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The Situation Room

Hurricane Rita Lashes Keys; Bush Visits Mississippi; Navy to Leave New Orleans; Jeb Bush Orders Evacuations

Aired September 20, 2005 - 16:00   ET

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

WOLF BLITZER, CNN ANCHOR: It's 4:00 p.m. here in Washington and you're in THE SITUATION ROOM, where news and information from around the world arrive in one place simultaneously.
Happening now, Hurricane Rita, now whipping the Florida Keys and threatening to bring new rain and anguish to the battered Gulf coast. This hour, up to the minute reports on the storms, the evacuations, and forecasters' worst fears.

President Bush in the disaster zone and on the defensive. He's tapped an in-house adviser to review the government's Katrina response. Democrats still demanding an independent investigation.

And paying the price for hurricane recovery -- new arguments this hour over post-Katrina budget cuts and spending priorities, with the U.S. preparing to go billions of dollars deeper into debt. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

Those who haven't fled the Florida Keys are being warned by the governor to hunker down as Hurricane Rita storms the Gulf. Our John Zarrella is standing by live in the Keys. First, though, the Katrina forecast -- the Rita forecast, that is, from our meteorologist, Jacqui Jeras. Katrina, Rita -- you get confused after a while, Jacqui.

JACQUI JERAS, AMS METEOROLOGIST: And we had Ophelia. Yes, they are all ended with As, Wolf. I think I said it once myself the wrong way. Hurricane Rita producing possible tornadoes at this hour. We just got a tornado warning from Monroe County and this includes you near Ocean Reef and also near Key Largo.

Here's the storm of concern, a waterspout about 14 miles northeast of Key Largo or near Ocean Reef. It's heading on up towards the north and west. This is a radar indicated tornado. We haven't seen one on the ground or over the water, but it is a good possibility.

And check out just the extent of this huge line, this outer feeder band, mostly ever the Everglades, so good news is lot of that is not very popular, but torrential downpours, a good inch and a half to two inches plus inches per hour expected within this line. It's moving very quickly though, this line itself, on off to the west.

The storm itself is almost due south now of the Dry Tortugas. There you can see the eye of the storm. As of the 2:00 o'clock advisory it was 80 miles south of Key West, and it's moving off to the west now at about 14 or 15 miles per hour. It is a Category 2 hurricane, packing winds of 100 miles per hour, with some gusts beyond that. We could see hurricane force wind gusts now across the lower and central Keys. We're getting tropical storm force wind gusts all across parts of south Florida at this time.

The worst that -- we're kind of in the thick of it right now, and then the storm is going to continue to pull away. We're expecting much calmer conditions by the time you wake up for tomorrow morning. We're expecting further intensification throughout the afternoon and evening hours and possibly becoming a Category 3 before tomorrow morning.

It will continue its westerly track until it gets caught up on the backside of an area of dry pressure, and that will start to drive the storm more northward. Still some uncertainty as to exactly where this storm is going, Wolf.

We're watching northern Mexico, all of the Texas coast, and Louisiana, but most of the models are in good agreement that it will likely be somewhere across the Texas coast. But keep in mind, this is a big storm and it will be affecting millions of people even if they don't get hit with the eye of the storm -- Wolf.

BLITZER: Jacqui, we know what a hurricane is, we know what a tornado is, but a lot of our viewers probably don't know what a waterspout is. What exactly is that? What's the danger of that?

JERAS: Same thing as a tornado. It's basically a tornado over the water. Once it gets over land, then we call it a tornado. Usually in hurricanes they're weak tornadoes, F0 or F1, but they can cause damage, so you need to take cover if you live in that area, Wolf.

BLITZER: When will they have a better handle on what part of Texas or Louisiana this hurricane might exactly wind up at?

JERAS: Well, we need to give it really a good day, day and a half at least before we have a better idea. We want to watch as that high pressure system as it starts to shift on off to the east. We need to get it a little bit closer into the Gulf of Mexico before we have a better idea, but feeling pretty good right now about Texas somewhere.

BLITZER: All right. I don't know if they're feeling so good in Texas about that, but ...

JERAS: Confident in our forecast. Let's correct me.

BLITZER: That's correct. John Zarrella, we're going to go to him in a second. He's in Key West. What exactly should he be bracing for? Is the worst over for him or is he going to get it even worse?

JERAS: Well, he's really getting the worst of it right now in Key West, at least in terms of the storm surge and the maximum sustained winds, but keep in mind some of these outer bands or these feeder bands that I was talking about, these are going to be pushing through the lower keys later on for tonight, so they may experience conditions that are nearly as bad with a strong, gusty wind -- 50, 60 plus miles per hour as they move through, with torrential downpours and some flash flooding.

