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Latest Collision Between Congressional Democrats and President Bush on the war in Iraq and Republicans Breaking With the President. White House vows to Invoke Executive Privilege in the Scandal Surrounding the Firing of Eight Federal Prosecutors

Aired July 9, 2007 - 16:00   ET

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


WOLF BLITZER, HOST: Thank you very much, guys.
Happening now, Senate Democrats compare Iraq to a deck of cards that's crashing down on U.S. troops. So they're urging even more Republicans to put pressure on President Bush to change course in the war.

Also, fears of a failed state.

What might happen if U.S. troops pull out of Iraq?

I'll ask the former secretary of state, Madeleine Albright.

And some are questioning Fred Thompson's views on abortion. This after a report says the potential presidential candidate once did work for a group that favors abortion rights.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

Congress is back in town after a break. And Senate Democrats are wasting no time blasting the Bush administration's Iraq policy. They say the war is headed in a very dangerous direction and that one way to change that is for more Republicans to join them in putting pressure on the White House. Democrats hope for brood bipartisan support for anti-war measures they'll be taking up in the coming days.

Our Congressional correspondent, Dana Bash, is up on Capitol Hill.

She's watching all of this unfold -- a lot of the strategy, Dana, depends on Republicans in increasing numbers joining the Democrats.

DANA BASH, CNN CORRESPONDENT: That's exactly right. And that's why Democrats, you saw today, trying to capitalize on recent Republican defections -- three prominent Republican defections, especially in the past several weeks -- saying the president must change course in Iraq.

Democrats also know that senators, Republicans and Democrats, are coming back from a week at home, likely hearings earfuls from -- from constituents who are, really, essentially fed up and frustrated with the war, as public opinion polls show. So today the Senate majority leader, Harry Reid, as I said, tried to capitalize on that and encouraged Republicans to vote with Democrats this coming week to start to bring troops home. The Democrats' proposal is starting to bring troops home in 120 days.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MAJORITY LEADER: For those Senate Republicans who are saying the right things on Iraq, they must put their words into action by voting with us to change course and responsibly end this war.

(END VIDEO CLIP)

BASH: The problem, though, for Democrats is that Republicans, even those who have come out -- and pretty harsh words -- said that the president's policy is not working, they are also saying that they do not feel comfortable in voting with Democrats on what they call precipitous withdrawal from Iraq.

(BEGIN VIDEO CLIP)

SEN. SUSAN COLLINS (R), MAINE: What many of us are looking for is the new strategy that would not be a precipitous pullout, with all the problems that that would cause, but rather a planned exit over the next year -- a carefully planned one, a new diplomatic effort. That's what many of us are seeking.

(END VIDEO CLIP)

BASH: So what's going on right now behind the scenes, Wolf, is a flurry of activity. Republicans like Susan Collins of Maine you just heard from. Others like John Warner of Virginia are trying to figure out how and if they can actually get together a proposal by Republicans and Democrats that will actually essentially put their money their mouth is, so to speak, and have legislation on the Senate floor in the next couple of weeks that will get support from 60 senators that will force the change in the president's Iraq policy -- Wolf.

BLITZER: And the Democrats are under enormous pressure from the base, especially from the left, to deliver and to get a formal timeline for a troop withdrawal and to stop at nothing short of that. And that's having an enormous impact on the strategy right now.

BASH: It is. And that is really the heart of the problem, if you will, for the Democratic majority, in getting 60 votes for anything here. Because, on the one hand, you have the left, who Democrats privately admit, there are very, very impatient and very intent on Democrats not settling for anything short of essentially immediate withdrawal. But they also know that in order to get Republicans like Susan Collins and others who have come out in recent weeks, they can't be that strident, if you will, in their demand for the troops to come home.

And that is why, at the end of the day, it might, despite the overwhelming opposition that we're hearing, or at least growing opposition from Republicans, we might be where we started, which is a deadlocked Senate when it comes to actually legislating a change in course in Iraq.

BLITZER: All right, Dana.

Thanks very much.

Dana is watching this unfolding story on the Hill.

The renewed debate offer Iraq providing fresh talking points for the various presidential candidates. Let's go to our senior political analyst, Bill Schneider.

He's joining us here in Washington.

How is this affecting the debate in the Senate right now, the candidates who happen to be senators -- Bill?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well, the Democratic candidates will now have a chance to showcase their anti- war credentials, as the spotlight shifts to the floor of the United States Senate.

(BEGIN VIDEO TAPE)

SCHNEIDER: (voice-over): With the Iraq War as the big issue in the presidential campaign, the Senate looks like the place to be, especially for Democrats in the next few weeks, as the Senate considers measures that would force President Bush to change policy.

PAUL KANE, WASHINGTONPOST.COM: They get to stand on the United States Senate floor, actually propose real legislative maneuvers that, you know, could bring -- if enacted in the law -- could bring this war to a close.

SCHNEIDER: Two maneuvers to end the war have already been tried. Both failed. One was to impose benchmarks to force the Iraqi government to accept the political settlement. The White House accepted that idea. But this week's progress report is likely to indicate that the Iraqi government will not meet the benchmarks.

