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THE SITUATION ROOM

Debate Over Iraq Timetable Heats Up; Bush Meets with E.U. Leaders in Vienna; Immigration Wars in Senate; President's Dinner Huge for Fundraising; Angelina Jolie Puts Attention On Refugees; Ken Mehlman Interview; David Safavian Convicted Today on Four of Five Charges; Raising Minimum Wage Again Becomes A Political Issue

Aired June 20, 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, a fateful day for U.S. forces in Iraq. It's midnight near Baghdad, where the bodies of two missing soldiers apparently have been found. Back home, loved ones are in mourning and U.S. senators waging their own Iraq war.

Plus, President Bush is set to square off with European leaders. It's 10:00 p.m. in Vienna, Austria, where Mr. Bush just landed a short while ago. He's looking for support in the nuclear standoff with Iran, but he's expecting to get some criticism, as well.

And CNN's special coverage of World Refugee Day. It's capped by an exclusive interview with the U.N. goodwill ambassador Angelina Jolie. This hour, the hopes and hardships of refugees that Angelina has seen firsthand,

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

Up first this hour, a grim discovery in Iraq, as the debate over bringing the troops home heats up even more. Coalition forces have recovered two bodies, believed to be soldiers Kristian Menchaca and Thomas Tucker. They've been missing since an insurgent attack on a U.S. checkpoint on Friday. Military sources tell CNN a tip from Iraqi civilians lead them to the bodies in the Yusufiyah area south of Baghdad. They say the area was booby-trapped and the bodies were mutilated beyond recognition.

(BEGIN VIDEO CLIP)

MAJ. GEN. WILLIAM CALDWELL, COALITION SPOKESMAN: Their remains, at this point, have been transported back to a coalition base and will be removed from country here and taken back to the United States for positive DNA verification.

(END VIDEO CLIP)

BLITZER: These new losses for U.S. troops come in the midst of a fierce new Senate battle over the war and dueling Democratic proposals to begin a withdrawal. Our congressional correspondent Dana Bash is following all of this from Capitol Hill -- Dana.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Hi, Wolf.

Well, the formal debate over Iraq won't spill onto the Senate floor, the showdown that is, until tomorrow now. But there has been no shortage of drama here on Capitol Hill over this issue today. That's for sure. Democratic senators with very different points of view on just how to approach Iraq have been lobbying their colleagues and lobbying them very hard to try to come their way on specific plans once they do get to offer them on the Senate floor tomorrow.

And even behind closed doors, we understand, there were some impassioned pitches made by Senators John Kerry and Russ Feingold on the one hand. They say they really think it's imperative, both from a policy point of view and a political point of view, to draw a hard line between Democrats and the Bush White House by saying there should be date certain for troops to come out of Iraq.

Now, on the other hand in that lunch, we know that Senator Carl Levin and Jack Reed also made their pitch to say that's simply the wrong way to go, that that is not necessarily responsible and that it's better to take a more cautious approach, say that we should perhaps begin to be withdrawn this year. That's their plan.

But basically Harry Reed, the Democratic leader, he's been trying, Wolf, to avoid this for weeks. He's been in closed door meetings, trying to come up with a consensus. That clearly hasn't happened. We'll see what the votes are in the end. But today what he tried to do was try to put best face on this, essentially saying that Democrats are united on one thing and that is, they don't think the Bush approach is right.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D), MINORITY LEADER: One thing Democrats agree on is this war has taken too long, it's too expensive, and cost too many lives and too many soldiers injured. We all agree there should be a change in the course of the war. We all agree that there should be a redeployment starting sooner rather than later.

(END VIDEO CLIP)

BASH: Now what's the Republican strategy here? For the most part, many Senate Republicans say they hope to just sit back and watch, Wolf. They say that this plays perfectly into their election- year strategy, and that is to paint Senate Democrats as weak.

(BEGIN VIDEO CLIP)

SEN. BILL FRIST (R), MAJORITY LEADER: We cannot retreat, we cannot surrender, we cannot go wobbly. The price is far too high. The strength we show now is the security we earn for the future. As the president has explained, America's troops will stand down as the Iraqi troops stand up. They're gaining strength every day. By keeping a steady eye on the ultimate goal, by having flexibility and patience, I'm confident we will succeed.

(END VIDEO CLIP)

BASH: Now, Republicans are, however, a little bit concerned, Wolf, about having their Republican senators vote against everything that comes before them and not have something to vote for. So we are likely to see something come from Senator Bill Frist or perhaps the Armed Services chairman, John Warner, maybe something like what the House passed last week that essentially says no arbitrary deadline is what the American people and what the Senate should be for, and that the war in Iraq is a good thing and that it is a part of the war on terrorism -- Wolf.

BLITZER: All right, Dana, thanks very much. Dana Bash on Capitol Hill.

President Bush is in Vienna, Austria, for a one-day stop at the European Union Summit. He and his E.U. counterparts face a host of international threats and conflicts, including Iran, Iraq, the war on terror. Mr. Bush knows the summit drill. Look for him to publicly emphasize areas of agreement and get an earful from some of the allies in private.

Our White correspondent Elaine Quijano is traveling with the president in Vienna -- Elaine.

