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THE SITUATION ROOM

U.S. Supreme Court Rules That President Bush Overstepped Authority in Planning Military Trials for Terror Suspects; Is the Bush Administration Under Increasing Pressure to Shut Down Guantanamo?; House Republicans Targeting "New York Times" and Other News Organizations for Revealing Secret Anti-Terror Program; Liberal Enclaves Passed Resolutions Calling on Congress to Impeach President Bush; Schwarzenegger To Meet With the Gay Political Group

Aired June 29, 2006 - 16:00   ET

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


WOLF BLITZER, CNN ANCHOR: To our viewers, you're in THE SITUATION ROOM, where new 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 stunning setback for the Bush administration. The U.S. Supreme Court rules that planned military trials for Guantanamo terror suspects are illegal. It's 4:00 PM here in Washington. Can the Congress give the president a way around the ruling?

On Capital Hill House Republicans target the "New York Times," condemning the disclosure of a secret government program to track bank records. A resolution coming up very shortly on the floor of the House, will it carry any weight though?

And it's 1:00 P.M. in California where Governor Arnold Schwarzenegger will meet with a gay Republican group for the first time, is it about time? I'm Wolf Blitzer, you are in THE SITUATION ROOM.

The U.S. Supreme Court delivered a sharp rebuke to the Bush administration, ruling that the president has overstepped his authority in planning military trials for terror suspects. The court declared 5-3 that war crimes tribunals for detainees held at Guantanamo Bay would violate U.S. law and the Geneva Conventions. The decision blocks the trial for a Yemeni man, Salim Ahmed Hamdan, who is accused of being a body guard and driver for Osama bin Laden.

It may also lead to more questions about the legal status of the Guantanamo detention camp and the hundreds of suspects that are still held there. In one of six separate opinions, Justice Stephen Breyer said nothing prevents the president from going to Congress to seek authority for the trials and Mr. Bush today suggests he may do just that.

Our congressional correspondent Dana Bash is standing by with more from Congress. Let's go to with the White House first our White House correspondent Ed Henry has the latest from there.

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Wolf, a slap in the face for President Bush from a conservative-leaning Supreme Court, declaring that the president does not have a blank check to conduct the war on terror. The president was busy in a meeting with the Japanese Prime Minister when this decision came down from the high court, so the president got what he himself termed a drive-by briefing by his staff.

We understand it lasted only about three minutes, on his way to a joint press conference with Prime Minister Koizumi. This enabled the president to deflect questions about how big of a limitation of his power to conduct these military tribunals this decision really was.

He said administration lawyers are still busy studying this, trying to figure it out, trying to sort it out and the president quickly tried to shift this to more politically advantageous ground for him, focusing on the broader war on terror and declaring he will make sure these detainees will not be dumped out on the streets of America.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The American people need to know that this ruling, as I understand it, won't cause killers to be put out on the street. In other words, as I was in a drive-by briefing on the way here, I was told this was not going to be the case, anyway we will seriously look at the findings, obviously. One thing I am not going to do, though, is I am not going to jeopardize the safety of the American people.

(END VIDEO CLIP)

HENRY: The president and his spokesman Tony Snow also quickly latched on to the part of Justice John Paul Stevens' opinion that suggested it could be up to Congress to decide all of this, navigate some sort of a legislative solution. Here's Tony Snow.

(BEGIN VIDEO CLIP)

TONY SNOW, WHITE HOUSE PRESS SECRETARY: I think what the court is saying is, it wants to make sure there's congressional authorization and it also is concerned about comporting with the Geneva Conventions and also the Uniform Code of Military Justice. Those are matters that will be taken under advisement.

(END VIDEO CLIP)

HENRY: But complying with the Geneva Convention is one of the things the administration has suggested it did not need to do, suggesting that the president did have broad powers to conduct the war on terror. That's why this decision is a slap at the president. That's why the White House is very eager to now say this is in Congress' lap.

BLITZER: Are they acknowledging this as a serious setback for what they hope to do?

HENRY: They are not. They are insisting this is really just a procedural maneuver. Tony Snow would not really acknowledge that it was a slap at the president. But he's pretty clear that this is not what the administration has been arguing, Wolf.

BLITZER: Ed Henry at the White House, thanks for that. On Capitol Hill, meanwhile, Democrats are hailing what they call a defeat for the Bush administration. Republicans say they will try to help the president find a new way around this Supreme Court ruling. Let's go to Capital Hill, our congressional correspondent Dana Bash has more on this part of the story.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Hi Wolf, well just as Ed said, this ruling clearly does put this issue squarely in the lap of members of Congress. So they've been scrambling since this morning, trying to figure out how to respond. But Democrats, as you can imagine, they are responding in very a specific way.

Essentially, what they are saying over and over is I told you so, that the Supreme Court said that the White House, the president doesn't have unchecked power and that the Democrats say they've been arguing that for sometime. In statement after statement, Democrats said the high court's ruling was a stinging repudiation or rebuke of President Bush's claim of sweeping war time power.

(BEGIN VIDEO CLIP)

SEN. DICK DURBIN (D-IL), MINORITY WHIP: The United States Supreme Court handed down a decision reminding the Bush administration that no president is above the law. The court rejected the Bush administration's decision to turn its back to treaties, and laws that have served America so well for generations.

