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THE SITUATION ROOM

Irene Leaves 2,500 Stranded in Outer Banks of North Carolina; Hurricane Political Damage; New Jersey Swamped by Flooding; Vermont Devastated by Worst Flooding in Decades; FEMA Running Out of Money; Moammar Gadhafi's Family Arrives in Algeria; Alan Krueger Tapped by President As New Head of Economic Council

Aired August 29, 2011 - 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: Happening now, roads, homes, even entire towns under water, just some of the dangers left behind from Hurricane Irene. We're tracking the serious flooding threat in parts of the Northeast.

Hurricane recovery is beginning further down the coast. Some Republicans are debating the role the federal government should play. This hour, disaster politics, who may be in need of damage control after Irene.

Plus, graphic new evidence of brutality by Moammar Gadhafi and his inner circle. This, just as we're hearing that his wife and several children have now escaped Libya. The pressure now growing to make sure Gadhafi himself doesn't get away.

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

Raging water in the Northeast so powerful, it can sweep away cars and swallow up homes. Right now Vermont is devastated by the worst flooding in decades.

CNN's Amber Lyon is joining us now from Brattleboro in Vermont.

And set the scene a little bit, Amber, for what's going on. What are you seeing? What are you hearing?

AMBER LYON, CNN CORRESPONDENT: Well, out here, Wolf, had I been standing out here earlier yesterday, I would be completely under water. I want to come here and show you this brook right here.

This is pretty much representative of what's happening across this state. And as I said, this is a brook, Whetstone Brook.

It's flowing more like a river though now. It's about four feet wider than usual.

And look over here, where it just washed away the ground underneath this artist studio building. No one was inside at the time, no one was hurt. But we're just sitting here waiting for this building to collapse and fall into the water.

Now, another problem, because the governor says every waterway in the state of Vermont is flooded, is that they're worried about the roads. Two hundred and sixty roads in this state currently flooded, and they're warning people not to get out and drive on roads even if they look OK, because although the top of the road might look OK, it may be eroded underneath. And if you're out there on your car, you could just sink into what would be similar to a quicksand road.

Right now the governor of Vermont says that they are moving into a stage of search and recovery. They say there are still people missing, believed to be swept away by some of these waters.

They also say that waters at higher elevations are starting to recede. Good news there. However, waters, streams in lower elevations are continuing to flood, and the waters are continuing to crest.

A big worry today, Wolf, for the state of Vermont and emergency crews here is how residents are dealing with the water. We've had a sewer line north of here busted. The water is dirty. They're telling people to boil your water, if you have a private well and floodwaters have passed over.

Also, we even have reports of people -- I've monitoring Twitter traffic -- that have complained of gassy smells in their towns because propane tanks have been sucked away by the streams. And just two blocks from here, the town was cordoned off by emergency crews because there was such an intense smell of gas in the area.

They're also warning people not to get into the waters. And above all, if you can, just stay home unless it's absolutely necessary to leave.

And 50,000 people across the state of Vermont are currently without power right now, and due to the fact that 260 roads are flooded, emergency crews and electric crews can't even give any type of an estimate as to when they're going to have this power back on -- Wolf.

BLITZER: Horrible devastation for Vermont.

Amber, we're going to get back to you.

We're also going to speak to the governor and the senator from Vermont as well.

Amber Lyon, reporting for us.

We're also seeing very, very dangerous flooding in parts of New York State and elsewhere across the Northeast. This, hours after the remnants of Hurricane Irene blew out of the region and out of the country.

Analysts predicted the storm caused up to $10 billion in damage during its rampage along the East Coast. At least 25 deaths have been reported in nine states. Five million customers still don't have power.

(BEGIN VIDEO CLIP) BARACK OBAMA, PRESIDENT OF THE UNITED STATES: It's going to take time to recover from a storm of this magnitude. The effects are still being felt across much of the country, including in New England and states like Vermont, where there's been an enormous amount of flooding. So our response continues, but I'm going to make sure that FEMA and other agencies are doing everything in their power to help people on the ground.

(END VIDEO CLIP)

BLITZER: And let's talk to the head of FEMA right now, the Federal Emergency Management Agency. Craig Fugate is joining us.

Mr. Fugate, thanks very much for coming in.

CRAIG FUGATE, DIRECTOR, FEMA: Thank you, sir.

BLITZER: You just heard the president. He wants to make sure you're getting everything you need.

Are you getting everything you need? Normally we hear from states FEMA's doing everything they can. Do you have everything you need right now?

FUGATE: Yes. The support and response, again, we've been talking with the states. We have daily conference calls.

One of the things we've been working on is trying to stay ahead of what they may need as we move from response to recovery. As you said, in some parts of the area of impact, we're very much still concerned about the flooding, and what the weather service tells us, it may be another two to three days before some of these rivers will crest.

