with the woman who heckled China's president at the White House yesterday. Wenyi Wang was charged today with harassing a foreign official. That's a federal misdemeanor, and it could land Ms. Wang in prison if she's convicted.

She's joining us now to explain why she interrupted yesterday's south lawn ceremony.

Thanks very much for coming into THE SITUATION ROOM.

WENYI WANG, PROTESTER: Thank you.

BLITZER: How long had you been planning this outburst, if you will?

WANG: Believe it or not, just the day before.

BLITZER: The day -- so, you went into the White House, you got the press pass from this organization, knowing that this is what you were going to do. You were going to start screaming at President Hu?

WANG: The reason I said very clear, because of myself, I'm a physician, a pathologist.

BLITZER: You're a physician?

WANG: Yes. And as a physician, you want to save the life. When you hear something like life, harvested organs, you certainly feel this is against a professional standard against humanity.

BLITZER: Did you understand the consequences of what you were doing?

WANG: I know perfectly, but you think that saving the people is more important.

BLITZER: But you knew you were potentially breaking federal law?

WANG: I don't know what kind of a law, but I know potentially people were unhappy about it. But I think the humanity issues surpasses everything.

BLITZER: So, you decided that because there was no other alternative for you, you were so concerned, you decided to mar this ceremony, this arrival ceremony and to scream out. What were you screaming specifically? We were trying to understand what you were saying in those few moments.

WANG: First of all, I said something very neutral. I just wanted him to know what (INAUDIBLE) saying.

I said, first of all, "Falun dafa hal (ph)." That means Falun Gong is good.

Secondly, I said to stop persecution and stop cleaning the culture.

BLITZER: Are you...

WANG: Mostly in Chinese, I said it.

BLITZER: Do you regret -- knowing what you know now, do you regret doing this?

WANG: No, not at all. BLITZER: You would do it again if you had the chance?

WANG: If I do again, I actual actually want him to really listen to me very clearly.

BLITZER: Now, you got a day -- a day pass, a press credential for a one-time visit to the White House for this event. Did the news organization that you were representing know what you were going to do?

WANG: No, this is just a personal act.

BLITZER: And are they angry at you for doing this?

WANG: I didn't talk to them. I just came out.

BLITZER: You haven't spoken to them?

WANG: No.

BLITZER: So what -- your lawyer tells you what kind of criminal charges potentially are you facing for doing this?

WANG: They said a lot of things, but I don't remember, to tell you the truth.

BLITZER: But you have a lawyer?

WANG: Yes, I have a lawyer. I just wanted to move through and let people through the hearing know why I'm doing this. This process is more important.

BLITZER: So, you were personally outraged that the president of the United States was receiving the president of China?

WANG: It's not outrage. At least I know that he's not knowing the truth. That's why I want to say such things both to him and President Bush can hear what's going on.

BLITZER: You don't think President Bush knows about the human rights abuses that are going on in China?

WANG: They should know the human rights abuse. That's something I expect that they have talked with China. But I don't think he knows the most severe, unspeakable crime going on in China.

BLITZER: Now, how long have you lived in the United States?

WANG: Almost 20 years.

BLITZER: So, are you an American citizen now?

WANG: Yes. I'm approved, but I didn't have ceremony yet.

BLITZER: But you've been approved to become an American citizen?

WANG: Yes, right.

BLITZER: You realize, of course, potentially, this could hurt that process, that citizenship process?

WANG: I know, but I think in the face of humanity and the integrity of dignity of a human being, this was worthwhile -- worthwhile with everything.

BLITZER: Your family is here or in China?

WANG: In here. And I have family member in China, too. Last year, my father died of the heart attack. I wanted to go back to China. They denied my entrance to China.

BLITZER: They're probably going to deny it if you try to go back now after what has happened.

WANG: That's true.

BLITZER: You're a courageous woman for doing for what you were doing, standing up for your principles, even though you did cause a shock that was heard around the world and a lot of -- a lot of anger, at least in the Chinese government. You know your words were not heard in China?