(END VIDEO CLIP)

BASH: Now, there are some Republicans who are actually agreeing with the Democrats' point, most Republicans, certainly the leaders support the president and say he, perhaps, did have that power, but some like Senator Lindsey Graham, who is a military lawyer himself by training, he reminded us today that he pushed about a year and a half ago for the White House to bring Congress into this process and says this was a repudiation of inherent executive authority unchecked.

However Senator Graham is now trying to work with the White House and Republican leaders, trying to find legislation in order to deal with this and what he has focused on and what most leaders here on the Republican side are focused on is pushing for this to stay in the military tribunal. He said what he is working for is not something that puts the detainees through the civilian court or perhaps would send them home.

(BEGIN VIDEO CLIP)

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: Now, it is incumbent upon Congress, do we let them go? No. Do we try them in civilian court, which would be a disaster. No. What we do in Congress is work with the administration to create a military tribunal system where Congress is a collaborative partner. And if we'll do that, the court, I think, will approve the trials

(END VIDEO CLIP)

BASH: Now, what Senator Graham tells us and a GOP leadership aid confirms is what they are working on right now is trying to find a way, perhaps, to write legislation that would put these detainees through the code of military justice, just as members of the United States military.

Senator Graham said, if it's OK for the troops to be tried in that model, it certainly would be OK for terrorists to be tried that way. And Wolf, Senator Bill Frist, the majority leader, hopes to actually have legislation ready to go after the July 4th recess.

They are trying to work very hard on this. One interesting twist though, I can tell you, I just ran into the chairman of the Armed Service Committee, John Warner. He said he is going to take the lead on this, but his lawyers are telling him perhaps they don't need legislation, so that's something that is being worked out. This very fast moving story, everyone's trying to figure out what next.

BLITZER: Alright Dana, thanks very much. Dana's on Capital Hill. Should the court curb the president's powers during the time of war? Is the president trying to assume too much authority? Our senior analyst Jeff Greenfield is in New York.

JEFF GREENFIELD, CNN SENIOR ANALYST: Wolf, the practical impact of today's Supreme Court decision on military tribunals will probably be limited. No one will is going to be strolling out of Guantanamo any time soon. The decision's real significance lies in how unusual it is. Throughout our history the court has rarely limited what a president tries to do in war time.

During the civil war, president Lincoln ordered the arrests of Americans sympathetic to the confederate cause and then suspended the Writ of Habeas Corpus so that these arrests could not be challenged in court. The Supreme Court was unable to effectively restore the writ until after the civil war ended, because Lincoln simply ignored earlier court rulings.

During World War I, the Wilson administration prosecuted some 2,000 people for opposing the war and the draft, in this case under laws passed by Congress to forbid disloyal and abusive language about form of the government of the United States.

The Supreme Court rejected the argument that such laws violated free speech. The legislation was repealed a few years after World War I ended, but not before hundreds of Americans had been deported without trials for what they spoke and wrote.

When the Roosevelt administration detained 100,000 Americans of Japanese decent during World War II, the Supreme Court upheld that internment in the Korematsu case. The government apologized decades later and Fred Korematsu was awarded the Presidential Medal of Freedom in 1998. More recently he filed a brief on behalf of the Guantanamo prisoners. One of the rare times the court did restrain a war time president was in 1952 when a threatened strike jeopardized steel production during the Korean War. President Truman, defying the Congress, ordered the steel mills seized. The president, Truman said, has the power to keep the country from going to hell. The Supreme Court said, no.

The president simply lacked the power to seize steel mills, especially where congress had rejected that claim. What makes the assertion of presidential power in our time so complicated is that the war on terror is utterly different from our traditional concept of war.

In the past, expansive presidential powers and their impacted individual freedoms have ended when the war has ended. But how will we know and who will decide when this war on terror, and the arguments for broad presidential power, will end?

(on camera): But here's something we can know: had a single vote on the majority shifted, that 4-4 vote would have upheld the Bush's administration claims. And that means we are learning once again a very old lesson: that the president's power to nominate Supreme Court justices is one of the most consequential powers that president has -- Wolf.

(END VIDEOTAPE)

BLITZER: Jeff Greenfield, thanks for that. Jeff Greenfield in New York.

Will the Bush administration now find a way to hold terror trials or will it find itself under increasing pressure to shut down the Guantanamo detention camp once and for all?

Let's turn to our senior legal analyst, Jeff Toobin. Let's talk about that. In the interim, before Congress enacts new legislation, what happens to these detainees?

JEFFREY TOOBIN, CNN SR. LEGAL ANALYST: They stay where they are, except for those the Bush administration can arrange to send back to wherever they came from. They've sent some back to Saudi Arabia, Yemen, Afghanistan. Those discussions are continuing, but the bush administration couldn't want to release dangerous criminals. And some of these countries don't want these people back so that's not an answer for all 450 people.

BLITZER: Correct me if I'm wrong, but the Supreme Court basically gave a little slap to the White House, to the executive branch of the government, saying you guys overreached by far in going forward with this concept of these military tribunals.

