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THE SITUATION ROOM

Pentagon Set to Release Results of Investigation Into American Air Strike in Western Afghanistan; Pakistani Military Attacks Militants

Aired May 7, 2009 - 18:00   ET

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


WOLF BLITZER, CNN ANCHOR: Let's get back to the breaking news this hour, it involves the recent killings of men, women, and children during U.S. air strikes in western Afghanistan. A U.S. military review is now assigning preliminary blame. Let's go straight to our CNN Pentagon correspondent, Barbara Starr, she's working the story for us. Yesterday, we heard the secretary of state, Hillary Clinton say she deeply regrets what might have happened, but there was confusion over who was responsible for the death of these young kids, these civilians in Afghanistan.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Wolf, things are beginning to sort out, tentatively a press conference is scheduled for Afghanistan tomorrow, but a senior U.S. military official now tells CNN that the preliminary results are in. The U.S. now believes that an unknown number of Afghan men, women, and children were, in fact, killed when the U.S. dropped bombs on half a dozen targets Tuesday in western Afghanistan, in Farah Province. There had been heavy fighting. The Taliban -- the U.S. says -- had been firing from a number of compounds, air strikes called in.

The U.S. believes these men, women and children were being held by the Taliban as human shields in this area, but, Wolf, there will be a much deeper investigation, how much did the U.S. know when they dropped the bombs? Did they have any suspicion, any information, that women and children were in this immediate area, even though the Taliban were firing, and let's go back to what we discussed yesterday. The U.S. says there is still credible intelligence that at the same time the Taliban executed a number of civilians using hand grenades to kill them and then display their bodies. Very tough business. There had been nasty fighting in this area for several hours.

BLITZER: Because some of the reports yesterday, as many as 100 or even 150 civilians were killed.

STARR: Let's address that briefly. What the U.S. military says is they may never know exactly how many, because, as you well know, in the Islamic faith, bodies are buried very quickly. They may never know.

BLITZER: Stand by for one moment, Barbara, because there's more.

Also in the region right now what was meant to be peace is really becoming a hell in a war zone. There are killings and chaos in northwest Pakistan going on right now. A peace pact is dead, as the Pakistani military beats back extremists. It's supposed to protect civilians, but it's actually forcing thousands of them right now from their homes. Barbara Starr is working this story for us as well. What's happening in Afghanistan, we heard that, but in Pakistan it looks like a potentially critical moment.

STARR: Across the border in Pakistan, things equally grim today, Wolf. The U.S. you know has been pressing the Pakistani government to crack down on insurgents. That's going on, and now there is a lot of concern about how far this conflict may go.

(BEGIN VIDEOTAPE)

STARR (voice-over): Pakistanis are flooding the roads on the run, 40,000 already displaced by the fighting between the military and the Taliban here in the Swat Valley, in recent days. Camps are filling up, as people wait for food, water, and shelter. This man says "there's been heavy shelling." The U.S. has been pressuring Pakistan to crack down in Swat. A government peace deal failed. The Taliban began to rule here getting a new toehold to expand their operations. So, officially, the U.S. supports the Pakistani military action.

ROBERT GATES, DEFENSE SECRETARY: I personally have been very satisfied with the strong response that the Pakistani government and army have taken.

STARR: Pakistani President Zardari is asking for humanitarian aid and promising to continue the offensive. But the government is empty now, whole towns and villages, so troops can move in. It's a counterinsurgency strategy that could spell disaster.

DAVID KILCULLEN, ADVISER TO GEN. PETRAEUS: What we're seeing is a heavy military approach. It's a, what you might describe as a search-and-destroy or sweep and clear.

STARR: Kilcullen a counterinsurgency expert says it's the wrong solution for Pakistani civilians.

KILCULLEN: They close ranks behind extremists and you actually bring more support to the enemy, and the whole population pushes back against you, and you find yourself fighting everybody who lives there.

STARR: With more Pakistani troops expected to move in, U.S. military officials now privately say the Pakistani military must start a new strategy, target only militants and provide aid for people who are caught in the cross fire.

(END OF VIDEOTAPE)

STARR: And, you know, U.S. officials say Swat is much more, Wolf, than just some remote valley. This is really the fight between the Taliban and the Pakistani military. Neither side appears willing to give up. The Taliban clearly on the march trying to destabilize this fight.

BLITZER: This is potentially as I said a decisive moment. We'll watch it with you, Barbara, thanks very much.

The United States is providing money to Pakistan and to its military of the $1 billion in emergency aid, some $400 million is for new military aid mostly to train and equip Pakistani forces for counterinsurgency operations. The Obama administration proposes adding another $700 million in its new budget. In terms of troop strength, Pakistan's military right now ranks seventh in the world with about 620,000 troops, another 500,000 troops are in the reserve.

Tomorrow, the president of Afghanistan, Hamid Karzai, will be my special guest here in THE SITUATION ROOM. What do you want to ask President Hamid Karzai? You can submit your video questions to ireport.com/situationroom. We'll try to include some of your questions to President Karzai tomorrow, here in THE SITUATION ROOM.

How would you like to save $17 billion? That's how much President Obama hopes to save American taxpayers. Today he offered a more detailed look at his 2010 budget plan, asking congress to cut or cut back funds for more than 100 programs. The president's plan, though, may anger some of his political allies. Let's go to CNN's Jill Dougherty. She's working the story for us over at the White House. Jill?