BLITZER: Jacqui, thank you very much. We'll check back with you.

Let's go to John Zarrella. John, how is that for individualized service? You got the latest forecast right on the scene.

JOHN ZARRELLA, CNN CORRESPONDENT: And right on the money, no less, too. She's exactly right. What we're experiencing, this is about the worst of what we've had all day. A lot of what she called the torrential downpours we're getting now, Wolf. You can see that the wind has kicked up, the rain has kicked up here. It's pouring off the gutters, off the sides of the roofs.

You take a look down here, the street on the side here is considerably flooded now, and just an hour ago, when we talked last, that wasn't the case at all. It's changed completely in the last hour because we've really had these downpours, and we've got these cars and all going through it.

Again, lots of traffic, lots of people on the street. They said about half, 50 percent of the population of Key West evacuated. That would be about 12,000 people, roughly, 12, 13,000 evacuated. I think we've seen all of the other 12,000 during the course of the day up and down Duvall Street here in the center of Key West.

And I have to tell you, we just got back from taking a quick tour around the portion of the island, went over to the southernmost point. Certainly that storm surge, the water is breaking over the sea wall there, but beyond that, a little bit of flooding.

This is about the worst you see. So beyond that, if this is as bad as it's going to get for Key West, and the islands down here, they've made out remarkably well compared to what they expected would happen to them yesterday when they thought they might take a direct hit from a Category 2 or Category 3 storm.

But with the eye staying to the south of us, a good enough distance, Wolf, again, what we're getting now is just a lot of rain and some continued squalls moving through here. And as Jacqui said, this is probably what we're going to experience for the next several hours throughout the night. Just getting us wet, Wolf.

BLITZER: But the folks there, they've got to be used to this by now. I mean, it's almost -- especially in the more recent years, the whole Keys area seems to be target number one.

ZARRELLA: Yes, and, you know, it's been -- this is the fifth evacuation of the Florida Keys in two years, so you know they're storm weary and evacuation weary, because to one degree or another they've evacuated residents, nonresidents, you know, tourists during the past two years on five separate occasions, and again, this being the fifth. So they're tired of it. Everybody's tired of hurricanes and hurricane season, but certainly down in the Keys, as you say, you know, this is usually, you know, the first - the first line in the sand that's drawn. When these storms come across and make their way into the Gulf, the Keys are always pretty much target number one, or certainly close to the top target -- Wolf.

BLITZER: And our viewers know, if there's a hurricane, John Zarrella's going to be there. All right. John, thank you very much. We're going to get back to you soon.

I want to show our viewers of Air Force One. It's on the tarmac now in Louisiana. It's preparing to bring the president of the United States back from his fifth visit to the Gulf coast, back to Andrews Air Force Base outside Washington, D.C. There's Air Force One. We'll continue to monitor the president's activities.

With Rita possibly on a collision course with Texas this week, people are packing up and getting out from the island of Galveston inland to Houston, where evacuees from New Orleans are being forced to flee once again. The Arkansas governor, Mike Huckabee, says emergency officials have already told them to be ready to shelter an enormous amount of people because of Rita. And Texas Governor, Rick Perry, is ordering emergency personnel helping with the Katrina recovery to return to Texas to prepare for this new hurricane.

(BEGIN VIDEO CLIP)

GOV. RICK PERRY (R), TEXAS: We've seen the tragic effects of a deadly hurricane in recent weeks, but there's no reason to panic if you're prepared and take an orderly approach to this developing storm. Now, we hope and pray that Rita dissipates in the Gulf waters, but it's better to be safe than sorry.

(END VIDEO CLIP)

BLITZER: As the waves whipped up in Galveston, officials have called for voluntary evacuations there. Busses will begin running tomorrow for people who can't leave on their own. Galveston was wiped out, as many of our viewers probably have read in their history books, more than a century ago this month.

Let's go to our affiliate reporter Charles Billi in Miami, South Beach, of our affiliate WSVN. I hope I pronounced your name -- your last name correctly, Charles.

CHARLES BILLI, WSVN REPORTER: You did, Mr. Blitzer.

BLITZER: You can call me Wolf, but tell our viewers what's happening in South Beach, an area probably familiar to a lot of our viewers out there.

BILLI: OK, this is South Beach. It's part of Miami Beach. It's the southern most end of it, and it is not on the mainland. It's actually out on the beach. And we're standing along the coast here, and you can see that Rita has kicked up the waves. There is definite chop in the water. But it looks at this point, Wolf, that we may be seeing the worst is over here in Miami-Dade County. Different in Key West, down in Monroe County, because they're closer to the storm and it's going through down there as we speak.

