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The Situation Room

President Unveils 'Vision' For America; GOP On Notice: No Renewal of Tax Cuts For Wealthy; U.S. Fighter Jets Flying Missions in Libya; Child Climbs Out of Sinking Minivan as Mother Commits Suicide Killing Thee Younger Children; Fact-Checking the President; Fueling Debate Over Spending; Rift Between U.S. and Saudi Arabia

Aired April 13, 2011 - 17:00   ET

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

WOLF BLITZER, HOST: Brooke, thanks very much.

Happening now, President Obama puts Republicans on notice, blasting what he calls their deeply pessimistic vision of the future and warning he will refuse to renew tax cuts for the wealthy.

Also, new indications U.S. Fighter jets are dropping bombs on Libya just weeks after handing over control of the military mission to NATO. So what is behind the latest revelation from the Pentagon?

And a 10-year-old child's chilling escape to safety after being driven into a river by his own mother.

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

Up first, the president's vision for America, a controversial plan he says will reduce the federal debt by some $4 trillion over the next 12 years. He's accusing Republicans and their plan of having a much more cynical view.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I believe it paints a vision of our future that is deeply pessimistic. It's a vision that says if our roads crumble and our bridges collapse, we can't afford to fix them; if there are bright young Americans who have the drive and the will but not the money to go to college, we can't afford to send them.

In the last decade, the average income of the bottom 90 percent of all working Americans actually declined. Meanwhile, the top 1 percent saw their income rise by an average of more than a quarter of a million dollars each. That's who needs to pay less taxes?

They want to give people like me a $200,000 tax cut that's paid for by asking 33 seniors each to pay $6,000 more in health costs.

That's not right. That's not going to happen as long as I'm president.

(END VIDEO CLIP) BLITZER: Let's go straight to Capitol Hill right now where outraged Republicans have just issued their immediate response to the president's speech.

Our senior congressional correspondent, Dana Bash, is up on Capitol Hill.

Dana, it's fair to say the Republicans reacted very angrily to what they heard from the president.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: They sure did, Wolf. Republicans didn't just dismiss the president's speech, they really attacked it in a very -- pretty harsh -- stunningly harsh language and actually, personal as well.

One of the Republican leaders who came to the microphone said that he was invited to the speech and said, quote, "I missed lunch for this?"

And when it comes to the House Budget chairman, Paul Ryan, who sat in the front row and listened to the president speak and listen to the president really rip into his plan, which deals with overhauling Medicare, changing Medicaid and, of course, keeping taxes low, this is the way he reacted to what he heard from the president.

(BEGIN VIDEO CLIP)

REP. PAUL RYAN (R-VA), BUDGET CHAIRMAN: What we got was a speech that was excessively partisan, dramatically inaccurate, and hopelessly inadequate to addressing our country's fiscal challenges.

What we heard today was not fiscal leadership from our commander- in-chief. What we heard today was a political broadside from our campaigner-in-chief.

We need leadership. We don't need a doubling down of the failed politics of the past. This is very sad and very unfortunate. Rather than building bridges, he's poisoning wells.

(END VIDEO CLIP)

BASH: Now, Ryan went on to say that the president was exploiting people's emotions and fear. He says anxiety and not envy is not hope, it's partisanship.

And he also said that what he believes that what the president did today was give a speech and not deliver a plan; he punted. And that's what Republicans across the Capitol are saying. They're saying that he gave what they consider a partisan speech. And that while he definitely gave some numbers and some goals when it comes to cutting Medicare, to cutting Medicaid, to cutting discretionary spending, he did not give specifics on how to get there.

And we are going to see -- you know, obviously, there are big differences, but we're going to see a vote with some specifics on the Republican plan later this week. In fact, on Friday, on Paul Ryan's plan.

One other interesting note. On entitlements, Wolf, Ryan also said that he actually thought before the speech that there was a possibility that the two sides could work together on Social Security, to make that system solvent. He said that he now thinks it was foolish optimism, "I was just naively optimistic." Pretty harsh stuff, Wolf.

BLITZER: Yes, well, the president was harsh with the Republicans, too, and now the Republicans very harsh with the president.

There is a group, though, in the Senate, of Republicans and Democrats, they are trying to find serious common ground.

BASH: That's right. While all of these rhetorical grenades are going back and forth and getting really tougher and tougher by the day, there is this bunker, if you will, of Republican and Democratic senators; they keep working.

I spoke to one of the members -- it's called the "Gang of Six" -- one of the members, Kent Conrad, right after the speech, and he told me that he does believe that they are making progress. He hopes that they can come up with something soon.