TOOBIN: I think the only thing I would correct you on, I think it was a big slap. I mean, this is a very consequential case. And they said was, you can't do this alone, executive branch, you need to involve Congress. Congress has to authorize whatever military tribunals that are set up. So that's why the action is really going to move to Congress now because that's the only way these tribunals can go forward, and there's really no way of dealing with these prisoners, according to the Bush administration, except through these military tribunals.

BLITZER: The administration had strongly argued that the Geneva Convention -- international law, in effect -- really did not apply to these detainees who were picked up on the battlefield, many of them in Afghanistan. The Supreme Court says, you know what, the Geneva Conventions apply.

TOOBIN: Absolutely. And it is because the Geneva Conventions that the detainees have to be treated according to regular procedures. That means a court-martial, a criminal trial in a federal district court or in a military tribunal authorized by Congress. And that's the way the Bush administration wants to go because they don't want to be having hearings, Miranda warning -- you know, did Hamdan receive a Miranda warning on the battlefields of Afghanistan? That's what you'd be dealing with if you had this in federal district court.

They want somewhat more limited proceeding in a military tribunal, but they've got to get that through Congress now, and Congress is a very different place than it was 2002. The Bush administration has less power there than it used to, so it's not going to be easy to get these procedures through in any quick way.

BLITZER: You've had a chance to read the decision. It's very complex, 5-3. That's the way it came down. The chief justice was not involved because he had participated in an appellate decision earlier, sided with the administration. What does this say about this new Supreme Court, the new members, the old members, if you look down the road?

TOOBIN: Two things, Wolf. It says that John Paul Stevens, who is 86 years old and who wrote this opinion, is the leader of the liberal wing of this party. He seems to be in very good health. He's obviously at the top of his game. But he's 86 years old and he can't be there forever.

The other thing it says is that the key vote in this court now is Anthony Kennedy. He was the one who gave the four relative liberals the fifth vote. Anthony Kennedy is the key to winning the Roberts court in the way that Sandra Day O'Connor was the way to winning the Rehnquist court.

BLITZER: Jeff Toobin, thanks very much. Always good analysis from Jeff.

Let's get some good analysis from our man Jack Cafferty. He's always in New York, as well. Why are you smiling?

JACK CAFFERTY, CNN ANCHOR: Well, I just -- I was momentarily amused by your suggestion that we get good analysis from me. I guess sometimes that's true.

BLITZER: You always give us good analysis. CAFFERTY: Well, try this one. There's some early signs of passable reconciliation coming out of Iraq, and that's something everyone agrees needs to happen if that country is ever going to be able to stand on its own two feet. Some of the insurgents now want a truce. This follows the country's prime minister reaching out to them with a reconciliation plan that included amnesty for fighters. The 11 Sunni insurgent groups say they will halt all attacks, including those on American soldiers. Their condition is that the United States agree to withdraw all foreign forces from Iraq within the next two years.

Prime Minister Nuri al-Maliki did not reject that timetable demand outright, but he did say it was unrealistic to know when the Iraqi army and police would be strong enough on their own. Meanwhile, Defense Secretary Donald Rumsfeld said President Bush's view is that a timetable is not something that's useful.

So here's the question. Is it time to negotiate with the insurgents in Iraq? E-mail your thoughts to CaffertyFile@CNN.com or go to CNN.com/CaffertyFile.

How was that, Wolf?

BLITZER: That was excellent analysis. Thank you.

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

Coming up, the worst is over for most people, but there are still fears of major flooding along the Delaware River. We'll take you state by state when we return.

More military action today in the standoff between the Israelis and the Palestinians. Our Zain Verjee will join us with all the latest developments.

And Congress gets ready to vote on a bill that takes on the media over leaks. We'll go live to Capitol Hill to find out what lawmakers are doing right now and why.

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

(COMMERCIAL BREAK)

BLITZER: High waters beginning to recede in parts of the flooded northeast. The mandatory evacuation order covering some 200,000 people in the Wilkes-Barre, Pennsylvania, area has been lifted. Flood walls and levees did their job along the Susquehanna River, and the governor says his of Pennsylvania, Ed Rendell, says his state dodged a bullet.

Upstream in Binghamton, New York, people are also being allowed to return home. Fifteen thousand were ordered out before the Susquehanna crested there yesterday. Meanwhile, the flooding Delaware River is forecast to crest next hour in Trenton, New Jersey, at 25 feet. That's three feet below what was predicted yesterday, but officials say it could still be days before thousands of evacuees can return home.

More than 2,000 people near Rockville, Maryland are also being told to stay away from their homes while officials try to assess whether a leaking earthen dam will hold.

And not even the tax man escaped unharmed. The Internal Revenue Service headquarters here in the nation's Capitol suffered extensive damage and flooding earlier this week. Officials now say it will be at least a month before the building reopens. We're going to have much more on this story in the next hour, including live reports from the flood zones.

Let's bring in our Zain Verjee. She's joining us here in Washington with a closer look at some other important stories making news -- Zain.