A second move was to cut funding for the war. Three Democratic contenders for '08 voted to do that -- Senators Clinton, Dodd and Obama. But the funding bill passed without them.

The Senate now begins debate on three more options to end the war. One is a measure co-sponsored by Senators Reid and Feingold to withdraw troops by the end of March. Dodd has already embraced that measure, which is favored by the Democrats' anti-war base.

KANE: Their top choice would be the Reid-Feingold measure, because that's a very definitive piece of legislation. It says when -- when the troops must come home.

SCHNEIDER: Other '08 Democrats are likely to support it. SEN. BARACK OBAMA (D), ILLINOIS: We can still get our combat troops out by next year. And if we have our combat troops out by next year, that allows us to refocus our attention.

SCHNEIDER: Senators and Clinton and Byrd are sponsoring a measure that would revoke the authority Congress gave President Bush to wage war in October 2002.

SEN. HILLARY RODHAM CLINTON (D), NEW YORK: That's why I believe it's essential that we change course in Iraq.

SCHNEIDER: It's important for her because she voted to authorize the use of force.

KANE: It essentially gives a do-over vote to the October 2002 vote.

(END VIDEO TAPE)

SCHNEIDER: Option three, a measure to implement the recommendations of the Iraq Study Group, is the least popular among the Democratic Party's base. But it may stand the best chance of passing because it can get more Republican support -- Wolf.

BLITZER: Will the debate that's unfolding this week and next week on the Senate floor have some opportunities for Republicans out there?

SCHNEIDER: Oh, yes it does, especially John McCain, who was just in Iraq. McCain is playing to a Republican audience. The Republicans are also unhappy about the war. They want to win. So we may hear from Senator McCain how he thinks we can do that -- Wolf.

BLITZER: BLITZER: All right, in the next hour, we're going to be hearing from our White House correspondent, Suzanne Malveaux, on the discussions unfolding there on what the president should be doing in the coming days and weeks, as well.

Meanwhile, the answer coming from the White House is no. The White House telling Congress the administration will not give in to some Congressional demands regarding the firings of those U.S. attorneys.

Our White House correspondent, Ed Henry, has more -- Ed.

ED HENRY, WHITE HOUSE CORRESPONDENT: Wolf, the White House today inched closer to a constitutional clash with Congress, as the president reasserted that he will invoke executive privilege in the fight over Democratic demands for documents in the U.S. attorney case.

In a letter to Democratic leaders, White House Counsel Fred Fielding said the president will also shield from testimony two former White House aides, Political Director Sara Taylor, as well as former Counsel Harriet Miers, in their roles over the firings of eight federal prosecutors.

White House Spokesman Tony Snow insisted there is an important principle at stake -- the ability of the president to get candid advice from his staff.

(BEGIN VIDEO CLIP)

TONY SNOW, WHITE HOUSE PRESS SECRETARY: There does have to be, for politicians who have very difficult jobs, the ability to get honest counsel from people who are working for them. That's all this is about. This is not trying to throw a big smoke cloud over how the government works.

(END VIDEO CLIP)

HENRY: But Democrats John Conyers and Patrick Leahy are not buying that argument. They're now threatening to file contempt of Congress charges against the White House. This case will likely land in federal court and the big question will be whether it gets settled before the president leaves office. Some Democrats charging that the real goal of the White House is to run out the clock -- Wolf.

BLITZER: Ed Henry at the White House.

Thanks very much.

Let's check in with Jack Cafferty.

He's back.

He's in New York.

He's got The Cafferty File.

Welcome back -- Jack.

JACK CAFFERTY, CNN CORRESPONDENT: Thank you.

You go away for a week, nothing changes.

It sounds pretty much like before long now everybody in Iraq is going to have a gun. Top Shiite and Sunni politicians are now calling on Iraqi civilians to arm themselves -- those who haven't already.

Following an extraordinarily bloody weekend in that country, violence killing upwards of 250 Iraqis, lawmakers are urging ordinary Iraqi citizens to take up arms to defend themselves. A Shiite lawmaker says authorities should help residents arm themselves and the country's Sunni/Arab vice president agrees, saying people have a right to expect protection from the government and security forces.

But in the case of Iraq's instability: "the people have no choice but to take up their own defense."

These calls come at a time of growing frustration with the inability of Iraq's security forces to prevent these ongoing attacks.

So our question is this -- where is Iraq headed if Iraqi politicians are now urging the civilian population to arm themselves?

E-mail caffertyfile@cnn.com or go to cnn.com/caffertyfile -- Wolf.

BLITZER: Things pretty much the same after a week off, Jack.

Thank you.

CAFFERTY: You know, in Washington, in Iraq, it's just -- it's all the same.

BLITZER: All right, Jack, stand by.

Thank you.

Coming up, the man many conservatives love now is seeing his conservative credentials questioned. There are claims potential presidential candidate Fred Thompson once lobbied for an abortion rights group.

Also, as lawmakers debate changing course in Iraq, what might happen if U.S. troops pull out?

I'll ask the former secretary of state, Madeleine Albright. She's standing by live.

And anti-war activist Cindy Sheehan tells the House speaker, Nancy Pelosi, move to impeach President Bush or else. We'll tell you what she's threatening to do.