WANG: Not heard. And actually, this is (INAUDIBLE) we can now call (ph), because there is a Chinese saying, "For a thousand years, what you've done today will come back to you."

Some people doing something unspeakable -- crime, something will happen to them. So, you just try to stop them from continuing that. It's good for them.

BLITZER: Wenyi Wang, thanks very much for coming into THE SITUATION ROOM.

WANG: Thank you so much.

BLITZER: Thank you.

And still to come tonight in THE SITUATION ROOM, are oil companies engaging in gas gouging? If so, what should be done? I'll ask New York Democratic senator Chuck Schumer.

And is art really imitating life? Some new movie depictions of an American president -- that would be the current president -- might be sending up more ridicule than reality.

Stay with us.

(COMMERCIAL BREAK)

BLITZER: There's a story unfolding right now on the borders of China, near Pakistan, Afghanistan, Iran, with potentially significant strategic ramifications for the United States, and it involves a small country called Nepal. CNN's Tom Foreman is here with some disturbing details of what is going on and what this could mean for us.

This is a story, Tom, we shouldn't ignore.

TOM FOREMAN, CNN CORRESPONDENT: Yes, this is the kind of thing that's very easy for people to sit at home and say, "Why do I care about Nepal?" The reason you care about Nepal is its geographic location.

Let's move in and take a closer look.

When you come in here, Nepal is a small country about the size of Arkansas, about 28 million people. But what matters is this: China, to the north, India to the south. These are big players in the world scene. And right now, what is happening in Nepal is big news.

Nepal is most known for many people as the home to Mt. Everest and also eight of the 10 tallest mountains in the world. But not far away, in Kathmandu, right now, they're facing some of the most serious problems they've faced in many years.

(BEGIN VIDEOTAPE)

FOREMAN (voice-over): Dire warning from the U.S. ambassador to Nepal, suggesting its king give up power to avoid full-scale revolution.

JAMES MORIARTY, U.S. AMBASSADOR TO NEPAL: I think it's a mess. The situation is deteriorating very rapidly. The only possible alternative for him now is to hand over power immediately to the political parties and to accept a largely ceremonial role.

FOREMAN: And just hours later, the king of Nepal did just that.

KING GYANENDRA, NEPAL (through translator): The executive power of the kingdom of Nepal, which was in our safekeeping, shall, from this day, be returned to the people.

FOREMAN: King Gyanendra is trying to put an end to a growing crisis, marked by street violence in which more than a dozen demonstrators have been killed, beaten with sticks, and fired at with guns and tear gas. Despite the crackdown, the demonstrators defy curfews, even burning the king in effigy.

The king grabbed power 14 months ago, saved the country from a corrupt government and insurgents who wanted to bring a brand of communism modeled on China in the days of Mao Tse Tung. But even with the king's pledge to give up power, the opposition is not satisfied yet, vowing to continue the protests until a new constitution is drafted.

(END VIDEOTAPE)

FOREMAN: They've had very big problems here, and they continue. These curfews are in certain areas like this. A lot of the problem has been in the western side of Kathmandu, even out in the suburbs. They said they don't want anybody out. Many, many, many thousands of people have defied those curfews, not only here, but also in another town over here called Pokara (ph).

There are big problems right now in Nepal. It's very easy to say this is a small country on the other side of the world, has nothing to do with us, but when it's that close to China and to India, think about how concerned we are about what's happening in Bolivia and Venezuela, and they're not nearly as close.

BLITZER: And if there's a Maoist regime there, we'll really be concerned.

We'll watch this together...

FOREMAN: It would be a brave new world.

BLITZER: It would -- it would, indeed.

Thanks very much for that important report, Tom.

Just ahead, are oil companies manipulating gas prices to make them soar? Senator Chuck Schumer calling for a federal investigation. He's standing by to join us live in THE SITUATION ROOM.

Plus, President Bush taking a beating at the box office. But could Hollywood's jabs backfire? Maybe, maybe not. We'll tell you.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Right now, President Bush is in California for a four- day swing through the West Coast. Surely, he'll be bearing what he considers to be some good news. And yet, at least on one positive issue, there are serious questions of whether the president's message is actually getting out.