ZAIN VERJEE, CNN ANCHOR: Wolf, the crisis over a kidnapped Israeli soldier is deepening. Israeli tanks have been pounding northern Gaza with artillery. Now residents are bracing for the possibility of more ground incursions. Hundreds of Palestinian gunmen wielding automatic rifles and anti-tank weapons are taking up positions. And an Israeli newspaper is this hour reporting that the country's defense minister has approved new military action.

Earlier, a funeral was held for an 18-year-old Jewish settler, apparently abducted on Sunday. His body was discovered on the West Bank overnight. Also overnight, at least 84 people, including more than two dozen Palestinian government officials and lawmakers, were arrested in Israeli sweeps.

A suicide car bomber killed at last four people at a Shia funeral in the northern Iraqi city of Kirkuk this afternoon. Thirty-one others were wounded. The bomber drove his car into a tent where services for a slain Iraqi soldier were being held. In violence elsewhere around Iraq, at least 18 other deaths are being reported.

Not now. Iran's foreign minister says Tehran needs until August to respond to an international incentives package that's essentially aimed at getting Iran to give up it's uranium enrichment program. Iran had been asked to respond by July the 5th. Foreign Minister Manouchehr Mottaki says that Iran will raise questions at upcoming talks with the Europeans.

Federal authorities are analyzing recovered computer equipment that contains personal identification data for more than 26 million veterans. The laptop computer and external drive were stolen from the home of a Veteran Affairs programmer in May.

V.A. Secretary Jim Nicholson says it showed up at an FBI field office in Baltimore yesterday. Documents released today showed the programmer was cleared to take the equipment home. Nicholson says initial analysis indicates that data was not accessed by the thieves, but that more tests are needed.

(BEGIN VIDEO CLIP)

JIM NICHOLSON, VETERANS AFFAIRS SECRETARY: The number one concern in this whole saga is our veterans. And though I'm happy and I'm really feeling quite optimistic for our veterans that are affected, but I cannot tell them, yet, that there is no reason to worry because I do not have those assurances from the law enforcement community.

(END VIDEO CLIP)

VERJEE: Overnight, bank lending rates are now at their highest levels since January of 2001. This after the Federal Reserve today raised benchmark interest rates by a quarter of a percentage point. It's the 17th straight time the Feds raised rates over the past two years. The Fed says economic growth is cooling, but that some inflation risks still remain -- Wolf.

BLITZER: It really propelled the stock markets today. We're going to have more on that later, Zain. Thanks very much.

On Capitol Hill, House Republicans are targeting the "New York Times" and other news organizations for revealing a secret anti-terror program which tracks bank records. A resolution is due to come to a vote shortly.

Let's bring in our congressional correspondent, Andrea Koppel. What's the latest, Andrea?

ANDREA KOPPEL, CNN CONGRESSIONAL CORRESPONDENT: Well, Wolf, Independence Day may not be until next week but the fireworks were already going off on the House floor this afternoon with Republicans and Democrats hurling accusations at one another.

At the heart of this argument, of this really emotional debate, a seven-page Republican resolution which basically goes after not just the "New York Times," but all types of news media. In the resolution, it condemns administration leakers and it demands the cooperation of the news media, quote, "in not disclosing classified intelligence programs."

Now, Democrats accuse Republicans of playing politics, and Republicans said enough was enough.

(BEGIN VIDEO CLIP)

REP. MICHAEL OXLEY (R), OHIO: This is the third time, in a relatively short period of time, that this country has been witness to essentially treasonous behavior on the part of individuals who leak classified information clearly against the law -- clearly against the law -- and then brazenly report it in the front pages of major newspapers, aiding and abetting the enemy. We are at war, ladies and gentlemen.

REP. JAMES MCGOVERN (D), MASSACHUSETTS: No one in this House supports the disclosure of classified information that could genuinely endanger the lives of Americans, but we all know that's not what's going on here. In reality, it is an attempt to punish and intimidate the "New York Times" and other newspapers for publishing a story about the administration's surveillance of international financial transactions.

(END VIDEO CLIP)

KOPPEL: Democrats also objected to the Republicans blocking their attempts to offer an alternative resolution, Wolf, because the Democrats say that they dispute almost all the conclusions that the Republicans drew in that seven-page resolution. We expect the debate to continue a little bit later this afternoon with a vote sometime around 6:00 this afternoon, Wolf.

BLITZER: And all of this is simply symbolic, Andrea. This is a sense of the Congress resolution. It has no real, substantive meaning beyond sending a message?

KOPPEL: Absolutely. This has no force of law. Nevertheless, Republicans say they want to send a very strong message to the Bush administration that they believe this program that monitored bank records was legal and that it was fundamental to the U.S. fight in the war on terror, Wolf.

BLITZER: All right, Andrea. Thanks very much. We will stand by for that vote. It should be coming up fairly soon.

And we're going to have more on the leak controversy when we return, James Carville and Bay Buchanan, they're standing by live to join us in today's "Strategy Session."

Plus back to today's Supreme Court decision on military tribunals. It seems like a political defeat for the president, is it? James and Bay will answer that question. Stay with us.

(COMMERCIAL BREAK)

BLITZER: Welcome back to THE SITUATION ROOM. I'm Wolf Blitzer in Washington. The U.S. Supreme Court said today that military tribunals for foreign terror suspects are illegal. Is it a serious setback for the Bush administration, or is it simply a bump in the road?