But these are just some feeder bands that are coming across. And you can see that there's a haze across the beach right now. What you're seeing is the sand being picked up and slammed into the dunes and onto Ocean Drive. And that's what we're showing you right now. That is really the only significant damage that we have seen out here.

We are actually now down to the hard pack, Wolf. And on the beach, for people who are not familiar with it, a hard pack is the hard pounded sand surface that they lay that soft, fluffy sand on top of. It's always a beach restoration effort going on here in south Florida, because we've gotten storm after storm after storm. So they're going to need to bring the sand back.

But we haven't seen significant damage. There are some power outages here in Miami-Dade County, roughly 4,500 customers without power. But we can tell you that the FPNL crews are lined up right over our shoulders here. We're going to spin the camera around, do a 360 here and show you the FPNL crews, that is our local power company. These guys are at the ready, standing by to do whatever they need to do. And they are able to operate when winds are not sustained over 40 miles an hour.

So as soon as they -- winds drop below 40 miles an hour, and I believe that's where we are about right now, maybe somewhere around 30 or 35, these guys are working. Beach crews from the city of Miami, big thumbs up to them, being ready to handle anything that Rita could have brought. They're already out there cleaning up palm fronds, coconuts, things that get blown around here in south Florida, and can be projectiles. And so they've already picked all of that up off of the beach and off of Ocean Drive.

And every once in a while, we get a trickle of residents and some tourists who come out to get a taste of what Mother Nature can bring, this one in the form of Hurricane Rita. But it's a very serene afternoon out here, considering what we could have gotten from Rita, which just never came to fruition.

BLITZER: Charles Billi of our affiliate WSVN. Charles, thank you very much for that report from South Beach in Miami.

Still ahead, Rita's threat and Katrina's legacy. The Florida Keys under hurricane alert and Governor Jeb Bush due to hold another briefing. That's coming up shortly. We're planning on bringing it to you live.

And the military issues new orders in advance of Hurricane Rita. We'll go live to the Pentagon for an update on its plans.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK) BLITZER: President Bush today returned to the Gulf Coast for a fifth time since Katrina hit, with new storm fronts on the horizon. Check this out. This i a live picture of Air Force One, due to depart New Orleans shortly to return to Washington.

In addition to facing Hurricane Rita, the president's choice to head an investigation of hurricane relief under Katrina is under fire right now.

Let's get the latest. Our White House correspondent Suzanne Malveaux is standing by -- Suzanne.

SUZANNE MALVEAUX, CNN WHITE CORRESPONDENT: Well, Wolf, the fifth visit here, of course, comes amid some poll numbers that show the majority of Americans doubt the president's motives. Some 56 percent believe that perhaps he is taking these trips, these steps, for political reasons, that he doesn't sincerely care about the victims.

The Bush administration wants to prove that is farthest from the truth, that the fifth visit here -- the first stop, of course, Gulfport, Mississippi. That is where he met with the governor, as well as his commission of business leaders, praising them for having an independent kind of can-do spirit, he said. But the president also taking on direct criticism. That criticism that government's red tape is getting in the way of getting things done.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Looking at these bridges requires more than just, you know, writing a check. It requires the Coast Guard to look at the spans, it requires the -- I think you've got a role in parts of the state highways. I mean, we're trying to help get this recovery going by plowing through the paperwork requirements as fast as possible.

(END VIDEO CLIP)

MALVEAUX: Now, his second stop is New Orleans, aboard the Iwo Jima. That is where he got a briefing, a teleconference briefing on Hurricane Rita's track. He also signed an emergency declaration for Florida, to make sure that they are able to get federal funding right away. He has spoken with the governor of Texas, Rick Perry, who has not yet asked for emergency funding.

Also interesting, Wolf, he praised Mayor Ray Nagin. As you know, New Orleans mayor earlier today saying that he kept the people away, that he is taking them out of New Orleans to keep them away from Hurricane Rita. There was a big public disagreement between the president, as well as the mayor of the administration, over that. The mayor ultimately reversing his position. President Bush giving him public praise for that reversal -- Wolf.

BLITZER: What about this internal investigation the president has ordered? What's the latest on that?

MALVEAUX: Well, the internal investigation is actually going to be led by Fran Townsend. She is the Homeland Security adviser to the president. They say she is very capable. She has spent 13 years in the Justice Department. She was an intelligence official before for the Coast Guard. They believe that she will be the perfect person. She's bridged the gap between Republicans and Democrats.