JILL DOUGHERTY, CNN CORRESPONDENT: Wolf, President Obama says Americans are tightening their belts, and so should Washington. But the federal budget isn't on a diet yet.

(BEGIN VIDEOTAPE)

DOUGHERTY (voice-over): The cuts President Obama wants are sure to annoy both parties. Conservatives, by eliminating the pentagon's f-22 raptor fighter jet, saving $2.9 billion. Liberals by ending the educational program Even Start, saving $66 million. Ending or reducing 121 programs would total $17 billion in savings.

OBAMA: For every dollar we seek to save, there will be those who have an interest in seeing it spent. That's how unnecessary programs survive year after year. That's how budgets swell.

DOUGHERTY: House republicans say, they've heard this song before.

REP. JOHN BOEHNER, (R) MINORITY LEADER: They're the same cuts that were proposed by President Bush that congress -- the democratic congress chose to ignore.

DOUGHERTY: Senator John McCain calls the cuts important, but he wants more.

SEN. JOHN MCCAIN, (R) ARIZONA: What I'd really like to see from the president is just an open statement saying, I will veto any bill that comes -- appropriations bill that comes across my desk with a single earmark on it.

DOUGHERTY: The president's proposed cuts are just one half of 1 percent of a total budget of $3.6 trillion. ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: $17 billion is a lot of money to people in America. I understand that -- I understand that it might not be to some people in this town, but that's probably why we're sitting on a $12 trillion American Express bill.

(END OF VIDEOTAPE)

DOUGHERTY: Percentage wise these cuts may be small, but President Obama says none of this will be easy. His aides say you got to start somewhere, but they've got a pretty big hole to dig out of. Wolf?

BLITZER: All right, Jill, thank you. Jill Dougherty is over at the White House.

One of the senate budget committee's top republicans says the president's proposed cuts amount to very little.

(BEGIN VIDEO CLIP)

SEN. JUDD GREGG, (R) NEW HAMPSHIRE: It's like taking a teaspoon of water out of a -- out of a bathtub. While you keep the spigot on at full speed and the bathtub continues to fill up. A spigot of spending. A spigot of economic -- of government growth.

(END OF VIDEO CLIP)

BLITZER: Let's go to our senior congressional correspondent, Dana Bash, she's on Capitol Hill. Even though these cuts are relatively small, Dana, there's no guarantee congress is even going forward with these cuts.

DANA BASH, CNN SR. CONGRESSIONAL CORRESPONDENT: No guarantee at all, because each of the 121 programs that President Obama wants to cut is in somebody's district or congressman's district and in a senator's state, so we're already hearing pushback on some of these cuts. In fact, take a look at the wall for one example. The president's helicopter. The White House wants to cut $750 million for this year, millions more next year, to cut this controversial program to make a new presidential helicopter. Well, guess what? That helicopter is being built in New York, and the two senators from New York are saying let's not cut that. In fact, I spoke to one of the senators, Kirsten Gillibrand earlier today.

(BEGIN VIDEO CLIP)

SEN. KIRSTEN GILLIBRAND, (D) NEW YORK: This is 800 jobs in upstate New York that really make a difference to 800 families. And these projects are all part of the military requirements they have for their fleet, for the security for the president, and those are important issues.

(END OF VIDEO CLIP)

BASH: Now, the program to build a new helicopter, that might not make it because it has been so controversial, it's gotten such a bad rap. But other programs like education, they will be more of a fight here in congress, because the bottom line, Wolf, is that the president can make these proposals for these cuts, but congress holds the purse strings, and democrats say that they're going to have their own ideas for what to cut. We're going to see those early next month. Wolf?

BLITZER: And the president makes a point, he likes marine one pretty much the way it is right now. He thinks it's a pretty good helicopter. All right, Dana, thanks very much.

BASH: Thank you.

BLITZER: Let's go to Jack Cafferty right now for "The Cafferty File." Jack?

JACK CAFFERTY: There are a few signs, if you look closely, that the nation's beat-up housing market might just be starting to recover a little, or at least maybe to stabilize. "USA Today" reports more homes for sale are now getting multiple offers, as buyers are trying to lock in deals at incredibly low prices. Real estate experts say this has been especially true in states like California, that are hard hit by foreclosures, and dramatic drops in price. One Florida realtor reports that 1 in 10 homes now gets multiple offers, that's up from 1 in 30 homes last fall. The competition for some homes is driven by extremely low prices, down almost 40 percent in some places. Low mortgage rates also figure in, and a new tax credit of up to $8,000 for some first-time home buyers.

Meanwhile, first-time owners are now buying more than half of all homes on the market, and experts say they could help the industry by snapping up a lot of the excess inventory and there's a lot of it out there. There are some other positive signs, pending sales of existing homes posted back-to-back gains for the first time in almost a year. Construction spending unexpectedly rose, ending a six-month decline, and one report shows the decline in home prices in 20 major cities slowed during February, for the first time since 2007. When you add in some scattered signs the job situation's not unraveling quite so fast and an uptick in consumer confidence, well, you might have the makings of a better spring than a lot of the experts expected.

Here's the question, is the housing market better or worse than it was six months ago where you live? Go to cnn.com/caffertyfile post a comment on my blog.

