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Larry Craig Stays in Senate; Gates Orders Investigation of Security Contractors in Iraq

Aired September 26, 2007 - 17:00   ET

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


WOLF BLITZER, CNN ANCHOR: I'm Wolf Blitzer.
You're in THE SITUATION ROOM.

And let's get that new information just coming in.

Dana Bash is on the scene in Minnesota for us, our Congressional correspondent.

Senator Larry Craig had said he would resign by this weekend, at least that was his intent.

But what's going on right now -- Dana.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: What's going on right now, Wolf, is Senator Larry Craig is staying in the Senate. The judge here in Minnesota made clear today that he is not going to decide whether or not Senator Craig's guilty plea will be withdrawn until sometime late next week, well after Senator Craig's self-imposed deadline of September 30th.

And Senator Craig just issued a statement saying that because the judge has not yet ruled on his motion: "For now. I will continue my work in the United States Senate for Idaho." Leaving it very vague when the senator will or if the senator will leave.

And certainly, I can tell you, likely leaving a lot of his Republican colleagues very unhappy back in Washington -- those Republican colleagues who pushed him to resign very aggressively about a month ago -- Wolf.

BLITZER: All right, Dana.

Thanks very much.

Dana was watching that hearing out there today. We expect the judge to rule on that guilty plea next week.

Let's continue our look into some other important stories we're following, including more money for a troubled war and growing concerns about those security contractors in Iraq. Defense Secretary Gates ordering his own investigation right now, even as he asks Congress for another $190 billion to fund that war and the one in Afghanistan for another year.

Our senior Pentagon correspondent, Jamie McIntyre, is joining us right now -- Jamie, it's a substantially bigger number than was anticipated.

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: That's right, Wolf.

The U.S. Defense secretary, Robert Gates, went up to Capitol Hill hat in hand asking for more money for a war that he conceded is requiring more sacrifice than many people anticipated.

(BEGIN VIDEO TAPE)

MCINTYRE (voice-over): The surge may or may not have turned things around in Iraq, but one thing is certain. It will help make 2008 the most expensive year yet in what the Bush administration calls the war on terror. The $190 billion request now includes an extra $42 billion, of which $6 billion will cover the higher pace of operations, and a whopping $11 billion would go to double the number of heavily armored MRAP vehicles on order, from 8,000 to 15,000.

In delivering the news, Defense Secretary Robert Gates acknowledged the price of the prolonged war is cheap.

ROBERT GATES, SECRETARY OF DEFENSE: Mr. Chairman, I know that Iraq and other difficult choices America faces in this war on terror will continue to be a source of friction within the Congress -- between the Congress and the president and the wider public debate.

MCINTYRE: Gates had already withstood a flurry of broadsides from committee chairman and ardent war critic, Robert Byrd, who railed against the cost of what he called "the nefarious infernal war in Iraq."

SEN. ROBERT BYRD (D), WEST VIRGINIA: Such a long-term presence could cost well in excess of $2 trillion -- $2 trillion. Yes, you heard me, $2 trillion. That's quite a burden that this president is leaving to our grandchildren.

MCINTYRE: In fact, if you add the $190 billion to what's been spent since the 2003 invasion of Iraq, the total is over $760 billion. And it's well on its way to a trillion.

(END VIDEO TAPE)

MCINTYRE: One effect of the news that the U.S. Military was going to be buying more equipment and spending more for those MRAP vehicles is that stocks in defense companies went up today, as investors poured money into companies that they think will benefit from all this spending -- Wolf.

BLITZER: All right, Jamie.

Thanks very much.

At the same time, Secretary Gates says he's worried there's not enough oversight of the thousands of private contractors working for the U.S. In Iraq.

Let's go to CNN's Brian Todd.

He's watching this story for us.

What's Gates doing about all of this -- Brian?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, he's trying to preempt any potential fallout from operations of the Pentagon's own contractors in Iraq.

(BEGIN VIDEO TAPE)

TODD (voice-over): Determined to head off any Blackwater type incident under his watch, the defense secretary dispatches his own team of investigators to Iraq.

GATES: My concern is whether there has been sufficient accountability and oversight in the region over the activities of these security companies. And that's the main thing that our team is looking into out there.

TODD: The Blackwater contractors involved in this month's shooting in Baghdad are under the State Department's authority. The military has more than 7,000 of its own private security contractors there, many of them guarding important U.S. And Iraqi government sites.

Pentagon officials say Gates was not satisfied with recent answers he's gotten about how they operate. But the Pentagon doesn't want its contractors lumped in with others.

GEOFFREY MORRELL, PENTAGON SPOKESMAN: But this notion that there are these -- that people are running around lawlessly in Iraq with guns and under our authority is just not an accurate portrayal.

