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THE SITUATION ROOM

William Jefferson Responds to Corruption Probe; Tony Blair Meets with Iraq's New Prime Minister; Global Warming Returning as a Hot Political Issue; Dixie Chicks Continue to Speak Out

Aired May 22, 2006 - 16:00   ET

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


WOLF BLITZER, CNN ANCHOR: To our viewers, you're in "THE SITUATION ROOM," where news 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, cold cash and videotape. The potentially powerful evidence against Congressman William Jefferson. It's 4:00 p.m. here in Washington where the Louisiana Democrat is speaking out about bribery allegations after an FBI raid on his office. We'll have his new statement, that's coming up this hour. We'll bring it to you live.

Also, talk of a turning point in Iraq. It's 3:00 p.m. in Chicago where President Bush gave a nod to Baghdad's new government. But is there enough progress to convince war-weary Americans to be patient?

And the Dixie Chicks versus President Bush. Are they still ashamed that he's from their home state of Texas? It's 3:00 p.m. in Texas where the country music group has a new album and new comments about the commander-in-chief. I'm Wolf Blitzer, you're in THE SITUATION ROOM.

Up first this hour, stunning new developments in a federal probe of corruption on Capitol Hill. Congressman William Jefferson of Louisiana is defending himself against allegations he was caught on videotape accepting a bribe and that he hid thousands of dollars of cash in his freezer.

The Louisiana Democrat spoke out just a short while ago and he's going to be speaking with reporters once again later this hour. We'll bring you his comments live. In the meantime let's go up to Capitol Hill. Our congressional correspondent Dana Bash is standing by with what we know. Dana?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Wolf, the headline from those remarks the congressman just had with reporters is that he's refusing to resign. Now he has not been charged with anything but he still says he will not resign despite these new detailed allegations that have come out against him over the weekend and again today.

Democrats, of course, have been wanting to make this issue, corruption, a big issue against Republicans. So they have been privately trying to pressure the congressman to step down. He says flatly he will not do that. Now we'll hear more about what he had to say to reporters in just a moment. First, here's some background.

(BEGIN VIDEOTAPE)

BASH (voice-over): On Saturday evening, overnight through Sunday afternoon for nearly 18 hours, FBI agents searched Louisiana Congressman William Jefferson's Capitol office.

MICHAEL LEVY, FORMER FEDERAL PROSECUTOR: To actually have the executive branch of the government go in and spend 18 hours going through a sitting member of Congress's office up on Capitol Hill, as far as anyone knows, never occurred before.

BASH: All this, a hunt for evidence to back a bribery case the government has been building for 14 months against the eight-term Democrat. The 82-page affidavit supporting the search warrant told of the congressman being secretly videotaped outside this Virginia hotel taking $100,000 in 100 dollar bills from a businesswoman turned FBI informant, according to a government official.

When the FBI raided his D.C. home three days later, it found 90,000 of that cash stuffed in a freezer in "various frozen food containers wrapped in aluminum foil." The breathtaking narrative details multiple taped conversations with the informant, including Jefferson at one point laughing as he says "all these damn notes we're writing to each other as if we're talking as if the FBI is watching."

Though he has not been charged the affidavit accuses the congressman of taking hundreds of thousands in bribes and using his office to help a small technology company he had a stake in to secure business in Nigeria and Ghana.

(END VIDEOTAPE)

BASH: Now the congressman maintains that he is innocent. He says what the government has laid out is just one side of the story and again he spoke to reporters a short while ago. Let's listen.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: The search warrant for your office says that you took $100,000 in cash from a briefcase from Lori Mody's car. What can you say to that allegation?

REP. WILLIAM JEFFERSON (D), LOUISIANA: You know I can't talk about any specific allegations that I made in an affidavit or any other place. My lawyers advised me not to talk about those things so I will not. I will simply say to you that there are two sides to this story and we'll have a chance in the right forum to express our side and say what it is. But this is a selective release of information which is incomplete and therefore we think not what it should be.

UNIDENTIFIED FEMALE: Were you shocked by the search of your office, sir?

JEFFERSON: Oh, yes. I think it's unprecedented. There were no exigent circumstances that I'm aware of. And this is a matter that will have to be taken up in the legal process.

UNIDENTIFIED MALE: And when you say incomplete...

JEFFERSON: I can't answer any details. I won't get into facts.

UNIDENTIFIED FEMALE: Congressman, are you going to resign?

JEFFERSON: No, I don't plan to resign.

UNIDENTIFIED FEMALE: When you say incomplete, did you take $100,000 in cash?

JEFFERSON: I have simply said to you that my lawyers advised me not to talk about the facts and I will not talk about facts. I will simply say that there are two sides to this story and we'll get a chance to make our side in the proper forum and this isn't it.

UNIDENTIFIED MALE: Any more reaction to the search of your office, of the FBI spending the majority of the weekend in there looking around?

JEFFERSON: No I've just said that I believe that it's completely inappropriate to use the police powers of the federal government to come into the offices of a congressman. This hasn't happened before. And frankly the -- there's a way to make a response to an inquiry for information, which my lawyers will carefully follow to do. But this isn't the way that it should be done.

(END VIDEOTAPE)

BASH: You heard there the congressman talking about the fact that he's concerned about the FBI coming into his Capitol office and searching it here. Now that is actually, Wolf, an interesting subplot that is kind of brewing around this story here on Capitol Hill.