BLITZER: But money is becoming an increasingly big problem for FEMA, you're telling us. You're running out of money in short, right?

FUGATE: Well, we reached a point where we felt it was prudent not to continue to fund new work and older disasters, but to continue funding support for the survivors of previous disasters, as well as being able to ensure that we could undertake this response to Irene.

BLITZER: How much money do you need now in order to really do what FEMA was created to do, given the tornadoes, earthquakes, hurricanes? You got a lot of problems, floods out there. What kind of money do you need from Congress during these tough economic times?

FUGATE: Well, part of this will be as we do the assessments for Irene -- you know, some of the numbers that are being put out there about damages oftentimes include insurer costs. And what we look at, at FEMA, are those costs that would be borne by the taxpayer in support of either survivors or uninsured losses or, you know, cost the government has to respond and rebuild from this disaster.

BLITZER: Because if we're saying $10 billion in damage as a result of Irene, how much of that is FEMA going to be responsible for? FUGATE: Well, that's part of what we'll find out as we begin damage assessments. Again, ,you've heard some states are still very much in response mode, but particularly in North Carolina, working north. As we go out there and look at the damages and start counting that up, we'll have a better idea of what the federal share will be for some of these costs.

BLITZER: I've heard from a lot of governors who were in a direct hit from Hurricane Irene, the governors of Maryland, Virginia, New Jersey, New York, elsewhere, they're very pleased with the federal response, specifically the FEMA response.

What do you say to Congressman Ron Paul, though, who says, really, the federal government should not be in the business of what FEMA is doing?

FUGATE: Not much. I'm pretty much focused on the job at hand and undertaking the responsibilities that Congress has given to FEMA, and under the leadership of the president. We're just focused on trying to deal with the disaster right now.

BLITZER: Are you getting any serious complaints from anyone as a result of what you did or didn't do this time around?

FUGATE: Not yet. But again, we'll do after-actions. But really, we're still very much focused on the disaster at hand, particularly, as you heard, the impacts from river flooding, possibility of more impacts. So, really right now, we're trying to stay focused on what's happening in front of us, and then, when we get to the other side of this, we'll start looking at lessons learned and always try to improve our response before the next disaster.

BLITZER: You've heard some of the criticism, Mr. Fugate, that Hurricane Irene was over-hyped, if you will, that we were expecting enormous disasters, for example, in New York City. That didn't happen.

What do you say to those people who say that you guys were just -- not necessarily you, personally, but that the federal government, states, local authorities were just hyping this whole Hurricane Irene?

FUGATE: Well, my condolences to the families that lost lives, to the homes that have been destroyed, to the communities that have been flooded. You know, part of this is we work from a forecast. There's not so much precision that we can say whose house will be impacted and who is not.

I've been involved in a lot of hurricanes where we've evacuated, and fortunately there was no damage and people could go home. And that's good. But there are going to be folks that can't go home, there's folks who have lost their homes, there's folks that still don't have power. And unfortunately, there's people that lost lives. We prepare based upon the forecast, and that's how we respond.

BLITZER: Under the theory it's better to be safe than sorry.

FUGATE: Well, under the theory that you can't change the outcomes if you're not ready.

BLITZER: Good advice.

The administrator of FEMA, Craig Fugate, the Federal Emergency Management Agency.

Thanks for all the good work you're doing. We'll stay in close touch.

FUGATE: Thank you, sir.

BLITZER: And to our viewers out there, you can make a huge difference and help those devastated by Hurricane Irene. You can find out how to do that. Visit our "Impact Your World" page at CNN.com/impact.

We're learning more right now about the fate of Moammar Gadhafi's family, and we're seeing disturbing new evidence of his reign of terror. Stand by for that and the latest on where Gadhafi may -- repeat, may -- be hiding.

And verbal jabs between two titans of the George W. Bush administration. Did Dick Cheney take a cheap shot at Colin Powell?

Mary Matalin and Paul Begala, they're standing by.

(COMMERCIAL BREAK)

BLITZER: There are dramatic developments happening in Libya right now, including the battle for Libya. We're learning that members of Moammar Gadhafi's family, including his wife, three children and grandchildren, have been granted entry into Algeria. This, amid new reports that another son of the dictator, the military commander Khamis Gadhafi, has been killed.

CNN's Arwa Damon is joining us now live from Tripoli with all the latest developments.

This struggle for Libya, Arwa, clearly continues.

ARWA DAMON, CNN INTERNATIONAL CORRESPONDENT: It most certainly does, Wolf. And it was the Algerian government that put out the news that Gadhafi's wife and three of his children had crossed by land from Libya into Algeria at around 8:45 in the morning. Their current whereabouts though do remain unknown, as do the whereabouts of Gadhafi himself.

But separately, the rebels here are saying that they killed Khamis Gadhafi. He leads the 32nd Brigade.