TODD: One of Gates' deputies, meanwhile, has sent a memo to commanders in Iraq, making sure they know their responsibilities for holding contractors accountable. But the fallout from the Blackwater incident remains intense. The Iraqi interior ministry claims the contractors shot and killed as many as 20 civilians. An industry source says the company was responding to a hostile attack.

State Department officials are now fending off reports that the Pentagon has pressed them to assert more control over Blackwater.

TOM CASEY, STATE DEPARTMENT SPOKESMAN: We're in this together. This not a Department of State problem. It's not a Department of Defense problem. It's a U.S. Government problem.

TODD: A problem that may be around a while. One Pentagon contractor who has worked in Iraq says of Blackwater and other private security contractors, Iraqis hate them. They run roughshod. They're abusive. They're undermining what we're trying to accomplish with the Iraqis.

(END VIDEO TAPE) TODD: Contacted by CNN, a Blackwater official said more people who know about the situation remain supportive of their operations even now in Iraq, than they are critical -- Wolf.

BLITZER: All right -- Brian.

Thanks very much.

Brian Todd reporting.

Let's check back with Jack Cafferty in New York for The Cafferty File -- Jack.

CAFFERTY: In 2000, Wolf, the nation's airlines promised to come up with contingency plans for passengers stranded during long delays -- things like stocking enough food and water on board and figuring out how and when they would allow people to get off the airplane.

It's not happening. In fact, it looks like things are getting worse -- quite a bit worse. The Transportation Department's inspector general reports 3.7 million passengers experienced ground delays of one to five hours or more during the first seven months of this year. And that is up a whopping 42 percent from 2006.

Congress is considering forcing the airlines to do something about this. But, of course, the airlines don't want to hear about that. They say the government getting involved could do more harm than good.

But it might be worth considering. As much as we all detest government interference, consider this -- seven of 13 airlines in this report have not even defined what constitutes an extended period of time when it comes to meeting the needs of its passengers or at what point they should be allowed off the airplanes. In other words, they have done absolutely nothing.

The investigation was prompted by a couple of incidents last winter -- you'll remember these -- passengers stranded on board airplanes for more than 10 hours.

So here's the question -- are you satisfied with how the airlines treat delays?

E-mail us at caffertyfile@CNN.com or go to CNN.com/caffertyfile -- Wolf.

BLITZER: Thanks, Jack, very much.

Up ahead, my exclusive interview with the former vice president of the United States, Al Gore.

Will he make an endorsement in the race for the White House?

Also, he's been making headlines around the world. Now our chief international correspondent, Christiane Amanpour, gets an interview with the Iranian president, Mahmoud Ahmadinejad. What did he have to say?

And details emerging of a troubled past. Two men at the center of a mystery at sea appear in court while the search intensifies for four missing people.

Stick around.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Heads of state from around the world are turning their attention to global warming as they gather in New York for the United Nations General Assembly.

The former vice president, Al Gore, one of this country's most outspoken advocates for action on climate change, was there with an urgent, urgent message.

And joining us now, the former vice president of the United States, Al Gore.

Mr. Vice President, thanks very much for coming into THE SITUATION ROOM.

We're speaking -- you're at the United Nations and there's a lot of people looking to the United Nations to do something about global change, about climate change, global warming.

Do you really expect the U.N. to do anything concrete right now?

AL GORE, FORMER VICE PRESIDENT OF THE UNITED STATES: Wolf, I do. This was the largest gathering of heads of state in history to focus on the climate crisis. And the immediate purpose was to give a mandate to the negotiators that will be meeting in early December in Bali, in Indonesia, to start the negotiating process for a new and tougher treaty to take the place of the Kyoto Treaty. And I called upon them today to finish that up two years ahead of what's currently planned now, 2012 -- instead to get it completely in place by 2010.

We face a planetary emergency. Just three days ago, as you know, the scientists reported that the melting of the north polar ice cap was 10 times faster than expected. It's fallen off a cliff, in the word of one of these scientific experts. And it really is an emergency.

BLITZER: But what about India and China, two of the world's biggest polluters in the past?

They've not cooperated. They've not participated in any of these protocols, basically.

Do you have any commitment, any idea whether they're going to change their mind right now? GORE: Well, the best way to get them to is for the United States to provide leadership. Both were represented at this meeting today. And the head of China took the position at the APEC meeting, 10 days ago in Australia, that he supports the Kyoto Treaty. And both China and India have talked about the need for every nation, including their own, to be a part of this new treaty.

So it will be a negotiating process. But, yes, they have to be a part of it.

BLITZER: So what I hear you saying, Mr. Vice President, correct me if I am wrong that the U.S. -- the Bush administration is the big stumbling block right now.