Lawmakers in both parties say that they are concerned and looking into this because there is -- this raises flags they say in terms of separation of powers. In fact, the top Republican in the Senate, Bill Frist, says he was concerned about that very issue that his lawyers, his counsel in his office is looking into it.

But we are told by a government official that they actually did try to subpoena what was in his office eight months ago and that the congressman and his lawyers essentially ignored the subpoena. And one last thing, the attorney general himself also did speak about this just a short while ago about this controversy over whether or not the office should have been raided by the FBI. He said "I admit that this was an unusual step we have taken and it was in response to an unusual set of circumstances." Wolf?

BLITZER: Dana, thank you very much. And later this hour the congressman is expected to make another statement to reporters. We're going to bring you those remarks live once they happen on Capitol Hill.

Let's get some more though on the story. We'll bring in our Abbi Tatton, she's following all of these developments. She's actually seen the search warrant from the FBI raid. Abbi?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, here's the affidavit supporting that search here. It's over 80 pages. Some of it is redacted. The items to be seized, they are not listed although you can get a clue what the FBI was interested in from elsewhere.

Faxes from the congressman's office, travel records, even a folder labeled "Ghana" that is lifted in the affidavit. It also refers to the $100,000 in cash. The affidavit states that Congressman Jefferson placed it in his Lincoln town car, all the time being videotaped by the FBI.

It later showed up, as we heard in Jefferson's freezer, wrapped in foil, $90,000 of it in any case. It's all listed here at CNN.com/situationreport. We posted it there for you to read. As we heard, Jefferson has not been charged. His lawyer called the search outrageous. Wolf?

BLITZER: Abbi, thank you. And once again we'll bring you his remarks live coming up later this hour once he goes out and speaks to reporters. We'll move onto other important news we're following.

New endorsements today for the new Iraqi government from two world leaders whose political fortunes have plummeted because of the war. The British Prime Minister Tony Blair met with Iraq's new prime minister in Baghdad. The visit comes just two days after Iraq's national unity government finally was sworn in. And it comes just days before Blair holds talks on Iraq with President Bush here in Washington. Today Mr. Bush is touting what he calls a watershed event in Iraq and he's asking for patience from Americans who disapprove of his handling of the war in Iraq, 62 percent taken in our poll only last week. Let's get some more now from our White House correspondent Ed Henry. Ed?

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Wolf, with Iraq pulling the president's poll numbers down to historic lows as you noted, he's trying to pivot off this good news, trying to boost his own standing but also raise the fortunes of Republicans heading into the midterm elections. He gave a speech today in Chicago about the war on terror and what was significant was that the president was not trying to paint too rosy of a scenario. He's been accused of doing that before by Democrats. This time coming out of this good news of Iraq this weekend, he was really trying to strike sort of a cautiously optimistic tone, acknowledging many mistakes in Iraq. Take a listen.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Our nation's been through three difficult years in Iraq. And the way forward will bring more days of challenge and loss. The progress we've made has been hard fought and has been incremental. There have been setbacks and missteps, like Abu Ghraib. They were felt immediately and have been difficult to overcome. Yet, we have now reached a turning point in the struggle between freedom and terror.

(END VIDEO CLIP) HENRY: Meanwhile, the president's key ally in the war on terror British Prime Minister Tony Blair made a surprise visit to Baghdad. The first world leader to go into Iraq since the new government was formed. Mr. Blair is now going to come to the White House later this week to report back on this trip to the president.

And what is interesting is various British media reports are suggesting that the two leaders may announce later this week that they are going to cut U.S. troop levels down to 100,000 from about 132,000 as they are right now or that there may even be some sort of announcement about various all foreign troops being pulled out over the next four years.

I just got out of a briefing with a senior administration official here at the White House, who is saying they do not expect any announcement like that. They don't expect any major announcement at all from the two leaders. And the president today, once again, in a speech -- not a surprise -- did not mention anything about troop withdrawals -- Wolf.

BLITZER: What day is the meeting scheduled to take place, the Blair- Bush meeting?

HENRY: We're expecting it to be Thursday. And now a lot of people wondering what exactly will come out of it. Because, again, we're not expecting a major announcement. Instead probably a lot more talk about how they fell we're turning the corner but the specifics are still vague -- Wolf.

BLITZER: Ed Henry at the White House, thanks very much. And Ed Henry and Dana Bash are part, as you know, of the best political team on television, CNN America's campaign headquarters.

Fresh examples today of what Mr. Bush is calling the challenge and the loss ahead in Iraq. At least 16 Iraqis were killed in attacks across the country today, and the Pentagon confirms another United States Marine died in Iraq yesterday. Two thousand four hundred fifty-five American servicemen and women have died in Iraq since the start of the war, a little bit more than three years ago.

One of the president's most vocal Democratic critics on Iraq is being honored today. Pennsylvania Congressman John Murtha received the John F. Kennedy profile in courage award. Speaking in Boston, the combat veteran noted that most Americans now share his belief that U.S. troops should withdraw from Iraq as soon as possible.

The leading Democrat, who supported the Iraq war, is feeling some new heat today. Senator, former vice-presidential candidate, Joe Lieberman says he's ready for a good primary fight against businessman Ned Lamont. Lamont secured a spot on the Connecticut primary ballot this weekend. He picked up a surprisingly strong one-third of the support delegates at the state Democratic Party convention.

An update now on another hot button election year issue, the Senate has gone back to debating its version of immigration reform. Even opponents acknowledge the measure is probably going to be approved perhaps later this week in the Senate. Today President Bush renewed his call for a key provision of the Senate plan, a guest worker program.