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Wolf, President Bush sits down with European Union leaders here in Vienna to highlight what they can agree on rather than focusing on lingering disagreements.

(BEGIN VIDEOTAPE)

QUIJANO (voice-over): He'll be in Vienna for just one day, but for President Bush, the U.S./E.U. Summit is a chance to demonstrate that the U.S. and Europe are on the same page when it comes to Iran's nuclear ambitions.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: America and our partners are united. We have presented a reasonable offer. Iran's leaders should see our proposal for what it is: an historic opportunity to set their country on a better course.

QUIJANO: Recently, in a dramatic tactical shift, the president decided the U.S. would join its European allies in multilateral talks with Iran.

SIMON SERFATY, CTR. FOR STRATEGIC & INTERNATIONAL STUDIES: The E.U. has informed the U.S., the U.S. has informed the E.U., and both together have influenced somewhat Tehran. That has worked.

QUIJANO: Yet sharp divisions remain. The suicides of three Guantanamo detainees has sparked renewed debate about the facility run by the U.S. military. European leaders want the detention center shut down, arguing that holding detainees without charges runs counter to American ideals. ANDERS FOGH RASMUSSEN, DANISH PRIME MINISTER: It would be to the benefit of our cause and our fight for freedom and against terrorism if the facilities at Guantanamo were closed down.

JOHN HULSMAN, HERITAGE FOUNDATION: This is a major concern among European political elites, and probably most of this will be done behind the scenes. Probably very little will change. But they'll use the opportunity to twist the arm of the administration about this right now.

QUIJANO: In recent weeks, President Bush has said he wants Guantanamo closed eventually. He says the U.S. is working to repatriate some detainees, but insists others are dangerous enemy combatants.

BUSH: The best way to handle -- in my judgment -- handle these types of people is through our military courts. And that's why we're waiting on the Supreme Court to make a decision.

QUIJANO: After Vienna, the president will visit Budapest, Hungary, to deliver remarks commemorating the 50th anniversary of the Hungarian revolution, when tens of thousands of Hungarians rose up to demand an end to Soviet rule.

(END VIDEOTAPE)

QUIJANO: Mr. Bush's comments there will be likely be listened to closely by Russian President Vladimir Putin. Putin has expressed his displeasure with recent U.S. comments criticizing Moscow for backsliding on democracy -- Wolf.

BLITZER: Elaine Quijano in Vienna for us. Thanks, Elaine.

Zain Verjee is off today. She'll be back tomorrow. Susan Hendricks joining us now the CNN global headquarters in Atlanta with a closer look at some other stories making news -- Susan.

SUSAN HENDRICKS, CNN CORRESPONDENT: Hi, Wolf.

At least 11 dead and 60 hurt, unfortunately, across Iraq. Today was a mirror image of other recent days, as violence claimed more lives. In Baghdad, four people died after a car bombing on a commercial strip in a Sunni/Shiite neighborhood. And in Basra, a suicide bomber apparently strapped on explosives, walked into a senior citizens home for Iraqi women and detonated that bomb. Two people died.

Well, they'll soon be leaving. Japanese troops in Iraq. Today the Japanese Prime Minister said Japan will withdraw its 600 ground troops, but he did not say when. Japan's troops have been based is in one of Iraq's southern provinces, all in non-combat roles, helping to rebuild infrastructure. The Japanese prime minister says they have completed their mission there.

And in Arizona, beating back a blaze that just doesn't want to give up. A stubborn fire scorching some 1,500 acres. Right now near Sedona, over 400 personnel are using four air tankers, 31 fire engines and eight helicopters to try put out that blaze. It threatens hundreds of nearby homes, and is only about 5 percent contained, though fire officials say a drop in temperature there will help them contain it more -- Wolf.

BLITZER: Susan, thank you very much.

On Capitol Hill today, a new development in the immigration wars. House Republican leaders now say they'll hold hearings on the issue this summer. Democrats are accusing them of stalling efforts to try to reach a House/Senate compromise on immigration reform. Let's bring in our congressional correspondent Andrea Koppel. She's got the latest -- Andrea?

ANDREA KOPPEL, CNN CONGRESSIONAL CORRESPONDENT: Wolf, in a highly unusual move, the House Speaker Dennis Hastert emerged this morning from a meeting with some of his committee members saying that the House intended to hold hearings, as you mentioned, beginning next month here in Washington and then moving on in August to other towns and cities across the country.

Now ever since this Senate passed that highly controversial immigration reform bill last month, one that included both the guest worker program and an earned path to citizenship, senators have been waiting for Speaker Hastert to name the members who'd be sitting across the table from them to try to work out a compromise.

Remember that the House passed a border security only very tough bill late last year. Now the debate over immigration reform has split the Republican Party. It's got many members caught up in tight races and those opposed to what they say is amnesty for illegal immigrants are dug in. At least one Democratic senator, Ken Salazar, who was among those who co-sponsored the legislation, says this is all about election-year politics, Wolf, and he said that House Republicans were fanning the flames of hatred.

(BEGIN VIDEO CLIP)

SEN. KEN SALAZAR (D), COLORADO: I smell a rat. I think the rat is that the House of Representatives under their leadership really don't want a bill at all. What they want to do is they want to orchestrate this issue for political advantage. And it's wrong to do that, whether it's war in Iraq or whether it's the immigration issues of our country.