BLITZER: Thank you, Jack.

Results are now in, the government's stress test for the nation's biggest banks, how their health may affect your financial health.

And General Motors is on the edge of bankruptcy so how did it manage to treat hundreds of clients to stay at a luxury resort?

Plus, fire on the mountain, whipped by wind, the flames are at least in some places out of control in California. Thousands are fleeing their homes. Some no longer even have homes. (COMMERCIAL BREAK)

BLITZER: The treasury department releases results of its stress tests to see if the nation's largest banks have enough capital to make it through some tough economic times. And is the struggling automaker throwing good money after bad? Mary Snow is standing by on that story, but let's go to our senior correspondent, Allan Chernoff on the stress tests. These banks, they have a lot of problems right now, and we are beginning to understand how much money many of them may need.

ALLAN CHERNOFF, CNN CORRESPONDENT: Indeed, Wolf, a little scary here. The tests found that nine of the nation's biggest banks will need to raise a total of $75 billion to protect themselves against possible losses if the economy remains in a slump through the end of next year. Now, as a bank customer, we don't have to stress. But, remember, if you are a taxpayer here, which we all are, we could be on the hook here, and that is what's really important. Let's have a listen.

(BEGIN VIDEOTAPE)

CHERNOFF (voice-over): Among the banks that will have to raise more capital are Bank of America, Citigroup, Wells Fargo and GMAC. Stress tests determined these banks need a stronger financial buffer, if the economy remains in a deep slump through the end of next year. So, regulators are telling the banks to increase their capital base as a cushion against potential losses. They need to raise money by selling stock to the public or private investors, or by selling assets. Bank of America, for example, is already trying to unload its subsidiary, First Republic Bank. The demand for more capital has not spooked shareholders.

ROBERT LITAN, KAUFFMAN FOUNDATION: It's a success for now. I think the treasury got the tranquilizer they wanted out of the stress test.

CHERNOFF: But if the banks can't raise enough capital through those steps, they may have to turn to an alternative to cushion them against losses, and here's where taxpayers may suffer. In return for bailout money, major banks issued secure, preferred stock to the government that has already paid taxpayers more than $2.5 billion in dividends. A bank could be required to convert that preferred stock into far more volatile common stock, putting taxpayers at risk of losing the bailout funds they lent the bank.

PROF. DAVID BEIM, COLUMBIA UNIVERSITY: This is going to be another hit to the taxpayers, and I think it's an ongoing problem. These tests only cover the 19 largest banks.

CHERNOFF: On the plus side, JP Morgan Chase, Goldman Sachs, Bank of New York Mellon and others were found to have enough capital. Those banks say before long, they hope to return T.A.R.P. bailout money to the treasury.

(END OF VIDEOTAPE) CHERNOFF: Keep in mind, the stress tests are only what-if scenarios. What if the unemployment rate went up to 10.3 percent next year? But if that were to happen, the tests conclude the nation's 19 biggest banks would lose a total of $600 billion this year and next. Wolf?

BLITZER: Wow, all right, thanks very much, Allan, for that.

Even after taxpayers bailed out the company, struggling automaker General Motors, is moving closer to bankruptcy, announcing today a big drop in revenue. So, how did GM just pay for hundreds of its clients to stay at a luxury resort? Let's go to CNN's Mary Snow. She's got the story for us. Mary?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, we've seen companies spark fury for the way they've spent money while getting bailed out by taxpayers. Take the public anger at AIG after it held an executive retreat last fall. Now, General Motors didn't hold a retreat, but critics are questioning a sales meeting that wrapped up today in Arizona.

(BEGIN VIDEOTAPE)

SNOW (voice-over): It bills itself as a destination resort outside Phoenix. The resort's website touts two 18-hole golf courses, 4 pools and a 17,500-square-foot spa. And it's where General Motors hosted about 500 of its biggest customers this week, flying them in paying nearly $250 a night for their hotel rooms. A GM spokesman says the two-day sales event shows off its new line of cars and trucks to fleet buyers who make up about 25 percent of GM sales. And, he says, the event was scaled back. No free golf. No spa services. But it didn't convince public spending watchdogs who question why GM held it at all, when it's on the brink of bankruptcy and taxpayers have footed $15 billion in bailout money.

TOM SCHATZ, CITIZENS AGAINST GOVT. WASTE: It just doesn't look good, and certainly it would outrage any shareholder of any company, and especially when the shareholders are being forced to hold part of that company.

SNOW: A spokesman for GM says it needs to keep customers from going to competitors, adding whether we file for bankruptcy for not, for us to pay back the loans and have a future, we have to sell products. One business professor specializing in branding says while GM has an image issue, there's a difference between auto executives flying corporate jets to Washington, asking for bailout money, and the company trying to sway customers.

DAVID ROGERS, COLUMBIA UNIV. BUSINESS SCHOOL: Nobody wants to see any of the companies that are on the government dole right now using their money for themselves. But, obviously, they're trying to stay in business. They're trying to make money. You've got to spend money on your customers.

(END OF VIDEOTAPE)

SNOW: And as far as how much money General Motors spent on its customers this week, it declined to provide the overall cost. Wolf?

BLITZER: Mary Snow, thanks very much for that report.

Medical records hacked. Millions of them. And now the hacker is making a demand. $10 million or else.