It is the most feared and loathed brigade. There are a few different versions though as to how, where and when he was killed. We are being told, on the one hand, that he was killed in an air strike around 10 days ago, but then we were separately also told that he was killed in a firefight that took place on Sunday around 40 miles southeast of the capital, Tripoli.

Now, when it comes to the family itself beginning to flee, a top aide to Gadhafi was saying that this is an indication that perhaps at least some members of the family have accepted defeat. He was comparing this to their surrender, but he also said that he believed that Gadhafi himself was still in Libya and would remain in Libya until the very end -- Wolf.

BLITZER: You're also getting new information, these horrific accounts that we've been hearing about these prisoners who were literally killed and tortured by Gadhafi's men. What are you hearing?

DAMON: That's right, Wolf. And these atrocities are absolutely hair- raising. In fact, they're so disturbing, that some of the rebels who escorted us to one site asked that we wrap it up quickly because they were so disturbed by what they had seen.

And we do have to warn our viewers that the images that they're about to see, some of them could find them very disturbing.

(BEGIN VIDEOTAPE)

DAMON (voice-over): They heard screams, gunshots. But it would be days before people discovered the magnitude of the horror within these walls.

Monid Ohm (ph) was picked up by Gadhafi's forces along with his younger brother in early August.

"My brother and I were in the street. They grabbed us, and blindfolded and cuffed us" he remembers.

The detainees ranged in age from 17 to 70, Monid (ph) says.

We were beaten, penned up like animals, and in their last days, deprived of food and water.

He says he survived by dreaming of freedom, "that one day I would leave this place."

Early last week he thought that day had come.

"The last day informed us they are going to release us. We all started planning," he says, "preparing to reunite with loved ones."

This warehouse is around 15 by 10 meters, 45 by 30 feet and Monid (ph) says there were 175 people crammed inside here. At sunset, he says, the guards came and opened the door. He and the other prisoners thought they were going to make good on their word and set them free.

Instead, he says, the soldiers threw a grenade through the door and opened fire. Monid made a run for it.

"I ran away. I jumped over that wall but I don't remember anything else."

Though he survived, his younger brother and most of the others trapped in this hell did not. The warehouse is located in a lot on the back end of Khamis Gadhafi's 32nd brigade headquarters, the most feared and loathed unit of his father's military. When rebels finally secured the area and people felt safe enough to approach the warehouse, this was all they found.

Voluntary workers have pulled out the remains of at least 150 bodies.

UNIDENTIFIED MALE: Some of the bags, there are more than one body, some of them four, three in one bag.

DAMON: He says the bodies -- you can't recognize the bodies?

UNIDENTIFIED MALE: It's difficult because they are burned. You can't recognize them. So we have some papers.

DAMON: The ID of people from all over Libya.

Do you know why these men who were here were detained?

UNIDENTIFIED MALE: They are detained for some of them for nothing, just to say Gadhafi go out, or just to raise the flag, the new flag with the new color, different color, not the green, not the green flag, this one.

DAMON: And in another corner of the lot, the people who have gathered report yet another atrocity. We're being told a number of bodies were also dug up right here, and the dirt, it's just, it's filled, it's crawling with maggots. The cost of freedom in Libya.

Many of the victims will remain unknown, their families left without answers to their fate.

(END VIDEOTAPE)

DAMON: And Wolf, there are widespread fears that many similar sites, sites of such massacres, sites of mass graves will be uncovered in the future. The military spokesman for the Transitional Council was saying that they believe that 57 people were detained by Gadhafi's regime, but so far they've only been able to find 10,000 to 11,000 of them and there's now a search effort under way to try to uncover more mass graves, Wolf?

BLITZER: Does the National Transitional Council, the group now in charge of Libya, suspect, Arwa, they're any closer to finding Moammar Gadhafi?

DAMON: Well, at one point they thought that he was just to the area east of the airport, and they were basing that on the intensity of the fighting there but then the commanders told us that the Gadhafi units there withdrew, moving to the southeast and the predominant belief right now is that he is in the south, that is where his tribe is from, but there is no concrete information as to exactly where he may be.

So the search for him is certainly on. They hope, though, is that since some of his family members did, in fact, flee this could perhaps discourage some of his loyalist from continuing the fight, although he himself is believed to still be in Libya.

BLITZER: Arwa Damon in Libya for us. Thank you, Arwa.

Hurricane Irene's powerful journey up the east coast may be over but many states are just now beginning to feel the full blow. Ahead we'll take you on a chopper tour of new jersey's mass damage and flooding.

Plus, new concerns the International Space Station may have to be abandoned. We're going to tell you why.

(COMMERCIAL BREAK)

BLITZER: President Obama one step closer to filling a key role in his economic team. Our Lisa Sylvester is monitoring that and some other top stories in The Situation Room right now. What is the latest?