But Wolf, I can tell you, Democrats are not necessarily pleased with this because they know there's going to be an internal investigation. There's also going to be a congressional investigation. But what they want is an independent one.

BLITZER: All right. Suzanne Malveaux at the White House. Thanks very much. And as Suzanne noted, top House and Senate Democrats are raising lots of red flags about the president's choice of Fran Townsend to investigate the Katrina response. They're pressing for a fully independent probe, and they question whether Bush allies such as Fran Townsend will get to the bottom of what went wrong.

(BEGIN VIDEO CLIP)

SEN. RICHARD DURBIN, (D) MINORITY WHIP: I don't know her. She may be a very competent individual. But how in the world can we get to the truth of the question as to what went wrong with Hurricane Katrina, how can we really hope to discover the incompetence that led to all of this human suffering and devastation, if the administration is going to investigate itself?

(END VIDEO CLIP)

BLITZER: Our new poll shows 81 percent of Americans do want an independent panel to investigate the federal response to Hurricane Katrina. Just 18 percent think Congress is up to the task. The House and Senate are working to create special committees to investigate the Katrina response. That's what the Republican leadership wants. The Democrats are not on board. The Senate Republican and Democratic leaders still very much at odds over the scope of this investigation.

Let's bring in our Jack Cafferty. He wants to weigh in on the big stories. He always weighs in on the big stories. The president wants his Homeland Security adviser to conduct an internal investigation. The Republican leadership in the House and Senate want a bipartisan, but Republican-led investigation. Where's the independent 9/11 Commission-type of investigation to get to the bottom of this?

JACK CAFFERTY, CNN ANCHOR: I have no idea. That's the short answer. You can't make this stuff up, Wolf. President Bush naming his Homeland Security adviser to investigate what went wrong with the government's response to Hurricane Katrina.

Frances Towsend is the one who most recently oversaw the reorganization of the nation's intelligence services following the WMD debacle. Given the outcome of that effort, she'll probably conclude there was no hurricane.

So what's all the fuss about? "Newsweek" magazine reported last week that when Katrina struck, no one wanted to tell the president the truth about what happened. None of his advisers wanted to bring him the bad news. What kind of staff is that? Nobody wanted to tell the president of the United States that the nation's 35th largest city had been destroyed? Who are these people and what kind of government do we have when everyone is afraid to tell the president anything when he doesn't want to hear?

Here's the question, is the president's Homeland Security adviser the right choice to investigate Hurricane Katrina? Duh. CaffertyFile, one word, CNN.com.

Let's see, the Democrats want a committee. The Republicans want a committee. The House will have a committee. The Senate will have a committee. We've got this lady that's going to have a committee. This is nonsense. They need to take this thing outside government. This was government's screw-up. Get somebody on the outside to take a look. I think I mentioned yesterday, get a dollar a year guy, somebody like Tom Cain who did the 9/11 Commission, and let him get the facts together and issue a report to the public. The public's not going to buy any of this stuff that comes out of Washington. They're not going to believe anything that comes out of these partisan reports, or stuff that was done from within the White House. It just isn't going to wash. You know, the game is up with John Q. Public. They're not buying this stuff anymore.

BLITZER: They want the truth, and that's whey deserve. Thanks very much, Jack. I'm anxious to hear what our viewers think about this as well.

Hurricane Rita is getting stronger, by the way, by the hour, and that may force the U.S. Navy to quickly start moving some of its ships. We'll go love to the Pentagon for an update on that.

Also, the storm's drenching the Keys and the rest of South Florida right now, but the big question is this. Where will it go next? We're tracking Rita.

Plus, paying for Katrina, billions will be spent, but where will the money come from? Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: The U.S. military is playing a huge roll in the recovery from Hurricane Katrina, but now it must protect its forces from a possible assault from Hurricane Rita. The Navy is moving ships out of harm's way, and commanders are looking ways to shelters thousands of troops. Let's go live to our senior pentagon correspondent, Jamie McIntyre. He's standing by -- Jamie.

JAMIE MCINTYRE, SENIOR PENTAGON CORRESPONDENT: That's right, Wolf. This is being monitored 24 hours a day at the U.S. Northern Command's Hurricane Center in Colorado Springs. A couple of things they have to be careful of.

One is they want to obviously make sure that the ships they already have down there are not in the path of the hurricane as they watch the track. That means they're going to be moving ships like the Iwo Jima, which has been serving as the command ship, further to the east, over toward Florida. In addition, they're moving the hospital ship Comfort, the U.S.S. Shreveport, Grapple all moving over to the east, and also the U.S.S. Baton, which you may recall, was the first amphibious assault ship on the scene in New Orleans. It's being moved and being resupplied so it can be in a position to respond to Hurricane Rita as well.