Is that right?

GORE: Well, that's long been the case. The United States has the greatest capacity to provide leadership and to help organize a global response to this crisis. But, you know, we do have new leadership in the Congress. And a little more than a year from now, we will have a new president, perhaps, one that is committed to action on the climate crisis.

So whatever is done in the next remaining year or so of the current president's term needs to be seen in that larger context.

But I don't rule out the possibility that President Bush and Vice President Cheney might make some small changes in their positions. I would hope so.

BLITZER: Condoleezza Rice, the secretary of state, was here at the United Nations this week speaking, in part, about global warming.

Do you think there's a change of heart on the part of this administration?

GORE: No, I don't think there's a change of heart yet at all. There's a small tweaking of the language and it sometimes conveys the impression that there's a change. But there's been no change in policy as yet.

Nevertheless, the rest of the world is moving and the foundation is being laid here at this meeting today for the negotiations that will begin December. And I'm very optimistic that we will get a new and tougher global agreement.

But the time is running out. We really need to approach it with a great sense of urgency and alarm. We can still solve it, but we don't have that much time.

GORE: You're looking ahead to the next U.S. President.

Who among the candidates, Democrat and Republican, do you think is most committed to where you stand in terms of the need to deal with global warming? GORE: Well, let's give them more time. The process still has a long way to go. Several of the candidates on the Democratic side have spoken out forcefully on this issue. None has yet presented a truly comprehensive plan. But I'm optimistic that as the debate continues, they will.

On the Republican side, I haven't heard much about it. John McCain has, in the past, had a very responsible position. But competing for the votes in those primaries, I guess, has led him in another direction.

But I really am optimistic that both political parties will make this one of the core issues. And I'm very optimistic that the next administration will be very different from this one.

BLITZER: I know you're studying all the candidates and their positions on this and other issues. Four years ago, you endorsed Howard Dean.

What about the prospect of Al Gore endorsing any of the candidates this time around?

GORE: I don't know if I'll make an endorsement or not. I just don't know.

BLITZER: Because the president, you heard him say this week, that he thinks Hillary Clinton is going to get the Democratic nomination, but then lose to the Republican next -- a year from now in November.

What do you think about that prediction by President Bush?

GORE: Well, I think it's too early to make predictions. -- at least it's too early for me to make predictions about it.

BLITZER: But you're not ready to jump on the Hillary Clinton bandwagon yet?

GORE: I'm not ready to endorse a candidate or to decide whether I will. But I appreciate your interest in it.

BLITZER: Al Gore, the former vice president, speaking with me earlier.

And please be sure to join us tomorrow for another exclusive interview. I'll sit down with the former Pakistani prime minister, Benazir Bhutto. She's poised to return to her homeland after years in exile, possibly return to power. That interview with Prime Minister Benazir Bhutto, tomorrow, right here in THE SITUATION ROOM.

Still ahead this hour, the crew of a chartered boat missing at sea. Now the men who may hold the answer to the mystery appear in court. We'll take you live to Miami for the latest.

Also, mounting problems for President Bush. We're going to show you why some of his signature issues face an uncertain future.

Stick around.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: There are new developments and new details emerging right now in a mystery at sea. Two men rescued from the Florida Straits appeared in court today, while investigators are trying to figure out what happened to the missing crew of the fishing boat they chartered. Take a look at this very dramatic stuff. That boat left Miami Saturday for the Bahamian island of Bimini. That island is about 50 miles east of Florida.

So what happened next?

No one, at least right now, seems to know for sure.

Our national correspondent, Susan Candiotti, is joining us live from Miami.

You're learning new details about this mystery -- Susan.

What do we know?

SUSAN CANDIOTTI, CNN CORRESPONDENT: Well, we're not sure what we know is true. But these are disturbing claims that are being made by one of the two people that was picked up in that life raft. This information coming from the 19-year-old, who was traveling with a 35- year-old traveling companion, that fugitive out of Arkansas.

He says they were attacked by hijackers, pirates out of nowhere. He said while they were out at sea, suddenly these people came out of nowhere, came aboard the boat, shot and killed the captain, then shot and killed his wife when she became hysterical, then shot and killed the two additional crew members when they refused to throw the bodies overboard.

Then he said he was told to do so and he did throw the bodies overboard, and that's apparently how, he says, his life was spared. Again, we have no information on what version we are getting from Kirby Archer, the man who was also found in that life raft.

This information coming out in a federal affidavit because prosecutors were trying to ask the court not to release these two people on bond until they find out more about what's going on. And they also consider them a flight risk. The court has gone along with that, while authorities try to sort things out.

