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THE SITUATION ROOM

Rove Testifies Again Before Grand Jury; Tony Snow Eager To Work With White House; Rumsfeld And Rice Appear Together In Iraq; Lawmakers Point Fingers Over Rising Gas Prices; Senate Diverts Money From Iraq To Border

Aired April 26, 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: 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 today's top stories.
Happening now, Karl Rove testifies again in the CIA leak investigation. Is the president's top political adviser closer to being cleared or being indicted? It's 4:00 p.m. here in Washington. We're keeping tabs on Rove, special prosecutor Patrick Fitzgerald and a federal grand jury.

Also this hour, the president's new front man, FOX News anchor Tony Snow signs on for the press secretary's job. And will his past criticism of Mr. Bush come back to haunt him?

Plus, Condi Rice and Donald Rumsfeld in the spotlight. The secretaries of state and defense make a surprise visit today to Baghdad. And they're featured players in our brand new poll. We're going to tell you what the American people think of both of them. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

Up first this hour, the deputy White House chief-of-staff Karl Rove in the hot seat again before a federal grand jury. Sources say it's his fifth time testifying in the CIA leak investigation. And it's spurring new speculation that Rove could become the second White House figure possibly to be indicted in the leak case. Our chief national correspondent John King first broke the story on these latest legal maneuvers and John's here in THE SITUATION ROOM. What do we know, John?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Highly unusual, Wolf, to be called for a fifth time before the federal grand jury. Sources sympathetic to Rove are saying they believe this could lead to the resolution. From their accounts, they say the special prosecutor has a few lingering questions in their view about Rove's account of exactly why he didn't tell the full story in his first grand jury testimony about conversations with reporters.

It's a very complicated legal argument. The Rove camp is saying they believe though that this fifth appearance could resolve all this and within a matter of days or weeks, he will get a clean bill of health, if you will, when it comes to criminal charges from the special prosecutor. But that is their version of events and they have said in the past that they thought this would all be wrapped up soon and the special prosecutor has kept this investigation going.

Mr. Rove went into the grand jury room about three hours ago now. The lunch hour ended at 1:00. That's when he went in. We're waiting for him to come out, but we're told not to expect Mr. Rove to say anything publicly. Perhaps a statement from his attorney. They say again that he's cooperating fully and that they have no indication that Mr. Fitzgerald is planning any charges. Mr. Fitzgerald's office is declining all comment on this. Obviously, a high stakes legal challenge for Mr. Rove. Also a political cloud over the White House as well.

BLITZER: A lot of speculation that why Patrick Fitzgerald wants him before the grand jury since the last time he was there involves the Viveca Novak issue. A former reporter now from "Time" magazine who came forward and made disclosures belatedly. What does that have to do with Karl Rove?

KING: Well the Rove camp says that is why he's back before the grand jury. It's a very complicated matter, but Karl Rove first went before the grand jury in 2004 and he said that he had spoken to Bob Novak, the columnist Bob Novak. He did not mention that he had spoken in July 2003 to Matt Cooper of "Time" magazine.

Now months later, Karl Rove went back to the prosecutor with an e-mail and said, "I forgot about the conversation, it was an oversight, it was inadvertent. But I did speak to Matt Cooper about this." Now how did Karl Rove find out about that? Their version of events is that Viveca Novak, the "Time" reporter was having drinks with Karl Rove's lawyer.

And he said, Bob Luskin, the lawyer, that Rove was never a source for Matt Cooper. And she said, "Are you sure about that? That's not what people at 'Time' say." And that triggered Luskin to then order this exhaustive search of Karl Rove's e-mail and then they say they found this e-mail about the conversation with Cooper. That is their version of events, which they say supports that this was an innocent oversight, that Karl Rove forgot when he first testified.

They say they hope now answering questions about Viveca Novak's account -- she talked to prosecutors in December, will clear all this up. Again, it's hard to get information on this because it is so secretive and so sensitive but Karl Rove's camp hoping that this is the ultimate resolution.

BLITZER: Let me just get to the specific point...

KING: It's a tough one.

BLITZER: ... About the Karl Rove investigation. They're talking to me at the same time as I'm talking to you. Apparently we can use the statement now that Karl Rove's attorney has released the conversation that he had, the testimony before the federal grand jury has been resolved. In fact, we have it right here, John. I don't have it right here.

KING: I have it right here. Let me read it to you. We were told to wait for the statement but if we're told we can clear it let me read it to you. "Karl Rove appeared today before the grand jury investigating the disclosure of a CIA agent's identity. He testified voluntarily and unconditionally at the request of special counsel Patrick Fitzgerald to explore a matter raised since Mr. Rove's last appearance in October of 2005. In connection with his appearance, the special counsel has advised Mr. Rove that he is not a target of the investigation. Mr. Fitzgerald has affirmed that he has made no decision concerning charges. At the request of the special counsel, Mr. Rove will not discuss the substance of his testimony."

Again implied there is that Karl Rove is called back because of new information since his last testimony. We know that among that new information is what Viveca Novak told prosecutors. We certainly do not know that that's that only new information. We know about that but there's a lot about this case and the separate case against Scooter Libby that we learned from different court filings. So there's still a mystery to all of this.