Stick around.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: He's not yet formally a presidential candidate. But he is a well known conservative with many people comparing his politics to those of Ronald Reagan. And yet some are now questioning just where "Law and Order" actor Fred Thompson stands on a key issue so many conservatives care deeply about. That would be abortion.

Mary Snow is joining us from New York.

She's watching this story.

Now, tell us about this new report that's come out linking Fred Thompson to this group that favors abortion rights for women.

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, it's a classic case of she said/he said.

Did Thompson once agree to work for an abortion rights group?

(BEGIN VIDEO TAPE)

SNOW: (voice-over): If Fred Thompson decides to run for president, he's counting on the support of anti-abortion social conservatives. That strategy may have taken a hit Saturday, when "The (ph) Los Angeles Times" reported that in 1991, Thompson agreed to work for a pro-abortion rights group, the National Family Planning and Reproductive Health Association.

According to the minutes of the group's September 14th, 1991 meeting, which CNN has obtained, Judith DeSarno, the group's president at the time said, the association had hired Thompson's as counsel to, "aid us in discussions with the administration."

Neither the group nor anyone else has come forward with any other written evidence that Thompson was hired to work with the abortion rights group.

The former senator's spokesman Mark Corallo, told CNN: "Fred Thompson has no recollection of doing any work on behalf of this group. He may have been consulted by one of the firm's partners, who represented this group in 1991. Former Democratic Congressman Michael Barnes, who was Thompson's law partner at the time, told CNN that he told her to talk to Thompson for help getting the White House to rescind a rule prohibiting abortion counseling at federally funded clinics. From that point on, he said the only person who worked on it was Fred.

John Sununu, White House chief of staff at the time, told CNN today that: "I did not talk to Fred at all about this and I have no awareness whatsoever about Fred lobbying about this."

UNIDENTIFIED MALE: Fred Thompson is not pro-life.

SNOW: Thompson has already been feeling the heat from some anti- abortion activists. One posting on YouTube shows his answer in a 1994 Senate debate to a question about supporting or opposing laws permitting abortion on demand.

(BEGIN VIDEO CLIP)

FRED THOMPSON (R), FORMER U.S. SENATOR: I do not believe that the federal government ought to be involved in that process.

(END VIDEO CLIP)

SNOW: Thompson's voting record in the Senate is consistently anti-abortion. One issue where he did part ways with social conservatives was the McCain-Feingold campaign finance bill. Thompson supported it, while many conservatives opposed it.

(END VIDEO TAPE)

SNOW: Now all this attention about Thompson's abortion record is coming before he has even formally said if he's running. We can expect a lot more of it if he does decide to run -- Wolf.

BLITZER: BLITZER: Mary, thanks very much.

Already, some conservatives are reacting to this report. Paul Weyerich, the president of The Free Congress Foundation, had this to say about the charge that Fred Thompson once lobbied for an abortion rights group. He told the "L.A. Times" -- and I'm quoting now -- "that would not be helpful," and added, "With all the people who keep changing their minds on abortion, that's got to be unsettling."

Joining us now, our senior political correspondent, Candy Crowley.

Surely, this is not what the Fred Thompson camp would like to be discussing right now.

CANDY CROWLEY, CNN CORRESPONDENT: No. But it is probably what they're expecting. They know that the minute he gets into this campaign, as Mary said, it only begins to go upwards -- ratchets upward the details of his past, of how he stood on all of these issues.

I will say that a number of conservatives when you talk to them, do say, when they look at Mitt Romney, who also has, you know, flip- flopped, changed his mind, however you want to put it, on abortion -- Dr. Richard Land, who, as you know, is in the policy arm of the Southern Baptist Convention says, listen, you know, with abortion it's all about peopling converting and changing their minds. So it is not necessarily something that's going to stop conservatives and social conservatives from supporting Fred Thompson.

BLITZER: So what does that mean?

Is it or is it not going to hurt him, potentially, with social conservatives?

CROWLEY: You know, they keep saying in the Thompson non-campaign that, in fact, he did have an 80 plus percent voting record with social conservatives. McCain-Feingold was the one thing that really stuck in their craw. But beyond that, he says he also has changed since seeing the sonograms of his two young daughters. So there is a conversion factor there, as well.

BLITZER: When is he finally going to make his announcement?

CROWLEY: (LAUGHTER). Oh, yes.

BLITZER: You know, we thought July 4th was the sort of tentative timetable?

CROWLEY: Oh, mid to late July. It keeps -- you know, this is the campaign that has to start at 70 miles per hour. They have to have all the nuts and bolts in place before they enter, because it will be scrutinized like you wouldn't believe. So they've got to get all that together. And I think that's we what's delaying this event.

BLITZER: And there's going to be a huge paper trail. There's no doubt he's getting ready for that once he makes that announcement.

Thanks very much, Candy, for that.

The next presidential debate, by the way, will be on July 23rd in Charleston, South Carolina. CNN is teaming up with YouTube. It will be the first debate where all of you can submit your questions to the candidates online.

Still ahead, a major figure in the anti-war movement and her political threat to the most powerful woman in the House of Representatives. Cindy Sheehan wants the House speaker, Nancy Pelosi, to move to impeach President Bush -- or else.