Meantime, Wolf, sad to say, we don't really know for sure what happened to those four crew members who are lost at sea.

BLITZER: All right, Susan.

I know you're going to stay on top of this story for us.

Thanks very much. Carol Costello is monitoring some other stories incoming into THE SITUATION ROOM right now -- Carol, what do you have?

CAROL COSTELLO, CNN CORRESPONDENT: We'll start with a strange one, Wolf.

Well, investigators in Hollywood, Florida are trying to piece together what happened in a very odd bank robbery. They say the device strapped to a bank employee yesterday was not a bomb. The teller told police three masked men forced him to wear it and robbed the bank where he works. They made off with $25,000. The teller and his girlfriend are considered either victims or possible participants.

Classes are canceled tonight on the Queens campus and New York's St. John's University is still in lockdown. This after a police nabbed a man with a rifle on campus. His apprehension was confirmed in a written statement from the university. It says university police quickly disarmed the gunman, a student at St. John's. Officers are said to be searching for up to two more people. No one was hurt.

That's a look at the headlines right now -- Wolf.

BLITZER: All right, Carol.

Thanks very much.

Some -- let's bring in our Internet reporter Abbi Tatton.

She's also getting some photos coming into CNN from the campus -- what are you seeing?

ABBI TATTON, CNN CORRESPONDENT: Wolf, we've just been getting these in, in the last half hour.

These from senior Thomas Rodrigues, who sends them into CNN I- Report. Thomas says he's been one of the many students, he says, gathered around the main gate of the Queens campus of St. John's University. What he's seeing, the entrances and exits to the university in lockdown, and this area, he says, is kind of a makeshift command center. He says he's seen the helicopters overhead; earlier on a SWAT team going in. And we know from the university's Web site, as well, that the NYPD -- you can see there -- has a heavy presence on campus and is conducting an extensive search.

What Thomas says is where he is, where the other students are, there's a lot of information flying around. What he's been hearing, the same as us here at CNN, is that police are searching for as many as two other potentially armed people -- Wolf.

BLITZER: Thanks very much, Abbi, for that.

Up next, the former president, Bill Clinton, talks to CNN. Why he says the Republicans are "feigning outrage" come -- that's coming up.

And his foreign policy legacy is unsettled. Now, mounting problems for President Bush on the domestic front. Stay with us.

We're also going to play for you some of the interview that Christiane Amanpour did with the Iranian president, Mahmoud Ahmadinejad.

All that coming up, right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

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

Happening now, Senator Larry Craig says he will not resign on September 30th as planned. The Idaho Republican now saying he will wait until a judge rules on his request to reverse his guilty plea entered after a bathroom sex sting. Craig's attorneys made the motion in a Minnesota courtroom earlier today.

The FBI is reorganizing its counter-terrorism division. It says it will merge its Osama bin Laden unit and the unit for other terrorist groups. The bureau says the change will help with identifying terrorist trends and the sharing of information.

And the Government Accountability Office says Walter Reed Army Medical Center, here in the nation's capital, is still plagued by several problems. The less than glowing report was presented to the Congress today. The facility fell under scrutiny this year for substandard conditions and services for returning war wounded.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

Secretary of State Condoleezza Rice at the United Nations trying to gather support for new sanctions against Iran over its nuclear program. This one day after the countries president was there, delivering a closely watched speech. You saw it live yesterday here in THE SITUATION ROOM.

Let's go to our chief international correspondent, Christiane Amanpour.

She had an exclusive interview with the Iranian president earlier today.

She's joining us from New York -- first of all, Christiane, what was your impression about his performance at the United Nations?

CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: Well, yesterday he was boilerplate Ahmadinejad. He did what he does often in these forums, and that is present Iran's case.

He starts with, always, with his religious greetings and his religious prayers. And then he was talking about all the issues. He did talk very, at length, about what he called the big powers and how he was saying that actually the time has moved on past the sort of world -- post-World War II power relationship and the world can no longer be in a master/servant relationship -- talking about, as he always does, the about the arrogance and the bullying of the big powers.

But he, also, of course, hit the headlines when he talked about Iran's nuclear file. That case is one that is being watched around the world and, of course, in the United States, as well. He's saying that now he considered the political aspects of it closed, that he considered the idea of Iran being a target of the United Nations Security Council closed and that now this would be just a matter just for the IAEA, the U.N.'s nuclear regulatory agency. And by this, he was meaning that because of the deal that the director general of the IAEA has handed out to Iran, in other words, come clean with all outstanding questions that we still have and then you can start with sort of a clean slate. It appears that Ahmadinejad, in any event, is saying that they do plan to cooperate with the IAEA, something the IAEA will be watching very, very closely because it's giving him about -- it's giving Iran about three months or so, till the end of this year, to come clean on both of these outstanding issues.