BLITZER: And I just want to be up front to our viewers. That was a statement that Bob Luskin, the attorney for Karl Rove released and wrote before the end of the testimony, embargoed for release once the testimony was complete.

Now that the testimony is complete, we can report what Bob Luskin is saying. Bottom line in all of this, a lot of our viewers are probably going to think last week he may have been demoted, lost the policy part of his job, focusing in strictly on the political part of the job.

What connection, if any, is this investigation, is appearing once again before the grand jury, to what's happening to Karl Rove at the White House?

KING: The White House says there's no connection. The new chief-of-staff wanted his own man to handle policy, that's Joel Kaplan, wanted Karl Rove to focus more on big picture planning and the importance of the midterm elections.

But obviously, they would like this legal cloud to be removed so it does not become a further political problem. Just today Democratic Senator Chuck Schumer of New York says "Ah ha, Karl Rove being called before the grand jury yet again. This is an ominous problem for him in the White House."

So they would like to remove at least that part of this. Karl Rove is controversial to Democrats, every time he breathes. But they would like to remove the legal cloud at least so that Karl Rove can focus on his political work. They insist losing his policy portfolio is not related to this at all.

BLITZER: All right, John, you're going to be back in THE SITUATION ROOM with all the late developments as they come in. Thank you very much.

Karl Rove may be a well-known figure here in Washington, but our new poll shows nearly half of the American people haven't formed an opinion about him, 18 percent say they view Rove favorably, 33 percent have an unfavorable opinion of him. We're going to have more on our new poll, that's coming up ahead.

And we'll have much more on the Rove grand jury appearance. Jack Cafferty will be along with his question shortly. Our senior legal analyst Jeff Toobin is standing by. He'll look at the legal peril Rove may be in. And in our "Strategy Session," Donna Brazile and Bill Bennett will consider the political jeopardy for the Bush White House right now. It's all coming up here in THE SITUATION ROOM.

Over at the White House right now, a new man has been tapped to get the president's message out and to try to get his poll numbers back up. Mr. Bush announced today that the FOX News anchor Tony Snow has agreed to replace Scott McClellan as the press secretary. Let's bring in our White House correspondent Elaine Quijano. She has the latest. Elaine?

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Good afternoon to you, Wolf. With President Bush's approval ratings in the low thirties, more new blood here at the White House meant to reenergize the Bush administration.

Tony Snow named the new White House press secretary. Snow actually met with President Bush last Thursday in the residence. He accepted the job we are told yesterday after talking with Dan Bartlett, the counselor to the president, also the new White House chief-of-staff, Josh Bolten. Now Republican sources had said that before this, Snow had wanted and received assurances that he would play an active role in major policy debates. Nevertheless, Mr. Bush made it clear that ultimately, any decisions are still his to make.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I'm confident that Tony Snow will make an outstanding addition to this White House staff. I am confident he will help you do your job. My job is to make decisions and his job is to help explain those decisions to the press corps and the American people.

TONY SNOW, INCOMING WHITE HOUSE PRESS SECRETARY: One of the reasons I took the job is not only because I believe in the president, because believe it or not, I want to work with you. These are times that are going to be very challenging. We've got a lot of big issues ahead and we've got a lot of important things that all of us are going to be covering together. And I am very excited and I can't wait.

(END VIDEO CLIP)

QUIJANO: Meantime, Democrats question whether or not any of this will result in major change here at the White House. After the announcement we should mention, Snow actually wasted no time in meeting and greeting the reporters here on the White House beat.

Also, as a conservative commentator, he has had some tough words certainly for the Bush administration. He was asked during that informal session whether he'd be able to deliver the same tough messages now that he'll be working here at the White House.

His answer, quote, "You're not coming here to drink the Kool-Aid. You're coming here to serve the president" Wolf?

BLITZER: Did he get a clean bill of health from his doctors give the fact he's had colon cancer?

QUIJANO: We understand that in fact that was what he was holding off on, obviously that a major concern since being diagnosed with colon cancer. But the all the clear given apparently given and Tony Snow accepting just yesterday. Wolf?

BLITZER: All right, good luck to Tony Snow at the White House. We'll see how he does. Elaine, thank you very much.

Today some Democrats are gleefully pointing out Tony Snow's past criticism of President Bush. And even circulating e-mail with some of his most pointed comments. Snow wrote this about Mr. Bush on a Web site called townhall.com in November of 2005: "His wavering conservatism" -- referring to the president -- "has become an active concern among Republicans. The newly passive George Bush has become something of an embarrassment."

But today the president said he likes the fact that Snow speaks his mind. Listen to this.

(BEGIN VIDEO CLIP)

BUSH: He's not afraid to express his own opinions. For those of you who have read his columns and listened to his radio show, he sometimes has disagreed with me. I asked him about those comments, and he said, "You should have heard what I said about the other guy." I like his perspective. I like the perspective he brings to this job. And I think you're going to like it, too."

(END VIDEO CLIP)

BLITZER: Despite Snow's past criticism of Mr. Bush, the top Democrat in the House sees the outgoing Fox News anchor as a Bush loyalist then and now.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA), MINORITY LEADER: What can I say? As Jay Leno said last night, so he defended -- now his job is to defend the president at the White House when he's been defending the president on Fox. What's changed?