We are joined now by Democratic strategist James Carville and American Cause president Bay Buchanan for our daily "Strategy Session." Jane Harman, the ranking Democrat on the House Intelligence Committee, issued a statement saying this: "Since 9/11, the Bush administration has operating in the fog of law, expanding executive branch power, ignoring the will of Congress, bypassing courts, and disregarding international law. Today's Supreme Court decision will help lift that fog."

Is she right?

BAY BUCHANAN, CNN CONTRIBUTOR: No. She's wrong. And, in fact, I think this is a -- it was clearly a loss for the president, no question about that. But it's one that I believe he will turn into a huge victory. He's going to go up there on the Hill. They are going to pass some bill up there. Let's see how the Democrats are going to vote. Are we going to let these fellows go down there in Guantanamo? They -- are we going to make them go on trail? They are suspected terrorists. What are we going to do? And I think the president is going to win big, and he's going to energize his base because of it.

BLITZER: Tony Snow, the White House press secretary, put out a similar line earlier. I want you to listen to what he said.

(BEGIN VIDEO CLIP)

TONY SNOW, WHITE HOUSE PRESS SECRETARY: This will not mean closing down Guantanamo. There's nothing in this opinion that dictates mean closing down Guantanamo. And we are studying very carefully what other implications there may be.

(END VIDEO CLIP)

BLITZER: All right, what do you think, James?

JAMES CARVILLE, CNN POLITICAL ANALYST: Look, you know, he -- the president is humiliated before the country and the world.

I mean, it's very simple what happened here. And you're right. No one is going to advocate that we just let people go, need to -- need -- that's not what the Supreme Court said, as I understand it. They said that certain rules apply, and you have to do this.

But this is a -- I don't know how much more humiliation this man can take. You had the Iranians dissing him today. This is going to feed right into it. And he said himself that he would like to see Guantanamo Bay closed at some point. Hopefully, this will -- this might expedite that.

But there's no way that we can sit here and say this is a black eye for this administration's ability to conduct business.

BLITZER: Bay, what the Supreme Court did say, which is a major setback for the administration's stance, is that the Geneva Conventions and international law apply to these 450 detainees.

That's something that the French, the Germans...

(CROSSTALK)

BLITZER: ... the Europeans, people around the world, including the British, have been telling the president and the vice president.

BUCHANAN: Yes.

BLITZER: The Supreme Court reinforced that today.

BUCHANAN: They did.

And what was the decision? If the chief justice was voting, we all know it would be 5-4. So, the four conservatives were voting with the president. It's basically an issue here where, where are the American people going to stand? And that's the only way you can decide if this is going to hurt the president.

The key here is, the Americans are going to side with the president. They want an aggressive, tough stance against terrorists.

(CROSSTALK)

BUCHANAN: These guys are suspected terrorists.

CARVILLE: You just didn't say -- I didn't hear that. I didn't hear somebody say it was a 5-4 decision. Bush is president because of a 5-4 decision.

(LAUGHTER)

CARVILLE: I mean, this is not horseshoes and hand grenades.

BLITZER: It was a...

(CROSSTALK)

CARVILLE: I mean, they cannot really...

(CROSSTALK)

BLITZER: It was a -- it was a 5-3 decision...

CARVILLE: It was 5-3.

(CROSSTALK)

BLITZER: ... because Justice Roberts...

(CROSSTALK)

BUCHANAN: We know what Justice Roberts would vote. That is quite clear. He already made that decision some time ago.

So, it's a really very close decision. Where is Congress going to stand? What happens when this bill is presented to Congress? What are Democrats going to do? Are Democrats going to prove to the American people that they are not tough enough against terrorists, or are they going to vote that we can have tribunals against...

(CROSSTALK)

CARVILLE: I am absolutely speechless...

(LAUGHTER)

CARVILLE: ... that someone would say that a 5-4 decision carries any less weight.

Bush is a -- is president of the United States because of a 5-4 decision. I'm just -- it was actually 5-3. I am completely stunned. Someone told me that Tony Snow made that point today. I don't believe that he did, because I think he is much too smart to make a -- to saying something like that, I think.

BUCHANAN: This is the courts trying to say what a president, who is a commander in chief at a time of war, can or cannot do.

You tell me what the American people are going to say. I'm telling you, this is going to turn into a positive vote up on the Hill. It's going to be good for us, can use it against Democrats. In addition, it's going to energize conservatives and say, we really do need that fifth judge.

CARVILLE: Can you imagine a Supreme Court saying what the Constitution means? I can't imagine that they would...

(LAUGHTER)

CARVILLE: ... they would actually try to interpret the Constitution.

BUCHANAN: They have made mistakes in the past, James. A lot of us believe that. They made...

(CROSSTALK)

BLITZER: It's a sobering moment, though, for the White House, because the Supreme Court, as Jeff Toobin said, did give them a big slap.

BUCHANAN: Oh, there's no question they took a hit there.

However, I think they can turn this around to be a positive, even bigger than if they had won in the Supreme Court.

BLITZER: They now have to...