(BEGIN VIDEO CLIP)

BUSH: You can't secure our border with thousands trying to sneak in, and therefore this country needs a temporary worker program that will allow foreign workers to enter our country legally on a temporary basis to meet the needs of our economy and take the pressure off our border.

(END VIDEO CLIP)

BLITZER: Once the Senate bill is approved, the president is expected to focus on trying to reconcile that measure with the enforcement only immigration bill that was passed in the House. That's not going to be easy by any means finding common ground between the Senate and the House.

Jack Cafferty is back. He was off on Friday. We missed you, Jack. But fortunately you're with us once again today.

JACK CAFFERTY, CNN CORRESPONDENT: Well, things to look forward and be thankful for. Thank you, Wolf.

Two years in the political wilderness would do us a lot of good. That's a Republican member of Congress talking. He wouldn't give his name. But he said that his party and the midterm elections have caused him to think that maybe if they got their butts whipped a little bit, it might do the whole party some good.

"The Los Angeles Times" saying Republicans are so discouraged by the direction the country is headed in and their party's record that they are now wondering out loud if Republicans would actually be better off if they lost control of the Congress. The unhappiness of many Republican supporters is beginning to take a toll, affecting things like morale, the all important fund-raising and some of the results of the very early elections.

The Republican National Committee dismisses such talk, saying the Republicans will be just fine in November once people realize the polices the Democrats will promote if they win control of the Congress.

So here's the question this hour. Would Republicans be better off losing control of Congress in the upcoming elections? E-mail your thoughts to CaffertyFile@CNN.com or go to CNN.com/CaffertyFile -- Wolf.

BLITZER: I suppose some people could argue, Jack, you have got to take one step back in order to take two steps forward at some point down the road. Some people can argue that.

CAFFERTY: Yes, well, the other argument to make is that every incumbent officeholder should be voted out, every single one of them, Republicans, Democrats and Independents. Throw them all out and let's start over. It couldn't be any worse.

BLITZER: You could make that argument too, Jack.

CAFFERTY: Just did.

BLITZER: I heard you. Thank you.

And if our viewers want a sneak preview of Jack's questions, plus an early read on the day's political news and what is ahead in THE SITUATION ROOM here's what you do. You sign up for our daily e-mail alert. You go to CNN.com/SITUATIONROOM. Simple to do.

Coming up, how did Ray Nagin do it? Down in the polls, the New Orleans mayor came storming back to win reelection. We'll have a live report. That's only moments away.

Plus, will hurricane season be as bad this year as it was last year? We're going to tell you what a new government forecast out today suggests.

And next hour, he shocked the nation two years ago when he admitted he was gay and he resigned as New Jersey's governor. Now an early look at Jim McGreevey's memoirs. Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: In New Orleans today, Mayor Ray Nagin is promising to bring the city together after his reelection victory. Nagin narrowly defeated Lieutenant Governor Mitch Landrieu in Saturday's runoff election. Now, the mayor at the center of the Katrina storm is set to begin his new term next week the day before the start of the hurricane season.

Our Gulf Coast correspondent Susan Roesgen is joining us now live from New Orleans with more on this story -- Susan.

SUSAN ROESGEN, CNN GULF COAST CORRESPONDENT: Wolf, I think even the mayor himself was a little bit surprised by the outcome of this election. It was such a close race. But now he has got to do a big job for the next four years.

(BEGIN VIDEOTAPE)

ROESGEN (voice over): Mayor Ray Nagin used to say that after Hurricane Katrina no one would want his job. In the end, he barely held onto it. Nagin defeated Lieutenant Governor Mitch Landrieu by fewer than 6,000 votes.

MAYOR RAY NAGIN, NEW ORLEANS: It was a hard fought battle. And I want to reiterate my thanks to Mitch Landrieu for running a very good campaign. And we stayed on the high road.

So I think that was pretty unusual for New Orleans because, you know, everywhere we would go, people were saying when are you all going to mix it up a little bit more? And we decided to kind of stick with the issues since people since people were dealing with so many tough issues.

ROESGEN: The issues are obvious and everywhere, piles of trash on the streets, thousands of flooded and abandoned cars and neighborhood after neighborhood empty. Still enough of the voters believed Nagin deserves another chance to make things right.

Nagin received more than 80 percent of the Black vote and just 20 percent of the White vote. But that 20 percent was key. Nagin was able to convince conservative white voters that Landrieu, part after political dynasty in New Orleans with roots in the civil rights movement was too liberal to be trusted.

SILAS LEE, POLITICAL ANALYST: It was a political shotgun marriage essentially where you had a conservative whites coming together to support Mayor Nagin because he was closer in terms of political philosophy with them than Mitch Landrieu.

ROESGEN: Mayor Nagin, a Katrina survivor is now a political survivor.

NAGIN: Gandhi said it best. First they ignore you. Then they laugh at you. Then they fight you. And then you win. God bless you.

(END VIDEOTAPE)

ROESGEN: The mayor was especially pleased that President Bush called him over the weekend to congratulate him. He's counting on THAT relationship with the president to keep the federal funding continuing to come down to New Orleans.

BLITZER: Was there any evidence that the Democratic party got involved behind the scenes in helping or hurting either one of these candidates?