(END VIDEO CLIP)

BLITZER: Tony Snow's paper trail is catching up with him. Abbi Tatton is standing by with "The Situation Online." What are we picking up, Abbi?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, you don't have to look very far to find Tony Snow's comments critical of the president online. His own Web site from his radio show, an announcement that he's going to work for the president.

And then just under that, in the "Word From Tony" section, from an older column, talking about the president's listless domestic policy, that from a column from townhall.com from February of this year where he was also critical of Bush's energy policies, policies that now Tony Snow is going to be defending presumably from the podium.

Because he is a longtime TV and radio personality, has a long digital paper trail, the left-leaning blog Think Progress has rounded up many of the things that Tony Snow has said in the past, including this from August of 2000 when he criticized Bush as saying he sounded like "a soul tortured with Tourette's." We should say blogs on the right are highly supportive of this new position -- Wolf.

BLITZER: Abbi Tatton and John King, Elaine Quijano, part of the best political team on television. Thanks to all of you.

There are new developments today for America's mission in Iraq. Pentagon sources tell CNN the U.S. military is planning for a possible reduction of 30,000 troops by the end of the year. Today Defense Secretary Donald Rumsfeld got a first hand look at the military and political situation on the ground in Iraq, along with Secretary of State Condoleezza Rice.

It was a surprise visit, the first time two Bush cabinet members appeared together in Iraq. They met with Iraq's new prime minister designate and cheered on his efforts to try to form a national unity government.

(BEGIN VIDEO CLIP)

DONALD RUMSFELD, DEFENSE SECRETARY: It's not a transitional government. It's not an interim government. It's not a governing council. It's a government, a government of Iraq. That's an important thing. This is a sovereign country, and they're making impressive progress.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

CONDOLEEZZA RICE, SECRETARY OF STATE: It's very stimulating for us both to be in these meetings with Iraq's leaders together. We can take a look at the nexus between political and military issues because, after all, the security issues here have both a political and military aspect.

(END VIDEO CLIP)

BLITZER: Secretary Rice spoke with CNN's Ryan Chilcote in Baghdad. We're going to have much more of that interview in the next hour here in THE SITUATION ROOM.

And coming up, Rumsfeld versus Rice in a popularity contest. We're going to give you the latest poll numbers, as I said. That's coming up in THE SITUATION ROOM as well, the favorability numbers or unfavorability, in some cases, as well.

Let's go up to New York, Jack Cafferty. He has a very high favorability number with our viewers.

JACK CAFFERTY, CNN ANCHOR: Oh, yes. Why do I think that's no contest, that Rice-Rumsfeld deal? We'll find out. But if I was going to make a bet, I think I would bet on the lady being the more popular of the two.

Guess who is back in front of the federal grand jury for a fifth time in the CIA leak investigation? It doesn't get any better than this. The president's top adviser and confidante, Karl Rove, being quizzed again by special prosecutor Patrick Fitzgerald, who wants to know why Rove didn't originally disclose that he had talked to a "Time" magazine reporter about Valerie Plame's CIA status.

Rove's answer? I forgot. Karl Rove is arguably the shrewdest political operative in the country. He gets subpoenaed to appear before a grand jury investigating a CIA leak from the White House, but he forgot to mention that he talked to a reporter from "Time" magazine about this woman. I find that a bit incredulous, don't you? Sources say that the goal of Rove's session today was to clean up some things in the hopes of coming to a resolution.

Here's the question. What does it mean when Karl Rove is testifying for a fifth time before the grand jury in the CIA leak case? E-mail us your thoughts, CaffertyFile@CNN.com or go to CNN.com/CaffertyFile.

I mean, that's an answer, Wolf, that you probably got and I know I got from my daughters when I'd say, how come you didn't study for the test that you got the C on? And they'd go, I forgot.

BLITZER: I don't recall -- something like that. Thanks, Jack. Thanks very much.

Coming up, extreme makeover White House edition. What do you think? Is it working? We've got some new poll numbers out this hour. We'll share them with you.

Plus, which political party has got the cure for America's addiction to gasoline? We'll go live to Capitol Hill as Democrats and Republicans battle over soaring energy costs.

And later, a Congressional brawl over spending. Should lawmakers take money away from the fight in Iraq to spend it on border security? That's a debate unfolding right now in Congress. Stay with us.

(COMMERCIAL BREAK)

BLITZER: Let's bring in Zain Verjee from the CNN Global Headquarters in Atlanta for a closer look at some other stories making news -- Zain.

ZAIN VERJEE, CNN ANCHOR: Wolf, nearly five years after the World Trade Center was destroyed in the 91/1 attacks, there's finally a deal to rebuild on Ground Zero. Today the owner of the site and the site developer reached a deal concerning ho will get what in that location. In one part of the deal, developer Larry Silverstein will keep control of three buildings but give up control of a plot of land across the street.

The jury deciding the fate of Zacarias Moussaoui ends a third day of deliberations without reaching a verdict. Meanwhile, federal prosecutors want the judge to change one of her key rulings in the case. Now, that ruling granted some 9/11 families who were suing airlines to have access to the same aviation security evidence turned over to Moussaoui's lawyers.