Other members are saying the same thing. That they are taking some bits and pieces from both of the plans, from the president and from the Republican plan. This is something that people think may be the best hope of getting something done on a bipartisan basis.

They have been working for months. You heard the president talk about the fact that Vice President Biden and others are going to come to have other bipartisan discussions, but I think people are banking on this small group to get a plan out first.

BLITZER: We'll see what they can do.

Dana, thanks very much.

And joining us now from the White House, the director of the president's National Economic Council, Gene Sperling.

Gene, thanks very much for coming in.

GENE SPERLING, DIRECTOR, NATIONAL ECONOMIC COUNCIL: Thanks for having me, Wolf.

BLITZER: Here's one of the criticisms of the president: He's not leading, he's responding. That he waited until the Republicans came out with their long-term deficit reduction plan and now he's counterpunching.

What's the argument against that?

SPERLING: Well, the president has led by putting together a bipartisan tax agreement in December that's been very important to the strength of this recovery.

He's led by working together and getting a bipartisan agreement on spending, historic spending cuts still protecting the investments he cares about.

And he has now led by putting forward, I think, one of the most serious deficit reduction plans I've ever seen a president put forward -- $4 trillion over 12 years --

(CROSSTALK)

BLITZER: Well, let me --

(CROSSTALK)

SPERLING: -- dollars in spending cuts --

(CROSSTALK)

BLITZER: -- let me interrupt you --

(CROSSTALK)

SPERLING: -- dollar revenues.

BLITZER: Let me interrupt you, Gene. Let me interrupt you on that point.

Four trillion over 12 years. At the end of 12 years, does that mean there would be a balanced budget?

SPERLING: There is not any plan at the moment that would have a balanced budget, whether you're looking at the House Republican plan or ours in this time period.

But what's important, Wolf -- and this is very important -- is that we show that we can bring the deficit down. That we can create confidence among the public and among global markets. That the United States is living within its means. And that means showing that our debt, as a percentage of our income, is coming down.

BLITZER: All right --

SPERLING: And the president's made a firm commitment, and even put in a back stop, a failsafe, an across-the-board mechanism to make sure that under any circumstance, by 2014, we are once again living within our means.

BLITZER: Well, at what point -- at what year, under the president's plan, would there be a -- a balanced budget? In other words, the debt would not continue to increase.

SPERLING: This plan is designed to make sure that the debt is not going up as a percentage of our income, to lock that in by 2014.

But the deficit has been coming down significantly from that $1.3 trillion that the president inherited. It is projected to come down significantly over the last few years.

But when you've inherited this type of a large deficit, $1.3 trillion, that's what the president inherited when he walked in --

(CROSSTALK)

BLITZER: But it's going to be --

(CROSSTALK)

SPERLING: -- the important thing --

(CROSSTALK)

BLITZER: -- $1.6 trillion this year. And what I hear you saying is that there's -- as far as the eye can see, there is not going to be a balanced budget.

SPERLING: Wolf, what is -- this is not an accounting game here. This is about creating confidence in -- for our country that we are once again living within our means.

You cannot balance the budget overnight, whether you are Paul Ryan, whether you are Ken Conrad, whether you are Barack Obama.

What you can do is do very, very significant but balanced deficit reduction, and do it in a way that does not harm the strength of our recovery, our ability to invest in education, research in our future and that still can protect the basic compact --

BLITZER: All right.

SPERLING: -- we have in areas like Medicare and Social Security. And that is what the president put forward. And $4 trillion over 12 years is a very, very significant deficit reduction.

BLITZER: Well, the Republicans say their plan, Paul Ryan's plan, would cut $6.2 trillion over 10 years. The president said it would only cut $4 trillion.

Where are you getting your -- why is there a difference --

SPERLING: No, no, no, no.

BLITZER: -- of $2 trillion?

SPERLING: No, no, no. The -- we're talking about how much it reduces the deficit and the debt. They'd like to count how much -- they just count spending, they don't want to acknowledge that they are also increasing borrowing by having more tax relief for those who are most well off.

So what you have is both the bipartisan commission and the House Republican plan did set targets of $4 trillion in deficit reduction over 10 years. What the president said is that by achieving that goal over 12 years, we can do so in a way that creates just as much confidence about our ability to live within our means, to encourage investment on our shores, but do so in a way that ensures we're not being harmful to our economic recovery, to job growth, to investment or things that are important --

BLITZER: All right.

SPERLING: -- like the basic guarantee of Medicare.

BLITZER: The president said flatly he will not allow the Bush tax cuts for the wealthiest Americans, families earning more than $250,000 a year, to continue any longer.