LISA SYLVERESTER, CNN CORRESPONDENT: Hi there, Wolf.

Well, the president is nominating Alan Krueger to be the new chairman of the White House Council of Economic Advisers. The announcement comes just days before Mr. Obama is expected to outline new plans for jump starting the ailing economy.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I rely on the Council of Economic Advisers to provide unvarnished analysis and recommendations not based on politics, not based on narrow interests, but based on the best evidence, based on what's going to do the most good for the most people in this country. And that's more important than ever right now. We need folks in Washington to make decisions based on what's best for the country, that's not what's best for any political party or special interest.

(END VIDEO CLIP)

SYLVESTER: If confirmed by the senate, Krueger will be the Obama administration's third council chair.

NASA is raising concerns the International Space Station may need to be temporarily abandoned. This comes after the crash of an unmanned Soyuz rocket headed there last week. The accident is reporetedly prompting the Russian space agency to postpone its next manned mission to the station pending an investigation.

NASA says a delay could prevent the ability to bring in replacements.

And GOP presidential candidate and former U.S. ambassador to China Jon Huntsman is picking up an early endorsement from the attorney general in the critical primary state of South Carolina.

Alan Wilson, who is the son of Republican Congressman Joe Wilson announced his support for Huntsman at an event today.

And Arizona's Senior Senator John McCain is celebrating his 75th birthday on Twitter. The 2008 GOP presidential candidate tweeted his thanks for all of the birthday wishes, adding, quote, "if I had known I would live this long, I would have taken better care of myself."

75 years old, he's in pretty good shape though.

BLITZER: Happy birthday to Senator McCain. You know, he spent six years as POW in North Vietnam. So, you know, he's had a rough life.

SYLVERSTER: Yeah, but he certainly gets around. He doesn't stop him at all. He's 75 and still going strong.

BLITEZR: I don't know if we can, Chip, get that video up of the president and Professor Krueger over at the White House making the announcement about the new White House chairman of the Council of -- Lisa, you tell me, you're better at this than I am, did they coordinate their outfits today, the professor and the president?

SYLVESTER: Look at that tie exactly.

BLITZER: The light shirt, the dark suit.

SYLVESTER: It's the tie.

BLITZER: What do you think? Did they -- is that just a coincidence or they had some sort of coordinator?

SYLVESTER: I think it's just a coincidence. But you know, you would fit in, given your tie and your outfit there. So similar men of good taste is what we will say.

BLITZER: He's going to fit in, Professor Krueger, over at the White House.

Thanks very much.

Two days after Hurricane Irene hit North Carolina, some people who refused to evacuate are now paying a price. Our own Brian Todd is with rescue crews on the hunt for people stranded by the storm.

And as Irene was lashing the east coast, one Republican presidential candidate was joking about it. We're taking a closer look at the political fallout from the disaster.

(COMMERCIAL BREAK)

BLITZER: Roads torn apart by Hurricane Irene along the North Carolina coast where the storm first hit land here in the United States. Irene left 2,500 people stranded in North Carolina and some of them still are isolated more than two days later.

Our own Brian Todd is in Stumpy Point, North Carolina. Brian your team was the only news crew that went out with the National Guard helicopters. How did that go?

BRIAN TODD, CNN CORRESPONDENT: It went well, Wolf. But these people are pretty much cut off right now, at least temporarily. This ferry behind me, the only lifeline right now to those 2,500 people still on Hatteras Island. Now folks there who have ridden out other stronger hurricanes before are now isolated as you've said, and some of them surprised by how much punch this category one storm packed.

(BEGIN VIDEOTAPE)

TODD (voice-over): This is what isolation looks like on the Outer Banks: Highway 12 connecting Hatteras Island, North Carolina, to the rest of the barrier islands, washed over, chopped up in several places, caved in, power lines down at the breach, the Atlantic Ocean now flowing over it. A costly casualty of Irene's storm surge.

Twenty-five hundred people who ignored mandatory evacuation orders stranded here, at least temporarily. The only way we could get there, by riding with North Carolina National Guard helicopters on a damage assessment mission.

(on camera): We're flying over the (INAUDIBLE) a very remote island on the Outer Banks.

(voice-over): With our cameras connected to a gyroscopic camera, we captured severe damage to homes, flooding in whole neighborhoods, and that critical breach on Hatteras Island. When we put down on Hatteras, we met up with Abby Miget (ph), a handyman company owner who has lived her his whole life and chose to stay.

ABBY MIGET, HANDYMAN: The best part of living on a barrier island. I mean, that's like asking people in California, why do you live there, on a fault?

TODD (on camera): Yes.

(voice-over): Chopper pilot David Pope (ph) has flown combat missions in Afghanistan and several rescue flights on the Carolina coast.