ROESGEN: Wolf, that's a rumor that's out there but we haven't been able to confirm that at all. I'm sure that both big national Democratic supporters supported Mitch Landrieu because he's got the long Democratic history in the city. Mayor Nagin of course also a Democratic candidate but he positioned himself almost a Republican in this race, Wolf, as the more conservative candidate. That's what apparently helped push him over the edge to the win.

BLITZER: We'll see how he does over the next four years. Susan, thank you for that report.

Zain Verjee is off today. Betty Nguyen is joining us from the CNN global headquarters in Atlanta with a look at some other important stories making news.

BETTY NGUYEN, CNN ANCHOR: You have to listen to this, it's a report suggesting you get what you pay for. A new report says the levees in New Orleans failed during Hurricane Katrina because not enough money was put into making them stronger. The report from the University of California at Berkeley also says the levees were chronically and routinely underfunded by congress for 50 years. The report says Louisiana state and local governments did not properly maintain them.

Meanwhile shoring up those levees is taking more immediacy in the worrying forecasts for the upcoming hurricane season. Right now experts are warning it will be a very active season. There could be between 13 and 16 storms, up to ten of them could be hurricanes and forecasters urge Americans, especially those in hurricane prone areas, to be prepared.

But how prepared is the federal government for another catastrophic weather season? Many Americans believe not very prepared at all. A new CNN poll says just 12 percent of Americans feel very confident in the federal government's ability to handle hurricane damage, 40 percent say they are somewhat confident while 45 percent say they are not confident at all. Wolf?

BLITZER: Thank you for that. And this note to our viewers will have a lot more on the upcoming hurricane season. The forecast that has just been put out by the National Hurricane Center earlier today. I'll speak in the next hour with Max Mayfield. He's the director of the National Hurricane Center. This is an important interview you won't want to miss.

A major data breach today involving the personal information of 26.5 million Americans. Computer records from the Department of Veteran Affairs were stolen from the home of one of the department's employees. Is identity theft now a possibility? Our Internet reporter Jacki Schechner is joining us with the details.

JACKI SCHECHNER, CNN INTERNET REPORTER: According to Veteran Affairs Secretary Jim Nicholson we're talking about every living veteran from 1975 to the present and some of their spouses. The information we're talking about are names, birth dates and Social Security numbers.

If you think you may have been affected, here's what you do. Go on line to firstgov.gov. On the right hand side of your screen, you're going to see a box like this. It's a little bit smaller. Click on this. It will take you to a page that looks like that. Has all of the pertinent information. Frequently asked questions. Makes sure to tell you there's no sign this information has been misused as of yet.

You should keep a close eye on the financial statements and report any suspicious activity. We spoke today to a woman named Beth Givens (ph) and they keep track of data breaches. She said a preemptive strike may be good in this circumstance. What you do is go to one of the credit reporting agents tell them to put a fraud alert on your account. That says don't extend credit to anybody without calling me at this phone number first.

We have all of these resources for you on line. Go to CNN.com/situationreport.

BLITZER: Jacki, thanks very much. This note to our viewers, our John King is also working the story. He'll have the full report on how this could happen in this day and age. That's coming up in the next hour right here in THE SITUATION ROOM.

Up next though, when it comes to politics, global warming is hotter than ever. Is it a bigger threat than terrorism? We're going to tell you what former president Bill Clinton says.

Plus, he's under investigation by the FBI for accepting bribes. We expect to hear from Congressman Jefferson. He's expected to speak out in a few minutes and we're going to have live coverage of that. That's coming up. Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Welcome back to THE SITUATION ROOM. I'm Wolf Blitzer in Washington. Former president Bill Clinton is sounding new alarm bells about the environment and he's doing it in very dramatic terms. Let's turn to our Brian Todd joining us with this hot-button political issue. Brian.

BRIAN TODD, CNN CORRESPONDENT: Wolf, Bill Clinton touched on the environment or global warming at least four times during this recent speech and the speech itself seems to follow a recent political pattern. The question, though, is it coincidence?

(BEGIN VIDEOTAPE)

(voice-over): As a political issue global warming may never have been hotter. Take former president Clinton who compared it to the war on terror.

BILL CLINTON, FORMER U.S. PRESIDENT: Climate change is the most -- more remote than terror but a more profound threat to the future of the children and grandchildren that I hope all of you had.

TODD: Clinton gave the same warnings that if the polar icecap keeps melting at it's current rate, in 50 years it will pour fresh water into the North Atlantic, blocking the flow of the Gulf stream, causing unbearably cold winters in Europe, massive drought in Africa and millions of refugees.

CLINTON: I am not one of those who is pessimistic about the future of the world assuming we get off our duffs and do something about climate change in a timely fashion.

TODD: The latest in a veritable media blitz that includes the new documentary from Mr. Clinton's former vice president.

AL GORE, FORMER U.S. VICE PRESIDENT: I hope you all enjoy the movie.

TODD: And cover stories in major magazines.

(END VIDEOTAPE)

TODD: Now, on the other side of that coin, we spoke to a gentlemen named Fred Smith of the Competitive Enterprise Institute, who called these projections way overstated. (COUGHING)

TODD: Excuse me.

He says that the projections for global warming in the future are alarmist. We're going to have more on his position a little bit later in THE SITUATION ROOM.

What do scientists say? Well, researchers agree that the planet has gotten warmer over the past century and that humans have had something to do with it. But they can't project for certain how bad it's going to get in the future. And they certainly can't make a link right now to the intensity of recent hurricanes -- Wolf.