(END VIDEO CLIP)

KOPPEL: Now House -- excuse me, Senate Republicans at the moment are holding their fire, hoping that some kind of a compromise might still be worked out. But when asked about it this morning, the House majority leader John Boehner seemed to express skepticism that this might happen, Wolf. He said -- it's possible, but I don't know how likely that is. I can tell you that one House Republican staffer I spoke to was much more pessimistic, Wolf. He said that effectively this is a nail in the coffin of the Senate bill.

BLITZER: Andrea Koppel, thank you very much for that report. Andrea reporting from the Hill.

And as President Bush knows, well issues are critical in the upcoming congressional elections. But cold-hard cash may be even more important. The fundraiser in chief helped Republican House and Senate candidates big time last night. Let's bring in our senior political correspondent Candy Crowley. She's watching the money race, Candy?

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Wolf, the president's dinner is the biggest event of the year for Republican House and Senate campaign committees. Big names, big crowds, big money.

(BEGIN VIDEOTAPE)

CROWLEY (voice-over): Some Republicans may not want the president campaigning with them, but all Republicans want him filling up the coffers.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Thank you all very much. Thank you, please be seated. Thanks for the warm welcome.

CROWLEY: The coffer is $27 million fuller as of last night's president's dinner, where Bush racked up cash and laid out a campaign blueprint. On the home front?

BUSH: As people start going to the polls next November, I want them to remember who cut the taxes and who was against the tax cuts. Every single tax cut was opposed by the Democratic leadership.

CROWLEY: And elsewhere.

BUSH: Democrats are good talkers. We're good doers, we get the job done. We understand the stakes in the world in which we live. We understand the most important responsibility we have in Washington is to defend the people of the United States.

CROWLEY: So far this election cycle he has raised over $150 million, the kind of cash only a president can attract. He gives his party a cumulative edge, $92 million more raised by Republicans than Democrats since the beginning of 2005.

Still the story of this season's money chase may be in the parts, rather than the whole. The Democratic Senatorial Campaign Committee has raised more than its Republican committee and has a lot more still to spend, important in the final months of any campaign.

And House Democratic fundraising is way up from last cycle and narrowing the gap with Republicans. The cash on hand is equivalent. The one coffer that worries Democrats is his. Though outpacing itself from last cycle the Democratic National Committee has only $9 million on hand, the Republican National Committee has five times as much.

HOWARD DEAN, DNC CHAIRMAN: We started investing very, very early. That's why our balance sheet doesn't look as good as the Republicans did. CROWLEY: Still, Hill Democrats worry that Dean has invested too much, laying the groundwork for the '08 presidential campaign and not enough in '06 races to help win back the House or Senate.

(END VIDEOTAPE)

CROWLEY: As it stands now, the bottom line belongs to Republicans so far this cycle. Democrats say they are ahead though in percentage increases compared to the last time around. And perhaps most worrisome for Republicans is a recent "Washington Post" report that said much of the Democratic surge this year comes from small, individual contributions which is to say voters -- Wolf?

BLITZER: Candy Crowley reporting, thanks for that excellent report. Candy Crowley, Andrea Koppel, Elaine Quijano and Dana Bash, they're all part of the best political team on television, CNN, America's campaign headquarters.

And Jack Cafferty is part of an excellent team as well and he's joining us now with "The Cafferty File." Jack?

JACK CAFFERTY, CNN ANCHOR: Afternoon, Wolf.

There's a potentially dangerous game of international chess going on. North Korea may be planning to test launch a long-range missile, one which is capable of hitting the United States. Satellite pictures indicate the fueling of the missile has been completed and launched could come at any time.

Secretary of State Condoleeza Rice has warned the Koreans that a missile launch would be a, "provocative act." The U.S. has deployed its own missile defense system, a multibillion dollar ground base system that's been in the developmental stage for years.

A Defense Department official says, "it's good to be ready." But the Pentagon press secretary would not directly answer whether the United States might try to shoot down a North Korean missile if its test fired. Here's the question, how should the U.S. respond if North Korea goes ahead with its missile test? E-mail your thoughts to CaffertyFile@CNN.com or go to CNN.com/CaffertyFile -- Wolf.

BLITZER: Jack, we're going to ask that specific question to former secretary of state Henry Kissinger in the next hour here in THE SITUATION ROOM as well, thank you.

Coming up, the numbers are staggering. More than eight million refugees worldwide. Today is World Refugee Day and all day long, CNN is shining a light on the millions who suffer and those who are trying to help. Our special coverage continues, that's coming up.

Plus the battle back here at home for control of Congress. Can the GOP hold onto its majority? I'll ask Republican Party chairman Ken Mehlman. He's standing by to join us here in THE SITUATION ROOM.

And later, much more on the challenges President Bush faces as he lands in Europe. Paul Begala and J.C. Watts, they'll face-off in today's "Strategy Situation." Stay with us, you're in THE SITUATION ROOM.

(COMMERCIAL BREAK

BLITZER: Welcome back. Today CNN covers World Refugee Day with reports from around the world.