Plus, two powerful voices going at each other. Why conservative radio talk show host, Rush Limbaugh, says Colin Powell needs to give it up.

And what firefighters are fearing most has happened. California now witnessing something it hasn't seen in decades.

(COMMERCIAL BREAK)

BLITZER: One person says, I'm quoting now, we're all in a panic. Fear is spreading along with a raging wildfire in California. At last resort, the fire in Santa Barbara has scorched 1,300 acres and is zero percent contained. It's burned at least 20 homes, forcing almost 5,000 home evacuations, affecting some 12,000 people. Let's go out to the frontlines, CNN's Thelma Gutierrez is joining us in Santa Barbara right now. What's the latest Thelma?

THELMA GUTIERREZ, CNN CORRESPONDENT: Wolf, I can tell you I talked to a firefighter a short time ago. He told me it is a race against time and a race against what they call the sundowner winds. Those are winds that kick up in the late afternoon and they can reach 65 miles an hour. Here's part of the problem. You take a look down below at this smoldering house. All it takes is for the embers to fan out across this dry vegetation that hasn't burned in almost half a century, and then you have a very catastrophic event in front of you, such as we had yesterday.

Now, right now, they are concentrating much of the firefighting effort on a ridge northwest of where I'm standing right now. There's 16 aircraft that are flying out there, above that area, making water drops. Tim Walton with the California Department of Forestry, you were out here yesterday. You know how quickly things can change. Right now it's calm. That could all change.

TIM WALTON, CALIFORNIA DEPT. OF FORESTRY: Yeah, I was out here yesterday afternoon just about this time filming, I'm a volunteer photographer, so I was shooting what looked like a calm, everyday, ordinary fire, and the winds kicked up, and behaved like I've never really seen it before, ever. And just started gusting up to 40, 50, and reports of 60-mile-an-hour gusts. And the fire went from a very, very calm-appearing situation to a firestorm that just took these canyons and all these homes.

GUTIERREZ: So even though it seems to be calm right now, you don't seem to be all that comfortable.

WALTON: Well, no, I don't think anybody's comfortable here. I think they need -- the fire needs to be put out, and all the resources that are needed are hopefully here, and they can get to it and do all the dirty work of putting out all these embers. GUTIERREZ: All right, thank you, Tim. In terms of resources, Wolf, 1,400 firefighters out here and 16 aircraft in the air. So, they're really giving it all they have. Wolf?

BLITZER: Good luck to all those folks out there Thelma, thank you.

Abbi Tatton is here, she's got some i-Reports, people watching this fire and it's getting very close to some of them.

ABBI TATTON, CNN INTERNET REPORTER: Wolf, thousands of them are under this mandatory evacuation order, but still more are under a voluntary evacuation. We've got these i-Reports coming in from people who are just trying to figure out, watching and waiting to see if and when they should leave their homes. This is what we're talking about. This is a picture from Jenny Deakyne who has a pretty good view of the hillside there of flames approaching and if we advance that, you can see just how ominous these smoke clouds are. This is a view right from her front yard. She said her family has two cars packed up and ready to go. They can leave at a moment's notice.

Nearby, Ryan Pfleger is a film student who shot this video from his rooftop. If you listen to this, you can really hear how strong these winds are that are driving these wildfires. Ryan said first thing this morning they had a glimmer of hope. They thought it was dying down a little bit, but as these winds picked up, the situation got worse again and he could see flames once more. Wolf, Ryan told me that he's lived there since 2003, they're used to wildfires, but this is the first time he said that he's been genuinely nervous.

BLITZER: Yeah, a lot of people are scared out there. All right Abbi, thank you.

Millions of patient records stolen from a government website. The hacker wants $10 million. Is your social security number, your prescription drug information at risk?

A senate report sounds the alarm on Iran. Why it may be another step closer to having the ability to build a nuclear weapon.

And police step up their manhunt after a killing leaves a college and a community terrified.

(COMMERCIAL BREAK)

BLITZER: To our viewers, you're in THE SITUATION ROOM. Happening now -- new warnings about Iran. A senate report says the country could be as close as six months away from having the material to build a nuclear weapon.

The actor Kiefer Sutherland, surrenders to New York Police to face misdemeanor assault charges. He's accused of head butting a fashion designer at a Manhattan nightclub.

And a gas explosion injures nine people in a Maryland strip mall, and the blast is all caught on tape. All of this coming up, plus, the best political team on television.

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

Here's the question -- where to after Guantanamo? Lawmakers are now pressing the Obama administration, demanding to know what it plans to do with more than 200 terror suspects held at the controversial camp, now targeted for closure? Our homeland security correspondent, Jeanne Meserve has details. Jeanne?

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: Wolf, the big question is, when the government closes Guantanamo Bay, where will it put the detainees? The answer from some members of congress, not in my backyard.

(BEGIN VIDEOTAPE)

MESERVE (voice-over): The 241 Guantanamo detainees have to go somewhere when the facility closes. There is concern that, for some, that somewhere might be the United States.

REP. LAMAR SMITH (R), TEXAS: The transfer of detainees to U.S. soil presents a clear and present danger to American lives.

MESERVE: While Republican House members introduced legislation to stop the movement of detainees into this country, senators of both parties grilled Attorney General Eric Holder.