(on camera): They said Category 1, they could ride it out, they've been through worse. What do you think of that?

DAVID POPE (ph), CHOPPER PILOT: I think anybody that rides it out, they should have second thoughts before they do that. They're so unpredictable, the storms, the intensity, how quickly they can develop.

TODD (voice-over): On the ground, damage to the severed highway seems like it came from an earthquake and a hurricane.

(on camera): This is what it feels like to be cut off from the outside world. We are standing on Highway 12, and I am still standing on Highway 12.

Look at this. Going into the water here. It gets pretty deep. You've got downed power lines over here.

Highway 12 connects us to Manio, and then the bridges that go to the mainland. This isn't going to be back up anytime soon.

(voice-over): At least a couple of weeks before this lifeline will be repaired.

Hatteras Island resident Matthew Williams (ph) offers more perspective.

(on camera): Why do people like you stay through this?

MATTHEW WILLIAMS (ph), HATTERAS ISLAND RESIDENT: I don't know. I guess it's -- I don't know.

We grew up here. The main thing is getting back. When you're gone, you're wondering your belongings, your property, you're wondering how it is. It's your whole life here, so it's kind of hard to leave.

(END VIDEOTAPE)

TODD: But for now, Matthew Williams (ph) and his neighbors are going to have to rely on this to connect them to the outside. The state has started running these ferries with food, medical supplies, highway construction equipment to Hatteras Island. But these ferries move fairly slowly. They take about two-and-a-half hours each way -- Wolf.

BLITZER: Brian, are officials there angry with these people for staying put despite the orders to evacuate?

TODD: Well, at least outwardly they are not saying so. Governor Bev Perdue was asked that earlier today, that very same question, and she said no, she's not angry.

She kind of described the people on Hatteras Island as the real North Carolinians who live there, the true lifeblood of the place. But look, the fact of the matter is, it's costing taxpayer money to get the supplies out there.

This is only set up in an emergency. And also, if anybody is in need of dire medical attention, it's probably going to take a helicopter flight to pick them up and get them out of there. That's several thousand dollars a pop as well.

BLITZER: Brian Todd, on the scene for us, as he always is.

Thanks very much.

A record in the wake of Hurricane Irene. In 2011, the United States has endured 10 natural disasters causing $1 billion or more in damage. It's more fuel for politicians worried about the nation's soaring debt.

We asked our own Jim Acosta to take a closer look into the politics of this storm and all the other disasters, for that matter.

What did you find out?

JIM ACOSTA, CNN CORRESPONDENT: Well, and this discussion is happening at an important time. On this sixth anniversary of Hurricane Katrina, the debate over the federal government's role in disaster response is still raging, and the Tea Party may be winning the argument. (BEGIN VIDEOTAPE)

ACOSTA (voice-over): Just as Hurricane Irene was slamming the East Coast, the political rhetoric was approaching Category 5 strength. GOP presidential candidate Michele Bachmann joked the disaster was a sign from God that federal spending was out of control.

REP. MICHELE BACHMANN (R), PRESIDENTIAL CANDIDATE: Washington, D.C., you would think by now they'd get the message -- an earthquake, a hurricane. Are you listening?

(LAUGHTER)

ACOSTA: But budget-cutting fever could one day have an impact on how Washington responds to disasters. Tea Party favorite Ron Paul would eliminate the Federal Emergency Management Agency, which he says bails out homeowners living in risky places.

REP. RON PAUL (R-TX), PRESIDENTIAL CANDIDATE: This idea that the world comes to an end if you don't have somebody at the federal level taking care of you, I mean, it's a natural problem. It's wind. It's a storm.

ACOSTA: After last week's earthquake, House Majority Leader Eric Cantor insisted any disaster relief be matched with spending cuts. FEMA is making its own adjustments, saying it would delay some rebuilding projects in Joplin, Missouri, where tornadoes struck earlier this year to respond to Irene. Emergency management experts wonder whether deficit hysteria is becoming a disaster in the making.

UNIDENTIFIED MALE: I can't imagine being in a community that has just been devastated by Hurricane Irene and sitting back and wondering, are you going to be able to repair your water treatment facility? How about your waste water treatment facility? Is your school going to be repaired?

ACOSTA: In a speech announcing his campaign for president, Rick Perry saw government as the problem.

GOV. RICK PERRY (R-TX), PRESIDENTIAL CANDIDATE: I'll work every day to try to make Washington, D.C., as inconsequential in your life as I can.

ACOSTA: But as the Texas governor battled wildfires earlier this year, he saw FEMA as part of the solution.

PERRY: We're having to pick up 100 percent of the cost. Historically, the federal government picks up 75 percent of the cost when there is a disaster like we have here, so there is no consistency with this administration.