Our senior analyst, Jeff Greenfield has more -- Jeff.

(BEGIN VIDEOTAPE)

JEFF GREENFIELD, CNN SR. ANALYST: Wolf, it's a question that's been troubling Republicans and delighting Democrats for months now: why isn't the president getting credit for good economic news? Unemployment's at 4.7 percent, inflation is under control, the economy is chugging along. As they say in "The King and I," it is a puzzlement or is it?

(BEGIN VIDEOTAPE)

GREENFIELD (voice-over): Here is the most obvious villain, the price at the pump.

UNIDENTIFIED MALE: You got nothing to do. You still got to go to work. You still got to commute. GREENFIELD: Several times a week, most Americans get an unwelcome, firsthand dose of bad economic news. One recent survey reports that a big majority of Americans see gas prices as a genuine hardship. But that's not the only source of pessimism.

On a regular basis, we are seeing news that once powerful companies, major airlines, General Motors, among others are looking for deep cuts in pension and health benefits. These stories strike at two major enduring sources of concern. Will I have enough to live on when I retire and will illness wipe me out financially? Not exactly a source of good feelings.

But the fundamental reason for pessimism may lie beneath the surface numbers. For most Americans, the good news on growth, on inflation and on unemployment simply have not translated into better times for them. Between 2000 and 2005, says the Economic Policy Institute, real wages of the average worker, that is the worth of what they earn once inflation is taken into account, actually fell by 1.3 percent.

Even if you fold in benefits, health care and the like, the average worker actually fell behind in the struggle for better living standards. Real gains were confined to those at the top of the earnings pyramid, with those at the very top making huge gains.

This is a big contrast with the late 1990s when a tight labor market and an explosion of new businesses made the story brighter for just about everyone. For instance, in 1998 real average wages for adults who dropped out of high school, the least advantaged of the workforce, rose 5.9 percent, their first real gain in almost 20 years.

Not so incidentally, the optimistic good times are here feeling was one big reason why President Clinton survived impeachment.

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: And I tried to give as good as I got.

GREENFIELD: Just as the surge of bad economic news in 1973 and 74 helped doom Richard Nixon as the tide of Watergate rose.

(END VIDEOTAPE)

GREENFIELD: So even if the economic news hadn't been overshadowed by Iraq and by Katrina, there are economic enough clouds on the horizon to make it tough for the public to see blue skies ahead -- Wolf.

BLITZER: Jeff, thanks.

Our Internet reporter Abbi Tatton is standing by with more on what you can do about these surging gas prices -- Abbi.

ABBI TATTON, CNN INTERNET REPORTER: Wolf, here is a web site, gas buddy.com, that is trying to help you find the cheapest prices in your neighborhood and across the country. Look at this, they have a temperature map. If you're in one of these green areas here like Wyoming, you're doing pretty well, $2.33 a gallon there. It is a lot more if you're in one of the orange or red areas, almost a dollar more here in El Dorado, California.

This site, Gas buddy, actually relies on almost 200 local web sites, where volunteers like you and me are reporting in gas prices in the neighborhood. Other sites like map gas prices rely on gas price data across the country. Plus in your address to one of these, you will see that the prices on one block might be a lot more than just a few blocks away -- Wolf.

BLITZER: Abbi, thanks.

And, this note, Senator Chuck Schumer will be joining me live here in THE SITUATION ROOM. That is coming up. He is calling for a federal investigation into allegations of price gouging by the big oil companies. That's coming up shortly.

Meanwhile, other important news, the war in Iraq coming home in a very personal way in two new documentaries debuting at New York's Tribeca Film Festival.

Our Mary Snow is standing live in New York with a preview. This is pretty amazing stuff, Mary.

MARY SNOW, CNN CORRESPONDENT: It really is, Wolf. And one of the films is gaining attention because of the subject matter it tackles. Another is noteworthy because it uses the latest technology to hear from unlikely filmmakers, the soldiers themselves.