SEN. RICHARD SHELBY (R), ALABAMA: Do you have the authority under the law to do this, to bring terrorists into this country?

ERIC HOLDER, ATTORNEY GENERAL: We would not bring them into this country and release them, anybody who we would consider to be a terrorist.

MESERVE: Holder says he thinks about the safety of the American people every waking moment and it would be a foremost consideration as his department reviews the cases of the Guantanamo detainees.

HOLDER: Some are going to be released. Some are going to be tried. Some will be detained on a fairly extended basis. And so those who will be released are those who we think can be released and be released on a safe basis.

MESERVE: And before any are released or imprisoned here, he promised consultation with state and local authorities.

Left unanswered -- what happens to detainees who are tried in the U.S. and acquitted?

And what about people like Abdullah al-Azri?

He blew himself up in a suicide attack in Iraq -- one of more than 60 former prisoners who are committed or are suspected of committing terrorist attacks after their release from Guantanamo. (END VIDEO TAPE)

MESERVE: With some European nations refusing to take detainees, the administration's options are shrinking. And Holder says the movement of detainees out of Guantanamo may begin within just a few months -- Wolf.

BLITZER: All right. Jeanne, thank you.

A state Web site hacked -- patient records and the personal information of millions of people right now at risk. And the hacker is demanding a $10 million ransom.

CNN's Brian Todd is here in THE SITUATION ROOM.

He's got the details -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Wolf, this Web site, that has about 35 million personal records for some very sensitive drug prescriptions, has, indeed, been compromised.

(BEGIN VIDEOTAPE)

TODD (voice-over): A shakedown, targeting the Virginia state Web site that tracks potential abuse of drugs like OxyContin and Vicodin. A hacker claims to have stolen more than eight million patient records -- more than 35 million prescriptions. The attacker brazenly wiped out the home page of the Virginia Prescription Monitoring Program's Web site last week. In its place, a note saying: "I have your expletive. I made an encrypted backup" and "for $10 million, I will gladly send along the password."

Experts warn of a security threat.

(BEGIN VIDEO CLIP, COURTESY WTVR)

PROF. DOUGLAS SZAJDA, UNIVERSITY OF RICHMOND: They have no guarantee that this person hasn't made 100 copies of this and has sent them out and is still going to sell them to the highest bidder.

TODD: The person did threaten that if not paid by late this week: "At the very least, I can find a buyer for the personal data -- name, age, address, Social Security number, driver's license number."

Virginia officials tell us driver's license numbers are not posted on the site. But the other information mentioned by the hacker, including some Social Security numbers, is posted.

has, indeed, been WINKLER, AUTHOR, "SPIES AMONG US": That's enough, in many cases, to -- to perform identity theft, depending on how much the company you're giving it to checks out the information.

TODD: The state prescription Web site is now shut down, but the hacker's extortion note is preserved on Wikileaks, a Web site that publishes leaked documents. The FBI and state police are investigating, but won't comment on the case. (END VIDEO TAPE)

TODD: Now, state officials tell us that so far, they don't have evidence that any personal information may be at risk in this case. They say they have not lost any of the information hacked.

Virginia's governor, Tim Kaine, says this hacker should not be paid a dime. Internet security expert Ira Winkler agrees, saying it's like given in to the demands of terrorists. And he says given the apparent immaturity of this hacker, there's no guarantee that he wouldn't just take the money and then sell the information anyway -- Wolf.

BLITZER: Wasn't this information on this Web site protected?

TODD: It was supposed to be, according to Ira Winkler. He says most of these Web sites are supposed to have what they call encryption. It's like a code where only the operators have access to it.

We asked state officials about that. They said they would not comment on that while the investigation is going on.

BLITZER: Brian, thanks very much.

A very disturbing story.

Rush Limbaugh versus Colin Powell -- their war of words heating up, with Limbaugh firing a new shot at the former secretary of State.

Plus, President Obama issues a statement on this National Day of Prayer, but skips public events.

Could that wind up hurting him?

Gloria Borger, David Brody, Roland Martin -- they're all here to discuss that and more.

(COMMERCIAL BREAK)

BLITZER: Let's get right to our senior political analyst, Gloria Borger; David Brody, the White House correspondent for the Christian Broadcasting Network; and our CNN political analyst, Roland Martin.

Check out the cover of the new issue of "Time Magazine" -- Gloria, it's got a picture, you can see, of an elephant. But the title, "Endangered Species."

Here's the question, is the Republican Party an endangered species?

GLORIA BORGER, SENIOR POLITICAL ANALYST: Well, there's no doubt about it, they're having a little bit of trouble right now. But you could have asked that question about the Democratic Party 20 years ago. And so, you know, look, they lost a presidential election.

And I've got two things to say -- they need some ideas and they need some new leaders.

BLITZER: David, they've got plenty of ideas there. They've got plenty of leaders. But the question is, do they need new ideas and new leaders?

BORGER: New.

DAVID BRODY, CHRISTIAN BROADCASTING NETWORK: Well, I think a little bit of both, Wolf. I don't think there's a question about that. But here's the other part of that story. And that is the overreach factor. I mean, look, the Democrats are in a position where they could overreach here. So that's something they're going to have to watch out for. And that's very important as they go forward.