And what's the holdup? That's what some of the families of victims of United Flight 93 are asking. Flight 93 went down in Pennsylvania during the 9/11 attacks. Some families are protesting in Washington. At issue, Congressional funding for a memorial near the scene of the crash.

Republican Congressman Charles Taylor of North Carolina has blocked the funding for the memorial for two years. Taylor is concerned about how much the government will pay for the memorial versus private contributions. We're going to bring you a live report next hour.

Twenty years after an explosion and fire at the Chernobyl nuclear plant, a day of remembrance. Today in Ukraine, mourners placed red carnations, which really was to represent a symbol of grief. And they also gathered for other vigils. Chernobyl released about 400 times more radiation than the U.S. atomic bomb dropped over Hiroshima in World War II; 31 people were killed and millions of others developed lasting health problems.

BLITZER: Thank you very much, Zain.

At the White House, incoming press secretary Tony Snow may have his work cut out for him if he hopes to make the president and his top aides more popular with the public. Our senior political analyst Bill Schneider is here with some brand new poll numbers. Bill.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Wolf, you know those TV shows about extreme makeovers? The Bush White House seems to have gotten an idea.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): When things are falling apart, you get a makeover. It works on TV. Maybe it will work for the White House. The first thing you do is call in a makeover expert. That's new chief of staff Josh Bolten, who got started right away. Karl Rove, move him into the back room. And how about a new face in the press room, like Tony Snow?

In politics, just like in TV, you live and die by your favorability ratings. And this White House has seen its ratings plummet. President Bush started his second term with 59 percent favorability. Now at a time when only 32 percent of Americans think Mr. Bush is doing a good job, just 40 percent say they like him.

Dick Cheney's numbers are worse. His favorables are down to 35. Some generals have been calling for Donald Rumsfeld's head. That hasn't helped his ratings. He's down to 33 percent. There's only one high administration figure whose numbers have held up, Condoleezza Rice. Her favorability rating is 57 percent, just about where it was when she started as secretary of state.

What's dragging the White House down? Iraq. Most Americans believe Iraq was a mistake. Among those who feel that way, opinions of Bush, Cheney and Rumsfeld have bottomed out. But Rice is still pretty popular, even among those critical of the war. Why? Maybe because she's been smart enough to signal that a makeover might be in order.

RICE: I know we've made tactical errors, thousands of them, I'm sure.

SCHNEIDER: Rice and Rumsfeld even showed up in Baghdad to celebrate Iraq's new government.

RUMSFELD: We now are moving through another important milestone, the formation of a new government, a sovereign government of Iraq.

SCHNEIDER: Iraq is getting a makeover, too.

(END VIDEOTAPE)

Does the White House makeover go far enough? Well, the TV show is called "Extreme Makeover" and some people think that may be what's need here, Wolf.

BLITZER: Bill, what is the difference between the poll that talks about favorability numbers as opposed to approval numbers? Because there are some significant differences.

SCHNEIDER: Yes. The approval number is job approval. The question is, do you approve the way Mr. Bush is handling his job. That number is 32 percent, an all-time low. The favorability number is essentially do you like him? Do you have a favorable or unfavorable opinion of the president. That's a little higher, 40 percent. But still 57 percent say they don't like him.

BLITZER: Good point. I just want to make sure our viewers understand the difference between approval and favorability. You did an excellent job, as always, explaining it. Bill Schneider, thank you.

We're getting videotape that literally just came in from the courthouse in D.C. Karl Rove, you'll see him shortly emerging from the grand jury. He'll be getting into this car presumably to take him either back to his lawyer's office or back to the White House. There he is. Karl Rove testifying today for a fifth time before the grand jury.

Only a few minutes before Karl Rove got into that car, we saw Patrick Fitzgerald, the special prosecutor. He emerged. This is, again -- there's Patrick Fitzgerald. He walked out and the cameras were all around him. He's asked Karl Rove now to testify once again. Almost unprecedented in this kind of a situation. Patrick Fitzgerald speaking briefly with reporters over there, presumably not saying a whole lot. But we'll continue to watch this jury as well.

Wonder if Patrick Fitzgerald has got a car to pick him up or if he's going to take a cab. We'll see and let you know on that little nuance.

Up next here in THE SITUATION ROOM, as gas prices rise, so does the rhetoric on Capitol Hill. Will the political battle between Democrats and Republicans lead to any relief at the pumps? Later, much more on our top story. Karl Rove in front of the grand jury for the fifth time. What should the White House do? I'll ask Donna Brazile and Bill Bennett in today's "Strategy Session." Stay with us.

(COMMERCIAL BREAK)

BLITZER: Welcome back to THE SITUATION ROOM. I'm Wolf Blitzer in Washington. And in Washington today, still more fuel for the political fight over rising gas prices. Our congressional correspondent, Andrea Koppel is on the Hill. She's keeping tabs of what's going on. What's going on, Andrea?

ANDREA KOPPEL, CNN CONGRESSIONAL CORRESPONDENT: Wolf, as we all know, yesterday Democrats both in the House and the Senate held back- to-back news conferences to get their message out. Today Democrats I guess you could say took their message on the road. Or at least down the road from the Hill.

(BEGIN VIDEOTAPE)

KOPPEL (voice-over): Senate Democrats made a point of walking to a nearby gas station, a sign with the latest gas prices, another chance to drill away at the White House and Republicans.