BUCHANAN: They are going to get their way. If the court -- if Congress decides -- even -- even Kennedy says, if it goes back to Congress, and they approve, he can move ahead.

BLITZER: Well, let me ask, James, how do the Democrats now, because Bay makes a fair point, deal?

CARVILLE: Right.

BLITZER: There is going to be legislation introduced...

(CROSSTALK)

BLITZER: ... presumably in the coming days, to come up with some new formula deciding what to do with these detainees.

(CROSSTALK)

BLITZER: Where do the Democrats come down?

CARVILLE: I think the Democrats probably will offer something, that you have tribunals that are in accordance -- you know, it's not like you can't -- you can't have the rule of law and fight terrorism.

It's not like you -- it's not like you have to break international law to be able to succeed at this. And Democrats and the Republicans, anybody, is going to be to, within the parameters that the Supreme Court said.

Clearly, what the Supreme Court said is, what they were doing is illegal. Everybody in the country, everybody in the world sees that. The Supreme Court never said you had to let anybody go. They said there were certain procedures that you had to follow, which, to most people, makes eminent sense.

And, of course, no -- the Democrats are not going to say to let all these people go. It -- in fact, what scares the dickens out of me and every other American is, is that, if some people were in there that really didn't hate the United States when they got there, for God's sakes, they probably hate us now, after we have tortured them, or whatever we have done to those people.

BLITZER: We are going to be speaking to one of those detainees in the next hour.

Very briefly, the House Republicans -- at least a lot of House Republicans -- introducing a sense of the House resolution in the next hour that would condemn the news media, especially the "New York Times," for this story about these international bank transactions.

Why are you smiling?

BUCHANAN: Don't you feel partially responsible for...

(LAUGHTER)

BUCHANAN: I think they have got a good issue here. There's no question.

I mean, again, what do the American people want? It's a time of war. And Americans believe that we should be very aggressive against terrorists, and that every single American in this country, whether you're in the media or elsewhere, should not be revealing secrets, that -- secret programs that could indeed endanger the American lives.

CARVILLE: I'm going to try to keep a straight face on this...

(LAUGHTER)

CARVILLE: ... because this is a president that authorized the leak of the national intelligence estimate to the "New York Times." This is the administration that leaked the name of a CIA agent to the "New York Times." This is an administration that bogusly got the "New York Times" to print a false story that there were biological weapons labs in Iraq. And, so, all of a sudden, these Republicans, after "The Wall Street Journal" and "The Los Angeles Times" print the same story, are now going to do -- you know what this is about?

This is about activating all these nutty people that buy these Ann Coulter books.

(CROSSTALK)

CARVILLE: This has got nothing to do with anything other than them trying to gin people up about the "New York Times."

BUCHANAN: Let me ask you...

(CROSSTALK)

CARVILLE: It's got zero to do -- they have leaked to the "New York Times," when it served their purpose, left and right.

BLITZER: All right.

(CROSSTALK)

BLITZER: Very quickly.

BUCHANAN: A legitimate question is, James, does the media have some responsibility in a time of war when they get information that could, indeed -- what the administration feels is secret.

CARVILLE: Of course they do. And they had three different news entities that printed this story. And they want to single the "New York Times" because they want to activate all these nutty...

(CROSSTALK)

CARVILLE: There's so much insincerity here, I can't get -- I'm stunned by it.

BLITZER: James and Bay, we got to leave it here. A good discussion.

CARVILLE: Thank you.

(LAUGHTER)

BLITZER: Have a -- thanks. We will have you back. Of course we will.

Should newspapers be held accountable for publishing classified information? That question being debated, as we just heard, not only here in THE SITUATION ROOM, but on Capitol Hill as well, and it's being debated right now.

So, where do Republicans and Democrats disagree on the resolution?

Our Internet reporter, Abbi Tatton, standing by with details -- Abbi.

ABBI TATTON, CNN INTERNET REPORTER: Wolf, the seven-page Republican resolution supports the finance surveillance program, and simultaneously condemns the news media for disclosing classified information.

Compare that to the Democrats' version, and you will see that some major changes here have been made. The Democrat version was submitted by Congressman Barney Frank. While the language remains intact on support for the program, there are significant changes. Whole sections regarding the news media are hacked out of there. And sections on the effects of publications are also removed, with a note, conclusion not known.

There are also some notable additions made on the disclosure of sensitive intelligence. They have added, this should specifically include clandestine services offices of the CIA, an obvious reference there. We have put both of those resolutions online at CNN.com/SITUATIONREPORT -- Wolf.

BLITZER: Abbi, thanks very much.

Up next, first, they were whispering. Now they are saying it a little bit louder, some Democrats -- a very few, but some Democrats in some prominent locations talking about impeachment. Is it all talk? What does it mean?

And a new development in the CIA leak case -- why lawyers for Lewis Scooter Libby are asking for more time right now.

Stay with us.

(COMMERCIAL BREAK)

BLITZER: From local councils to Congress, liberals are beginning to use the I-word, or two I-words, actually, investigation and impeachment.

Our senior political analyst, Bill Schneider, standing by with the story -- Bill.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Wolf, will impeachment be an issue in this year's congressional campaign?