And regarding Iraq, is it in danger of becoming a failed state?

I'll ask the former secretary of state, Madeleine Albright.

Stick around.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Carol Costello is on assignment.

Brianna Keilar is monitoring stories incoming to THE SITUATION ROOM right now -- Brianna, what do you have?

BRIANNA KEILAR, CNN CORRESPONDENT: Wolf, Alzheimer's patients will soon be able to take medication through a skin patch. Just a short time ago, the manufacturer of the patch announced that it had gained federal approval and would be available soon. Now, the drug in the patch treats mild dementia and is already available in pill form. But the patch is believed to provide a more consistent dose.

And a jury in London has convicted four men of plotting to bomb London's transport system two years ago. Jurors are continuing to deliberate the cases of two other defendants. The six are accused of plotting to set off bombs hidden in backpacks on subway trains and a bus in London in 2005, but the bombs failed to explode. It would have come two weeks after similar attacks killed 52 people in London.

And residents and visitors to Pennsylvania are having to do without a variety of public services due to a partial government shutdown. Democratic Governor Ed Rendell is locked in a legislative battle with Republican lawmakers over the state's budget. Late last night, the governor put about 24,000 state workers on unpaid leave because they're not considered to be critical to health or safety.

And leaders of the NAACP are hoping that a symbolic funeral will help lay to rest the lose of a longstanding racial slur. At its annual convention in Detroit this morning, the group held a symbolic funeral march for the "N" word. Julian Bond, the group's chairman, points out that when it comes to racially insensitive remarks, African-Americans must hold themselves to the same standards that they hold others.

And we're going to have much more on this story from Jason Carroll in the next hour -- Wolf.

BLITZER: All right, Brianna, thank you.

Still to come, Iraq -- a cauldron of violence, with U.S. troops clearly still there.

So what might happen if the U.S. were to pull out?

Standing by live, the former secretary of state, Madeleine Albright.

And in Iraq, fears of what one top official is calling a hurricane in Iraq.

Think it's bad now?

It could be, he says, a whole lot worse. It concerns the Iraqi prime minister and how much confidence Iraqis have in him.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Happening now, that heat wave that hit much of the country last week has now moved over the East Coast. We're going to show you how people are dealing with it; take you out West, as well, where wildfires are still burning out of control in some areas. That's coming up.

Also coming up, it reads like a cold war suspense novel, complete with charges of espionage and political thuggery. But rather than the Kremlin, this story revolves around the state capital building in New York.

And former Panamanian strongman Manuel Noriega is due to be released from a U.S. prison. He says he's a changed man and just wants to live quietly. But several foreign governments are saying not so fast.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

At least 12 people were killed in attacks around Baghdad this morning and police found the bodies of a dozen more people who were kidnapped over the weekend. The violence coming as Iraq's prime minister is struggling to retain his position.

CNN's Hala Gorani is joining us from Baghdad with details -- Hala.

HALA GORANI, CNN CORRESPONDENT: Wolf, the political crisis in Iraq is intensifying. Nuri al-Maliki is weakened and isolated. There are still two major political blocs that are not attending cabinet meetings and boycotting parliamentary sessions. Those are the Sunnis and the Sadirists, those loyal to the radical anti-American Shiite cleric, Muqtada al-Sadr.

There were reports over the weekend that the Sunni bloc was intending on introducing a motion of no confidence against the Shiite prime minister, Nuri al-Maliki. The Iraqi vice president, a Sunni himself, vehemently denied those reports and said the door is still open for negotiation with the prime minister, but also indicated that if he does not feel like he's included in the executive decision- making of the government, that he will not hesitate to leave.

It is crunch time for Nuri al-Maliki. He is expected to majorly reshuffle his cabinet.

As for the Americans, a government teetering on the brink and a very bloody weekend here in Iraq may indicate that there will be no quick fix solutions over the summer in this country -- Wolf.

BLITZER: Hala Gorani reporting for us from Baghdad.

More Republican senators, meanwhile, are breaking ranks with President Bush on the Iraq War. And that's leading to some speculation that the administration itself may be forced to consider a change of strategy sooner than they'd hoped.

The White House insists no change is imminent.

But what would happen if the U.S. were to pullout and pullout relatively quickly?

The former secretary of state, Madeleine Albright, is joining us here in THE SITUATION ROOM.

Madam Secretary, thanks for coming in.

MADELEINE ALBRIGHT, FORMER SECRETARY OF STATE: Good to be with you, Wolf.

BLITZER: Well, what would happen if there were a failed state in Iraq right now?

Because a lot of people suspect that the government of Nuri al- Maliki is really shaky right now. And yesterday the national security adviser of Iraq told me that if that government falls, there would be a hurricane. That as bad as it is right now, it would be so much worse. The consequences, the stakes, for the U.S. would be enormous.

ALBRIGHT: Well, there are no good options here, Wolf. I mean this is a war that has been so terribly botched. And I have said over and over again that I think this is going to go down in history as the greatest disaster in American foreign policy.

BLITZER: But what do we do now with the deck that we -- the hand -- the deck of cards that we have?

ALBRIGHT: I think we have to leave. But we have to leave in a systematic way, to make sure that things are secure, that we do not leave our troops in more danger.