The United Nations declared World Refugee Day six years ago as a step to try to help bring attention to the anguish of millions of men, women and children who are forced to leave their homes. The United Nations says there are some 15 million people without a home. That includes 8.4 million refugees worldwide.

The good news is that's the smallest number in more than 25 years, but the number of people displaced inside their own countries is growing. Nearly seven million people fall into that category, and nearly 21 million are listed by the United Nations as people of concern.

Pakistan and Iran host the most refugees. The United States ranks fifth on that list. Nearly half of all displaced people come from just five nations. Those countries are Colombia, Iraq, Pakistan, Sudan and Afghanistan.

Hollywood superstar Angelina Jolie helps put the world's attention on refugees. She's the goodwill ambassador for the United Nations Refugee Agency. Jolie has traveled to more than 20 countries, and she has donated more than $3 million for refugee causes.

In an exclusive interview with CNN's Anderson Cooper, the actress talks about her efforts to help refugees in Africa and around the world.

(BEGIN VIDEOTAPE)

ANDERSON COOPER, CNN ANCHOR: Since the late '90s, I mean, more than three million people have died, 1,000 they say die a day from war-related conditions, malnutrition and things like that.

ANGELINA JOLIE, ACTRESS: And there's also all the rapes in Congo, which is that thing which is ...

COOPER: The rapes, yes.

JOLIE: ... and from Rwanda, you know, that that shocked me. I didn't realize how that was still -- I mean, that's the thing you realize and I think why people are worried about Darfur now. So one area of Africa falls apart and then how it just destabilizes a region, and you can see from Rwanda, still affecting Congo from, you know, these ...

(CROSSTALK)

COOPER: It's also so often women and children who are the ones bearing the brunt of all this. I mean, in the Congo it's women being raped, tens of thousands of women. And I mean, I read the -- you saw children who had been, you know, macheted. What is that like to see that? I mean, to see that being done to kids?

JOLIE: I just don't know. I mean, how do -- how could you possibly explain that? It's like being in Sierra Leone and seeing -- I saw a 3-year-old who had her arms cut off. And you just think, you know, what kind of a human being -- you try to imagine, it must be drugs, it must be -- but what kind of a person could do that?

And the rapes in the Congo are so brutal. I mean, for the people that don't know about it, there's so much -- and even that we recently had a baby in Africa and people talking about the surgeries and the different types of surgeries, but they talk so much about Congo and having to sew the kids back together because they've been just ripped completely open.

And, you know, that's -- how do you make sense of any of that? It doesn't make any sense. It's disgusting and it's horrible and it needs -- you start to wonder with all of these things, you know, when does it take us as an international community to just get together and say OK, that just has to stop?

Joseph Kony has to stop. And it has to stop now. And how long does it have take for us to start to enforce an international law on these kind of situations and deal with it immediately?

(END VIDEOTAPE)

BLITZER: Angelina Jolie speaking with Anderson Cooper. Anderson, by the way, is going to join us live in our 7:00 p.m. Eastern hour to talk more about his interview with Angelina Jolie, which also includes comments about her new baby. And, of course, be sure to catch Anderson's entire conversation with Angelina Jolie on a special edition of "ANDERSON COOPER 360" tonight. That begins at 10:00 p.m. Eastern.

From comprehensive facts to fundraising, extraordinary online resources on World Refugee Day are only a few keystrokes away.

Let's bring in our Internet reporter Abbi Tatton. She's standing by with more -- Abbi.

ABBI TATTON, CNN INTERNET REPORTER: Wolf, events are happening around the world today from Iceland to Sierra Leone, to draw the world's attention to the plight of refugees, the millions of people displaced from their homes. These are pictures of children in refugee communities in Uganda.

This is at the site NineMillion.org, which supports the U.N.'s refugee agency, that number nine million referring to the number of children displaced. At the U.N.'s own site, current crises the agency is facing in Sudan and neighboring Chad, in Pakistan after the earthquake. You can donate to these sites online -- Wolf.

BLITZER: Abbi, thank you very much.

And our coverage of World Refugee Day -- World Refugee Day, that is, continues next hour when a refugee who went on to become the secretary of state of the United States joins us live right here in THE SITUATION ROOM. That refugee is Henry Kissinger.

But up next, his party is facing tough times in the polls. So what can the Republican Party chairman do to hold his party together and hold his party with the majority of the Congress? I will ask Ken Mehlman. He's standing by to join us next, right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

WOLF BLITZER, CNN ANCHOR: Welcome back to THE SITUATION ROOM. I'm Wolf Blitzer in Washington.

In this congressional election year, Democrats and Republicans are finding plenty of ammunition against one another, especially when it comes to the war in Iraq.

In THE SITUATION ROOM yesterday, you heard Democratic Party Chairman Howard Dean blast Republicans. Now, it's his GOP counterpart's turn. We are joined by the Republican National Committee chairman, Ken Mehlman. Ken, welcome back to THE SITUATION ROOM.

KEN MEHLMAN, REPUBLICAN NATL. CMTE. CHAIRMAN: Thanks for having you.

BLITZER: Good to have you back here. Let me play an excerpt of what Howard Dean said 24 hours ago. Listen to this.

MEHLMAN: OK.