(BEGIN VIDEOTAPE)

SNOW (voice-over): The Iraq war from the front lines, "The War Tapes" documents the real-life experiences of a New Hampshire National Guard unit. Members were given digital video cameras.

UNIDENTIFIED MALE: I walk everywhere. I recycle everything damn it.

PETER SCARLET, TRIBECA FILM FESTIVAL: Filmmakers have taken advantage of this incredible new digital equipment we now have and have been able to go places and see things that filmmakers couldn't go before.

SNOW: Film critics say it tells the story of the restricted areas, where media cameras can't go.

RICHARD SCHICKEL, TIME MAGAZINE FILM CRITIC: This kind of thing is a sort of answer to the military's attempts to kind of censor the imagery coming out of the current war zone.

SNOW: But the battlefield is not the only place dealing with the Iraq war.

UNIDENTIFIED MALE: You want to see my home? You want to see my home? My home is right there. You understand? That's my home.

SNOW: "When I Came Home" is a documentary that looks at Iraq war veterans who return to find themselves homeless.

DAN LOHAUS, DIRECTOR, "WHEN I CAME HOME": I hope people walk out angry. You know, when I tell people I'm working on a film about homeless Iraq war vets, they go, what? From this war? You mean, the last war, not this war. Yes, this war.

SNOW: Director Dan Lohaus hopes his film will shed light on what he says is a growing problem.

LOHAUS: I think this is just one more piece of this war that we're finding out about.

SNOW: Critics say mass appeal is difficult.

SCHICKEL: I think these are very tough sells to the general movie going public.

(END VIDEOTAPE)

SNOW: While these films may be tough sells, the organizers of the Tribeca Film Festival said there were dozens of films about Iraq to choose from for this festival, and they expect that trend to continue -- Wolf.

BLITZER: Mary, thanks.

Up ahead tonight, gas price outrage. More on this story. Well will find out why one U.S. senator wants a federal investigation. Chuck Schumer standing by live in THE SITUATION ROOM.

Also, bad poll numbers. Public worries over the war in Iraq. The last thing the president needs are more movies making fun of his administration's problems. But that's exactly what Hollywood is putting out right now. I'll tell you what's going on. Stay with us, you're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: President Bush is in California right now even as Hollywood is putting out some very unflattering depictions of the president.

Our Brooke Anderson is in Los Angeles with details -- Brooke.

BROOKE ANDERSON, CNN ENTERTAINMENT CORRESPONDENT: Wolf, we've seen Hollywood during previous administrations take aim at the White House. For example, during the Clinton years, the movies "Primary Colors" and "Wag the Dog" seemed to reflect the man in office. But what may be different now is just how barbed the attacks really are on President Bush.

(BEGIN VIDEOTAPE)

ANDERSON (voice-over): As if sagging poll numbers weren't enough for President Bush, he's also taking a beating at the box office.

UNIDENTIFIED MALE: The only demo where you have an approval rating above 30 percent is with children under the age of 5.

ANDERSON: Two new comedies lampooned the president including "American Dreamz," opening this weekend.

UNIDENTIFIED MALE: Did you know that there are two kinds of Iraqistanis? I mean, actually three.

ANDERSON: And in a scene evoking the documentary "Fahrenheit 9/11," "Scary Movie 4" parodies the president's immediate reaction to the 9/11 attacks.

UNIDENTIFIED ACTRESS: A girl had a pet duck.

UNIDENTIFIED ACTOR: Mr. President, the planet is under attack by aliens.

LESLIE NIELSEN, ACTOR: Well, I will handle that in a minute. Right now, I want to see what happens with the duck.

KURT LODER, MTV NEWS: The more vulnerable George Bush becomes, and the lower his ratings sink, I think the easier it is to come out and sort of attack him.

ANDERSON: But conservative blogger Jason Apuzzo says Hollywood's presidential potshots could backfire by alienating some moviegoers.

JASON APUZZO, CO-FOUNDER AND CO-DIRECTOR, LIBERTY FILM FESTIVAL: It is, in effect, just, you know, alienating half your audience. And I don't, frankly, see the compelling reason to do that, unless you're just trying to make a cheap political message.