BLITZER: Have you been checking the situation, Brian? Why are we hearing so much about climate change right now?

TODD: Well, political analysts, we also spoke to them to get their perspective on this, and why we are hearing so much of it from President Clinton, from Vice President Gore in the recent magazine issues.

They say it has a lot to do with the projections for the upcoming hurricane season and the continuing political fallout from the past one. You saw the election just -- that you just covered a moment ago from New Orleans, political fallout in that debate.

Also, the national debate over gas prices plays into this and how fast we should all be converting to cleaner-burning fuels. It all plays into this debate. And global warming keeps coming back.

BLITZER: I'm going to be asking Max Mayfield, the director of the National Hurricane Center, coming up in the next hour, what impact global warming, climate change might be having on the upcoming hurricane season. I will ask him that question.

Brian, thanks to you.

Let's go back to Betty.

She is joining us from the Global Headquarters in Atlanta with a quick look at some other stories making news -- Betty.

NGUYEN: Hi there, Wolf.

I want you to take a look at this, a violent gun battle, a car pockmarked with bullets and a bloody corpse inside. It was Palestinian against Palestinian today in Gaza City, as police battled Hamas militiamen loyal to the Hamas-led government. One person is dead, six hurt. Tensions have been high over the past week, after Palestinian President Mahmoud Abbas ordered Hamas to remove its new 3,000-member militia from the streets.

We will keep on top of that.

Well, the recent fighting in southern Afghanistan has killed between 65 to 80 people. That is according to two reports released today. The report says a number of those killed were civilians. The governor of Kandahar says 50 Taliban fighters died in U.S. airstrikes on a rebel stronghold.

And high drama at the Saddam Hussein trial today -- Hussein's half-brother compared the U.S. military's 2004 assault in Fallujah to the bloody crackdown on Shiites that Hussein himself allegedly ordered in 1982. That prompted Saddam to smile and laugh.

And, meanwhile, a female attorney for Hussein was physically thrown out of court just minutes after she had been let back in. The lawyer was ejected for ignoring the chief judge's warning to be quiet.

And, in Eastern Kentucky, the brother of the sole survivor of Saturday's mine explosion says his brother's air pack didn't work properly. Jeff Ledford is the brother of Paul Ledford, who survived the blast. Five miners died, three of them of carbon monoxide poisoning.

Now, Jeff Ledford says his brother told him the air packs only worked for five minutes, before failing. Those air packs were the same types as those used by miners in the Sago Mine tragedy. Remember that? It killed 12 men in West Virginia in January -- Wolf.

BLITZER: Sad story, Betty. Thank you very much for that.

And coming up, we're waiting for remarks from Congressman William Jefferson. He's the target of a bribery probe investigation on Capitol Hill that allegedly turned up tens of thousands of dollars in cash in his freezer. We're going to bring you his remarks live as soon as they start.

Plus, President Bush is hailing it as a new turning point in Iraq. But what will the public do? Will the public give the president any credit?

James Carville and Torie Clark standing by -- they will square off right here in our "Strategy Session."

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

(COMMERCIAL BREAK)

BLITZER: Welcome back.

In our "Strategy Session," the president calls the formation of a new Iraqi government a watershed event. What will this mean for U.S. military involvement? Is the country closer to standing on its own?

Joining us right now, our CNN political analysts, Democratic strategist James Carville and former Pentagon spokeswoman Torie Clarke.

We are also standing by, guys, for William Jefferson. The congressman from Louisiana is expected to make a statement momentarily about this investigation, bribery -- bribery allegations. This is a potential serious problem for the Democrats, because they thought they had a winning -- oh, actually, here he comes.

(CROSSTALK)

BLITZER: He's walking out right now, as you can see.

TORIE CLARKE, CNN CONTRIBUTOR: Timing is everything.

BLITZER: Let's listen.

JEFFERSON: Good afternoon.

I know there's extraordinary interest in the matters at hand regarding me. And I've come here because I recognize that and because I -- I want to be as available to you with respect to these matters as I can be.

However, as you know, there's a criminal investigation going on regarding this. And my lawyers have advised me not to discuss -- and I will not discuss -- any of the alleged facts in the case. That would be extraordinarily foolhardy and -- to avoid their advice. And, therefore, I will not do that.

I do want to say to you, however, that there are two sides to every story. There are certainly two sides to this story. There will be an appropriate time and forum when that can be explained and explicated. But this is not the time. This is not the forum. And, operating on advice of counsel, I will not get into facts.

On the second matter, with respect to the search in my office the other day, I think it represents the -- an outrageous intrusion into separation of powers between the executive branch and the congressional branch. And no one has seen this in all the time of the life of the Congress.

As far as I know, there's no real authority for it. Beyond that, there were no exigent circumstances of which I'm aware. Under ordinary circumstances, it would require it.

And, so, we are at a loss as to what has happened. My lawyers have expressed outrage. Others have as well. All of those who consider themselves scholars in the matter have also done so. And, so, I think that, with respect to that, we are -- are correct.

There was some discussion about what I would do from day to day here. I plan to go to the floor to vote tonight. I plan to go to the floor to vote tomorrow. I plan to carry out my responsibilities here, as I have since the time that I've been here.

I expect to continue to represent the people who've sent me here and to try to respond to their needs and -- and their issues. And I will continue to do that, so long as they permit me to. And that is -- that is my position with regard to that.

So, I will try, if I can, to make some brief response to -- to you, but it won't be very much of one, because I will not get into the facts. And you should know that before you start. And, if you ask me, of course, I will simply decline to answer.