And I have just come back from Turkey. They are very...

(CROSSTALK)

BLITZER: Which is a neighbor, obviously, of Iraq.

ALBRIGHT: A neighbor, and obviously many more problems because of the Kurdish population in the north and the Kurds that live in Turkey.

And what they are worried about is complete chaos. And I do think that, as we pull out, which I believe we have to do, because it's unclear about the mission, I think we have to be concerned about where we leave troops. And we might consider leaving some troops in the north, in order to make sure that...

BLITZER: In Kurdistan.

ALBRIGHT: In Kurdistan.

BLITZER: And, basically, to reassure the Turks not to invade, because the Turks, what, have about 150,000 troops not far from the border of Iraq, Kurdistan, in the north.

ALBRIGHT: Right.

And they are now talking, because they are concerned about a group, PKK, which is known as a terrorist group, making inroads into Turkey and destabilizing the situation there. I just used that as an example of what happens. And these are the unintended consequences of this very badly planned expedition.

BLITZER: Because, right now, we're hearing from top U.S. military commanders, Major General Rick Lynch -- I spoke with him yesterday -- saying that, if the U.S. were to withdraw quickly, it would be a mess, because the Iraqi troops, right now, the political system over there, they're not ready to take charge.

ALBRIGHT: Well, the bottom line is, it is a mess, period, whether we're there or not there. And I think that the question is how to do -- how to leave in a systematic way, because our the -- mission for our troops is very unclear.

And the administration is obviously very unclear about what it thinks it's doing. I mean, your lead-in to this, in terms of lowering expectations, trying to figure out whether to change course, they have to change course. This course is not working.

BLITZER: But, if there's a failed state in Iraq, the Sunnis, the Shia, the Kurds, they're at odds with each other, the civil war explodes, that -- that creates a vacuum for al Qaeda, really, to establish a base there, from which, potentially, they could do a whole lot of damage.

ALBRIGHT: I think it is important for us to have a number of troops there to deal with al Qaeda.

But this is the reason that it is essential to have some kind of a regional diplomatic solution to this, so that -- because it does create a vacuum. And those are the kinds of things that have not happened.

We have said over and over again -- the administration has said military, but there has to be a political solution.

And, listening to your report now, it's very clear that the political bottom is falling out of this, and there are no good options.

BLITZER: So, what's your worst-case scenario? What do you fear most?

ALBRIGHT: The worst-case scenario, I think, is total splitting up of Iraq.

BLITZER: Into three different...

ALBRIGHT: In three different -- and that comes basically because we don't know what the effect of that would be.

So, I would hope that there would be increased regional autonomy, with a central government of some kind, but not a total disintegration of Iraq, because of how it affects countries in the region.

BLITZER: Has Iran, Iran, a huge neighbor of Iraq, been a huge winner as a result of what's happened these past four years?

ALBRIGHT: Definitely. If you were to say, who really comes out ahead of this, I would say Iran, because it is now a regional power, potentially, even more so. They had not been in that position. And -- and we -- in many ways, what is such an irony is, we need them, in terms of trying to figure out how to stabilize Iraq in some way, and which is a reason for us to be talking to Iran.

BLITZER: What about the Israeli/Palestinian situation right now? You were just in the region. You have spent some time looking at it. What would you do differently than Secretary of State Condoleezza Rice right now in trying to work with the parties? I assume you would like to strengthen the Palestinian Authority president, Mahmoud Abbas?

ALBRIGHT: I -- definitely.

I think he needs to show that he can deliver. And this is, frankly, something, Wolf, that should have been done a long time ago. You know, the minute he was elected as president, or even before that as prime minister, we should have seen that strengthening him in a way, so that they could deliver services, is something that's very important.

I think there has to be a way to show that his Fatah government can deliver, and that that is the support that -- so that there is somebody to talk to Prime Minister Olmert of Israel. I think that, when people were looking at a two-state solution, they weren't talking about a two-Palestinian-state solution.

BLITZER: Should the U.S. be talking to Hamas right now?

ALBRIGHT: I think it's hard. They are on the terrorist list.

But I do think what should be trying to happen is to split away the terrorists element of Hamas, to see whether there's some way that there can be a discussion with them. But we cannot deal with Hamas as long as it's a terror -- has a terrorist element.

BLITZER: But is it realistic to think that they might change, accept Israel's right to exist, renounce terrorism, accept previous Israeli-Palestinian agreements, which have been the conditions the U.S., the Europeans, the Israelis have put forward?

ALBRIGHT: I think it is possible that they might. But they have to be pushed into that.

And I would hope that other countries that do deal with them would be able to persuade them that that is the better part of valor. They clearly were trying to accomplish something when they released the BBC correspondent. They were trying to show that they could be humane.

They have, in some ways, increased the security in Gaza. But, until they really live up to those conditions, there's no way that the United States can deal with them.

Other countries, though, can persuade them that they would be better off with recognition of Israel.

BLITZER: And a lot of Israelis would like them to release that Israeli soldier, Gilad Shalit, who has been held now for more than a year. They think that would be a gesture as well.

Madeleine Albright, thanks for coming in.

ALBRIGHT: Good to be with you, Wolf. Thanks.