Now, he's made that -- those kinds of statements before. What if the Republicans refuse? What if the Republicans refuse to allow a tax increase for the wealthiest Americans, what will the president do then?

SPERLING: Well, the president has been pretty firm on this. And, Wolf, it's because if you want to have a serious deficit reduction plan, you have to have a sense of shared sacrifice.

What the president said is when you're giving somebody $2,000 tax relief who's very well off, at the same time, you're asking seniors to pay $6,000 more in Medicare costs starting in the next decade. What that means is you're putting a very heavy burden on -- on millions of seniors, not to reduce our deficit, not to reduce the debt, but simply to afford the borrowing for our most well-off Americans.

That is -- you cannot do that when you have --

BLITZER: All right.

SPERLING: -- a sense of shared sacrifice. And all of the bipartisan deficit reduction plans, from 1983 with Tip O'Neill and Ronald Reagan, or 1990, all of them had some sense of shared sacrifice as the main component.

BLITZER: All right, very quickly, because we're out of time.

Under the president's plan, General Electric, which, last year, made $14 billion in profit, $5 billion here in the United States, paid zero tax, how much tax would they pay under the president's new plan?

SPERLING: The important thing about what the president has called for is he said let's have revenue neutral corporate tax reform where we reduce new tax expenditures --

(CROSSTALK)

BLITZER: So how much tax would they pay?

SPERLING: Wolf, I'm not -- I'm not going to tell you what a particular company is going to pay. What I am going to tell you is -- (CROSSTALK)

BLITZER: But would they pay anything?

SPERLING: What I'm going to tell you is that the problem we have is that people can use the different loopholes and expenditures in our tax code to pay less taxes than they should, and the way to solve that is the president's solution on corporate taxes. Let's lower rates, but let's do so in a way that doesn't increase the deficit by removing and eliminating most of the loopholes and tax expenditures.

And that is something this president has said he would work with with business, with Republicans and Democrats in Congress. It's one example of something we could get done this year that could make a big difference for economic growth and our future competitiveness.

BLITZER: So would G.E. pay anything?

SPERLING: Wolf, I am --

(CROSSTALK)

BLITZER: It's a simple question.

SPERLING: Wolf, I'm the president's national economic adviser. I'm not going to comment on specific companies. I'm telling you about the public policy and how it would affect how the corporate tax code for hundreds of thousands of companies.

It would lower the rates. It would take away loopholes and tax expenditures. And I -- we think that would make us more competitive. We'd have a more competitive tax rate. And we'd make sure that there's a greater sense that everybody is paying their fair share.

That's what the president is proposing. That's what we could get done if we could work in bi -- in a bipartisan way on corporate tax reform --

BLITZER: All right.

SPERLING: -- as well as the president's larger comprehensive deficit reduction plan that he put forward today.

BLITZER: Gene Sperling, thanks very much.

SPERLING: Thank you.

We're talking also live to two House members to get their different, very different take on the president's plan, Anthony Weiner and Jeb Hensarling. Stand by for that interview, that's coming up later.

Also, a mother tries to kill her children, how one of them survived.

And a shocking announcement from the Pentagon today on U.S. military activity in Libya.

(COMMERCIAL BREAK)

BLITZER: Rising gas prices are fueling Jack Cafferty's question this hour. Let's go to Jack for "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN CONTRIBUTOR: What a clever little play on words that was.

Get ready for more pain at the pump, some experts are predicting gasoline $5 a gallon by Memorial Day, which isn't very far away.

Right now, the national average for a gallon of gas is $3.80, that's regular unleaded. In some places, $4.00 a gallon is already in the rearview mirror. Prices have been climbing pretty steadily for weeks now. We're off the all-time record high on average, but not by very much. Gas peaked in July of 2008 when the national average of $4.11 a gallon. It's almost a foregone conclusion that we're going to blow by that number and soon.

This comes at a bad time, of course, it always does. We have a fragile U.S. economy, gas prices threaten the recovery. According to a new Reuters/IPSos poll, 68 percent of Americans say the high cost of gasoline has forced them to cut back on other areas of spending, 62 percent said they are driving less because of how much it costs to fill the tank.

And businesses are experiencing higher transportation costs. They are faced with a tough decision, either eat those costs or pass them on to the rest of us. Either way, it spells tough times for most Americans.

Crude oils prices drive gas prices. The unrest in the Middle East has been pushing crude prices oil, so has an ever increasing demand coming from developing countries.

Republicans blame President Obama. What's new about that? When President Obama took office, national average for a gallon of regular unleaded gas, $1.79, less than half of what it is today.

Former Alaska Governor Sarah Palin has used Facebook to call Obama the $4-a-gallon president. She is not often right, but she might be on to something here.