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): Local governments and liberal enclaves across the country, San Francisco, Vermont, have passed resolutions calling on Congress to impeach President Bush.

This week, the Berkeley, California, City Council went one step further, and put an impeachment measure on the November ballot -- the grounds, lying about the case for war in Iraq, torture of detainees, and unlawful domestic spying.

UNIDENTIFIED FEMALE: The worst president in the history of this country.

(CHEERING AND APPLAUSE)

SCHNEIDER: The idea is to build grassroots pressure on Democrats to take a stand. Some have.

More than 30 House Democrats are supporting a measure that calls for a committee to investigate grounds for impeachment. But, for the most part, congressional Democrats are staying away from the impeachment issue.

RON BROWNSTEIN, CNN POLITICAL ANALYST: I have got to think they would be extremely leery of going at all in this direction, because, again, it would seem as though they were using their new power to settle partisan scores, rather than to address the problems of the public.

SCHNEIDER: Polls show that about a third of the public favors impeachment of President Bush, about the same number that favored impeachment of President Clinton in 1998, when the issue backfired on Republicans in the midterm election.

That's why there's one other constituency eager to make impeachment an issue this year: conservatives. They think it could energize a demoralized Republican base.

"Let's have this impeachment debate before the election, so voters can know what is really at stake," "The Wall Street Journal" editorialized. In other words, bring it on.

Do the voters of Berkeley want to bring it on? They're not so sure.

UNIDENTIFIED MALE: I don't know of anything he did that was impeachable.

(END VIDEOTAPE)

SCHNEIDER: Impeachment is a base issue. It excites the base of both parties, the kind of people you need to turn out in a midterm election -- Wolf.

BLITZER: Russ Feingold, the senator from Wisconsin, proposing censuring the president, which is obviously not impeaching the president. How much support is out there for that?

SCHNEIDER: We haven't really tested this. There's a little bit more support for censure than there is for impeachment. But it -- it also divides the country.

And I should point out that the Senate cannot, under the Constitution, initiate impeachment proceedings. So, he, as a senator, has called for censure. BLITZER: Good point, as usual, Bill. Thanks very much.

Bill Schneider, and, as you saw earlier, James Carville and Bay Buchanan, they are all part of the best political team on television -- CNN America's campaign headquarters.

Coming up: Can Democrats hold up raises for members of Congress until Congress raises the minimum wage? Some are betting their bottom dollar that they can.

And is Governor Arnold Schwarzenegger breaking with some in his own party by breaking bread with gay Republicans?

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

(COMMERCIAL BREAK)

BLITZER: Some serious politics tops today's "Political Radar."

Two Senate Democrats today vowed to block pay hikes for members of Congress until the minimum wage for all Americans is raised. Last week, the Senate voted down a minimum wage increase. The current minimum wage is $5.15 an hour. Democrats want to raise that to $7.25 an hour. The last hike in the minimum wage was nine years ago. Republicans argue that the hike for low-income workers would actually hurt small businesses.

The Senate majority leader, Bill Frist, stunned fellow Republicans last night when he came out in support of a bill to boost federal funding for embryonic stem cell research. Now, according to the Associated Press, thanks to a push from Nancy Reagan, he's reviving the bill, despite a veto threat from President Bush.

Passed by the House last year, the bill has been stalled in the Senate, though most polls show that about 70 percent of the public supports such a measure. Frist's office says expect stem cell research to be debated in the Senate some time next month.

Lawyers for former White House aide Lewis Scooter Libby are asking for a delay in the start of the CIA leak trial. The former chief of staff to the vice president, Dick Cheney, is charged with perjury and obstruction of justice. Libby's lead attorney is asking for a one-month delay in the trial, from January to February of next year, because he's worried he won't be finished with an unrelated trial.

Former Alabama Governor Don Siegelman and former HealthSouth CEO Richard Scrushy were both convicted today in a bribery scheme that derailed Siegelman's campaign to retake his former office. Siegelman was accused of trading government favors for campaign donations when he was governor and lieutenant governor of Alabama.

Is a third-party moment under way? That's the hope of one group online. Now the centrist organization Unity08 is launching a new campaign to force Washington politicians to the moderate middle, as they like to call it. Our Internet reporter, Jacki Schechner, has more -- Jacki.

JACKI SCHECHNER, CNN INTERNET REPORTER: Wolf, this is a Web- based campaign. And they are using blogs and videos, like the one you see playing behind me, to help get the attention of voters they say feel polarized and alienated by the current political process.

Their latest move, they formulated a declaration of independence that they plan to deliver to congressional leaders come this Fourth of July -- among the truths they find to be self-evident, things like, "To bicker is not to lead."

Now, we should point out they are not going to form a third party. They are forming this third-party movement. The idea is really to get some attention. They are going to do a full nominating convention online and put together an '08 ticket. They hope to have a Democrat and a Republican.

When they present these signatures, they are not only going to present the names, but they are going to present the comments as well, things like, "I am sick of fiscal irresponsibility," and, "I would love to feel like I have a choice" -- Wolf.

BLITZER: Thank you very much, Jacki.