ACOSTA: President Bush learned the hard way Washington matters in a disaster, which is why the current man in the White House was careful to look hands-on during Irene.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: This has been an exemplary effort of how good government at every level should be responsive to people's needs, work to keep them safe, and protect and promote the nation's prosperity.

(END VIDEOTAPE)

ACOSTA: The problem for the president though is that a dwindling number of Americans actually have a positive view of the federal government, just 17 percent in the latest Gallup poll. That's at the very bottom of any industry in American life right now, right after the oil and gas industry -- Wolf.

BLITZER: Yes, not very good at all.

ACOSTA: Not good.

BLITZER: But they want the federal government when they need the federal government.

ACOSTA: Exactly.

BLITZER: Otherwise they say we don't want the federal government.

ACOSTA: Easy to beat up on FEMA when you don't need them, but when you do need them, they tend to rate a little higher in your book.

BLITZER: Yes, they certainly do. All right. Thanks very much for that, Jim Acosta.

ACOSTA: You bet.

BLITZER: This note to our viewers. Stay with CNN to see the Republican presidential candidate's face off two weeks from today. I'll be the moderator when CNN hosts the Republican presidential debate, along with several Tea Party groups in Tampa, Florida. That's Monday, September 12th, 8:00 p.m. Eastern, only here on CNN.

Parts of New Jersey are swamped right now by serious flooding. Our own Mary Snow takes us on a helicopter tour of the hardest-hit areas.

And a shocking find in Libya. CNN tracks down the Lockerbie bomber, who appears to be close to be taking his secrets to his grave.

(COMMERCIAL BREAK)

BLITZER: We've been getting some powerful iReports from up and down the East Coast showing the damage from Irene.

Check out the raging floodwaters in the Catskills and upstate New York. Smaller communities in upstate New York also took a harder hit than New York City. The Big Apple's subway system and three major airports all reopened today.

More than 600,000 people had no electricity in Connecticut this morning after Irene blew down trees and power lines. There are hundreds of thousands of additional power outages up and down the East Coast right now. New Jersey has been on alert all day for more flooding as rivers crest. Check out a military vehicle nearly engulfed by high water.

Now the big picture of the flooding in New Jersey. Let's go to CNN's Mary Snow. She went on a helicopter tour of the damage with the National Guard.

She's joining us now from Pompton Lakes with more.

Mary, what are you seeing?

MARY SNOW, CNN CORRESPONDENT: Yes. Wolf, we're here in northern New Jersey, some of the hardest hit areas by flooding. If you take a look, this is a National Guard truck moving through.

This flooding over here, this is actually much improved since earlier today.

We're going to move over here for a minute.

What happened here earlier today in Pompton Lakes, Wolf, was there was a fire at a home. And it was believed that it was caused by a gas explosion. And fortunately, no one was injured in that fire because they had evacuated.

But what prompted that was about 30 to 35 people in the town, we're told, called in, asking to be rescued. And there have been rescues going on throughout the day. But we took a big-picture look at Passaic County, went up with the New Jersey National Guard earlier today to get an aerial view of the county.

The governor has said about nine rivers have reached or -- have reached near record levels, or in some cases record levels through the northern part of the state. And if you take a look at the damage, it is widespread flooding, but it is intermittent. There are some pockets that are fine, and back to normal, and then you go to other parts of the county where you could see extensive flooding.

We spoke with Colonel Kevin Hagerty of the New Jersey National Guard, and he says what he is concerned about most is that some rivers have not yet crested, and that waters are continuing to rise. Here's what he had to say.

(BEGIN VIDEO CLIP)

COL. KEVIN HAGERTY, NEW JERSEY NATIONAL GUARD: We expect that we'll have a larger issue as the rivers crest and things become more of a water problem than necessarily a hurricane and a wind problem.

SNOW: So the worst isn't over because some of these rivers haven't crested yet.

HAGERTY: That's correct. We expect the worst in terms of water and flooding still remains before us.

SNOW: And when do you expect that? HAGERTY: The next 24, 48 hours.

(END VIDEO CLIP)

SNOW: Here some of the residents have reported water up to about seven feet in some homes. What is happening now, people are starting to come back.

As I said, these waters are receding, so as much water as there is, this is much improved from 24 hours ago. And, you know, all these rescues of people coming out today. And there were town officials reported no one has been injured. What they're getting ready to do now is go on to the next towns where the rivers are continuing to rise and crest within 24 hours -- Wolf.

BLITZER: Mary, that military, it looked like a military truck that was moving towards you, telling you to get out of the way. Was that what they were screaming at you?

SNOW: Yes, that's what they were screaming. Bad timing there, Wolf.

It was the National Guard coming through, and there were workers in there. We didn't see any residents in there, but yes, they were telling us basically to get out of the way.

BLITZER: Which was smart, get out of the way of a big truck like that.

SNOW: Exactly.

BLITZER: All right. Mary, thanks very much.