Here's the question: How are you handling near record high gas prices? Go to CNN.com/caffertyfile, post a comment on my blog.

I filled my daughter's -- she has Trailblazer, Chevy Trailblazer. I filled it up the other day with just the middle grade, not the premium but not the regular either. It was like $70. It was like, what? You've got to be kidding me.

BLITZER: Was that in New Jersey or New York?

CAFFERTY: That was in New Jersey.

BLITZER: Because New Jersey is relatively cheap, too.

CAFFERTY: And it's cheaper where I live than in the city, you're right. It got my attention. Seventy dollars, wow.

BLITZER: You know what really perked me up just now listening to you, Jack?

CAFFERTY: What's that?

BLITZER: You said something nice about Sarah Palin.

CAFFERTY: No, I didn't. I said she might be right about that particular issue.

BLITZER: That's what I mean. Yes, that's something nice about Sarah Palin.

CAFFERTY: But I prefaced it by saying she not often right about anything. So --

(LAUGHTER)

BLITZER: OK, backhanded compliment.

CAFFERTY: yes.

BLITZER: Jack, see you soon.

A very sad story coming up. A mother drives her young children into the Hudson River. We're going to tell you what happened, give you the latest on what we know. That's coming up.

(COMMERCIAL BREAK)

BLITZER: A horrifying scene in Newburgh, New York, that's just outside New York City. Police say a mother drove her minivan into the Hudson River with her four young children inside. Everyone drowned except her 10-year-old son who was able to escape.

CNN's Deborah Feyerick is joining us now from the scene, it's 60 miles just outside of New York.

What are the police saying about this horrible, horrible case?

DEBORAH FEYERICK, CNN CORRESPONDENT: Well, you know, it really is a tragedy. Police still investigating, and the community really coming to terms, grappling with this tragedy, the scope of this tragedy. They really want to find out why this young mom, who apparently had never caused any problem, what drove her to do this.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: Nobody knows what my niece has been through. Nobody.

FEYERICK (voice-over): Grief stricken, Angela Gulliam (ph) came to the banks of New York's Hudson river to mourn. Her niece, 25-year- old Lashandra Armstrong, described by neighbors as quiet, polite and a loving mother, packed her four kids can, ages 10, 5, 2, and 11 months in the family minivan, then drove into the river just blocks from her home.

Neighbors say Armstrong never showed signs that something was wrong.

TINA CLAYBORNE, NEIGHBOR: Well mannered, well dressed, they were fed, very polite. (INAUDIBLE) That's how we were. We never got into nobody else's business.

FEYERICK: Only the eldest child, 10-year-old Lashaun Armstrong, survived, scrambling out a window and swimming to shore.

CHIEF MICHAEL VATTER, NEWBURGH, N.Y. FIRE DEPARTMENT: He was having difficulty speaking, of course, and just was repeating about the car being in the water with his mom and siblings.

FEYERICK: Police say without the boy's eyewitness account, the family would likely have disappeared under the frigid water. The child's bravery not surprising at his church and daycare center where he watched out for his siblings.

DESIREE WATSON, YOUNG AND UNIQUE CHRISTIAN CHILD CARE CENTER: He's 10 years old and he was probably aware of what was going on and was able to do something about it.

Like I said, he's a good kid. He was always one to help with the other children.

FEYERICK: The tragedy occurred moments after police responded to a 911 call concerning a domestic dispute at the family's home in a rundown part of Newburgh, New York. Police found the apartment empty.

The director of the daycare center said that the mom picked up the kids unusually early and a teacher noticed Lashandra Armstrong didn't look right.

WATSON: She mentioned that she was going through something with the dad at one time and just recently she had removed him from the pickup list and said that she was filing some type of court order against him.

FEYERICK: The landlord said he changed the locks twice in six months.

UNIDENTIFIED MALE: I'm assuming that she didn't want the person that was living with her being here.

FEYERICK: The 10-year-old boy is staying with his aunt.

DR. LOU BAPTISTA, CHILD AND ADOLESCENT PSYCHIATRY, COLUMBIA UNIVERSITY: He's going to suffer a lot. It sounds like from the narrow information that we have about this boy that he's a resilient boy, a likeable boy, a resourceful boy. (END VIDEOTAPE)

FEYERICK: Now the couple was not married. Police have questioned the father of the three youngest children, the three who perished. They are trying to find some answers as to what may have triggered this tragedy, Wolf.

BLITZER: What a tragedy, indeed.

Thank you very much, Deborah Feyerick in Newburgh, New York.

President Obama focuses a lot today on tax cuts for the rich, but if they're eliminated, would that really make a different. We're crunching the numbers, stand by.