ANDERSON: Besides moviemakers, some recording artists also are taking aim at President Bush.

UNIDENTIFIED FEMALE (singing): I'm not ready to make nice.

ANDERSON: New music from the Dixie Chicks and Neil Young take the president to task.

It's enough to leave a president, fictional or otherwise, confused about why his popularity has slipped.

QUAID: There are some -- some things that kind of seem pretty black and white, and now they are kind of becoming a little gray seeming.

DAFOE: Are you getting toasted again? Do you have a bottle hiding...

(END VIDEOTAPE)

ANDERSON: Now, this all comes at a time when the new issue of "Rolling Stone" magazine boldly asks on its cover, "The Worst President In History"? So we asked the White House for a response to the salvos from the entertainment world, and were told, quote, "the White House is not in the business of doing movie or music reviews" -- Wolf.

BLITZER: Brooke, thanks very much.

The Bush administration says Web site operators need to implement government ratings or possibly face prison time. The attorney general, Alberto Gonzales, says it will go a long way toward stomping out child pornography. But the proposed law goes much further. Let's bring in our Internet reporter, Jacki Schechner. Jacki?

JACKI SCHECHNER, CNN INTERNET REPORTER: Wolf, when it comes to child pornography, the proposed legislation would triple current fines for Internet service providers who don't report child pornography. That means up to $150,00 for a first offense.

But the law goes a little further, the proposed law. It would address sexually-explicit Web sites. It would require Web sites like this to have a code on the back end that will require it to be easily filtered if people are looking for this sort of content or looking to avoid it.

That, if you don't comply, could be punishable by up to five years in prison. It would also require Web sites to have an extra page so you wouldn't actually get graphic content when you first go to it. You'd have to click through.

Now we spoke today to the Internet Content Rating Association, this is a non-profit organization that has members like AT&T and Microsoft and Verizon, and they told us that while they're committed to fighting child pornography, they don't think that this bill is the way to go. They think that they would get better results with voluntary labeling and voluntary regulations. Wolf?

BLITZER: Thanks, Jacki.

Up ahead, do you really expect the government to do anything about high gas prices? Jack Cafferty is going through your e-mail. Also, cars that take you for a drive, literally. CNN's Miles O'Brien shows us what the future may hold. Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: And this is just coming in to CNN: financial officials from the world's leading industrial powers have just issued a statement expressing concern about zooming oil prices.

Finance ministers in central-backed presidents from the group of seven industrial nations are vowing to take action to try to prevent the global economy from getting knocked off course. This comes as oil prices today shot up to over $75 a barrel. That's a record.

Democratic Senator Charles Schumer of New York is calling for a federal investigation into whether oil companies are manipulating capacities to keep prices high. And Senator Schumer is joining us now live from New York. Senator, thanks very much for joining us. Do you have hard evidence that ExxonMobil or any of the major oil companies in the United States are engaged in price gouging?

SEN. CHARLES SCHUMER (D), NEW YORK: Well there isn't hard evidence because no one can get a look at their books. But Wolf, it's common sense. You don't need a Ph.D. in economics to simply look at the amount of supply, the amount of demand on the world market a month ago, look at it today and say the price of gasoline shouldn't have gone up 40 cents.

What these oil companies do is they use the slightest pretext to raise the price and then the market never brings it down. It's the same thing after Katrina. Should prices have gone up after Katrina? Yes, but not for as long, not as high and not as in many places.

The market, when you have four major international oil companies no longer sets price. And they look for all kinds of excuses and then just raise the price almost at will.

BLITZER: I spoke earlier today with the chief economist of the American Petroleum Institute, which is the major lobby here in Washington representing the major oil companies. Listen to what he said, listen to this.

(BEGIN VIDEO CLIP)

JOHN FELMY, AMERICAN PETROLEUM INSTITUTE: We don't set the price. The market sets the price for these products. The market sets a price for the crude oil. Whatever comes out is a function of the revenues we turn and the cost and then you get earnings if you have a positive return on that. So, saying that we can reduce the price just flies in the face of a market economy.