In Florida they've already designated a homestead air reserve base as a preposition point for supplies. They're moving helicopters into Patrick Air Force Base in Florida, again, in case they're needed for search and rescue, and they're just watching the track of the storm. The Iwo Jima could move as soon as tomorrow, depending on whether the storm continues on its current track through the Gulf of Mexico -- Wolf.

BLITZER: So they've learned some lessons, I suppose, from Katrina. Is that fair?

MCINTYRE: Yes, they have. And obviously they're very sensitive to making sure they have things pre-positioned. In addition, they want to make sure that the troops that are there to help with Katrina don't become victims of this hurricane, so they're looking for good places to shelter them. And they've taken about 1,100 of the National Guard who are from Texas, moved them back to Texas, so they'll be back in their home state to help there if needed.

BLITZER: All right. Jamie, thank you very much. Jamie McIntyre reporting for us from the Pentagon.

We're awaiting two briefings, this hour the Florida governor, Jeb Bush, on how his state is weathering Hurricane Rita. And we're also awaiting the New Orleans mayor, Ray Nagin, on how his state is dealing with recovery efforts in New Orleans and elsewhere. We'll have a live up-date, live coverage of both of these briefings. Stay tuned for that.

Plus, Rita is now a Category 2 hurricane, and it's getting stronger. The storm slamming the Florida Keys this hour, but where will it go next? We're tracking Rita. Much more here in THE SITUATION ROOM. Right after this.

(COMMERCIAL BREAK)

BLITZER: Here's a quick look at some of the hot shots coming in from our friends over at the Associated Press, pictures likely to be in your hometown newspapers tomorrow.

In Nepal, protesting against the king. Riot police stop dozens of women who broke through barricades demanding democracy.

Over in the West Bank, Palestinians celebrating the evacuation of the Israeli settlement of Sanur. Unarmed policeman patrolled the area to keep order.

Kandahar, Afghanistan. Workers hand-counting ballots two days after the landmark legislative elections.

And over in Italy, look at this. Bruce Willis keeps himself busy between movies, crowning the new Miss Italy.

And that's today's hot shots.

We're watching Hurricane Rita as it heads through the Florida straits, on its way to the Gulf of Mexico. The storm is now a Category 2 hurricane, and it's moving toward the Gulf of Mexico. Could likely become a Category 3, not very -- in the not very distant future. We're expecting the Florida governor, Jeb Bush, to start briefing reporters shortly on what's going on. We'll bring you his news conference live, as soon as it begins.

We're also watching the president of the United States -- there's Marine One. His helicopter has just returned to the airport in New Orleans. The president on a tour, his fifth of the region, spending some time getting briefings in New Orleans, earlier in Mississippi. He'll board Air Force One shortly, and that will bring him back to Washington, specifically to Andrews Air Force Base, just outside Washington, in suburban Maryland.

The president did have some remarks when he was in New Orleans. We will be getting that tape. We will be getting that tape shortly, bringing you the president's remarks.

But in the meantime, let's immediately go to Tallahassee, Florida. The Governor Jeb Bush, speaking to reporters.

(JOINED IN PROGRESS)

GOV. JEB BUSH, FLORIDA: ... south, southwest of Key West, and tropical storm force winds extend out 120 miles. The storm continues to impact the Keys particularly, and south Florida, with heavy rain. Rain bands will continue moving across southeast Florida throughout tonight and may cause some flooding.

Hurricane warnings remain in place for all of Monroe County, and tropical storm warnings are in place for the southwest coast of Florida. Earlier today, President Bush granted Florida an emergency declaration, for which we're very grateful.

South Florida residents should remain vigilant. We say this for each one of the storms that we have to deal with in our state. It is more dangerous after a storm than during a storm. Please continue to shelter in place. Don't drive in these conditions. They are still tropical force winds throughout the region, and it's not safe. And it makes it harder for law enforcement officers that are doing assessment of damage to do their jobs when people -- and to quickly respond to any emergencies while -- if people are getting out of their homes too early.

There are three special needs shelters open, two in Broward County, and one in Miami-Dade, serving 104 of Florida's most frail and vulnerable citizens. Each shelter, by the way, is staffed with medical personnel with the equipment and supplies necessary to ensure that these patients, our fellow citizens, receive proper care if they need.

Twelve shelters serving special needs and the general population are open in Broward, Collier and Miami-Dade counties, and approximately 1,300 people have taken shelter from the storm. This is the seventh hurricane, believe it or not, in 13 months, and our third one this season.