And they're new in Congress, but these freshman are not letting that stop them from flexing their muscles.

(COMMERCIAL BREAK)

BLITZER: President Obama is insisting taxing the rich is key to helping reduce the long-term federal debt.

(BEGIN VIDEO CLIP)

OBAMA: Some will argue we should not even consider ever, ever raising taxes, even if only on the wealthiest Americans.

It's just an article of faith to them.

I say that at a time when the tax burden on the wealthy is at its lowest level in half a century, the most fortunate among us can afford to pay a little more.

I don't need another tax cut. Warren Buffett doesn't need another tax cut. Not if we have to pay for it by making seniors pay more for Medicare or by cutting kids from Head Start or by taking away college scholarships that I wouldn't be here without, and that some of you wouldn't be here without.

And here's the thing: I believe that most wealthy Americans would agree with me. They want to give back to their country, a country that's done so much for them.

(END VIDEO CLIP)

BLITZER: Let's dig deeper right now with Mary Snow, she's working this part of the story for us.

This is a huge controversy, extending the Bush tax cuts for the wealthy. The president says he is not going to go along with it anymore.

Go ahead and give us your fact check.

MARY SNOW, CNN CORRESPONDENT: Well, all right, Wolf, as you know and your viewers know this, this is just one part of the president's plan, but budget experts say taxing the rich won't bring in as much revenue as people might think.

(BEGIN VIDEOTAPE)

SNOW (voice-over): He said it before and President Obama vowed again not to extend Bush-era tax cuts for families making more than $250,000 a year.

OBAMA: We cannot afford $1 trillion worth of tax cuts for every millionaire and billionaire in our society.

SNOW: If those tax cuts are not renewed, it would mean that taxes would go up for about 2 percent of the population, the president calls them the richest Americans. But budget experts say it's not enough to help lower the deficit, even with spending cuts.

Here's a hypothetical scenario. The Congressional Budget Office crunched the numbers, if taxes were 1 percentage point for people in the top two tax brackets, it would amount to $115 billion over a decade.

But raise taxes by that same amount, 1 percentage point, on all the other brackets, and it comes to just under $500 billion.

CNNMoney's Jeanne Sahadi says there are other reasons why the richest Americans cannot generate the kind of revenue that is need.

JEANNE SAHADI, SR. WRITER, CNNMONEY.COM: The income of the very wealthy tends to be more volatile than the income of most people because it's tied up with investments. And when the economy goes south, often their income gets hurt.

So you're not going to get as much revenue from them as you might expect, especially when you need it in a downturn. And two, there are just not that many rich people. As much as we think there are a lot of them, they're not enough to carry the country in terms of deficit reduction.

SNOW: But with the 2012 presidential election around the corner, budget experts say no one wants to raise taxes on the middle class. Ron Haskins, who served as a senior adviser on welfare policy to President George W. Bush, says both Democrats and Republicans are wrong.

RON HASKINS, SR. ECONOMIC FELLOW, BROOKINGS INSTITUTION: Republicans are betting that if they say no new taxes, the American people will like that and we'll try to do it all on the spending side. The problem is spending affects the American public, too. A lot of people are going to lose their benefits. And Democrats say we'll just tax the rich and not the middle class, but that won't produce enough revenue, so that's not going to work either.

(END VIDEOTAPE)

SNOW: And if the last fight of the Bush-era tax cuts is any indication this will be a fierce battle, the president had vowed many times he wouldn't extend the Bush-era tax cuts, but in December he did. He said he did so in order to prevent a tax hike on middle class Americans.

And Wolf, want to remind our viewers, for much more on this debate, you can check out, of course, CNN's Money Web site.

BLITZER: And the debate is only beginning, Mary. Thanks very much.

Let's dig deeper right now with CNN Senior Political Analyst Gloria Borger.

The president had been on the sidelines over these past several months, waiting for the Republicans, presumably, to come up with their plan. Now he's playing. He's part of this fight right now. He's no longer on the sidelines.

GLORIA BORGER, CNN SR. POLITICAL ANALYST: No, not on the sidelines anymore. And I think as we go through the 2012 campaign, we may very well look back at this speech as the first speech of the 2012 campaign.

I don't know about you, but what I heard the president -- he seemed almost emotional in a way that I hadn't heard him before, particularly over the issue of Medicare. Just listen to what he said, and then listen to what the House budget chairman, Paul Ryan, said in response.