(BEGIN VIDEO CLIP)

HOWARD DEAN, DEMOCRATIC NATL. CMTE. CHAIRMAN: The fact of the matter is, that you can't trust the Republicans to defend the country, again, not because they don't want to, but they are not smart enough to listen to the military and listen to people who have served like Jack Murtha.

(END VIDEO CLIP)

BLITZER: Now, he bases that, I assume, in part on polls. Our CNN poll -- recent poll -- said how are things going for the U.S. in Iraq? Forty-one percent said they're going well, 55 percent said they're going badly, this even after the president's visit there, the killing of Abu Musab al-Zarqawi, the formation of a new Iraqi government. You have your work cut out for yourself.

MEHLMAN: Absolutely, but listen. What we want to do is exactly what Chairman Dean said, which is we want to listen to the military. And there's a debate going on within the Democratic Party. Some are saying we need to cut and run, others are saying we need to cut and jog, and still others are saying we need to cut and walk.

BLITZER: Now, who is saying cut and run?

MEHLMAN: Well, I think you look at what Mr. Murtha suggested, which would have been out last November, that's a cut and run approach. If we had followed his advice, we wouldn't have gotten Zarqawi, we wouldn't have had 40,000 Iraqi troops who would have been trained. The cooperation that exists that helped us get Zarqawi, between the Jordanians and the Iraqis and others, that wouldn't necessarily be there. It would be the exact ...

BLITZER: Because the Senate Democrats, even those who want the U.S. out by a year from now, July 1st of 2007, they are saying that's plenty of time, three years plus already, another year for this new Iraqi government to get its act together, to form a cohesive military and political unit and bring the U.S. troops home.

MEHLMAN: We might want to call that one the cut and walk option.

The fact is, if you did any of these things, the enemy would see it as surrender, and it would make Americans less safe.

It was very revealing, I thought, that, when Jack Murtha was on "Meet the Press," the two analogies he gave of what we should do were Somalia, one, and Beirut, two.

There was an Osama bin Laden interview with ABC News where he said one of the reasons they continue to escalate the attacks on America was because of what they learned in Somalia and what they learned in Beirut by Americans pulling out after the attacks. If you think...

BLITZER: Well, you could make the argument, too, that the U.S. should have never gotten involved in Beirut, should have never gotten involved in Mogadishu.

MEHLMAN: But the notion that we are being attacked because we are in that neighborhood is entirely wrong and has been disproven again and again.

The reason we're attacked is because, for a generation, we did what Jack Murtha suggested, which is, when they hit us, we would back down, as opposed to recognizing that the way we win this war on terror, the way we won World War II, the way we won the Cold War, is by being on the offense, not the defense.

BLITZER: You are trying to hold on to the majority in the Senate and the House of Representatives.

In our -- in a CBS News poll -- excuse me -- the approval of the way Congress is handling its job -- and this is a Republican-led House and Senate.

MEHLMAN: Yes.

BLITZER: Only 26 percent say they approve of the way the Congress is handling its job. Sixty percent disapprove.

And if -- and if you ask registered voters in our poll, who do you prefer, generically...

MEHLMAN: Yes.

BLITZER: ... 45 percent go for the Democrats. Thirty-eight percent go for the Republicans.

It looks like the Democrats, if they get their act together, they have a shot at taking the majority in the Senate and the House.

MEHLMAN: Wolf, I don't think that they will.

I think it's going to be all politics is local, race vs. race. You saw what happened in the California 50 seat, when they preferred the Republican. And one of the reasons I think our candidates are going to win is this debate on Iraq.

People may disagree about how we got there. They may disagree about some of the specifics, but they recognize that a strategy that the terrorists would see as surrender is the wrong strategy.

(CROSSTALK)

MEHLMAN: Another issue that is also an important one we have seen over the last two weeks is taxes.

Democrats have already told you what the centerpiece of their economic agenda will be, $2.4 trillion in higher taxes, which would be something they would support, because the Bush tax cuts, which have helped propel this economy along, they would repeal.

BLITZER: What they argue is, the tax cuts go for the wealthy. The middle-class would gain.

MEHLMAN: Yes.

BLITZER: But what -- we are not going to get into a discussion of taxes right now. We are going to get into a discussion of immigration...

MEHLMAN: Yes.

BLITZER: ... which is a really important issue...

MEHLMAN: Very important.

BLITZER: .... for millions and millions of people out there.

There seem to be some serious divisions within the Republican Party on immigration. And, today, we learned that the House speaker is going to hold hearings on immigration reform, even though the House has already passed legislation. The Senate has passed legislation. Normally, after both bodies pass legislation, they go to a conference committee. They resolve their differences.

They don't start holding hearings again. The charge being leveled against the Republicans is, they just want this as an issue. They really don't want a compromise.

MEHLMAN: I don't think that's the case, Wolf.

In fact, if you think of what Congress just passed last week, they passed a significant amount of money that the president asked for, for more personnel at the border, more technology at the border, and more barriers at the border. That's all critical.

The president, the House, the Senate Republicans all agree that we need to secure our borders first. But the president also believes -- and I think he's right -- that we want to do more than just deal with the immediate problem, but to deal with the root cause of the problem, that we want to fundamentally make sure we deal with the fact that the reason we have so much illegal immigration in this country is, we have a problem with supply and demand.