SEN. CHARLES SCHUMER (D), NEW YORK: The president has said Americans are addicted to oil. Well, the president and the White House are addicted to oil companies.

KOPPEL: Democrats intend to call on Congress this week to spend $350 million so the federal government can better monitor oil companies and crack down on possible price gouging.

SEN. DICK DURBIN (D), ILLINOIS: It goes back to the beginning when Vice President Cheney sat down with the oil company executives to write the policy for America. Well, the policy has been a disaster.

KOPPEL: But House Republicans say Democrats have blocked possible solutions, and say perhaps as early as next week the House could vote on another Republican plan to ease the current energy crisis, including another shot at opening up the Alaskan wilderness, also known as ANWR, to drilling.

REP. JOE BARTON (R-TX), ENERGY AND COMMERCE CHAIRMAN: We didn't open up ANWR. We didn't open up any of the Outer Continental Shelf. That is biting us in the rear now as gasoline prices are approaching in some parts of the nation -- have gone over $3 a gallon.

KOPPEL: Back at that Capitol Hill gas station, Derek Whittenburg from New York is staying away from the Washington blame game and says $3 a gallon won't keep him off the road.

DEREK WHITTENBURG, MOTORIST: They're high or whatever. And I just think that that's part of life and we have to make those adjustments.

KOPPEL: But with midterm elections just around the corner --

SCHUMER: We're going to keep repeating it until we get some action.

(END VIDEOTAPE)

KOPPEL: And while Democrats are clearly in no rush to move off the subject any time soon, and plan to hold yet another press conference tomorrow, a House leadership Republican aide tells CNN, Wolf, that the House speaker, Dennis Hastert, and other Republicans plan to take their message to the pumps tomorrow as well, to try to lay out some of the ideas that they say they have in store for lowering those prices.

And, also, Wolf, they want to have the last word before they leave for the weekend -- Wolf.

BLITZER: Andrea, thank you.

And the oil companies, by the way, also spoke out today. They made clear that -- where their stance is, in denying any price- gouging. We're going to have a complete report on what the oil companies are saying. Our senior national correspondent, John Roberts, will be joining us here in THE SITUATION ROOM, 7:00 p.m. Eastern tonight.

Up next, a new spokesman at the White House, but will Tony Snow make a real difference? I will ask two experts, Donna Brazile and Bill Bennett.

Plus, star power today in Iraq, but was it a smart move to have both the secretary of state and the secretary of defense together in Baghdad today? Today's "Strategy Session" starts in just two minutes.

(COMMERCIAL BREAK)

BLITZER: Welcome back.

Today, in our "Strategy Session" a new press secretary at the White House, and more fallout from the CIA leak investigation. Will bringing Tony Snow on board change the Bush administration's dealings with the press? And is Karl Rove's return to a grand jury here in Washington a recurring headache for the White House? Joining us now, our CNN political analyst Democratic strategist Donna Brazile, and Bill Bennett, the host of the radio show "Morning in America," which soon will be expanded and will air on Sirius Satellite Radio.

Congratulations to you, Bill, on that.

BILL BENNETT, CNN CONTRIBUTOR: Thank you. Thank you.

BLITZER: I hope they're paying you Howard Stern-type money.

(LAUGHTER)

BLITZER: But I'm sure they are not.

BENNETT: I'm not Howard Stern in any way, believe me, money or anything else.

(LAUGHTER)

BLITZER: Let's talk about Karl Rove making a surprise appearance today before the grand jury, his fifth time there. Chuck Schumer, the Democratic senator from New York state, one of two, said this: "While, obviously, no one knows what goes on in the grand jury, the fact that Karl Rove has been called back once again is ominous."

What do you think, Bill?

BENNETT: Well, I understand he went there voluntarily.

But I have got to tell you, what fascinates me is the degree of interest by the all of the media in this case. We are talking about a -- the name of an agent that was not covert. There was no damage done to the CIA or classified information. And, yet, the whole world of the media is absolutely obsessed with it.

BLITZER: Well, let me just point out...

BENNETT: Sure.

BLITZER: ... we're talking about the deputy White House chief of staff.

BENNETT: Yes.

BLITZER: That's what we're talking about.

BENNETT: Right.

BLITZER: And the fact that her name was classified or not classified, we don't know what damage was done to any of the operatives she may have been working with in foreign countries. We do know that her assignment was now impossible. If she was going to be sent back out by the CIA to run spies in foreign countries, that would now become impossible. BENNETT: No plausible case has been made for any damage. People have looked, and they haven't been able to make the case. She was not covert.

But, indeed, it is the White House. That is what explains it, because it is a deputy at the White House.

Meanwhile, you have these two other situations, which we have talked about at length, classified information, national security, extremely delicate. I mean, you can't -- couldn't get near a microphone in this town with Karl Rove, people calling for a special prosecutor. Where is the call for the special prosecutor in the CIA leak? Where is that call?

BLITZER: I want Donna to weigh in.

BENNETT: OK.

BLITZER: The CIA does say she was a clandestine officer.

BENNETT: Yes.

BLITZER: She was not an analyst.

BENNETT: Yes.

BLITZER: She was a clandestine officer who had a front company that they had established...

BENNETT: Yes.