(BEGIN VIDEO CLIP)

OBAMA: I will not allow Medicare to become a voucher program that leaves seniors at the mercy of the insurance industry, with a shrinking benefit to pay for rising costs. I will not tell families with children who have disabilities that they have to fend for themselves.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

REP. PAUL RYAN (R), WISCONSIN: Exploiting people's emotions of fear, envy and anxiety is not hope, it's not change. It's partisanship.

(END VIDEO CLIP)

BORGER: Well, it was very partisan, Wolf, and we're used to seeing the president stand back and let other people draw the bright red lines. Well, today, he drew the bright red line, not only on no vouchers for Medicare, but also on, as Mary Snow was talking about, the tax cuts for the wealthy, extending them. And he said, "I did that once and I refuse to renew them again."

So there isn't any wiggle room in that one, Wolf. BLITZER: Well, we've heard some statements like that over the past couple of years, and he did eventually find some wiggle room because he had no choice. He's got to be pragmatic, he's got to compromise. But on that issue, he's got some strong political base on which to deal.

BORGER: Sure, he does. On Medicare, of course, with seniors. But on the tax issue, he's on very safe terrain.

You know, we had to deal with this during the lame-duck session when, in the end, they ended up extending the tax cuts for the wealthy. Take a look at this poll we did back in December, when it was a large issue.

And you can see by about a 2-1 margin, 37 percent, favored a tax cut -- extending a tax cut for Americans with more than $250,000 and 62 percent opposed it. So, you see, not very popular.

The question is, Wolf, where will the public stand on the larger debate that we're about to enter into? And that is the question of tax reform. Are they willing for a lower marginal rate to give up some pretty sacrosanct tax deductions like their home mortgage and charitable giving? That's going to be the really interesting debate.

BLITZER: Yes, but e said -- the president said -- only the richest would give up some of those deductions.

BORGER: That's right.

BLITZER: The middle class would not be affected.

BORGER: And because it's the richest who itemize more than anybody else.

BLITZER: Right.

BORGER: Exactly.

BLITZER: All right. This debate is going to be fierce, intense, and I think you're absolutely right, today was the opening salvo of campaign 2012 for the race for the White House.

BORGER: On to the debt ceiling.

BLITZER: There's some significant differences there no matter who the Republican nominee turns out to be.

BORGER: Exactly.

BLITZER: We're sitting down with four House freshmen members. Their thoughts on how Speaker John Boehner is doing, that's coming up next.

(COMMERCIAL BREAK)

BLITZER: There's a partial verdict in the case of the baseball slugger Barry Bonds. Lisa Sylvester has got it for us.

What happened, Lisa?

SYLVESTER: Well, Wolf, this information is just coming in. The jury returned a verdict of guilty on one count of obstruction of justice, but the jury could not reach a decision on the other three remaining charges of perjury, so the judge has declared a mistrial on the three remaining counts of perjury. Each one of these counts though could carry a potential sentence of 10 years in prison.

So, at this point, Wolf, only guilty of one charge, the verdict of guilty, on one count of obstruction of justice -- Wolf.

BLITZER: Thanks very much, Lisa, for that.

Lisa Sylvester.

The growing spending battle here in Washington is being fueled, in part, by a whole new freshman class of Republican lawmakers.

Our congressional correspondent, Brianna Keilar, had the chance to sit down with some of the them in a joint venture with "TIME" correspondent Jay Newton-Small, and she joins us now.

Brianna, did you talk to them about how they were going to vote on this budget deal tomorrow?

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: We certainly did, Wolf. These were four members, all of them Tea Party-backed. And check out how they are actually split on how they are going to vote.

Ann Marie Buerkle of New York, as well as Paul Gosar of Arizona, they both say they are leaning towards voting yes. And then Raul Labrador of Idaho says he's leaning no, and Tom Graves of Georgia says he's going to vote no.

Their concern? That there is not enough spending cuts.

It's kind of a surprising split for this group. They are among 87 GOP freshmen who are frequently referred to as a monolithic bunch.

(BEGIN VIDEOTAPE)

JAY NEWTON-SMALL, "TIME" CORRESPONDENT: But in splitting like this, aren't you sort of underlining the Democratic argument that the Republican Party is split, that the Tea Party is splitting the Republican Party, that there's a chasm between you?

REP. RAUL LABRADOR (R), IDAHO: Not at all. In fact, if you look at it, when we started the debate, the initial offer was $31 billion in cuts. Some of us spoke up and we said that we needed it to be more. So we actually got it to $61 billion in cuts, and now we're getting $38 billion, $39 billion in cuts. If we hadn't said that we were going to stand and we were going to vote against these things, I think we would have much less than the $38 billion or $39 billion right now.