And I'm proud of our team. They really have done an extraordinary job. And I'm very proud of the local emergency responders. These are dedicated professionals that do their jobs day in and day out, in extraordinary fashion. But they're -- they particularly do it well as we prepare for storms.

And we have a plan that is -- that we're trained to carry out. And the first priority after the storm is saving lives and restoring security for the safety of our citizens. Twenty-four hundred guardsmen are mobilized, an additional 2,000 are on alert. Our search and rescue and medical teams are ready to respond, and they're staging as we speak.

Our second priority is meeting the immediate needs of all of the residents. And that means for many that don't have power, water, ice, and food should be made available. We have over 200 trucks that are in varying stages of being staged in different parts of our state. And as soon as it's safe, once requested by the local officials, we will make our way to the impacted region.

As they have in all of the storms, the power companies will begin working to restore power to critical facilities, homes, and businesses. And I spoke to Senator Pruitt, who lives in St. Lucie County today. This afternoon he told me that he had already seen a long phalanx of Florida Power and Light utility trucks heading south to stage and prepare, to provide relief for their customers in southern Florida. As of 3:00 p.m., about 24,000 customers in Monroe, Broward, Palm Beach and Miami-Dade counties were without power.

During the first two hurricanes of this season, Hurricanes Dennis and Katrina, many Floridians used their generators for the first time. A lot -- I think we led the nation in the purchases of generators after last summer. And a lot of people were using them for the first time. And I imagine that many more will use their generator for the first time today and tomorrow. Please follow the generator instructions. Some may remember that during these two storms, we've had loss of life for not following the instructions. Don't use the generators in your home. Don't set them up in your garages. This is really a matter of life or death.

Our third priority is to help all Floridians resume their normal lives with normal activities as soon as possible. And as Rita moves into the Gulf of Mexico, we're looking to do just that, to make sure that people can get back into their homes as quickly as possible in the Keys, and that we continue to work with our -- with the energy companies to make sure that we have a stable fuel supply to our state.

If you don't mind, I'd like to say a few words in Spanish, as well. (SPEAKING IN SPANISH)

BLITZER: We're going to break away as the governor of Florida speaks in Spanish. We're going to get back to him once he starts answering some questions from reporters there in Tallahassee.

(WEATHER REPORT)

BLITZER: We're going to continue to track Hurricane Rita.

Coming up, paying for Katrina, though, on the Gulf coast. Billions will be spent, but where will the money come from? That's a huge question here in Washington. We'll have some specifics.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Welcome back. The president, by the way -- Air Force One getting ready to leave New Orleans to head back to Washington. He did speak to reporters. We'll bring you those remarks shortly.

Meantime here in Washington, the debate intensifying over how to pay for disaster relief in the Gulf coast. And it's not just a Democrat versus Republican argument. Fiscal conservatives are pressing the president to trim programs such as the new Medicare prescription drug benefit. House Republican Mike Pence of Indiana is planning to propose a variety of cuts.

(BEGIN VIDEO CLIP)

REP. MIKE PENCE (R), INDIANA: What you're going to see tomorrow is really an effort to look at the domestic budget, to deal with the domestic crisis. We're going to take a hard look at entitlements, transportation spending, and a broad range of government programs that have not recently been given the scrutiny that many conservatives in Congress believe they should have be given.

(END VIDEO CLIP)

BLITZER: Democrats are urging Republicans to cut wisely and to keep the spending axe away from entitlement programs.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MINORITY LEADER: We want to stop the Republican controlled House and Senate from cutting Medicaid by another $10 billion. We want to stop them from cutting student loans, as is in their budget.

(END VIDEO CLIP)

BLITZER: By some estimates the cost of Katrina relief could reach $200 billion, maybe even more. The Bush administration acknowledges the federal deficit is likely to swell even bigger.

Let's bring in our senior political analyst, Bill Schneider. Bill, are Americans worried about the deficit right now?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Wolf, apparently they are. We asked people which worries you more, that the federal government will spend too much on hurricane recovery and thereby ignore other problems, or that they'll spend too little and not fix the problems caused by the storm?

And by 50 to 40 percent, people are worried that the government will spend too much. President Bush now has made two open-ended commitments where he says, we'll stay as long as necessary and spend whatever it takes. Iraq and Katrina. The public's preference on this is clear.

A majority of Americans feel the best way to pay for the hurricane recovery is to cut spending on Iraq. Fifty-four percent say that. Raising taxes is actually a little bit more popular than increasing the deficit to pay for the recovery.