BLITZER: Coming up: Cindy Sheehan suggests she is not afraid of political battle with the most powerful woman in the U.S. House of Representatives. The anti-war activist has drawn a line in the sand with a brazen threat.

And some suggest they would be a dream team, Democrats Hillary Clinton and Barack Obama. We will discuss that possibility in our "Strategy Session."

Stick around. We will be right back.

(COMMERCIAL BREAK)

BLITZER: Cindy Sheehan is threatening to take on Nancy Pelosi. The former face of the anti-war movement is giving the House speaker an ultimatum.

Let's bring in Tom Foreman. He's here in THE SITUATION ROOM covering the story.

What's Cindy Sheehan threatening to do, Tom? TOM FOREMAN, CNN CORRESPONDENT: Well, this is really political strong-arming, is what it is. What she's saying, basically, is, if Nancy Pelosi will not introduce articles of impeachment against President Bush, then she, Ms. Sheehan, will take on the House speaker when she's up for reelection next year.

(BEGIN VIDEOTAPE)

CINDY SHEEHAN, MOTHER OF KILLED U.S. SOLDIER: They killed my son.

UNIDENTIFIED MALE: Ma'am?

FOREMAN (voice-over): We got to know Cindy Sheehan two summers ago. Her son Casey was killed in Iraq a year earlier, and Sheehan came to Crawford, demanding to speak to President Bush, who was spending August at his Texas ranch.

SHEEHAN: I'm going to go see the president.

FOREMAN: She never met with Mr. Bush, but she was joined by thousands of protesters during her 26-day vigil. And Sheehan became the face of the anti-war movement.

SHEEHAN: I want to ask the president...

FOREMAN: Early last year, Sheehan threatened to run against Senator Dianne Feinstein, unless the California Democrat tried to hold up the Supreme Court nomination of Samuel Alito. Feinstein voted against Alito, but she didn't try to hold up the vote. Sheehan did not run against Feinstein.

SHEEHAN: I have decided not to run. But I am calling on all Californians and Americans to support all anti-war candidates.

FOREMAN: Two months ago, Sheehan announced she was leaving the anti-war movement, saying -- quote -- "I'm going to take whatever I have left and go home."

But now she says she will run against Pelosi as an independent, if the House speaker doesn't introduce articles of impeachment against the president by July 23. That's when Sheehan and her supporters arrive in Washington, after a two-week caravan that starts near the president's Texas ranch.

SHEEHAN: And I want Congress to impeach George Bush and Dick Cheney. I want them to do the job that we elected them for.

FOREMAN: That was Sheehan just three months ago. Now, she says, Democrats and Americans feel betrayed by the Democratic leadership.

Pelosi's office responded yesterday, saying, the speaker remains focused on ending the war in Iraq, and believes July will be a month of action.

(END VIDEOTAPE)

FOREMAN: In a political sense, this is one of the longest of long shots. But, you can ask, how would she fare against the House speaker, if she actually did this? Well, Pelosi won 81 percent of the vote in last year's reelection in her district. They are very fond of her there.

But President Bush is extremely unpopular in Pelosi's San Francisco area, winning only 14 percent of the vote there in his 2004 reelection. Still, what voters would have to do is have their dislike of the president become so enormous that it would outweigh their like of Ms. Pelosi. And that seems very unlikely.

BLITZER: Pretty liberal Democratic district.

FOREMAN: She's fairly safe there...

BLITZER: Yes, I would say.

FOREMAN: ... no matter what Ms. Sheehan does.

BLITZER: I would say.

All right, thanks very much for that -- Tom Foreman reporting.

Cindy Sheehan went online, by the way, today, to explain her challenge to Nancy Pelosi.

Let's go to our Internet reporter, Jacki Schechner.

What is Cindy Sheehan saying about Nancy Pelosi?

JACKI SCHECHNER, CNN INTERNET REPORTER: Well, Wolf, she's saying it's nothing personal against Nancy Pelosi, but she feels like the -- ending the occupation in Iraq means ending funding and also holding the Bush administration accountable.

She says that it's the constitutional and moral duty of Nancy Pelosi to call for impeachment and that wars need to be backed up by action. She wrote all of this on DailyKos.com, the top liberal blog, where we have seen her blog often before.

At least one other writer on the blog is happy with Sheehan just for bringing the word impeachment into the media. But we're not seeing a lot of the other top liberal blogs basically take up Sheehan's cause at this point.

What we are seeing are a lot of conservative bloggers weighing in on this decision, some saying it would be worth the price of admission just to see Pelosi and Sheehan square off, others saying that, even though Sheehan doesn't have a chance, what they are expecting to happen is, some of the people in the left who have embraced Cindy Sheehan along the way will then try to marginalize her, if she decides to run against the speaker of the House.

But, regardless of opinion out there, there is one image that is making the rounds on both the left and the right. It is this picture of the two women together that is archived on Nancy Pelosi's congressional Web site. They met in September of 2005 -- Wolf.

BLITZER: Jacki, thank you -- Jacki Schechner, our Internet reporter.

Up next in our "Strategy Session": more and more Republicans looking for a way out in Iraq.