(END VIDEO CLIP)

BLITZER: What do you say to that?

SCHUMER: Well, we ought to ask him when the spot market raises the price a couple of dollars, it's reflected at the pump the next day. When the spot market lowers the price by a couple of dollars, it takes weeks for the price to go back down.

So, something is really wrong. And every economist who looked at it, business leaders that I have talked to, said the free market is not working here. And it's logical. When you only have four producers, four major producers in the world, you don't get real competition.

BLITZER: Are you suggesting they're colluding with one another?

SCHUMER: No, they don't have to collude. And that's the problem here. What they're doing does not violate the law, at least at this point.

Rather, when there are only four there can be what's called price leadership. They all sort of, without talking to one another, say, OK, when the spot market goes up, we're all going to raise the price together immediately. Why is it if supply and demand were working, when the oil that's in the pipeline should be sold at the price that was on the spot market two, three weeks ago, when it was actually refined and bought, but it's not. And so in case after case, on the West Coast -- West Coast got no Gulf oil.

Why was it after Katrina their prices went up exactly the same as it did on the East Coast? There is no competition. And this administration has not done anything to change that. The FTC has been muzzled. The recent call, just today, of Speaker Hastert and Senator Frist for the FTC to do a real investigation, same thing I've been calling for for the last few weeks is welcome, and maybe now we'll get some real changes.

And then there's one other thing, Wolf. We don't have any long- term policy on energy and dependence either. And that is a fault not just of George Bush, but endemic throughout Washington. We should be -- go ahead.

BLITZER: I was going to say, ExxonMobil has made record profits in the billions and billions of dollars. Their retiring chairman and CEO got a compensation package, a retirement package, well over $150 million. But when you add in all the stock options, closer to $400 million.

Do you have a problem with either of that, the enormous profits that ExxonMobil, for example, is making and the compensation that their top executives are reaping?

SCHUMER: I have less problem with the compensation and much more problem with the record profits, because it's the record profits that take the money out of people's pockets. Once they make their profits, what they want to do with it is a different story.

But why are they making record profits? Why? Well, when you ask yourself, it's because they have the power to set prices. There is no longer a supply and demand equation. And we should never have let Exxon and Mobil merge, and that was done under a Democratic administration.

BLITZER: Are you among those supporting a windfall profit tax on the oil companies?

SCHUMER: I would support -- the first thing I would support is this FTC investigation. If they find that there's regular gouging, if they find, as I believe they will if they do a fair investigation, that there's no supply and demand, some kind of federal action should be taken to keep the oil companies in line. I would even look at exploring, going back to the days of 15 or 20 oil companies, not just four.

BLITZER: Chuck Schumer is the senior senator from New York. Thanks Senator Schumer, for joining us.

SCHUMER: Thanks, Wolf.

BLITZER: Now, let's stay in New York. Jack Cafferty has got "The Cafferty File" -- Jack.

CAFFERTY: Yes, thanks, Wolf.

The question for the viewers tonight is do you really expect the government will do anything about high gasoline prices? A lot of mail for Friday night.

Jim writes, "Yes, the government should double or even triple the price of gas, and use the windfall to create a national health care program."

Tom in Richmond, Indiana: "Why should we expect a pro-business government to do anything about profits of big oil when the general public continues to buy vehicles that don't give good fuel economy? The better question is, why do we demand the government save us from ourselves?"

Matthew in Kailua Kona, Hawaii: "Here's a way for the government to do something about our addiction to oil. Institute World War II- style gas rationing. Our president keeps reminding us that we're in a war. So, maybe the folks on the home front should make a few sacrifices as well. Gas rationing would cut our dependency on all oil and would entice consumers to buy more fuel-efficient cars."

Ron in Austin, Texas: "Jack, unfortunately we need high gas prices to force all the stupid people out of SUVs and trucks." In parentheses he says, "I live in Texas, and to give renewable energy a chance to grow. If we don't start now, it will be too late. Three dollar or higher gas must stay from now on, even if it hurts."