Good luck to all the folks in northern New Jersey.

We're going to have much more on the floods, the devastation caused by Irene. That's coming up.

Also, the former vice president, Dick Cheney, accused of taking cheap shots at the former secretary of state, Colin Powell.

And President Obama takes on the wrath of Hurricane Irene. How did he do? That's all in our "Strategy Session." That's coming up.

(COMMERCIAL BREAK)

BLITZER: Let's get back to the dangerous flooding in Vermont.

Let's speak to the governor, Peter Shumlin. He's joining us now from the state capital of Montpelier.

Governor, thanks very much for coming in. What's the latest? How bad is the situation in your state?

GOV. PETER SHUMLIN (D), VERMONT: Wolf, hold on. I'll be right with you. I've got the president on the other line. You're going to have to delay for a second. BLITZER: All right. No problem. Speak to the president. We'll speak to you in a few moments.

Stand by. We'll get back to the governor of Vermont, and we'll get a report on hopefully what he's talking about with President Obama right now.

But let's move on and get to our "Strategy Session."

The former secretary of state Colin Powell is blasting Dick Cheney for shots he says the former vice president is taking at him, as well as other former members of the Bush administration in a new book that will be released officially tomorrow.

(BEGIN VIDEO CLIP)

COLIN POWELL, FMR. SECRETARY OF STATE: Mr. Cheney has had a long and distinguished career, and I hope in his book that's what he will focus on, not these cheap shots that he's taking at me and other members of the administration who served to the best of our ability for President Bush.

(END VIDEO CLIP)

BLITZER: The relationship between these two men is the subject also of my SITUATION ROOM blog today, some of which let me just share with you right now.

"It was during Operation Desert Shield and Operation Desert Storm that I really got to know the then-defense secretary, Dick Cheney, and the then-chairman of the Joint Chiefs, General Colin Powell. I was CNN's Pentagon correspondent."

"During those days of the first Gulf War, they seemed to be a highly efficient team. We used to in fact talk about a Cheney-Powell doctrine."

"Flash forward to the years following 9/11. Things clearly had changed. Cheney, of course, was vice president, Powell was secretary of state."

"I began to hear grumblings from their respective aides during those years that things were not necessarily all that smooth between them. 'No love lost,' in fact, I remember one top adviser saying to me."

Let's talk about this in our "Strategy Session." Joining us, our two CNN political contributors, the Democratic strategist Paul Begala -- he's a senior strategist for the Democratic fund-raising groups Priorities USA and Priorities USA Action -- also joining us Republican strategist Mary Matalin, who used to work for Dick Cheney during the Bush administration.

Mary, how surprised you about this animus, this bitterness that has developed between Dick Cheney and Colin Powell?

MARY MATALIN, CNN POLITICAL CONTRIBUTOR: Well, full disclosure, my publishing line from Simon and Schuster published the vice president's memoirs, "In My Time," and clearly Secretary Powell had not read the book. I'm confident when he actually reads the book, that he won't consider the multiple positive praises for both the secretary and other Bush administration officials and, of course, the president himself to be cheap shots.

It's not a cheap shot book. Cheney is not a cheap-shotter.

But I will say this. As you noted, the official rollout isn't even until tonight, but after the secretary's impassioned interview, we shot up to number one on Amazon nonfiction. So we thank him for that.

But as for the love lost and animus, I've been in those rooms, you've reported on those rooms. When you have the security of the country at stake, and the young men and women on the front lines, yes, you get into those kind of debates.

They are not pretty. It's not about love. It's about doing what you think is the best. And I think it would be unusual for men of their stature and experience not to have the kinds of debates that the book is replete with describing.

BLITZER: And full disclosure, Mary, in addition to having worked for Dick Cheney, you now work for the publisher of his book.

Is that right?

MATALIN: That is correct.

BLITZER: So you have an interest, obviously, in promoting the book, which is your job.

Paul, hold on for a moment. I want you to talk about this as well, but the governor of Vermont has just wrapped up a phone conversation with the president of the United States.

Governor Shumlin, can you hear me OK right now?

SHUMLIN: Yes, we're with you.

BLITZER: OK. Good.

I don't know if you want to share with us what the president may have said to you, what you said to the president, but if you do, this is a good chance to do that.

SHUMLIN: Well, let me just tell you, Wolf, first, my apologies. The president of the United States is the only person that I would put you on hold for.

BLITZER: Well, that's fine.

SHUMLIN: But having said that, you know, the president has just been extraordinarily helpful to us, as has the entire team in Washington. And we're facing real challenges here in Vermont.

I mean, this hurricane just dealt us the most severe blow. We have extensive flooding, we have loss of life.

We've, as you probably already know, have already had three fatalities. We're searching for another missing person now. And we have widespread devastation to our infrastructure -- roads, bridges, rail. You name it, we've got it.