BLITZER: ... at great expense, trying to run spies...

BENNETT: Yes.

BLITZER: ... and protect national security. And that, of course, had to be rolled up as a result of this disclosure.

But, Donna, go ahead...

BENNETT: But that...

(CROSSTALK)

BLITZER: ... and weigh in on Karl Rove.

DONNA BRAZILE, CNN POLITICAL ANALYST: Look, there's no question this is the fifth time that Karl has appeared before the grand jury, five times.

He's trying once again to clarify what he said almost a year ago. There has been some new information, a new journalist that was involved in this matter. And, so, I think this is, once again, a major distraction for the White House. Clearly, at a time when they're trying to turn a new page, get a new chapter rolling, reminding the American people once again that this is still an ongoing investigation, that's not good news for the White House.

BLITZER: And we don't know. He may be totally cleared, and he may...

BENNETT: He may be.

BLITZER: He may be indicted. We just have to wait to see what Patrick Fitzgerald does.

By the way, he did get into a cab when he left the courthouse to go back to his office.

BENNETT: Now, that's important, too.

BLITZER: That's important.

(CROSSTALK)

BENNETT: That's...

(LAUGHTER)

BLITZER: I wanted to clear that up. We...

(CROSSTALK)

BRAZILE: It's important that he got -- he was able to get a cab in D.C.

(LAUGHTER)

BLITZER: We saw the videotape. And I wanted to -- I didn't want to leave our viewers hanging on that.

BENNETT: Yes.

BLITZER: Let's talk about Tony Snow.

BRAZILE: Yes.

BLITZER: He has got a big new job at the White House. A lot of people think he may have made a mistake to take that job. It's a tough job, as all of us know.

And now the paper trail, all the things that Tony Snow said about this president, may or may not come back to haunt him. He said this on November 11 of last year. "His" -- referring to Bush -- "Bush's wavering conservatism has become an active concern among Republicans, who wish he would stop cowering under the bed and start fighting back against the likes of Harry Reid, Nancy Pelosi, and Joe Wilson."

(LAUGHTER)

BLITZER: "The newly passive George Bush has become something of an embarrassment."

Those are blunt words from a conservative himself about this conservative president.

BENNETT: He can't win.

You know, if he had been a lapdog, it would have been, well, here he is, FOX and the White House, you know, they are in bed together, and now it's -- and here, now they have formalized the arrangement.

So, he has made some critical comments. I mean, he's a journalist. Over the course of his career, of course he's going to make some critical comments. But George Bush showed he's a big guy. He accepts him, brings him in.

Look, I think this is a great appointment. If this is what Josh Bolten meant, Wolf, by, we are going to court the press, have Tony Snow in there talking to David Gregory and Helen Thomas, it sounds good to me.

BLITZER: Do you think that there -- this notion some Democrats -- and Nancy Pelosi mentioned it earlier -- we ran that clip -- someone the White House brings in from FOX News, is that a problem to a good Democrat like you?

BRAZILE: Well, look, I know Tony. I know Tony. Tony is someone who speaks his mind.

And he's someone that's not afraid to stand up to power. So, on one hand, it's a good move by the White House to bring in somebody like Tony, with his qualifications. He's going to be the bragger in chief, according to Josh Bolten in the memo, that he has got five things they have to do.

(LAUGHTER)

BRAZILE: So, Tony is now going to be the big bragger. Tony will now be responsible for writing the talking points that he once delivered on FOX News.

So, this is going to be a very interesting arrangement. And to see Tony in his new position, I think many of us are going to take a new look at how he will try to convince the America people that there is something new, something fresh, something different going on at the White House.

BLITZER: You used to be an analyst at FOX News.

BENNETT: Sure, yes. No, no, no.

(LAUGHTER)

BENNETT: No, no, I wasn't trashing FOX News.

You understand, what I'm saying is, people are saying, if he hadn't said anything critical, well, it's a sweetheart relationship. You look for the things critical he said. Well, how can he get the job? But a note of agreement with Donna on this. I hope he does speak the truth to George Bush and tells him about the problems and the things that need to be addressed, and says, you know, occasionally, look, this isn't a good idea. That would be great. And I hope he speaks truth as well to that White House press corps, which could occasionally use some straight talk.

BRAZILE: Well, after all, look, the White House already has the FOX audience. They need to get the CNN audience. And if Tony is capable of getting to the rest of the American people, the ones who are not reading the talking points, then I think he will do a fine job.

BLITZER: I know -- I have known Tony Snow for many years. And, personally, I like him a lot.

BENNETT: Terrific, yes.

BLITZER: I think he is a very good guy. And I think he's a good addition for this White House. I think he will bring a good perspective that they sorely need inside the White House.

Let's talk a little bit about Iraq, because, no matter how smooth Tony Snow might be, or other Josh Bolten moves that may be in the works, as long as U.S. troops are dying in Iraq -- and the casualties this month, Bill, have be significant, a lot higher than in previous months -- the president is going to be in trouble politically.

BENNETT: Well, it's a very tough issue.

And it's obviously affecting his approval rating. But I believe he's doing the right thing. Look at that Zarqawi tape. Zarqawi, in the short run, is saying the same thing that a number of the president's critics are saying, which is: Get the troops out. We want the troops out.