BLITZER: You know, Bill, the president is about to speak actually on tape. He spoke a little while ago in New Orleans, just before boarding Air Force One. We just saw the plane take off. We're getting that tape in right now. The president speaking to reporters for the second time today during this, his fifth visit to the Gulf region. The president clearly determined to show that he cares and that he cares deeply. Let's listen in.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I want to thank the folks here at the Folgers Plant for inviting us to come say hello. The reason I've come with the mayor and Admiral Allen is because I want the people to know that there's progress being made in this part of the world.

We've got some people working here, because of the ingenuity of the plant managers. Behind me you see temporary housing where this company's provided housing for the folks who work here. And FEMA helped with that. And what you're beginning to see is a revitalized economy.

Progress is being made toward meeting the mayor's vision and my vision and everybody's vision involved in this of a vibrant New Orleans and surrounding parishes.

The other thing I just come from a briefing about Hurricane Rita or storm Rita, now a Category 2 hurricane. And we were watching very closely, of course, its track. All up and down this coastline people are now preparing for what is anticipated to be yet another significant storm.

And Admiral Allen is going to stay in charge of the Louisiana and Mississippi. We've got another admiral who is now being stationed in Texas to coordinate the relief response. We've got military assets that are being taken out of the New Orleans area, out of harm's way, and they'll come back in behind the storm to follow up where it's needed. I've been in touch with the governor of Texas. I've been briefed on the planning for what we pray is not a devastating storm. But there's one coming. And I appreciate the mayor recognizing that, and he made a wise decision to say to people, you know, be cautious about returning here because a rain of any amount could cause these levees to break again.

But progress is being made. As I said in Mississippi, I was -- I was pleased to see the progress being made on the ground. There's still a lot of work, but they're making progress, and they're making progress here in New Orleans, too. Again, we have a lot of work to do, but people are determined to get the job done. Anyway, I want to thank you for having me. Thank you for having me back. Thank you all.

(END VIDEO CLIP)

BLITZER: The president speaking just a short while ago in New Orleans before he boarded Air Force One to fly back to Washington. Interestingly, he was flanked -- behind him Vice Admiral Thad Allen of the U.S. Coast Guard who's the point man for FEMA on the ground there and mayor of New Orleans, Ray Nagin. We expect to hear, by the way, from both of them. That's coming up. We'll bring you their news conference shortly.

Let's bring back our senior political analyst, Bill Schneider. The president clearly, clearly is determined to show he really cares about what's going on, and not only about Katrina, but getting ready for Rita.

SCHNEIDER: That's right. The president is very worried about that, and he also expressed concern about the region's economy and the nation's economy, because right now the president only has 35 percent job approval on the national economy. That's the lowest economic rating this president has ever gotten.

The polls are showing rising economic pessimism in the country. Two-thirds of American's believe the nation's economy is getting worse. What's driving it? Two words -- gas prices, and Hurricane Rita may be heading for Houston, which is, of course, the nation's energy capital -- Wolf.

BLITZER: All right, Bill. Thank you very much.

Let's go back to Hurricane Rita. Our affiliate reporter, Glenna Milberg of WPLG is in Marathon, Florida. She's joining us live from there. It looks a tad windy. What's going on?

GLENNA MILBERG, WPLG REPORTER: Yes, a little windy out here. It's these huge wind squalls come through every once in a while, and my understanding as I'm sitting and listening to meteorological reports, this is probably the worst and the thick of it we've seen today.

I want to give you a little tour of the city of Marathon Marina. You're looking at here is some angry, angry oceans whipped up by probably 50 to 60-mile-an-hour wind gusts. And the good news, I think, if I can characterize it like that for Marathon, is that Rita is not nearly -- is not delivering nearly the storm surge here as was expected just yesterday.

And that's the good news, because, of course, a storm surge is just the absolute worst part, not only for property, but for people. I have to say the entire length of the Florida Keys is under a mandatory evacuation, but you would be shocked to find out just how many people flat out ignored the evacuation call, not really knowing that Rita would not be what was expected. Then you have people out here today, even in the worst of it, walking around, checking on their boats and really braving some fairly dangerous elements.

Damage-wise, we have not seen much frankly. I think the damage now is going to be some of the boating community. As far as tree limbs and power poles and some of the things you see normally in strong winds and hurricanes, we haven't seen, as we wipe our lens a little bit, all that much and I think that's because the two storms that went through here -- Katrina went through as a one last month.

Hurricane Dennis went through in June, or skirted. Those were the storms that kind of did some -- oh, nature's pruning, got out a lot of the limbs, tree limbs and things that were not strong enough and left the strong stuff.