(BEGIN VIDEO CLIP)

SEN. SUSAN COLLINS (R), MAINE: What many of us are looking for is a new strategy that would not be a precipitous pullout, with all the problems that that would cause, but, rather, a planned exit over the next year.

(END VIDEO CLIP)

BLITZER: But is there also growing dissension within the White House about what to do next?

And would a Clinton-Obama ticket be unbeatable in 2008? Or would it be a target of opportunity for the GOP? All that, lots more, with Donna Brazile and J.C. Watts -- they're standing by here live right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: As we told you earlier, President Bush is losing support in his own party for his Iraq war strategy. Could he be forced to consider changing his plans for U.S. troops earlier than he had hoped?

Joining us now for our "Strategy Session," Democratic strategist Donna Brazile and former Republican Congressman J.C. Watts.

Guys, thanks for coming in.

Let me play a little clip for you from Harry Reid, the Senate majority leader. This is what he said today.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MAJORITY LEADER: We have an opportunity in the next couple of weeks to truly change our Iraq strategy, to make America more secure, more safe. The question is whether President Bush and the Senate Republicans will join in that effort. I hope they do. The American people expect this change, and they expect it now.

(END VIDEO CLIP)

BLITZER: If there's going to be significant change, Donna, the Republicans, or at least more of them, have to come on board. You have got to get to the magic number of 60 in the U.S. Senate. The Democrats didn't get that -- that close the last time. Is it realistic to think that 60 members of the U.S. Senate will support a timeline for with withdrawing U.S. troops from Iraq? DONNA BRAZILE, CNN POLITICAL ANALYST: Well, already, four Republican senators have signed on to the Ken Salazar bill, of Colorado, which calls for a troop withdrawal beginning next March 2008.

BLITZER: That calls to support the Iraq Study Group, which is sort of -- it's nuanced, but some would interpret that as starting some sort of withdrawal around that time.

BRAZILE: I count several Republicans being on record now, going on record, in support of some form of troop withdrawal or change of course. And they are not just giving lip service. They're actually -- they're telling the president that it's time to huddle with Senator Reid and others to come up with a new strategy, so that our troops can come home.

BLITZER: There are -- we have, on our count -- and I'm going to put up on the screen -- eight Republican incumbent senators who are all up for reelection next year who are increasingly -- take a look behind you -- you can see all those Republican senators -- many of them to, you know, varying degrees, but they're raising serious questions. They're dissenting from some of the administration's strategy.

Other Republicans who are worried about getting reelected, are they going to join this list?

J.C. WATTS, CNN POLITICAL ANALYST: Wolf, this is the ugly thing about fighting a war in -- with a campaign, with an election, within 18 months of where we are today.

I think September is going to be an interesting month for the administration. They have got -- I think these members, these senators, they're wanting to have something tangible from General Petraeus' report, the report that he's going to give.

BLITZER: But some of these Republicans don't even want to wait anymore until September. Richard Lugar -- I spoke with him yesterday -- he's making it clear, he thinks there's -- right now, there's got to be some major policy changes.

WATTS: Well, and I thought Richard Lugar, I thought that was a real body blow, when he came out to being opposed to the current strategy.

Now, what they're saying is, Wolf -- you have not had anybody at this point, or the majority of those members, saying, let's pull out. They haven't taken the Democrat position. But I think what they're saying, reading between the lines, is, give us something that we can hang our hat on. Give us something that is tangible.

I think they're hoping that these reports in September will give them that.

(CROSSTALK) BLITZER: And, you know, it's interesting, too, Donna. "The New York Times" had a front-page story today, saying there are cracks developing even within the White House, that there are some now dissenting from the strategy, pragmatists, as opposed to the idealists who are the more hard-line advocates of maintaining the status quo.

You know, when Republican senators read that kind of stuff and hear about maybe there's even some changes coming from the White House, they are afraid the rug is going to be pulled out from under them, and they're going to start beginning to express their concerns as well.

BRAZILE: No question, Wolf.

Look, I counted seven. And you just showed eight. John Warner -- John Warner has said repeatedly that he's going to start talking now, in July, when the Pentagon will give their interim report. This report will tell us if the Iraqi government has met any of their benchmarks. And, so far, they have not met anything.

WATTS: But I think, of note -- I think it's important to note that John has said that. But I think it's also important to note that John Warner has never been a pull-out-at-all-costs senator.

(CROSSTALK)

BLITZER: Well, I don't think any of them really are at all costs.

WATTS: And that's what I'm saying, that they're saying -- hey, I think they want to try and be thoughtful. They want to be responsible in this situation.

But, at the same time, there are some political pressures that they are feeling.

BRAZILE: But we can begin to transition our mission, and give the Iraqi troops more of a frontline position and killing the insurgents or doing whatever they are doing.

But our troops need to begin to come home, and that's what many of the American -- that's what 70 percent of the American people believe.

(CROSSTALK)

WATTS: And I even think, when you use the word transition, I think even transition has to be defined. And I think these senators will play a critical role in that, but...

BLITZER: This debate will unfold over the next few days on the Senate floor.

Let's make a quick turn to presidential politics. Some people are suggesting a dream Democratic ticket would be Hillary Clinton running for president, Barack Obama her running mate, running for vice president.

Some are suggesting, on the other hand, that could be a nightmare for the Democrats.