BLITZER: When you sat down with him earlier today, you also spoke about his performance at Columbia University.

AMANPOUR: That's right, Wolf. It's hard to fathom perhaps the kind of pressure that Ahmadinejad is under here in the United States. I say that because, as you know, we had a promised interview that was heavily promoted on CNN and early this morning, we were informed that this interview, along with others that he had planned, would be cancelled. After a lot of intercession by myself and a senior executive here at CNN, they agreed to actually perhaps come and do a shorter interview, 15 minutes, after he had had some U.N. meetings this morning. But when we actually did sit down, he said he only had time for one question.

This was quite unusual, but, nonetheless, we did ask him about the reception that he got at Columbia University, that dramatic confrontation at Columbia University when he was, as he said, subjected to a wave of insults, particularly from the Columbia University president. But he said, nonetheless, he didn't regret that he had been there. Listen to what he said about that.

PRES. MAHMOUD AHMADINEJAD, IRAN (through translator): I think to the meetings I've had at the United Nations as well as the meeting at Columbia University, we did a lot of important work in helping increase the ability of people to listen together towards peace, towards justice, towards compassion and towards brotherhood. Around the world.

I refuse to discuss the marginal issues, what people were saying, what analysis came before and after the event. What really mattered was that several thousand students came to meet with a teacher, a teacher who doesn't teach there. But they sat down with me for over one hour. We debated. We talked. They heard and thought about the issues that I raised, and that to me was most valuable.

Most certainly there were things that had happened that I think were under the influence of political pressures from different sort of political groups here and politicians around this country. I wish that hadn't happened. But, nonetheless, I think academic students and universities have the ability to make their own judgments, to keep themselves away from such pressures and expand their horizons.

AMANPOUR: It's clear that a lot of Iranian officials believe there's sort of a drum beat towards war between the United States and Iran. But last night at a dinner of some journalists and a lot of think tank members and leaders, President Ahmadinejad, when asked about that, said, no, why should there be? I don't believe that there will be war.

Wolf.

BLITZER: All right, Christiane. Christiane Amanpour speaking with the president of Iran earlier today. There will be a lot more that Christiane has on "AC 360" later tonight. You'll want to see that 10:00 p.m. eastern.

Ahmadinejad was caught off guard when confronted by the anguished wife of a kidnapped Israeli soldier.

CNN's Deborah Feyerick is joining us now with that part of the story.

Deb, what did she ask the Iranian president?

DEBORAH FEYERICK, CNN CORRESPONDENT: Well, you know Wolf, it's not every day you see a young wife face down a world leader but she realized this was her one chance because it's not every day the Iranian president is in town.

The question during the Iranian president's press conference took many by surprise.

KARNIT GOLDWASSER, WIFE OF KIDNAPPED SOLDIER: I'm the wife of Goldwasser that was kidnapped by Hezbollah to Lebanon more than a year. You are responsible for this and by your support. I am asking how come you're not allowing the Red Cross to go in to visit them? How come you're not sending us a sign of life more than a year? How come you're not answering me?

The 31-year-old Karnit Goldwasser sitting in the first row directly in front of President Ahmadinejad said she knew she had one chance to ask him to step in and help.

GOLDWASSER: I have nothing to lose. I lost already my husband.

FEYERICK: Ehud Goldwasser and another soldier, Eldad Regev, were kidnapped last summer inside Israel while patrolling the border. The abduction by what the U.S. says is an Iranian backed Hezbollah militia triggered a two month assault against Lebanon by Israeli forces.

Since then Karnit Goldwasser's done everything possible to talk to prime ministers, presidents and anyone she thinks might be able to reach out to Hezbollah's leader, Hassan Nasrallah, so she can get some sign her husband is still alive.

GOLDWASSER: Ahmadinejad is in charge of the head of Hezbollah are, the one that kidnapped my husband. So I want him to be involved and also said to him give them a sign of life. Give them -- let the Red Cross to go to see them.

FEYERICK: The Iranian consul to the U.N. tells CNN Iran has no official comment on the issue of the kidnapped soldier. The distraught wife, a non-journalist, who was part of the Israeli delegation, was cut off by reporters in the room who later indicated she was out of line.

GOLDWASSER: I know it wasn't right what I did but I promised him years ago -- I said to him, if something happened to you, I will bring the moon to you and I will do whatever it needs me to do to go and bring you back.

FEYERICK: Now, the wife of the kidnapped Israeli says she hopes that when Ahmadinejad returns to Iran, if he's a humanitarian like he says, he will reach out to Hezbollah and maybe her husband will finally come home if he's still alive.

Wolf.