BLITZER: But isn't this pretty unusual, to hold hearings in the House after the House has already passed legislation?

MEHLMAN: I have confidence in the speaker. I have confidence in the leadership in Congress. They have moved forward with the money the president asked for.

Now we can all agree that border security comes first. The president, though, believes that, as part of border security, you need to figure out a way to make -- meet America's economic needs without encouraging more illegal immigration, something we have not done since 1986.

(CROSSTALK)

BLITZER: How worried are you that this will anger Latino voters? Because you, as chairman of the RNC...

MEHLMAN: Yes.

BLITZER: ... you have made a major push...

MEHLMAN: I have.

BLITZER: ... to bring in the Latino voters. And this, at least a lot of people think, is going to alienate a lot of those people.

MEHLMAN: I don't think it's going to anger Latino voters, because Latino Americans, like Anglo-Americans, like all Americans, recognize that, when you are at war, if your border is not secure, then no one is safe.

I will tell you this, Wolf, though. We are seeing politics played on the other side. You may remember, when the House Democrats overwhelmingly voted in order to make illegal immigrants felons, House Republicans voted against that. The Democrats thought they could win an issue. We were concerned with actually making sure that we passed a law that secured all Americans from all backgrounds and all walks of life.

BLITZER: Ken Mehlman is the chairman of the Republican Party.

We hope you will come back to THE SITUATION ROOM.

MEHLMAN: I will look forward to it. Thanks.

BLITZER: Thanks for coming in.

MEHLMAN: Thanks.

BLITZER: A former Bush White House official stands convicted today in connection with a massive influence-peddling probe here in Washington. Prosecutors accuse David Safavian of trying to cover up efforts to help disgraced lobbyist Jack Abramoff.

Our White House correspondent Ed Henry has more on this story -- Ed.

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Wolf, another shoe drops in the investigation of Republican lobbyist Jack Abramoff. And, this time, it's a former Bush official who has gotten in trouble.

David Safavian was convicted today in federal court on four of five charges of lying and obstructing justice, significant, because this is the first trial held in connection with the Abramoff scandal. Safavian was charged with lying about his relationship with Abramoff and his knowledge of the lobbyist's efforts to obtain properties from the General Services Administration, where Safavian served as the chief of staff.

Safavian took a weeklong golf trip to Scotland, at Abramoff's expense, allegedly in exchange for providing the lobbyist inside information about two government properties that Abramoff wanted to redevelop. Safavian said nothing as he left the courthouse today, but his attorney did speak out.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: They made a mountain out of a molehill, and now they are going to climb on top of the molehill and plant the flag. And I still find it perplexing.

(END VIDEO CLIP)

HENRY: The guilty verdict on four felony counts will undoubtedly give Democrats more fodder in their election-year claim that there's a Republican culture of corruption that extends from the White House all the way to Capitol Hill.

But that Democratic case could be undermined a bit by the fact that there have been some high-profile Democrats caught up in ethics cases of their own, most notably Democratic Congressman William Jefferson of Louisiana, who has denied wrongdoing, but allegedly kept $90,000 in bribes in his freezer here in Washington -- Wolf.

BLITZER: Ed Henry, at the White House, thanks very much.

Up next, we will have much more on the war in Iraq and the political fallout back here in Washington -- Paul Begala and J.C. Watts standing by live to join us in today's "Strategy Session."

And, in the next hour, a deadly plot by al Qaeda to attack New York's subway system, it's unearthed in an explosive new book. The book's author, Ron Suskind, standing by to join us in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: In our "Strategy Session": the election-year war between Republicans and Democrats.

In the Senate, new battle lines are being drawn over Iraq, even as President Bush tries to rally allies in Europe on a host of hot global issues. Joining us now, our CNN political analysts, Democratic strategist Paul Begala former Republican Congressman J.C. Watts.

You heard the strategy laid out by Ken Mehlman, Paul, only moments ago...

PAUL BEGALA, CNN POLITICAL ANALYST: Right.

BLITZER: ... a strategy we heard from Karl Rove. Basically, the best defense is a strong offense. These are guys who want to cut and run and squander America's reputation...

BEGALA: Yes.

BLITZER: ... and the war on terror around the world.

He's referring to you Democrats.

BEGALA: Yes, since America's reputation is so sterling now, thanks to George W. Bush.

Look, Lyndon Johnson used to say -- it's a great Texas aphorism -- he said, you can't shine a cow patty. Now, he had a different phrase, but we are a family network.

(LAUGHTER)

BEGALA: And that is what I was thinking. I saw poor Ken. He is buffing and shining. He's: Oh, man, things are great in Iraq. And the Democrats are cowards.

And, you know, it just -- as we said, that dog won't hunt. You know, the problem is, the country believes the president doesn't tell the truth and he is not competent on Iraq. And they're looking for a new direction.

Today's "Washington Post" had a very interesting op-ed piece in which this was the program that was called for -- first, reducing troops to 100,000 in '06, almost zero in '07, and absolutely zero by '08. Now, that's a timetable. The person who wrote this argued that drawing down foreign troops would strengthen the fledgling government in Iraq. Now, that was not Jack Murtha; that was not John Kerry; that wasn't Howard Dean. That was Mowaffak al-Rubaie, who said very much the same thing to you on Sunday. He's the Iraqi national security adviser.