What do you think?

(CROSSTALK)

BRAZILE: Well, I think those people should just wake up.

Barack Obama has a solid position right now. He's right behind Hillary Clinton. Some polls have him down 20 points. Some polls, you know, he's down maybe 10 points. I really believe it's still early. But, if Mrs. Clinton or Mr. Obama wins the nomination, I'm sure that they will put each other on their short list.

BLITZER: You think?

WATTS: Well, I have done a lot of traveling over the last 10 days, Wolf and Donna. I have talked to a lot of people, a lot of Republicans, a lot of Democrats as well.

I think Barack has to feel pretty good about how he's positioned right now. One of the things I picked up I thought was very interesting. People are saying, over the last 28 years, or in the next election, for 28 years, we have had a Bush or a Clinton on the ticket. You know, Senator Obama's saying, let's turn the page.

Is that resonating? We haven't seen it show up in his numbers, but he's a fund-raising machine. He's positioned very well. I still wouldn't say that the chickens have hatched on this.

BLITZER: She's ahead in the polls, but he's ahead in the fund- raising, which, in politics, as both of you know, is significant.

WATTS: That's right.

BLITZER: Guys, thanks very much.

BRAZILE: Thank you.

BLITZER: And still to come: Jack Cafferty with your e-mail.

Also, some of the people Michael Moore targets are now targeting his new film, "Sicko." Michael Moore, he is standing by to join us live here in THE SITUATION ROOM. He will be responding to his critics. And I will ask him which presidential candidate he thinks could best improve the U.S. health care system.

And nearly 20 years in custody, but soon to be free. Could Manuel Noriega get out of prison, only to go back to jail?

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

(COMMERCIAL BREAK)

BLITZER: Now, after eight years and nearly 100 million Internet and text message votes, the results are in.

Here's a look at the New Seven Wonders of the World. Chichen Itza is the most famous Mayan temple city. It was built around 880 A.D. The ancient Inca city of Machu Picchu was lost for nearly 300 years before being rediscovered in 1911. The 125-foot-high statue Jesus known as Christ Redeemer stands over Rio de Janeiro. The Colosseum in Rome was built to celebrate the glory of the Roman Empire.

In Jordan, Petra is perhaps the most spectacular ancient city remaining in the modern world. The nearly 400-year-old Taj Mahal is regarded as one of the finest examples of Muslim art in India. China's Great Wall stretches more than 4,000 miles, took over 2,000 years to compete. The Pyramids of Giza in Egypt are the lone surviving member of the original Seven Wonders of the World.

Let's go to Jack Cafferty with some serious analysis of these Seven Wonders of the World.

What do you think, Jack?

CAFFERTY: What happened to the old ones, I mean, the other ones?

BLITZER: Not worthy.

CAFFERTY: According to whom?

BLITZER: Millions of people who voted on the Internet.

CAFFERTY: I mean, just any old beer-drinking schlump in his burned-out sofa with a half-smoked cigarette...

(LAUGHTER)

CAFFERTY: ... can decide what the Seven Wonders of the World are?

BLITZER: Apparently.

CAFFERTY: Well, I don't think that's right.

BLITZER: All right. Let's change it.

CAFFERTY: I think you -- this should be up to people like you, Wolf.

BLITZER: All right.

CAFFERTY: The question this hour is: Where is Iraq headed, if Iraqi politicians are now urging civilians there to arm themselves?

Jamieson in Pennsylvania writes: "Arming the entire populace of Iraq seems to indicate that their political leaders expect an all-out civil war, not just random bombings. After all, what good is a gun against a car bomb?"

Jackie in San Francisco: "Sounds like Iraq will become exactly what the NRA envisions for America."

Milford in Florida: "Perhaps the only thing the terrorists in Iraq will fear will be the ordinary citizens absolutely disgusted with their behavior. Empowering the citizens is risky business, though. Some could take it too far, and the end result could be that everyone who looks even a little shady will get whacked."

Mark in California: "Let the Iraqis arm themselves. Let them defend themselves. For goodness sakes, maybe then we can leave."

Randy in Ohio: "If the Iraqis arm themselves, it would be more and more like Vietnam. Ten-year-olds and 80-year-olds will kill Americans, more than they do already."

Vince in Los Angeles: "Jack, where is Iraq headed, you ask? Straight for the script of a Sam Peckinpah film."

Robert in Massachusetts: "When Americans began arming themselves, brother vs. brother, family vs. family, state vs. state, in 1860, we called it civil war. I think it will be the same name in Iraq today."

And, finally, this -- Tim in California writes: "Where is Iraq headed? To hell in a handgun basket" -- Wolf.

BLITZER: Thank you, Jack.

To our viewers, you're in THE SITUATION ROOM.

Happening now: Congress waiting for a report card on the president's Iraq war strategy. But the White House and the Pentagon already downplaying any expectations of early success. Will bad grades, though, lead to new pressure for a troop pullout?

Burying a longstanding racial slur -- a leading civil rights organization holds a symbolic funeral for the N-word. Is it easier said, though, than done?

And he says America's health care system is "Sicko." Does the filmmaker Michael Moore think any of the presidential candidates can fix it? I'll ask him this hour.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

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