It's the same end. The president is standing up to that, and has to. I think it's interesting today that he sent both Condi Rice and Don Rumsfeld. By the way, that's not fair to compare their -- you might as well ask, Bill Bennett or Donna Brazile, who people like better.

(LAUGHTER)

BENNETT: I mean, come on.

BRAZILE: That's hands down...

BENNETT: Whose idea was this?

(LAUGHTER)

BENNETT: Anyway, but, I mean, that he sent Condi Rice and Don Rumsfeld...

(CROSSTALK) BLITZER: To send a powerful message to the...

BENNETT: Underscoring it.

BLITZER: ... the designated new prime minister.

BENNETT: Right.

And look at Iraq. I mean, this meant, to everybody: Take a look at Iraq. This is serious. I'm committed. We're committed.

BLITZER: Here are the numbers that we have in our latest CNN poll. Was it a mistake to send U.S. troops to Iraq? Fifty-five percent now say yes. Thirty-nine percent say no. Who's winning the war in Iraq? Twenty-six percent say the U.S. Thirteen percent say the insurgents. Fifty-eight percent say neither side.

This is an issue that hovers over this White House like none other.

BRAZILE: This is really the cornerstone of the president's legacy, and the reason why I believe so many of the American people have turned against this administration.

Look, Dr. Rice and Secretary Rumsfeld must convince the new Iraqi government that they have really got to escalate things a little bit, get the new government formed, get the Constitution on the road, get the -- get the troops trained.

There was a report today in "The New York Times" that some Shia militias are infiltrating the Iraqi army. They have got to get a handle on all of this. Look, there's a lot of work to do before our troops can begin to come home. But it's good to see the both of them in Iraq together.

BENNETT: But it's interesting, General Casey saying today that some of the troops will be coming home, this at the same time this high delegation visit. So, we will see.

It would be great to have a big break, to get Zarqawi, from Maliki here to really step up and do the job. People are very hopeful about that.

BLITZER: Donna Brazile and Bill Bennett, both have high favorability ratings...

(LAUGHTER)

BRAZILE: No.

BLITZER: ... at least here around this table.

BRAZILE: He has a satellite show now. So...

BENNETT: It's not on FOX. OK. Anyway.

(LAUGHTER)

BLITZER: Thanks very much.

(CROSSTALK)

BENNETT: Enough on that.

(CROSSTALK)

(LAUGHTER)

BLITZER: Thanks to both of you.

Coming up in THE SITUATION ROOM, is funding for the U.S. mission in Iraq right now a risk on Capitol Hill? We will tell you what's happening in a Senate fight over pork that has prompted a presidential veto threat.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: On Capitol Hill today, a political smackdown happening right now over spending. The Senate voted today to divert some of the money President Bush requested for the war in Iraq and the war on terror to efforts to increase U.S. border security.

The move only intensified a battle over pork that spurred President Bush to issue a veiled veto threat.

Our congressional correspondent Dana Bash is joining us from Capitol Hill with the latest.

Dana, what's going on?

DANA BASH, CNN WHITE HOUSE CORRESPONDENT: Hi, Wolf.

Well, on that $2 billion, Republicans offered that -- to add that money to border security, as an effort to lure conservatives on the issue of immigration, conservatives who say, we're not even going to talk about a guest-worker program until we beef up security at the borders.

But, in order to do that, because Republicans are really under the gun from conservatives, very angry at them about the amount of government spending, they had to cut it somewhere. And this is an emergency spending bill primarily to fund Iraq. So, that's where it was cut in this particular bill. And Democrats went to the Senate floor and called it outrageous.

(BEGIN VIDEO CLIP)

SEN. HILLARY CLINTON (D), NEW YORK: And now we're standing up here and, with a straight face, saying that we're going to cut their body-armor funds, we're going to cut the IED research program, we're going to cut the death gratuity, so we can score political points and act like, all of a sudden, we have become fiscally responsible?

I'm sorry, Mr. President. I find that a sad commentary about what should be expected from each and every one of us.

(END VIDEO CLIP)

BASH: Now, the Republican senator who was the author of that measure, Judd Gregg of -- of New Hampshire, ran to the Senate floor and defended himself, essentially saying that this is money that the Pentagon could, and he expects will, find in other parts of their operating budget. And he went back at Hillary Clinton, lashed out at her.

(BEGIN VIDEO CLIP)

SEN. JUDD GREGG (R), NEW HAMPSHIRE: So, to come down here and allege that these funds are going to come out of the needs of the people who are on the front lines in Iraq or Afghanistan is pure poppycock, pure. And to make that representation is hyperbole and waving a red flag, which is totally inappropriate.

(END VIDEO CLIP)

BASH: Now, Gregg and other Republicans say that the broad issue that they're supporting, nonetheless, is security. Border security is as important, they say, as funding the war in Iraq.

But, nonetheless, this is exhibit A, Wolf. And this major election-year challenge for Republicans is that they really are intent on keeping spending down.

BLITZER: Isn't the bigger issue here, Dana, this is supposed to be an emergency supplemental bill, emergency, not part of the regular budget, not part of the regular appropriations? Because of an emergency, the war in Iraq, Hurricane Katrina, they need more funding to go forward, yet, they have stacked this bill with billions of dollars in highway funds and all sorts of pork that have nothing to do with any emergency.