BLITZER: Underlining this -- these questions about the Republican Party, this battle that's now developing, Roland, between Rush Limbaugh and Colin Powell. Colin Powell, the other day, suggesting that the Republicans should just stop listening so much to Rush Limbaugh. And Rush Limbaugh responding with this.

Listen to this.

(BEGIN VIDEO CLIP FROM RUSHLIMBAUGH.COM)

RUSH LIMBAUGH, RADIO TALK SHOW HOST: What Colin Powell needs to do is close the loop and become a Democrat, instead of claiming to be a Republican interested in reforming the Republican Party. He's not. He's a full-fledged Democrat.

(END VIDEO CLIP)

BLITZER: Colin Powell has always been a Republican. But he did endorse Barack Obama for the presidency -- Roland.

ROLAND S. MARTIN, CNN POLITICAL ANALYST: Well, it's not like Rush Limbaugh is a full-fledged Republican. When you look at his family values and his consideration when the comes to moral issues, he's an economic conservative -- a fiscal conservative.

(CROSSTALK)

MARTIN: And, yes, I said it.

(LAUGHTER)

MARTIN: And I'm sick of Rush Limbaugh throwing this kind of crap out, because this is the problem with Democrats and Republicans. They act as if you can't have different people in the party. There are moderate Democrats, moderate Republicans. There are people on the left -- far left of the Democratic Party, folks on the far right in the Republican Party.

You need a variety of voices in the party. So just because Colin Powell chooses to have a difference of opinion from Rush Limbaugh, so be it. But Rush is also an idiot for keep trying to say, well, he only voted for Obama because he's black. Well, you know what, Carol Moseley-Braun ran in 2004. Reverend Al Sharpton ran in 2004. And a lot of black folks didn't vote for them.

Maybe he saw him as qualified, Rush. Maybe you ought to check that out.

BRODY: Wolf...

BLITZER: Yes. Go ahead -- go ahead, David.

BRODY: I've got to tell you real quick, there's going to be a Rush Limbaugh test coming up -- I mean you know this -- in 2012.

BLITZER: What is that -- what does that mean?

BORGER: What is that?

BRODY: In other words, Huckabee, Palin, Romney -- they're all going to be asked, do you agree with Limbaugh on this, do you agree with Limbaugh on that?

I mean there's going to be a weeding out to the...

BORGER: Who's going to be asking that?

BRODY: Say it again?

BORGER: Who's going to be asking that?

MARTIN: We will. We -- in every debate, we will.

(CROSSTALK)

BRODY: Oh, I don't think there's any question.

(CROSSTALK)

BRODY: The bigger question, Gloria, is...

BORGER: But what about Republican voters?

BRODY: ...what is a Republican?

BORGER: Yes?

BRODY: What is a conservative exactly?

And that's going to have to be well defined.

BLITZER: I guess the question is how much influence Rush Limbaugh really holds over the GOP, Gloria.

BORGER: Well, right now, there's a vacuum in terms of the Republican leadership. And they seem to be looking to the past rather than looking to the future. You have Rush Limbaugh, who's been around for a while. You have Newt Gingrich out there. And, of course, you have the former vice president, Dick Cheney, who seems to speak for a lot of conservatives in the party when it comes to issues of fighting terrorism.

So I think...

MARTIN: But...

BORGER: ...you know, they need to kind of look in the other direction.

MARTIN: But, Wolf, we're making a mistake here. I heard David say people want to ask themselves what's a Republican, what's a conservative. You can be a conservative and be a Democrat.

BORGER: Right.

MARTIN: This is not a question of liberal or conservative. The problem here is you can be a liberal, moderate or conservative Republican; a liberal, moderate or conservative Democrat. That's the problem with these labels.

And so if the only way the Republican Party competes, if they have different people, like a Colin Powell, an Arlen Specter, or even a Richard Shelby -- folks of different views. You can't just have one view...

BLITZER: All right.

MARTIN: ...that's how you lose.

BLITZER: David, let me pick your brain on this, today being the National Day of Prayer. The president of the United States, he issued a statement. I'll read the statement that he released: "As we observe this day of prayer, we remember the one law that binds all great religions together -- the golden rule and its call to love one another, to understand one another and to treat with dignity and respect those with whom we share a brief moment on this Earth."

Now that was a statement he released. But he didn't have an event -- a public event. George W. Bush had one every year in this -- in May. It was a -- it was a regular feature.

And the question to you, David, is this -- is this going to be a problem for President Obama, that he didn't hold a public event recognizing this National Day of Prayer?

BRODY: I think, at the end of the day, Wolf, it probably won't, only because, look, there was no expectation with this, especially among conservative Christians. I mean they -- they figured he wasn't going to hold an event.

And why is that?

Well, look, the National Day of Prayer Task Force is headed by Shirley Dobson. I mean imagine that photo-op at the White House, with Shirley Dobson and Barack Obama.

So, I mean, look, politically, it wasn't going to work for the cameras.

You know, but besides that, it's hard to make the case that the president has not reached out, especially during the campaign, to people of faith. And so, you know, that narrative has kind of left the station, to a degree, a little bit.

Now, the challenge in the future for conservatives -- conservative Christians, that is, is to peck away a little bit at the president, especially on the abortion issue, especially on some of the policy decisions he's made in the first few months here.

BLITZER: Roland...