And Pete in South Setauket, New York: "Since many members of Congress get money from these oil companies, they'd legalize gay marriage before they even think about solving this problem" -- Wolf.

BLITZER: Let's not forget "IN THE MONEY," your excellent weekend show that comes up Saturdays at 1:00 p.m. Eastern, replayed Sundays at 3:00 p.m. Eastern. Jack, give our viewers a little preview of what you've got in store on this show this weekend.

CAFFERTY: One of the things we're going to do is on this very subject, talk to an expert about why the prices of crude oil and gasoline are where they are. One of the factors that hasn't been discussed here this evening is the role that hedge fund managers and Wall Street speculators play in setting prices by buying and selling futures on the commodities of gasoline and oil.

The other interesting story is a woman who got fired by Woody Allen from a movie and turned it into a cottage industry. She's written a fascinating book full of fun tales of famous people who got the ax and went on to land on their feet. So we think it's an interesting show and we hope the viewers will check it out.

BLITZER: Well, if they like you in THE SITUATION ROOM they'll love you in "IN THE MONEY." Jack, thanks very much. Have a great weekend.

Let's stay in New York. Paula is standing by with a preview of her show that comes up right at the top of the hour.

PAULA ZAHN, CNN ANCHOR: Hi, Wolf. Thanks so much.

Just about six minutes from now, the dramatic news today in the Duke rape investigation. For the very first time, we're hearing from the other dancer who was at a party where a stripper was allegedly raped. What does she say about what happened that night and the timeline the defense team is now throwing out?

Also, the murder of a nun, a cold case for decades, finally reaches the courtroom. You'll never guess who's charged -- a priest. The shocking story with all the latest details from Toledo, Ohio coming up just about now five minutes from now, Wolf.

BLITZER: Thanks, Paula. Thanks very much.

And still ahead here in THE SITUATION ROOM, welcome to the future of driving. Miles O'Brien shows us how technology may change everything --everything -- behind the wheel. Stand by for that. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Welcome back. America's highway system is 50 years old. Is it time for an upgrade? CNN's Miles O'Brien shows us one idea to make you safer in today's edition of "Welcome to the Future" -- Miles.

MILES O'BRIEN, CNN ANCHOR: Wolf, here's a staggering statistic. If today is an average day here in the U.S., 109 people will be killed in traffic accidents. That's 40,000 people a year. But there may be a way to prevent many of these deaths by making cars and roads smarter.

(BEGIN VIDEOTAPE)

O'BRIEN (voice-over): Meet Jim Misener, a transportation safety expert at U.C.-Berkeley. His goal? Simple -- to eliminate accidents.

JIM MISENER, TRANSPORTATION SAFETY EXPERT: We focus on something called intelligent transportation systems, essentially putting technology into the roadside and into cars to make the road safer.

O'BRIEN: It's like your car's GPS navigation system beefed up and made interactive, with intelligent sensors mounted on the car and on the street, alerting you to unsafe intersections, blocked lanes or hazardous road conditions.

MISENER: You can have intersections talking to a car, cars talking to the intersections. The cars, therefore, can communicate better to the drivers what's happening.

O'BRIEN: Misener says the system could roll out as soon as 2010, with an end goal of George Jetson proportions.

MISENER: In the end, we could have very safe cars that drive automatically. If you have a fully automated system, you have to have a lot of acceptance by drivers and by society for it to happen.

(END VIDEOTAPE)

O'BRIEN: Misener says the California Department of Transportation is sponsoring the U.C.-Berkeley team to build a network of these smart intersections in the San Francisco Bay area. He hopes this real life application will give them even more insight to how cars and drivers can communicate -- Wolf.

BLITZER: Miles, thanks very much.

And I'll be back this Sunday for "LATE EDITION." Among my guests, Senators Arlen Specter and Carl Levin. "LATE EDITION" airs 11:00 a.m. Eastern Sunday. "LATE EDITION," the last word in Sunday talk.

That's it for me. Let's head up to New York. Paula Zahn is standing by -- Paula.

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