BLITZER: All right, Deb. Thanks very much. Deborah Feyerick in New York watching this story.

Meanwhile, there are some very troubled times for President Bush. With just over a year left in the White House, some see his political clout declining, his legacy in doubt, despite administration efforts to put out a positive image.

Our White House correspondent Ed Henry is joining us right now. The president is facing lots on his plate right now. Ed, what's going on?

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Well, that's right, Wolf. We didn't hear a lot of tough talk from the president at the U.N. He's obviously taken a lot of heat on the world stage but he's also facing real political challenges right here at home.

Three days at the United Nations did little to change the fact President Bush's legacy on foreign policy is still unsettled, at best. So he headed to a New York City school to shift focus to the domestic front, though that proved problematic, too, starting with Mr. Bush's syntax.

PRES. GEORGE W. BUSH, UNITED STATES: Children do learn when standards are high and results are measured. And so my call to the Congress is don't water down this good law. Don't go backwards when it comes to educational excellence.

HENRY: Even the president's signature education reform is now in danger of not being extended because fellow conservatives feel it's too restrictive. And Mr. Bush's effort to bathe himself in happy pictures with kids may be undermined by the fact he's vowing to veto a children's health insurance bill, a move that democrats say will leave 10 million children behind.

REP. NANCY PELOSI (D), HOUSE SPEAKER: Mr. President, please don't veto this bill. Please do not give new meaning to the words suffer little children.

HENRY: With Alan Greenspan's recent book charging the president did little to contain federal spending early in his administration, democrats are delighted Mr. Bush has decided to draw a line in the sand on children's health care.

BUSH: The legislation will raise taxes on working people and would raise spending by between $35 billion to $50 billion.

HENRY: That may be difficult to sustain politically especially with Defense Secretary Robert Gates revealing the White House is now seeking another $190 billion to fight the wars in Iraq and Afghanistan.

REP. RAHM EMANUEL (D), ILLINOIS: I do agree with the president. We do have excessive spending. We have excessive spending on the war in Iraq. One day of the war in Iraq would give 250,000 children health care in the United States.

HENRY: Now, 45 house republicans, more than expected, voted with democrats and against the president last night on this health bill. But democrats privately acknowledge they are very unlikely to get enough votes to override the president's likely veto of this health bill. Nevertheless, democrats are happy to have this as an issue. They say privately they're happy to get the president on record vetoing a health bill. They plan to make a lot of political fodder out of it in 2008, Wolf.

BLITZER: Thank you very much. Ed Henry reporting at the White House.

Dozens of Buddhist monks beaten an dragged as a peaceful protest turns violent. The full story, that's coming up.

And Bill Clinton talks to CNN, calling the republicans, and I'm quoting now, disingenuous. He weighs in on the political firestorm. That and a lot more coming up right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Peaceful protests erupt into a deadly violent round. Security forces open fire on pro democracy demonstrators in Myanmar, which used to be known as Burma. Witnesses say dozens of Buddhist monks were beaten and dragged away.

Our state department correspondent Zain Verjee is joining us.

Zain, it looks like things are coming to a head in Myanmar.

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Yes, Wolf. It really does seem so. The United Nations today called for the military rulers in Myanmar to back down. Gunshots, teargas, mass arrests. The military government in Myanmar has had enough of Buddhist monks leading massive protests that are getting bigger and bolder. One undercover British journalist described what he saw police doing in the capital Rangoon.

UNIDENTIFIED MALE: They dragged them away. There was some rough handling. Some teargas was used and some shots were also fired. Some people who were near me say they saw two young monks fall to the ground apparently having been shot and they were taken away. People were weeping. People were kind of clasping their hand in prayer. They believed that they had just seen two people die. They were absolutely distraught.

VERJEE: The government admits one person has been killed so far. It's impossible to know if the toll is even higher. For the first time in about 20 years, citizens are facing off with the repressive regime, fed up and frustrated with rising fuel prices. Huge crowds are backing and protecting the monks. A flurry of diplomatic activity at the United Nations. President Bush announcing new sanctions on Myanmar and lashing out at the secretive regime.

BUSH: A military junta has imposed a 19-year reign of fear. Basic freedoms of speech, assembly and worship are severely restricted. Ethnic minorities are persecuted. Forced child labor, human trafficking and rape are common.

VERJEE: Secretary of State Condoleezza Rice and European allies are condemning the blood shed, calling for the military government to "stop the violence and to open a process of dialogue with pro democracy leaders," like Aung San Suu Kyi, who has been under house arrest for 12 years on and off since 1989.

The last time there was an uprising was almost 20 years ago. The outcome, the military opened fire on peaceful demonstrators and killed thousands.