So as far as damage goes, some of the lower-lying neighborhoods in Marathon are under a foot of water right now, because, frankly, this neighborhood is in between water. And it's just a few blocks in between. It's a little slice between water. And so that's the damage that we're seeing. I guess we could say, if this is as bad as it's going to get, the Florida Keys, boy, did they get lucky.

BLITZER: All right. Glenna, thanks very much. Let's not speak to prematurely. We'll continue to watch what's going on. Glenna Milberg of our affiliate WPLG.

We expect to hear from the mayor of New Orleans, Ray Nagin, the vice admiral of the U.S. Coast Guard, Thad Allen, they're expected to brief reporters on what's going on as they prepare in their area for Hurricane Rita, the aftermath of Hurricane Katrina. We'll bring that news conference to you live once it happens. We're also going to bring you live Jack Cafferty, he's been reading your e-mails. He's here in THE SITUATION ROOM. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: Let's go right to the mayor of New Orleans, Ray Nagin. He's speaking to reporters.

RAY NAGIN, MAYOR, NEW ORLEANS: The pumping capacity continues to improve. We're still not at full capacity, but the number of pumps continue to go up every day.

Let me talk to the residents of New Orleans for a minute. I know it has been three weeks plus that you haven't been able to come back into your city. And I know there are lots of people who are very anxious about coming home. And I know some of you were prepared to come back to New Orleans.

You know, just hold on for a little longer. As soon as we get comfortable that Rita is clear of landfall in Louisiana, where we won't have any emergency impact, we will get back to our re-entry program as outlined. It may be a little more space, but we fully intend to follow through on some of the things that we talked out.

Once you get here -- let me just give everyone a word of caution, because I have been getting reports of individuals that have been coming back to the city and it's very shocking what they are finding, most of them.

I just want you to know that: Be prepared. You may not recognize some things. Your home may be in disarray. Your neighborhood may be in disarray. We want you to come prepared, with your eyes wide open, as it relates to what you might see.

We also want to make sure that you're aware we are not encouraging to you bring back any pets, any children, or any senior citizens. We have minimum hospital facilities. And we're still working to improve water quality. And the schools for the most part are not open in the city.

So I want to make sure that everyone understands that.

And as business people come to the city, you do not have the full services that you have enjoyed in the past. The purpose of this re- entry program is to allow people to come in, to reassess exactly what they have, what they have lost, and start to make plans for the future.

If you're near an area that was wet, that had some flooding, we encourage to you wear protective gear. Be careful with chain saws and generators, because that is where most of the accidents tend to happen. And go slowly.

When you open up your home, make sure that you ventilate and open up as many windows as possible before you enter. You may also find mold in your home, so we want you to be aware of that, and that's why ventilation is very important.

And we have a wonderful group behind me and beside me, and we want to emphasize that this is one leadership team. We may not always agree, but we have one mission, and that is to bring New Orleans back.

And I have a little gift from my good friend Admiral Allen. I have a wonderful T-shirt for him, it's called "I Love New Orleans." And I want to give him that as my gift.

ALLEN: Thank you.

NAGIN: Wear it with pride.

The governor of the great state of Louisiana, Kathleen Babineux Blanco. BLITZER: We're going to get back to the governor and the mayor momentarily, but there's breaking news to report. The National Hurricane Center's official forecast for this hour, almost 5:00 p.m. here on the east coast, now takes Hurricane Rita to a Category 4 status, That's a major hurricane, Category 4 status, by 2:00 p.m. tomorrow as it continues to move over the warm waters of the Gulf of Mexico. Our meteorologist, Jacqui Jeras is joining us live. Very bad news. We knew it was going to get to a Category 3, but Category 4 certainly escalates this problem.

JACQUI JERAS, CNN METEOROLOGIST: Yes, it does. We've kind of been rumbling about it all day here in the Weather Center, actually, that we thought it could be stronger than a three, maybe a four. And now the official forecast for The Hurricane Center has it by a four by 2:00 tomorrow afternoon, continuing at at least a four strength as it moves throughout the Gulf, and possibly still at four when it makes landfall. I wouldn't be surprised, either, if it could possibly get stronger than that, at least, for a brief time. But it's difficult for hurricanes to sustain strength at a strong four or a five for a long period of time, so we'll probably see some fluctuations with this as it moves through the Gulf. 5:00 advisory also in, by the way, and it has it still at a Category 2 with winds of 100 miles-per-hour right now, about 50 miles southwest of Key West -- Wolf.

BLITZER: Katrina, as all of our viewers remember, was a Category 4 once it hit as well. All right. Jacqui, stand by. We're going to get right back to you.

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