Now the Iraqis are saying, we need a timetable, not a date certain, but we need a process...

BLITZER: All right.

BEGALA: ... to withdraw American troops.

That's the Democratic position.

BLITZER: What about that Democratic position, the Democratic strategy on Iraq vs. the Republican strategy on Iraq?

J.C. WATTS, CNN POLITICAL ANALYST: Well, Wolf, while you can't shine a, you know, cow patty...

(LAUGHTER)

WATTS: ... you can't P.R. a bad product either.

And I think what the Democrats have is bad product, or bad policy, in terms of the war in Iraq. I don't think it's a cut-and-run strategy, what the Democrats are doing. I just think they are wrong on this policy.

BLITZER: J.C., listen to Dick Durbin, the Democratic senator from Illinois, the minority whip in the U.S. Senate.

(BEGIN VIDEO CLIP)

SEN. RICHARD DURBIN (D), ILLINOIS: This week, the Senate will have a chance, a chance to say to the Iraqi people that, as of the middle of next year, this becomes your responsibility. We will give you 12 months, and more American lives and more American dollars. And, then, Iraq, you have to stand up and defend yourself.

(END VIDEO CLIP)

BLITZER: So, that would be more than four years of this war, and hundreds of billions of dollars. Is that not enough time for this new Iraqi government to take charge?

WATTS: Well, Wolf, Paul pointed out what the gentleman said in "The Washington Post" today.

You know, the drawdown may be six months from now. It may be 12 months from now. It may be 18 months from now. But don't set that timeline. You know, let the Iraqi people get their footing. I think they are. You know, they have got a -- a new prime minister. They appointed a minister of defense, a minister of interior.

That shows they are getting their footing. And the president said all along, we will stand down when they stand up. But don't put an arbitrary time frame on it, to say, it's going to be in the next six months. We don't know that. This gentleman doesn't know that. So, let things take place.

(CROSSTALK)

BLITZER: Do you sense, Paul, that this Republican strategy, laid out by Karl Rove the other day in New Hampshire, reiterated today by Ken Mehlman on this program, is putting the Democrats on the defensive?

BEGALA: No.

Any discussion of Iraq is bad for the Republicans, good for the Democrats. The country believes the president has got us off on the wrong track in Iraq, that he has messed the whole deal up, and that we want a new direction.

Most Democrats actually agree with J.C. -- I do, certainly -- that an absolute date certain is arbitrary and unhelpful. This is the president's best argument. It's J.C.'s best argument. It's also the Democrats' argument. The only person who is arguing for an open- ended, endless commitment of our troops in Iraq is George W. Bush.

He has -- his aides in "The New York Times" this weekend, administration sources, said they were envisioning American troops in Iraq for as long as we had American troops in Korea, which was 50 years. Now, that's the position that's untenable, this sort of open- ended rubber stamp that the Republicans seem to be -- Mr. Bush seems to be supporting.

BLITZER: All right. Let me let J.C. respond to that.

WATTS: Well, you know, the fact is, Wolf, the Democrats, they have no policy.

(CROSSTALK)

BLITZER: Well, they do have a strategy, in the sense that some Democrats say, get out by July of next year. Others say, start the redeployment this year, Senator Levin, among others, and then continue that redeployment.

WATTS: But the strategy that they implement is, we have to be against President Bush's plan.

If President Bush came out and said, we are going to get out of there in the next 12 months, they would be opposed to that. They have to be against the president's plan.

But consider this, two resolutions on the Senate floor by Democrats, totally different than each other. Forty-two Democrats in the House two days ago voted against the Democrat leadership, that was -- that was saying, we need to pull out. They voted with the Republicans. Forty-two votes, that's a significant number of defections. So, again, the Democrats are all over the board, in disarray, concerning their Iraq policy.

BLITZER: All right.

(CROSSTALK)

BLITZER: Ten seconds.

BEGALA: There's a different between disarray and debate. J.C. is right. There is divergence of opinion among the Democrats as to which new direction we need.

Among the Republicans, they have nothing but a rubber stamp. It is more of the same.

And if Democrats -- if Republicans win, that's what we will get.

BLITZER: Paul Begala and J.C. Watts, thanks to both of you.

And, as our viewers know, not only Paul and J.C., but Ed Henry -- you saw him earlier -- they are all part of the best political team on television -- CNN, America's campaign headquarters.

Coming up: paycheck politics. Find out why the lowest paid workers are high on one party's priority list this year.

And America's military family in mourning again -- the bodies of two missing soldiers apparently have been found in Iraq. In our next hour, we will have a live report from the Pentagon on the very grim details.

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

(COMMERCIAL BREAK)

BLITZER: Welcome back.

America's lowest paid workers are making a comeback of sorts on Capitol Hill. It's about money and about election-year maneuvering.

And our senior political analyst, Bill Schneider, is following all of it.

Hi, Bill.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Wolf, everything old is new again, including one of the oldest issues in American politics.

(BEGIN VIDEOTAPE)

DURBIN: There was a time when both political parties cared about the issue of poverty. Today, we don't discuss it. I don't know why.