REP. TOM GRAVES (R), GEORGIA: Well, we're representing our districts. I mean, when I make decisions, it's not based on what the Republican Party does. I'm elected by the 9th congressional district. I vote my conscience first and my constituents next. I mean, that's how I make my decisions regardless of the direction of our leadership.

KEILAR: How do you think the leadership is doing? How do you think Speaker Boehner did on these negotiations?

LABRADOR: I think they're doing really well. I think they listen to us. They take our messaging to the other side. And I think the important thing is that as a freshman, you think that maybe you're not going to have a voice, and I think our voice is being heard.

REP. PAUL GOSAR (R), ARIZONA: And open rules processing, which both sides have had equal say on ideas and bringing things forth, only enhances the ability of having something bipartisan coming forward. So I like that aspect about it.

GRAVES: Well, there's one thing to say about John Boehner. He's a fighter. He does fight. And if there is somebody you want in the foxhole with you, it's going to be John Boehner. So I think he'll work hard to make America proud.

REP. ANN MARIE BUERKLE (R), NEW YORK: And I think that John Boehner listens. He listened to the freshman class, he heard our message, and he went back to the table and he got more cuts.

KEILAR (voice-over): Billions more in spending by these very Tea Party backed freshmen. Democrats say the Tea Party is the tail wagging the Republican dog, and they've called these members extremists.

(on camera): So, are you crazy, or are you really the sanest people in Washington?

LABRADOR: You know, if being fiscally responsible is extreme and crazy, then I am.

BUERKLE: Guilty as charged.

GRAVES: I'm just a country boy from north Georgia, and I have three children and a wonderful wife. And when I look at my three children who are 8, 11, and 12, and they really represent the faces and the future of the children all across my congressional district, and what the Tea Party stands for is not extremism, it's about their future.

GOSAR: I would also they have actually called me "Hermey," and I am a dentist. And if I do my job and I pull that molar out of the abominable federal government, I've done my job. I kind of like that.

(END VIDEOTAPE)

KEILAR: Now, a couple of other big spending battles ahead, Wolf, that we've been talking about. The 2012 budget proposed by Budget Committee Chairman Paul Ryan, which includes an overhaul of Medicare, we will see that vote on Friday.

All four of these freshmen saying they support that idea in taking on entitlements. And then, of course, raising the debt ceiling. All four of these members made it clear there's no way they would vote for that unless they got some serious concessions on spending from Democrats. In fact, Congressman Tom Graves of Georgia called warnings about the U.S. defaulting on loans come mid-May scare tactics -- Wolf.

BLITZER: All right, Brianna. Thanks very much.

This footnote. You can read more from Jay Newton-Small about the CNN/"TIME" political roundtable over at TIME.com.

Just days after NATO took control of operations in Libya, a surprising revelation about the U.S. military's role, what the Pentagon is now saying.

(COMMERCIAL BREAK)

BLITZER: Let's take a look at some of today's "Hot Shots."

In London, workers begin preparations for the royal wedding.

In Japan, a Buddhist monk prays for tsunami victims.

In Ivory Coast, two women walk past a burnt armored truck.

And in Nepal, a girl worshipped by Hindus and Buddhists as a living goddess is carried through the streets during a festival.

"Hot Shots," pictures from around the world.

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

CAFFERTY: The question this hour is: How are you handling near- record high gas prices? Predictions by a lot of experts now, $5 a gallon by Memorial Day.

Jen Rice (ph) from Granger, Texas, "We've cut back on eating out, going to a local store to buy food. We've put in a garden with tomatoes, okra, cucumbers, squash, sweet corn, et cetera. It may not save us a lot, but it's a start."

J. J. writes from Toledo, "We've given up on a vacation to North Carolina. It would have been our in 20 years. We planned to have some interior renovations done while we were away, but not this year. We'll use our money for gas, utilities and food, all of which have skyrocketed."

Steve in Michigan, "I arranged my life to reduce how much gas I burn a lot of years ago. When gas is cheap, I save money. When gas is higher, I save more money." It's a win-win deal. I drive a fuel-efficient car, live near work and all needed services. Gas could be $15 a gallon. It would not be that big a deal for me."

Pierre writes from Florida, "I drive a scooter around Miami. I get 80 to 90 miles per gallon."

Evinia writes, "Quit crying and suck it up. We in Canada have been paying nearly $6 a gallon for years. And guess what? The world has not come to an end."

"Americans think they are entitled to all the good things in life, but they don't want to pay for them. They don't want to pay taxes, they don't want to pay for health care, they want to pay to educate young people, they don't want to pay for infrastructure. You get the picture. At least some of you are starting to wake up now and smell the coffee."