QUESTION: Who's your lawyer?

JEFFERSON: My lawyer is Bob Trout, Robert Trout, Trout & Cacheris.

QUESTION: (OFF-MIKE)

JEFFERSON: I expect to run for reelection, but that's a matter that's down the road. But I expect to run for reelection.

QUESTION: Would you concede that it does not look good at this point?

JEFFERSON: Well, I -- I can't talk about the facts of the matter, with respect to whether things look good or don't look good. And, therefore, I won't make a response to that.

QUESTION: Are you considering resignation...

(CROSSTALK)

JEFFERSON: No. No, ma'am.

(CROSSTALK)

QUESTION: Mr. Jefferson, if you did not take a $100,000 bribe, why not just say it now?

JEFFERSON: You're asking me to get into facts that I have told you I will not get into.

QUESTION: (OFF-MIKE)

JEFFERSON: I told you I will not get into. And if you ask me that, I simply will decline to answer that or any fact you can think of or dream of today or that is apparent to you to ask.

I know that there's a great deal of interest in having me answer questions about facts. I've simply told you I will not get involved with that, because it is not a prudent thing to do based on advice of counsel, so I will not.

(CROSSTALK)

QUESTION: (OFF-MIKE)

JEFFERSON: I still maintain that, yes.

QUESTION: Sir, do you regret the situation that you're in, given the situation in your district right now and the fact that they could use a respected congressman? Do you think this has compromised your ability to be effective? JEFFERSON: I think I have been extraordinarily effective since the storm came last August. The matters we handled on the tax side, on the Ways and Means Committee, we've had extraordinary success.

I've been to the district with the president two or three times, and the last time, just a few weeks ago.

And I think that's been an example of how we continue to work with the administration.

I have -- my colleagues on the floor have been very responsive to the needs of our district. Our Katrina caucus continues to work, and I continue to work with it. And I expect to continue to represent the folks down there as well as I can.

Obviously, we would not like to have to deal with this in the middle of anything, but this will not retard my -- my capacity to continue to work for the people I represent.

UNIDENTIFIED FEMALE: All right. That's going to be all the questions for today. Thank you.

QUESTION: Why was the search of your office -- if they had a warrant, why was that -- why was that outrageous...

(CROSSTALK)

JEFFERSON: This is the last thing I will do.

Because I'm told by people who know this better than I do, constitutional scholars, that there's not been a search or a raid by search this -- by a search warrant of any office of any member of Congress in the history of the -- of the Congress, and that is a violation of separation of powers for that to have happened, along with other arguments of comity and all the rest.

But they will make those arguments in the proper forum. I'm not an expert on that, but I'm told that that is what the matter is.

BLITZER: All right, William Jefferson, Democratic congressman from Louisiana, is being investigated under allegations of bribery. They found, apparently, allegedly, some $90,000 in cash in his freezer.

It doesn't look good for him, James Carville.

(LAUGHTER)

BLITZER: But you never know. He says there are two sides to every story, in his words, certainly in this story, although he can't get into discussing the facts, based on the advice of his counsel.

(CROSSTALK)

JAMES CARVILLE, CNN POLITICAL ANALYST: I have been racking my brain all day And calling people, wanting to know what could be the other side of the story for a congressman having $90,000 of cash in his freezer. And the collective wisdom of my friends have not been able to come up with anything.

But somebody can think -- if he can come up with a reason for this, I'm waiting here, man. I want to hear it, because I can't think of it.

BLITZER: He makes a case -- and there are Republicans that are also concerned that, here, the executive branch of the U.S. government, the Justice Department, went and raided his office on Capitol Hill, something, apparently, that's never been done before.

(CROSSTALK)

BLITZER: There -- there's an issue here, though, that's a legitimate issue for discussion.

CLARKE: And, look, this whole thing would be funny, if it weren't so sad.

CARVILLE: Right.

CLARKE: This is just awful for Washington, awful for the country.

CARVILLE: Awful for Louisiana.

CLARKE: But what I'm wondering is, there are going to be huge legal battles about whether or not they could go into his office and do that. And how much will the battles over that taint the investigation and possible prosecution? This could really change things.

CARVILLE: I don't think so, because they found -- it was at his house that they found the freezer. It wasn't his office.

I mean, maybe -- it might be a nice constitutional question to be decided. But why -- again, if somebody -- if somebody can figure out why you would have $90,000 in your freezer...

(LAUGHTER)

CARVILLE: I don't know.

BLITZER: James...

CARVILLE: I can't think of it.

(CROSSTALK)

CARVILLE: I thought all day.

CLARKE: And the second question of the day, if it is -- if it is part of the alleged $100,000...

CARVILLE: Right. CLARKE: ... where's the other $10,000?

CARVILLE: Well, I suppose -- yes.

(CROSSTALK)

CARVILLE: ... have to -- have to skim some. Maybe he was like paying -- I don't know.

BLITZER: He says -- he says, flatly, you know, he's going to serve out his term. He's going to run for reelection. He's not going to resign.

Nancy Pelosi, the Democratic leader in the House, may have a political problem on her hands.

CARVILLE: My guess -- my guest is, I think that they will deal with this pretty soon.

I -- and I don't know what the leader can do. Maybe they can take him off the Ways and Means Committee.

(CROSSTALK)

CARVILLE: They can't remove a member of Congress that hasn't been -- but what -- what they are able to do, I'm not certain. My guess is, is, they can remove him from a committee, but they could not remove him from the Congress. It doesn't have the power.