BASH: Well, you know, it's an old saying around here, Wolf: One person's necessary funding is the other person's excess funding, or excess project.

And that's certainly what we're seeing play out -- you're right -- on this bill. It's about $14 billion in extra funding that they're debating right now. And the president says that he is going to veto this particular legislation if it comes to his desk with that extra $14 billion.

And this is really turning into a Republican-vs.-Republican fight. And it is spilling on to the Senate floor as we speak, because what some senators are saying is that they think some major projects by Republican senators need to be cut. For example, the biggest example here is Mississippi. There is a railroad that the Mississippi Republican senators want to be built. They say it is absolutely necessary for evacuation, for security. But Republicans, like Senator Tom Coburn, who is on the Senate floor -- or was just a short while ago -- he says, that is unnecessary right now; it is not an emergency, and should not be in there. And that is something that you are going to continue to see throughout this debate on this issue -- Wolf.

BLITZER: Dana, thank you.

A controversial entry in the online dictionary Wikipedia has two Georgia Democrats at odds over what is fair game in the race for the governor's mansion.

Our Internet reporter, Jacki Schechner, is standing by with details -- Jacki.

JACKI SCHECHNER, CNN INTERNET REPORTER: Cathy Cox and Mark Taylor are Democratic competitors in the Georgia governor's race. And they both have entries in Wikipedia, the online encyclopedia that anyone can edit.

Well, somebody edited Mark Taylor's bio. And his campaign looked to Cathy Cox's campaign to see if they were responsible for the change. Specifically, somebody added information about Taylor's son being part of a tragic drunk-driving accident.

It turns out, according to Wikipedia founder, Jimmy Wales, they did trace it back to Cox's campaign. Now, Taylor says they're very upset about this. His campaign says that they think this is a political stunt. Cathy Cox's campaign tells me that she had a mandate that this information was not to be used, under any circumstances, in her campaign. She's very upset and angry about it. And she plans to deal with it strongly -- Wolf.

BLITZER: Thank you, Jacki.

Up next here in THE SITUATION ROOM, President and Mrs. Bush give out an A-plus. We will tell you who is on the receiving end of the award.

And, with gas prices on the rise here, we will have a closer look, a rare look, at the fuel costs in Iran, CNN's Aneesh Raman, and one of the few Western reporters in Iran right now. And we will have a full report from Aneesh. That's coming up in our next hour.

Stay with us.

(COMMERCIAL BREAK)

BLITZER: Our Zain Verjee is joining us now from the CNN Global Headquarters in Atlanta once again with a closer look at some other stories -- Zain.

VERJEE: Wolf, new home sales are up, but the average price of homes is down. A new government report says home sales posted the biggest jump in 13 years last month. But with the drop in the average price of homes, experts are saying that it's really an indication that builders may be cutting prices, in response to higher mortgage rates and the sign of more unsold homes that are just lingering on the market.

And she says her students think she's the best. Now the rest of the country's calling her that, too. Today, President and first lady Bush applauded Kimberly Oliver and the -- who was the national teacher of the year. She is a kindergarten teacher at a board-run elementary school in Silver Spring, Maryland. The children come from various ethnic backgrounds. Oliver has praised them for helping overcome language, cultural and economic barriers to improve their test scores -- Wolf.

BLITZER: Thank you, Zain. Congratulations to her, too.

Still to come, Karl Rove testifying for a fifth time before the grand jury in the CIA leak case, what might that tell us about his legal fate? Jack Cafferty with your e-mail -- right after this.

(COMMERCIAL BREAK)

BLITZER: Let's head up to Jack in New York -- Jack.

CAFFERTY: The question, Wolf, is what do it mean when Karl Rove is spending a fifth session in front of the federal grand jury in that CIA leak case in Washington?

Got a lot of good e-mail.

Jeremy says: "Some people like to say there are two sides to every story. Apparently, Rove thinks there are more."

J.W.: "It means the Bush administration is harvesting exactly the seedy crop it planted. The chickens are coming home to roost, and we as a nation are coming to an end of this horror. And if the IRS ever asks me why I didn't file my income taxes, I think I will try the 'I forgot' defense."

Barry in Yuma, Arizona: "It means that CNN is off on a wild goose chase for the fifth time."

Bob in New York: "It means Tony Snow and FOX will claim it's a liberal conspiracy against the great decider."

Hilding in Maplewood, New Jersey: "Karl Rove is your garden- variety schoolyard bully with a brain. How he wound up in our White House, working for our president, is something the Republican Party will sooner or later have to answer for."

Arlene writes from Roanoke, Virginia: "I think special prosecutor Patrick Fitzgerald is one of the few people giving me any confidence in our country these days."

And Abram here in New York: "Jack, incredulous is no longer a synonym for incredible. Webster says its usage as such is obsolete. It is now only used this way: 'I am incredulous' -- that is, 'I don't believe it.' Anyway, you speak the truth, however you say it." But I did misuse the word incredulous -- Wolf.

BLITZER: A rare mistake by Jack.

Thanks, Jack, for admitting it...

(LAUGHTER)

CAFFERTY: Yes, right.

BLITZER: ... to our viewers. Appreciate it.

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