D. writes, "With improved weather, I started riding my bike to work. It not only saves gas and wear on tear on the car, hopefully it will help me get back in shape. It's a six-mile ride each way with many bike lanes to choose from, and I would encourage anyone who can to do it. You won't regret it."

Richard in Kansas writes, "Well, since I'm a wealthy oil executive, I would say I'm handling it quite well. I just keep getting richer while you poor dumb saps just keep paying whatever I demand. Suckers."

If you want to read more on this, go to the blog, CNN.com/caffertyfile.

We need to get some more stuff on the screen when I'm reading this e-mails. Maybe get some pictures of, like, your trip last summer. And you've got some more things up on the screen so that -- you know.

BLITZER: Yes. We're trying to make sure that everybody can fully enjoy the than entire visual experience.

CAFFERTY: Unbelievable.

BLITZER: Jack, thank you.

It started with Tunisia, then Egypt, now Libya. Here's a question: Is Saudi Arabia next? The message the White House is sending about the kingdom, about dealing with the Arab Spring.

(COMMERCIAL BREAK)

BLITZER: The unrest in the Middle East and North Africa certainly has put many nations in the region on edge. Among them right now, Saudi Arabia, a strong ally of the U.S. But Saudi rulers are not seeing eye to eye with the U.S. on the response to all of these uprisings.

Let's turn to CNN's Brian Todd. He is working this story for us.

A little tension going on right now between the U.S. and Saudi Arabia, Brian.

BRIAN TODD, CNN CORRESPONDENT: There is, Wolf. Administration officials are downplaying that tension, but the stakes for both sides are enormous if this gets much worse.

(BEGIN VIDEOTAPE)

TODD (voice-over): In the span of just a few days, the U.S. sends its defense secretary and national security adviser to meet with Saudi Arabia's king and his brothers. There are indications of a rift between the two close allies at a time when they can least afford.

MARTIN INDYK, FMR. ASSISTANT SECRETARY OF STATE: If there's instability in Saudi Arabia, that could put the oil market into shock.

TODD: Former assistant secretary of state Martin Indyk and other analysts say if the Saudi leaders experience unrest and sense that America's support for them is wavering, oil prices could go up even further. It could subvert America's economic recovery and President Obama's re-election chances.

Why are the Saudis upset?

JAMES BAKER, FMR. SECRETARY OF STATE: I believe that they felt that we were too quick to pull the plug on Hosni Mubarak, who had been an ally of the United States for 30 years.

TODD: The Obama's team assistance that Mubarak quit as Egypt's president rattled the Saudis, analysts say. Like Mubarak, the Saudi royals have longstanding ties with the U.S. and reportedly feel they might lose Washington's support if they have their own uprising.

Contacted by CNN, a White House security official said reports of tension between the U.S. and Saudi Arabia are overstated. We couldn't reach officials at the Saudi Embassy for comment, but the Saudis' response to at least one Arab revolt has angered the Obama administration.

BLITZER: Did you support the decision by Saudi Arabia and the United Arab Emirates to send ground forces into Bahrain to fight the opposition?

HILLARY CLINTON, SECRETARY OF STATE: Absolutely not. And we find what is happening in Bahrain to be alarming.

TODD: A position that's reported to have infuriated the Saudis, who are feeling the heat, literally, all around them.

(on camera): In addition to seeing their close friend Hosni Mubarak deposed next door in Egypt, the Saudis see the call for change in Yemen, right on their southern borders, turning violent. And behind the revolt against the king of Bahrain, their ally, analysts say the Saudis see the hand of Iran, their longtime and bitter rival. (voice-over): Still, the Middle East's top oil producer has stayed relatively stable through this season of turbulent change.

(on camera): Why so far has Saudi Arabia not really been affected by this Arab Spring?

INDYK: There are basically two reasons. Saudi Arabia is a traditional, conservative society. The king has religious legitimacy. He's the custodian to holy mosques of Mecca and Medina. And secondly, he has a lot of money to buy off dissent.

TODD: He's talking about social programs and payments to Saudi citizens from their rulers that have worked to head off rebellions. But if this wave of population dissent hits Saudi Arabia even harder, analysts say the king may not able to deal with it that way -- Wolf.

BLITZER: Brian, what are you hearing from analysts about the management of this very, very sensitive U.S./Saudi relationship inside the Obama team?

TODD: Martin Indyk and others say that because the administration was busy dealing with the rapid-fire uprisings elsewhere in the Middle East, they didn't really have much time to think through what it meant to the Saudis, that they turned on Hosni Mubarak so quickly. But some of those things, we're told, are being smoothed over right now with the Saudis.

BLITZER: Brian Todd.

Thanks very much for that.