SCHNEIDER (voice-over): Here's one reason. Bipartisanship has collapsed. SEN. EDWARD KENNEDY (D), MASSACHUSETTS: The history of the minimum wage, up to the last few years, has basically been a bipartisan effort. And, yet, we have not been able to get the bipartisan effort to increase the minimum wage over the period of the last nine years.

SCHNEIDER: Most voters say they would be more likely to vote for a candidate who favors raising the minimum wage. The problem is, the minimum wage has not been a high-priority item for the activist base of either party, compared with, say, Iraq or immigration.

So, why are Democrats offering minimum-wage amendments to nearly every bill? They want to embarrass Republican leaders....

DURBIN: While we have consistently, year after year, denied an increase in the minimum wage to the poorest, hardest working Americans, we ever, every year, without fail, increased congressional pay.

SCHNEIDER: ... and bring the Democratic Party back to its roots.

(BEGIN AUDIO CLIP)

REP. NANCY PELOSI (D-CA), MINORITY LEADER: The first day we control Congress, we will give Americans a raise by increasing the minimum wage.

(END AUDIO CLIP)

SCHNEIDER: Item one in the Democrat's version of a Contract With America.

(END VIDEOTAPE)

SCHNEIDER: Democrats are divided over Iraq and over immigration. But you know what? They're not divided over the minimum wage -- Wolf.

BLITZER: Bill Schneider reporting -- thank you, Bill.

Up next: Is Senator Hillary Clinton's fan club getting smaller? We have the latest poll numbers.

And Governor Arnold Schwarzenegger and the political debate over gay rights -- we will tell you what the California Republican is doing now.

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

(COMMERCIAL BREAK)

BLITZER: On our "Political Radar" this Tuesday: a slight dip in Senator Hillary Clinton's favorable ratings.

A Siena Research Institute poll shows 54 percent of New York state voters now view her favorably. That's down four points from early May. But she still has a more than 20-point lead over her Republican challenger, John Spencer.

California Governor Arnold Schwarzenegger reportedly plans to headline a fund-raiser for gay Republicans in Hollywood next week. "The Los Angeles Times" reports it would be his first appearance before a gay audience since he took office. The fund-raiser comes as Schwarzenegger considers whether to veto a bill that would require gay history to be added to textbooks in California public schools. Schwarzenegger has indicated that he opposes that measure.

If Governor Arnold Schwarzenegger could be any color, what would it be? That was one of the thousands of questions put to the governor by California residents in an unprecedented live Webcast.

Jacki Schechner is standing by with more on that -- Jacki.

JACKI SCHECHNER, CNN INTERNET REPORTER: I want to give you the answer to that question first. Take a listen.

(BEGIN VIDEO CLIP)

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: But I like the color red, because it is fire. And I see myself as always...

(END VIDEO CLIP)

SCHECHNER: I don't know if you can hear it, but he said that his favorite color was red.

They said this went on for about 20 minutes. They got hundreds, if not thousands, of questions. Here is how this worked. People would put their questions here on the Web site. And they would be taken beforehand and also live in answering them.

He answered everything from gay marriage, to why there aren't enough game wardens in California, to what it's like for him to commute to Sacramento. His office says he likes to do these, Wolf, because the questions that we as reporters ask are not always the questions that people like to ask.

BLITZER: Jacki, thanks very much for that.

Still to come: How should the U.S. respond if North Korea goes ahead with its missile test? Jack Cafferty standing by with your e- mail on our question of the hour.

And coming up in our next hour: His new book has some shocking allegations about the war on terror. Ron Suskind, the author of "The One Percent Doctrine," he will join us right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Jack Cafferty is standing by with "The Cafferty File" -- Jack.

CAFFERTY: Wolf, the question is: How should the United States respond if North Korea goes ahead with this threatened ballistic missile test?

Chuck in Mason, Missouri: "By announcing that we are giving South Korea a sufficient number of short-range nuclear missiles to wipe North Korea off the map."

Stu in Herndon, Virginia: "I don't believe the U.S. should have any say in a nation's right to launch a test missile. The issue should be if they choose to arm a missile capable of striking the United States."

Jeff in Los Angeles: "Unless the launch signifies some sort of departure from our current intelligence on North Korea's capabilities -- and I have a hard time believing that -- we should not let this affect our current diplomatic efforts one way or the other."

M.J. in Miamisburg, Ohio: "If North Korea launches a test missile, the U.S. should, in turn, reply with a real one. I seriously doubt China or Russia would kill the major source of their economic stability. And the world would be free of one less fanatical moron."

Andy in Yardley, Pennsylvania: "Shoot it out of the sky. It is important to show we are prepared and resolved to counter any move they make. They understand nothing less."

Jim in Spartanburg, South Carolina: "We should find out where the bullseye is and sit you on it, Jack."

And Brent writes: "How should the U.S. respond to a North Korea missile launch? I would say lock up Kim Jong Il in THE SITUATION ROOM with the Blitzer, throw away the key. Once the Blitzer conquers the Kim, declare mission accomplished."

I think you could take him, Wolf.

BLITZER: Yes. He's a very strong guy. I don't know.

(LAUGHTER)

BLITZER: Thank you very much, Jack...

(CROSSTALK)

BLITZER: ... for that.

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