Diplomats we've spoken to here say that the west knows that it has little influence in Myanmar, so what it's doing is putting pressure on countries like China, India, Indonesia as well as other countries in the region to use their influence, turn up the heat on the military regime there.

Wolf.

BLITZER: Will they help, Zain?

VERJEE: Well, it's hard to say. I mean many of the countries in the region have a relationship with Myanmar and they say what's going on there is an internal matter. There are also a lot of issues in China and other countries. They've got a lot of controversial issues going on in their own country, too, and they don't really want interference from the west. China's U.N. envoy, Wolf, just said today that sanctions would not be helpful.

Wolf.

BLITZER: Zain Verjee reporting. Thanks. Let's take a closer look at the nation of Myanmar. As we say, it used to be called Burma. Sandwiched between India and China and bordering Thailand, it's strategically located but also politically isolated. The military backed ruling party now known as the State Peace and Development Council changed the country's name when it took power among a lot of blood shed back in 1988. It also moved to change the name of the capital to Yangon from Rangoon. Slightly smaller than Texas. Myanmar has a population of more than 50 million people.

Up ahead, the former president Bill Clinton weighing in on a controversial ad criticizing a top U.S. general. We're going to tell you what Bill Clinton is saying right now.

And the republican race to the White House by the numbers. The latest polls shows it's a real horse race between two contenders right now in New Hampshire.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Bill Clinton is talking about the presidential campaign. He spoke earlier today with CNN's Anderson Cooper in New York. One issue he's weighing in on is the republican reaction to that controversial Moveon.org ad critical of the top U.S. military commander in Iraq, General David Petraeus.

BILL CLINTON: I think that there was something completely disingenuous about the feigned outrage of the republicans and the White House and then the Congress about this. This was classic bait and switch.

ANDERSON COOPER, CNN CORRESPONDENT: Focus on that as opposed to focusing on what's really happening.

CLINTON: Yes. That way I don't have to deal with Iraq. I don't have to tell anybody what we do. Everything in Iraq is obviously right because they said this, as if it was the only issue in the world.

Come on. These republicans that are all upset about Petraeus, this is one newspaper ad. These are the people that ran a television ad in Georgia with Max Cleland, who lost half his body in Vietnam, in the same ad with Osama Bin Laden and Saddam Hussein. That's what the republicans did. And the person that rode to the senate on that ad was there voting to condemn the democrats over the Petraeus ad.

I mean, these are the people that funded the swift boat veterans for truth. And the president appointed one of the principal funders of the swift boat ads to be an ambassador. But they're really upset about Petraeus. But it was OK to question John Kerry's patriotism on blatantly dishonest claims by people that didn't know what they were talking about. So it was just bait and switch. It was just, oh, thank goodness, I can take this little word here and ignore what we've done in Iraq and what we're going to do and the outrageous way we gain political power by smearing John Kerry. BLITZER: Wow. You can watch the entire interview with Anderson Cooper later tonight on "ANDERSON COOPER 360," right here on CNN, 10:00 p.m. eastern. What an interview.

Let's analyze what we just heard. Our chief national correspondent John King is here, our senior political analyst Gloria Borger. Bill Clinton is angry, very upset about this.

GLORIA BORGER, SENIOR POLITICAL ANALYST: He's out of the box on this, Wolf, I think you would have to say. I mean in a more measured way you heard Hillary Clinton saying the same kind of thing on the campaign trail about this, particularly after she voted in the senate on this issue. Raising John Kerry, I wonder if he got it from her or she got it from him but again, you can tell he's not running.

BLITZER: Did you see his eyes as he began to get into that answer to Anderson's question?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: I've seen those eyes before, Wolf, and you can bet there are democrats across the country, some of them watching saying amen, let's nominate Hillary Clinton and get that back into the fight, get Bill Clinton countering every blow the republicans want to send up. But there will be other democrats saying whoa and this is the Obama campaign message and the Edwards campaign message, do we really want to go over that again. If you put the Clintons in the race, you guarantee a polarizing my base against your base, red state, blue state election. Many democrats welcome that. They'd welcome Bill Clinton back in the fray but it makes some nervous.

BLITZER: It does help her with that democratic constituency out there to see her husband, the former president, get angry like that.

BORGER: Well, it does. It's kind of a mommy/daddy thing, if you will. She can be more measured. He's out rallying the base. She can appear more centrist to try to attract those independent voters. It works for the campaign.

BLITZER: And let's take a quick look while I have you guys at this race for the republican nomination. It's heating up in New Hampshire. On the democrat side Hillary Clinton has a wide lead. She's the frontrunner. In New Hampshire though, things are getting close.

KING: Republican race has no structure at all, Wolf. You have Rudy Giuliani and I'm sorry Mitt Romney at the top of the pack in New Hampshire and that pretty much ...