Up next: an unusual -- very unusual, in fact -- proposal from an insurgent group in Iraq. We are going to tell you all about it in "The Cafferty File" and poll viewers on what the U.S. response should be. That's coming up.

And, later, Israel's ambassador to the United States will join us live right here in THE SITUATION ROOM to discuss the latest crisis with the Palestinians.

Stay with us.

(COMMERCIAL BREAK)

BLITZER: Jack is back with "The Cafferty File" -- Jack.

CAFFERTY: Wolf, 11 Sunni insurgent groups say they will halt all attacks, including those on American troops -- their condition, the United States must agree to withdrawal all foreign forces from Iraq within two years.

The question this hour is: Is it time to negotiate with the insurgents in Iraq?

Got a lot of mail.

George in Florida: "We should always take the time to talk about ending violence and restoring peace, especially in a place that has never had peace. There will never be a military solution to Iraq. Talk has to start some time, better now than later."

S. in Ontario: "Not on your life. If negotiations begin with terrorists, what messages does that send, that the U.S. and its coalition members gave up thousand of live for nothing? All that would accomplish in the end would be to let the terrorists know that, if you are willing to wait long enough, you win."

Brian in Louisiana: "Yes, it's time to negotiate with the insurgents. The hawkish attitude that we don't negotiate with terrorists is old and played out. There is no longer room for narrow- minded bullying in a world more and more interconnected."

Matt in Pittsburgh: "Unlike many Americans, I agree with Don Rumsfeld on this subject. He believes, if America ever agreed to such a tenuous 'treaty,' the insurgents would just wait until American troops leave, and then start up the attacks again. The Sunnis had control over Iraq for decades. I am sure they are willing to wait two more years to take it back again."

Dave writes: "While I'm not qualified to comment on this matter, it might be noted that, every time a truce is called in the West Bank with the Israelis, it's just because the militants need time to re- arm. Maybe the Iraqis are reading from the same playbook."

And Craig writes this: "Give them back that worthless piece of real estate, and bring home our priceless children home" -- Wolf.

BLITZER: Jack, thanks for that.

Jack will be back in the next hour.

Still to come: He vetoed a bill that would have allowed same-sex marriage in California. Now the governor, Arnold Schwarzenegger, is seeking gay votes. We will take you live to Hollywood for the story.

And coming up, also, in our next hour: He's a British citizen and a former detainee in the war on terror who says he was actually tortured at Guantanamo Bay. We will talk about today's critical U.S. Supreme Court ruling.

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

(COMMERCIAL BREAK)

BLITZER: In the "Culture Wars": The California governor, Arnold Schwarzenegger, is about to meet for the first time with the gay political group the Log Cabin Republicans. He's the headliner at a Hollywood dinner that starts in just a few hours.

CNN's Chris Lawrence in joining us from L.A. He has got the story -- Chris.

CHRIS LAWRENCE, CNN CORRESPONDENT: Well, Wolf, polls show that Governor Schwarzenegger is in very a tight race for reelection. He needs to appeal to voters outside of his conservative base. In about five hours from now, he will speak to a gay and lesbian group for the first time.

(BEGIN VIDEOTAPE) LAWRENCE (voice-over): During his three years as governor, Arnold Schwarzenegger has been a friend to gay voters...

PATRICK GUERRIERO, DIRECTOR, LOG CABIN REPUBLICANS: And he has a record of signing over a dozen pro-gay bills since he took office.

LAWRENCE: ... and, at times, a foe.

GEOFF KORS, EXECUTIVE DIRECTOR, EQUALITY CALIFORNIA: A lot of the bills wouldn't be necessary if he hadn't vetoed the marriage equality bill.

LAWRENCE: The governor refused to back legislation that would have granted same-sex partners the right to marry. He also threatened to veto a bill that would mandate teaching gay history at California schools.

KORS: And the ones he has vetoed are the ones that the extreme right-wing hate-mongers of the Republican Party have yelled the loudest about. And it seems that, then, what -- when they yell, he jumps.

LAWRENCE: He has also signed three bills that the gay community fought for, including one that prohibits insurance companies from doing business in California if they don't give the same rates to domestic partners as married couples.

GUERRIERO: I would encourage his critics to compare his pro-gay record against any governor in America, Democrat or Republican.

LAWRENCE: Patrick Guerriero heads the Log Cabin Republicans and its 20,000 members. His group invited the governor to speak.

KAREEN CRARTON, PROFESSOR, UNIVERSITY OF SOUTHERN CALIFORNIA: If the strategy is simply to appear moderate to the public at large, then maybe this is going to be enough.

LAWRENCE: USC Professor Kareen Crarton says gay voters will demand more than from Schwarzenegger than a photo-op.

CRARTON: So, from the perspective of the people in the Log Cabin Republicans, I'm sure this has to be a down payment on something much larger in the future.

(END VIDEOTAPE)

LAWRENCE: Political analysts say Governor Schwarzenegger can only go so far, or else he risks alienating his conservative base, at a time when he really needs to be adding to them. After all, the governor remains a Republican governor in a heavily Democrat state -- Wolf.

BLITZER: All right, Chris, thanks very much -- Chris Lawrence in L.A. for us.

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