So it really hit the southern end of our state and moved north, and it just really knocked us a hard punch, probably the toughest flooding that we've seen in the state of Vermont in our history. So we've got our hands full and the president is being extraordinarily helpful.

BLITZER: Did you ask anything specific? What do you need the most right now?

SHUMLIN: Well, what we need is more resources. You know, we have some communities that are entirely isolated, no power, no water no, sewer. They are getting what they can from the local grocery stores, but they are running out of the supplies.

So, you know, really what we need now is a higher level of services in terms of help than Vermont would normally call for. You know, we have really widespread damage to very small communities.

You've got to remember, Vermont is a lot of beautiful mountains with valleys and small brooks that run into bigger rivers. Well, our small brooks have crested, our larger rivers have not, so we know that there's more trouble ahead.

BLITZER: Did the president give you a positive response?

SHUMLIN: He's just been extraordinary. He really reached out to me and to us. He's sending the FEMA director up here tomorrow, and he couldn't be more helpful.

BLITZER: You know, a lot of us were expecting horrendous damage in North Carolina, Virginia, Maryland, New Jersey, New York. Vermont necessarily was not on our radar screen. Was it on yours?

SHUMLIN: Well, to tell you the truth, it was. And I've got to say, there's been a lot of Monday morning quarterbacking going on in some of the media.

And they told us four days ago that we were in the eye of the storm, and by gosh, they were right. And while it hit slightly farther to the west than they predicted, you know, it was within the range. And they said you're going to get extraordinary flooding.

And so we prepared for the worst and hoped for the best, and we got dealt the worst. And, you know, we've had -- obviously, my heart goes out to the families who have lost their loved ones in the state. We're still searching for one other young man.

And we have widespread damage. A lot of seniors and low-income people living in shelters lost their homes. We have had to evacuate our entire state hospital, our most vulnerable population. The list goes on and on. So we lots of challenges up here, and we're going to dig our way through it. The great thing about Vermonters is we're resilient, we take care of each other, and we have a great sense of community. So we'll get through it.

BLITZER: I love Vermont. You've got a beautiful state.

Good luck, Governor, to you and to all the folks in Vermont. We're praying for you and we're wishing you only the best.

SHUMLIN: Well, thanks, Wolf. We appreciate your support.

BLITZER: Thank you very much.

Governor Peter Shumlin, the governor of Vermont.

Much more on the hurricane, the disaster that has occurred. That's coming up later.

We'll also get back to Paul Begala and Mary Matalin. Much to discuss with them when we come back.

(COMMERCIAL BREAK)

BLITZER: Let's get back to our "Strategy Session."

Joining us once again, Mary Matalin, Paul Begala, our CNN political contributors.

We just heard Mary say what she said, Paul, that this is not such a big deal, this animus, the hatred, maybe, that appears to have developed, at least on the surface, between Colin Powell and Dick Cheney.

What do you think?

PAUL BEGALA, CNN POLITICAL CONTRIBUTOR: Well, I'd give some free advice to Mr. Cheney. When you're a moral midget like Mr. Cheney, is don't pick a fight with a real man of towering integrity like Colin Powell. It's a mismatch.

Vice President Cheney -- the useful thing about this book -- and I'm glad that Mary published -- is because it allows us to have an honest debate about the Cheney record and the Bush/Cheney record. And this is the record.

He ignored the al Qaeda threat before 9/11. He was warned by national security professionals like Richard Clarke and others, and he ignored it. He was supposed to chair a taskforce on terrorism. He did nothing, and then the attacks came.

Then he helped squander the surplus. He was warned by his own treasury secretary, Paul O'Neill, that the policies he was putting in place would explode the deficit. He said, and I quote, "Deficits don't matter."

And then, of course, he helped mislead us into the war in Iraq. He said we would be greeted as liberators.

He gave credence to the myth that somehow Saddam was involved in 9/11. He even said Saddam has in fact constituted nuclear weapons.

All of that false. So I'm asking my followers on Twitter, where I'm @PaulBegala, was Dick Cheney the worst vice president in history or just maybe the second or third?

BLITZER: Mary, go ahead and respond.

MATALIN: No, I'm not responding. That is -- if Colin Powell is watching, now that's a cheap shot.

There's not one correct -- factually correct statement in that litany. So I quit listening.

Paul, I love you, you're my friend. I'm embarrassed for you. But I'm going to send you a free autographed copy of the book, and then we can have a conversation.

(LAUGHTER)

BLITZER: And I want to continue -- we don't have time now, guys, but I want to continue this conversation in a few days when you both have had a chance -- I know Mary has read the book. Paul, you'll take a closer look at the book.

I want you to come back. I'm going to interview Dick Cheney a week from tomorrow, and we'll have much more on this story coming up.

Thanks, Paul and Mary.

They disagree. I'm not surprised.