MARTIN: How (INAUDIBLE)...

BLITZER: Before you answer, Roland, we've got a picture of the president signing that proclamation today.

But go ahead and respond.

MARTIN: How is a National Day of Prayer all about conservative Christians?

Look, the president missed an opportunity. He could have used this opportunity to advance the whole (INAUDIBLE) of progressive Evangelicals -- issues beyond abortion and homosexuality.

BRODY: Right.

BORGER: But that would...

MARTIN: He doesn't have to only appeal to conservative Christians.

BRODY: You're right, but...

BORGER: But that would create more differences. You know, I mean it's a photo opportunities. Photo opportunities are a -- are a dime a dozen.

BRODY: Right.

(LAUGHTER)

BRODY: I agree.

BLITZER: All right. On that note, we'll leave it alone.

All right, guys. Thanks very much.

We'll continue this conversation tomorrow.

Meanwhile, a university and the local Jewish community living in fear after a deadly shooting. Now, there are new developments as the suspect's family pleads with him to turn himself in.

(COMMERCIAL BREAK)

LOU DOBBS, HOST, "LOU DOBBS TONIGHT": Coming up at the top of the hour, we're reporting on the president's plan to cut his 2010 federal budget by $17 billion. But Republicans say the cuts are a pittance -- it will have virtually no impact on the president's $3.5 trillion budget.

Also tonight, more than 1,000 firefighters are battling a dangerous wildfire in Santa Barbara, California. Fire officials say high winds could make it much harder to control the fire -- 13,000 people evacuated. We'll have the latest.

And Los Angeles Dodgers star Manny Ramirez has been suspended for 50 games for taking a banned drug. Ramirez also facing a multimillion dollar pay cut. We'll have complete coverage.

And new concerns that hackers could gain access to our air traffic control system and force airliners to collide or to crash. We'll have that special report, all the day's news and more, at the top of the hour.

Please join us for all of that.

THE SITUATION ROOM continues in just a moment.

(COMMERCIAL BREAK)

BLITZER: There's a nationwide manhunt underway right now for a suspect wanted in the killing of a female at a very well-known college.

(BEGIN VIDEO CLIP)

CHIEF LYNN BALDONI, MIDDLETOWN, CONNECTICUT POLICE: Detectives have uncovered a connection between the victim of yesterday's shooting and the suspect, Stephen Morgan. This information leads investigators to believe that this shooting, while tragic, was not a random act of violence. A nationwide APB has been issued for Stephen Morgan, who has past connections to New York, Colorado and Massachusetts.

(END VIDEO CLIP)

BLITZER: Right now, police are telling frightened students and nearby residents to lock their doors and avoid going outside. Again, the suspect is on the loose. And officials say he may be looking to kill more students and Jews.

Let's go straight to our national correspondent, Susan Candiotti.

She's in Middleton, Connecticut with the latest.

What do we know -- Susan?

SUSAN CANDIOTTI, CNN CORRESPONDENT: Well, police are still on the lookout for murder suspect, Stephen Morgan. And tonight, they have issued a first degree murder warrant for him. But they say they don't know where he is, including whether he might still be in Connecticut.

But we are learning a few more details about what happened yesterday when that shooting took place inside a bookstore here in Middleton -- the bookstore where the victim worked.

Her name, 21-year-old Johanna Justin-Jinich. It is clear now that police -- we have learned from a law enforcement source -- that they actually spoke with the suspect, Morgan, after the shooting took place -- unknowingly.

It is not uncommon, of course, for police to talk with people that are outside the scene of a crime after it happens. And a source tells us that they did take down his name and his name later came up. Of course, that name clicked.

Now, we are also -- understand that a lot of people are worried in this town because police also located a journal -- a journal that Morgan kept, in which he issued threats both to Wesleyan students, as well as Jews. In fact, the victim in this case is Jewish.

Morgan's family, the suspect -- a spokesman for that family spoke out late today and asked him to turn himself in. This is his sister.

(BEGIN VIDEO CLIP, COURTESY WHDH)

DIANA MORGAN, SUSPECT'S SISTER: We're shocked and sickened by the tragedy in Middletown. And our heartfelt condolences go out to the friends and family of the victim. We've been cooperating in every way possible with the authorities who are searching for Steve. We don't know where Steve is or where he might go. We would like to send him this message via the media. Steve, turn yourself in right now to any law enforcement agency wherever you are, to avoid any further bloodshed. We love you and we will support you in every way. And we don't want anyone else to get hurt.

(END VIDEO CLIP)

CANDIOTTI: School happens to be in recess at this time. Final exams are scheduled come Monday. We don't know yet whether they will proceed -- back to you -- Wolf.

BLITZER: Good luck to all the folks over there.

And thanks very much for that, Susan.

Let's go back to Jack for The Cafferty File.

CAFFERTY: The question this hour -- is the housing market better or worse than it was six months ago, where you live?

Jonathan writes from Phoenix: "The housing market here was terrible six months ago. It got worse for the next three months and now appears to be turning around. There are still homeowners and banks that price their houses above market value and that impacts our ability to get through the inventory. However, most individuals have realized the true value of their homes and we are seeing a moderation in the number of houses simply sitting on the market."

Anthony in New Jersey: "Funny you should ask. I sold my house and bought a new one right before the bubble burst. I made a killing. But now in my new, once burgeoning community, I see idle bulldozers all over the landscape and it feels like an eerie ghost town."