BLITZER: Virtually tied right now in our new poll.

KING: Virtually tied right. Romney's down a little bit and that's a blow to him. He spent $2 million, the only candidate on TV in New Hampshire. $2 million in ads, got ahead, now he's lost nine points in the last two months. The two that ticked up are Giuliani and McCain. What happened last month? The hearings here in Washington with General Petraeus. John McCain defending the war, getting in the face of the democrats criticizing it. Rudy Giuliani picking that fight with Moveon.org and Hillary Clinton saying I will stand by General Petraeus. I will stand by the president. The two guys in the center of the debate on Iraq moved up in New Hampshire.

BLITZER: All right. Fred Thompson not doing well in New Hampshire right now. In the national polls doing OK. But in New Hampshire, the people there, the republicans aren't happy he didn't show up for that debate.

BORGER: Not so much. You know he was supposed to come out of box and really soar and we haven't seen that. I think you've seen John McCain in a way really benefit from that.

Also in our poll today, Wolf, in terms of John McCain, he is the one rated the highest when it comes to the right experience to be president. You can be sure that's something he's going to continue talking about in New Hampshire to get himself some traction.

BLITZER: He's saying don't count me out yet. In fact, he's going to do what John Kerry did four years ago. You've heard that, John.

KING: He's going to try. The big question for Senator McCain is he has stopped the fall, now started to go back up. How do you sustain it? You need money to sustain it. There's a big filing deadline on Monday for all these candidates running for president. I'm told the McCain campaign will report raising slightly between $5 million and $6 million. That is better than they had been doing months past but it's still pretty anemic. Not enough to go on TV everywhere. Electability is a big issue in the republican primary, who is tough enough, well financed enough to go up against say Hillary Clinton. John McCain needs to prove he can raise more for republicans to think we're going to keep him in for the long haul.

BLITZER: John King, Gloria Borger, thanks to both of you.

And coming up, our question this hour. Are you satisfied with how airlines treat delays? Jack Cafferty and your e-mail right after this.

(COMMERCIAL BREAK)

BLITZER: Go right back to Jack Cafferty for the Cafferty file in New York.

Jack.

JACK CAFFERTY, CNN CORRESPONDENT: The transportation department reports, Wolf, that people who experience between one and five hours of delays on airplanes is up 42 percent this year. We asked are you satisfied with how airlines deal with delays?

Ron in San Diego, "No. It is because they don't have an effective way of dealing with it. A good friend of mine is in airline management. Our largest airports and air traffic space were never designed to handle the amount of traffic they do currently. The system is going to break. You can't blame the airlines for that."

Joseph in Hampton Bays, "I'm sick of the airlines holding us prisoners on their aircraft. I refuse to fly. My wife wants to travel but I refuse to be held prisoner on their extremely hot planes with no water for hours on end. The government ought to step in with a passenger bill of rights. Enough is enough, reduce the number of flights, do what has to be done. We can't take it anymore."

Gill in Texas, "I'm a retired airline officer, 33 years on the job. Like the public, you don't seem to understand once a plane backs out of the gate, the government takes complete and absolute control. While in winter you might get some delays from a pilot who wants to de-ice one more time for safety reasons, most delays are government controlled. Yeah, Jack, let's get more government interference with the airlines."

Andy is Scottsdale, Arizona, "No, I'm a pilot. The FAA restricts the amount of time that I am allowed to be on an airplane. It's called duty day. Flight attendants have to do this as well. It's in place so we don't get tired and overworked while on duty. Shouldn't the same courtesy be extended to the passengers?"

Joe in Florida writes, "Are you kidding? The best thing about being retired is that you don't have to take the bull from airlines. I have all the time in the world and I can drive anywhere in the country."

And Curtis in Pennsylvania says, "Sorry Jack but my answer will be delayed for the next several hours but here, have some peanuts while you wait."

If you didn't see your email here, you can go to CNN.com/CaffertyFile. We post more of them online along with video clips of the Cafferty File.

Wolf.

BLITZER: Did you see Bill Clinton in that little clip we ran, his interview with Anderson Cooper?

CAFFERTY: Downright exercising. You know what? He's right.

BLITZER: You know, we're going to play more of that interview coming up in an hour at 7:00 p.m. eastern. Thanks very much. Jack Cafferty will be back with us as well. We're here weekday afternoons from 4:00 to 6:00 p.m. eastern and back in another hour at 7:00 p.m. eastern. Until then, thanks very much for watching. I'm Wolf Blitzer in Washington.

"LOU DOBBS TONIGHT" starts right now. Kitty Pilgrim sitting in for Lou.

Kitty.

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