BLITZER: Unless he's indicted.

CARVILLE: Yes. Then the...

(CROSSTALK)

BLITZER: ... DeLay rule before that. If he's indicted, he -- he does have to resign.

No, DeLay was indicted, and he didn't resign.

BLITZER: He didn't have to, necessarily.

But there was an informal ruling...

CARVILLE: Right.

CLARKE: Enough pressure.

BLITZER: ... in the House that they would remove him as a leader.

CARVILLE: Right, as a leader.

(CROSSTALK)

BLITZER: As far as, Jefferson is not a leader... (CROSSTALK)

CARVILLE: No, but he's on the Ways and Means Committee. They may be able to strip him of his committee. I don't think they can remove him from the House.

BLITZER: Does this remove from the Democrats' deck, from their hand, this whole culture-of-corruption charge against the Republicans, Tom DeLay, Jack Abramoff, Bob Ney, who is under investigation?

CLARKE: No. And...

BLITZER: Does this -- does this ease the Republicans' problem going into the November election?

CLARKE: I think it all comes out in a wash.

What will happen is, some Democrats will say, oh, Jefferson is different. This isn't like those bad Republicans.

Some Republicans will say, see, they have their big problems, too.

And that's terrible for -- on both sides, in that, as I said, it just -- it contributes to the incredible dissatisfaction the American people have with Congress and the contempt they increasingly have for Washington. But that's what they will do.

CARVILLE: I noticed you named like six Republicans. You're right. It's kind of six to one.

(CROSSTALK)

BLITZER: Well, there is another -- there is a Democratic congressman from West Virginia.

CARVILLE: Right.

(CROSSTALK)

CARVILLE: You have -- and I think that we -- look, if it stops right now, you know, they will make the case. You know, still, Democrats have a pretty good case. My sense is, is, we have got more to come on a lot of fronts.

BLITZER: Let's make a turn and talk about Iraq.

The president did get what he wanted. The people of Iraq have come up with a national unity government. They announced it on Saturday in Baghdad. The president spoke out glowingly about what has happened in Iraq earlier today.

CLARKE: Carefully.

BLITZER: Listen -- listen to what he said.

(BEGIN VIDEO CLIP)

BUSH: The main reason I have come today is to talk to you about a watershed event that took place this weekend in Iraq. On Saturday, in Baghdad, Iraqis formed a new government, and the world saw the beginning of something new, constitutional democracy at the heart of the Middle East.

(END VIDEO CLIP)

BLITZER: Do you think he went too far with...

CLARKE: No, no, no. I...

BLITZER: ... when he says this is a watershed event?

CLARKE: I think -- and everyone is latching on to one word.

They should listen to the entire speech and listen to the fact that it was a very honest, very direct, very measured speech, in which he talked about incremental progress. But it's very significant that, in Iraq, they have a freely elected government and a constitution.

That is true. He also talked about tremendous challenges that lie ahead. I thought it was a very honest, very direct speech. And I hope people listen to the whole thing, not just react to one word.

CARVILLE: You know, I don't think people care what he says anymore. I mean, we are told a whole new day, and Qusay, and that Saddam Hussein, that was a watershed, breathtaking thing.

And then they had an election. They had a constitution. They had another election. And I think we saw it on the immigration -- I may be wrong. But I think -- he -- he -- I find that people -- even -- I don't -- people -- people are, OK, fine. They say that all the time.

But, for the longest time, they say, oh, we have turned it around here. This is a watershed. This is going to be whatever.

You know what? I hope he's right. You know, if -- I would give anything in the world if it was a watershed event and we could get our people home. But, frankly, I don't -- I don't think myself or the American people much care what he says about this anymore. He's pretty much shot all his credibility.

CLARKE: One of the things that was so interesting in the speech is, he talked about, in this information environment, it is hard to talk about significant things like political progress in Iraq.

The deaths, which are very important, can be captured instantly by a 24/7 media.

CARVILLE: Right.

CLARKE: The substantive progress, harder to capture. And that's one of the reasons it is hard to get through with these messages. CARVILLE: It is. But people see it, and they say, well, there's not an interior minister. There's not a defense minister. There's not a national security minister. It -- it -- it -- it -- I don't know.

I -- because I don't want to -- I hope he's right. I just wish we could get our people out of that place. You know what I mean? I would -- you know, but I hope he's right. But I don't think people pay attention to him. And I -- I hate to say that.

(CROSSTALK)

BLITZER: Torie and James...

CLARKE: At least we do.

BLITZER: ... we will see -- we will see what happens, as we have been saying all along.

(CROSSTALK)

BLITZER: James Carville and Torie Clark are part of the best political team on television -- CNN, America's campaign headquarters.

Up next -- for better or for worse. How might losing control of Congress affect the Republican Party in the upcoming midterm election? Jack Cafferty has your e-mail.

And are you prepared for the worst? Forecasters warning the upcoming hurricane season will be very, very busy. I will ask Max Mayfield, the director of the National Hurricane Center, just how busy he thinks we're all going to be.

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

(COMMERCIAL BREAK)

BLITZER: On our "Political Radar" this Monday, Democrat John Edwards is revealing why he may not join the presidential race in 2008. The former vice presidential nominee says he won't run if his wife's health gets worse. Elizabeth Edwards is recovering from breast cancer. Her husband says, right now, she is doing fine.