Chuck writes from Sheboygan, Wisconsin: "God, I hope so. I work at the largest manufacturer of kitchen and bath products in America. And if things don't pick up soon in the housing market, I'm going to be out of a job."

Micah writes from California: "It's gotten somewhat better. I've noticed that there are fewer "for rent" or "for sale" homes than there have been five, six, even three months ago. Granted, there are still many out there that haven't been moved into. It's kind of in limbo. I think, however, if people are beginning to gain confidence in the economy and the housing market again, things will continue to look up. Here's hoping."

Dan in New Jersey: "The housing market is about the same. Sellers are just more resigned to accepting the lower prices."

And Anna in Florida: "I live in Orlando and I certainly hope the housing market is getting better. We're moving to a new home in June and we're going to sell our old one. Wish us luck."

If you didn't see your e-mail here, you can go to my blog at CNN.com/caffertyfile and look for yours there among hundreds of others.

BLITZER: See you tomorrow, Jack.

Thank you.

A head-butt as a way to solve a problem -- the actor, Kiefer Sutherland, may think so. He's one of several celebs getting in on the action.

(COMMERCIAL BREAK)

BLITZER: Here's a look at some Hot Shots coming in from our friends at the Associated Press -- pictures likely to be in your newspapers tomorrow.

In Jerusalem, Catholic nuns wave outside a church in advance of Pope Benedict's visit to the Holy Land.

In Pakistan, a girl peers out from under her mother's burka at a refugee camp.

In Ukraine, soccer fans wave flares during an important match.

And in Florida, a squirrel tries his luck at moving a coconut almost twice its size.

Some of this hour's Hot Shots -- pictures worth a thousand words.

We told you about actor Kiefer Sutherland and the accusations he head-butted a fashion designer to make a point. He wouldn't be the first person.

CNN's Jeanne Moos takes a look at this Moost Unusual problem- solving technique.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): Bulls do it, sheep do it and now the guy who plays Jack Bauer has been charged with misdemeanor assault for doing it, though a head bump must seem pretty tame to an actor...

(VIDEO CLIP)

MOOS: ...who's been kicking guys and suffocating them...

(VIDEO CLIP)

MOOS: ...choking them with chains and kneeing them in the groin.

What's a little head-butt?

Something Dennis Rodman did to a ref and something we love to see on TV.

(BEGIN VIDEO CLIP FROM "DEXTER," COURTESY SHOWTIME)

UNIDENTIFIED MALE: I own you.

(END VIDEO CLIP)

MOOS: And at the movies

(BEGIN VIDEO CLIP FROM "NICK & NORAH'S INFINITE PLAYLIST, COURTESY COLUMBIA PICTURES)

UNIDENTIFIED MALE: That's it.

(END VIDEO CLIP)

MOOS: No tears from Kiefer Sutherland. After attending a gala at the Metropolitan Museum of Art, Sutherland allegedly head-butted a fashion designer who may have accidentally jostled Brooke Shields while Sutherland was talking to her. Sutherland isn't talking to us. We tried.

(on camera): An eyewitness told "The New York Post" that he supposedly saw Kiefer Sutherland earlier in the evening wearing a giant feather boa and acting crazy.

(voice-over): Now, he's poised to join the ranks of the fabled head-butters, like the French soccer star who head-butted an Italian during the World Cup. The French lost the Cup, but comedians gained

(BEGIN VIDEO CLIP FROM "JIMMY KIMMEL LIVE," COURTESY ABC)

JIMMY KIMMEL, HOST: Miss France. Miss Italy.

(END VIDEO CLIP)

MOOS: That's allegedly what singer Amy Winehouse did to a guy outside a London pub. And she's got a lot of head to butt.

(on camera): When head-butting, use your head. There are head- butting dos and head-butting don'ts.

(VIDEO CLIP)

MOOS (voice-over): Conveniently demonstrated in this how to head-butt video.

(BEGIN VIDEO CLIP, COURTESY STREETFIGHTSECRETS.COM)

UNIDENTIFIED MALE: You've got (INAUDIBLE) one massive and banging shot going boom, boom, boom.

(END VIDEO CLIP)

MOOS: Even Jack Bauer could use some street fighting tips.

(BEGIN VIDEO CLIP, COURTESY STREETFIGHTSECRETS.COM)

UNIDENTIFIED MALE: You can pull his face into your head as you're making the strike, so you've got a two-way motion.

(END VIDEO CLIP)

MOOS: At least this jockey didn't use two-way motion. His horse unseated him, so to make him stop horsing around, the jockey brought things to a head -- butt.

Jeanne Moos, CNN, New York.

(END VIDEO TAPE)

BLITZER: Thank you, Jeanne.

Tomorrow, the president of Afghanistan, Hamid Karzai -- he'll be my special guest here in THE SITUATION ROOM.

What do you want to ask him?

You can submit your video questions to iReport.com/situationroom. We'll try to include some of your questions for the president of Afghanistan tomorrow right here in THE SITUATION ROOM. Hamid Karzai will join me.

Until then, thanks very much for joining us.

I'm Wolf Blitzer in THE SITUATION ROOM.

Up next, "LOU DOBBS TONIGHT" -- Lou.

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