New commencement speech controversy -- dozens of faculty and students turned their backs and waved protest signs at Secretary of State Condoleezza Rice earlier today. She received an honorary degree at Boston College. Many at the school oppose the Iraq war and were critical of Rice's selection as speaker.

And Senator John McCain is speaking out about the harsh welcome he got from some students over at the New School University in New York City. The Arizona Republican was booed and heckled at the university last week. The possible presidential contender says he is saddened by the bitter political climate. And he suggests New School students should take a lesson in courtesy.

Jack Cafferty is joining us now with "The Cafferty File" -- Jack.

CAFFERTY: I like McCain, but who does he think created the bitter political climate? He and his colleagues in Washington, D.C. Didn't they?

BLITZER: Maybe.

(LAUGHTER)

BLITZER: We will ask him.

(LAUGHTER)

BLITZER: I will ask him what he thinks. I was...

CAFFERTY: That's...

BLITZER: I'm sure he would give you a very courteous response, though.

CAFFERTY: Oh, I'm sure he would. And, like I said, I like him.

But these -- I mean, these kids don't want to hear from these career politicians. They can spot the phonies as easily as the rest of us can from -- from a long ways away. And -- and -- and they don't buy into the idea that the system is wholesome and operating on their behalf, would be my suggestion.

"L.A. Times" reporting some Republicans are so discouraged by the direction the U.S. is headed that they think that their party would actually be better off -- Republicans are actually saying this -- if they lost control of Congress in the midterm elections.

That kind of plays in to what we were talking about with some of the receptions these speakers, graduation speakers, are getting.

The Republican National Committee pooh-poohs all that, says the Republicans will do just fine in November.

But we asked whether or not -- or what you thought about whether the Republicans would be better off if they lost control of the Congress.

John writes from Willowbrook, Illinois: "I think they're trying to put a good face on what is inevitable. Republicans are going to lose big time in the November elections. I think the remark by Jack should be the solution. Vote every incumbent out of office. We are not going to get immigration reform this session. There is not going to be a troop reduction in Iraq. The Gulf Coast isn't going to get any help. And they have done nothing to stay in office."

Bill writes: "I am a Democrat by default, but if the Democratic Party doesn't stop the vote-baiting and help some of the conservatives pass some tough immigration bills, I will just stay home on Election Day and let the Republicans keep it." Maurice writes: "The beginning of a solution to the gridlock, pork-barrel spending, and unethical behavior in Washington would be term limits. Perhaps the American voters could adopt another version of term limits: Never reelect anyone."

Dan writes: "Sure, Jack, a good idea, but you know it won't happen. It's a sad day in American history when Republicans and Democrats have to consider whether they will be better off if the other side wins the election. It means that party distinctions no longer have any meaning. Every man for himself."

And, finally, Harry in Los Angeles: "Lobbyists own the government. Chinese own our currency. Foreigners own our jobs. Big oil owns our pocketbook. And FEMA is our insurance against natural disasters. I don't know if the Republicans would be better off losing control of Congress, but I damn well know who would be" -- Wolf.

BLITZER: Jack, see you in a few minutes.

Still to come, they refuse to sing the praises of President Bush -- the Dixie Chicks are promoting a new album and adding fuel to their Texas brawl with the White House.

(COMMERCIAL BREAK)

BLITZER: Welcome back.

The Dixie Chicks are out selling a new album. So, are they ready to play nice with the Bush White House and the country music fans, many of them who support the president?

Let's bring in our senior political analyst, Bill Schneider -- Bill.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well, as you know, the Dixie Chicks caused a political furor three years ago. Are they ready to forgive and forget? Not on your life.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): Three years ago, just before the Iraq war, the Dixie Chicks caused a firestorm in the country music world, when lead singer Natalie Maines told a London audience, "We're ashamed the president of the United States is from Texas."

Many fans responded with outrage, boycotts, bans, boos, even death threats. A few days later, Maines issued an apology, sort of. She said, "I apologize to President Bush, because my remark was disrespectful."

NATALIE MAINES, DIXIE CHICKS: My apology was for the words that I used, but not for the motivation behind the words and for my beliefs.

SCHNEIDER: Now she tells "TIME" magazine: "I apologized disrespecting the office of the president, but I don't feel that way anymore. I don't feel he is owed any respect whatsoever."

Their new album, out Tuesday, is defiant. The first single released from the album is called "Not Ready to Make Nice."

DIXIE CHICKS (singing): I'm not ready to make nice. I'm not ready to back down.

CHRIS WILLMAN, "ENTERTAINMENT WEEKLY": The Chicks said: You know, we were so hurt by what happened to us that, you know, we're not ready to get over it. We don't think you got over it either.

SCHNEIDER: Country radio is backing off from the new album. In interviews, the Dixie Chicks have expressed resentment of the country music world and its pressure for political conformity.

WILLMAN: They are definitely trying to reposition themselves as more of a rock-friendly act, hoping that the audience -- it doesn't blink when Bruce Springsteen or Pearl Jam making a political statement will embrace them with open arms.

SCHNEIDER: The Dixie Chicks are giving up country radio for what may be a far more valuable kind of exposure, buzz.

WILLMAN: They are depending on being in the news to sell this album and they've certainly done that by being on "60 Minutes," being on the cover of "Time."

(END VIDEOTAPE)

SCHNEIDER: And, being on "LARRY KING LIVE" next week. Wolf?

BLITZER: Bill Schneider, thanks very much.

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

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