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Administration May Let Foreign Companies Control Security Screening Of U.S.-bound Cargo; Immigration Reform Protests; Pentagon Report On Lessons Learned From Iraq; Bush Says Talks With Iran Are Matter Of When, Not If; Pressure On Administration To Settle Abdul Rahman Case; Larry King Interview; Did Red Cross Workers Act Improperly In The First Days After Katrina?; Passengers Remember After Fire Broke Out On Carnival Cruise Lines Ship; Combining Laptops, Cell Phones And BlackBerrys

Aired March 24, 2006 - 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: And to our viewers, you're in THE SITUATION ROOM, where new pictures and information from around the world are arriving all the time.
Standing by, CNN reporters across the United States and around the world to bring you today's top stories.

Happening now, as Congress gears up for a clash on immigration, the battle over the borders is making its way to the streets.

It's 2:00 p.m. in California, where hundreds of high school students walk out of class.

In Phoenix, thousands march against a possible immigration crackdown.

It's early morning in Afghanistan. Does a new day, though, bring a new hope for an Afghan man threatened with execution because he converted from Islam to Christianity? New developments at this hour as the Bush administration puts on the pressure.

And it's 5:00 p.m. here in Washington. Larry King talks to the first lady, Laura Bush. I'll ask Larry about their conversation.

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

We begin with new developments in port security. Congress killed that deal to hand over control of U.S. ports to an Arab firm., but there's a new controversy brewing right now. Is the Bush administration now about to let foreign companies control security screening of U.S.-bound cargo?

CNN's Brian Todd is joining us now. He's been watching this story.

What's going on, Brian?

BRIAN TODD, CNN CORRESPONDENT: Wolf, we have confirmed that at least one foreign company based in China will likely have a key roll in screening containers at a facility not far from U.S. shores. (BEGIN VIDEOTAPE)

TODD (voice over): Should a Chinese company be involved in screening for nuclear material at these docks just 60 miles from Florida?

UNIDENTIFIED MALE: There's a chance for it to go haywire.

TODD: At the Freeport Container Port in the Bahamas, containers bound for the U.S. may soon be screened by Hong Kong-based Hutchison Whampoa. The U.S. Department of Energy is finalizing a contract for the Chinese company to operate screening devices that detect nuclear and radioactive material.

The U.S. government would provide the devices which would be mounted on so-called stradlers (ph) driven by workers from Hutchison Whampoa. Some homeland security experts say they are worried about espionage.

CLARK KENT ERVIN, CNN SECURITY ANALYST: The idea that we would give a contract, a no-bid contract, in fact, to a company with ties to China to operate radiation detection equipment at ports, cargo bound for the United States, is very troubling indeed. The issue here is whether those inspections will be done. We have no assurance of that because there's not going to be any, as I understand it, American inspectors stationed on the ground at these Bahamian ports.

TODD: Officials at the Department of Energy and U.S. Customs and Border Protection admit there are no U.S. Customs officials at Freeport yet. But they say they are laying the groundwork for that and they say they'll work closely with their Bahamian counterparts who will monitor the operation.

Other security experts say Hutchison Whampoa has an excellent reputation.

UNIDENTIFIED MALE: Hutchison Whampoa has on its own begun to do radiation screening of outbound containers sailing to U.S. ports from Hong Kong. They did that before the U.S. government even required them to do it.

(END VIDEOTAPE)

TODD: Also, U.S. officials say once this system is in place, 90 percent of all cargo will be screened at Freeport.

Now, on the criticism of this being a no-bid contract, U.S. officials tell us they had no choice in this matter . They needed to install these screening devices at Freeport, and Hutchison Whampoa was already there. They were the operator in place, already there in Freeport.

Contacted by CNN, a Hutchison Whampoa official said they have been a global leader in port security, that preventing espionage and terror is as important to the company as it is to U.S. officials. And he stresses their company has no ties to the Chinese government -- Wolf.

BLITZER: Thanks very much for that.

Brian Todd reporting.

Let's get a little bit more on this latest controversy involving port security. For that, we'll turn to CNN's Lou Dobbs. He's joining us from New York.

I know you're looking into this story, Lou. What's your immediate reaction?

LOU DOBBS, CNN ANCHOR: My immediate reaction is, what in the world is the Department of Homeland Security doing? What is the Bush administration trying to accomplish?

This is a no-bid contract, Wolf, with a -- with a Chinese company, Hutchison Whampoa, that already controls, in point of fact, the Panama Canal and has two pivot points within the hemisphere as a result of what it is doing in the Bahamas and in Panama. And our State Department, our national security people have to be on holiday to not be paying attention to the effect of this.

It is risking national security through the inspection. The National Nuclear Inspection Agency, which is part of the Department of Energy issuing a no-bid contract, telling -- telling the American people they had no choice because the Bahamas insisted? Give me a break. This is absolutely mindless.

BLITZER: You heard Richard Falkenrath say, though, that this company which may be based in Hong Kong is not necessarily a Chinese government-owned company. And it has a good reputation in the business world out there.

DOBBS: Li Ka-shing, Wolf, who is the man who owns Hutchison Whampoa, is a close, close associate and some would even say important tool for the wishes of Beijing. Such a remark that they're not connected with the government of the People's Republic of China is absurd.

It's not direct, but it's certainly indirect. It's further economic leverage. And as the Department of -- the Department of Defense's own intelligence agency said seven years ago, there is -- let me read to you from one of the unclassified documents that we have here that we'll be reporting on tonight at 6:00.

"Hutchison's containerized shipping facilities in the Panama Canal could provide" -- now, this is from our own government, the Department of Defense Intelligence Agency -- "could provide a conduit for illegal shipments of technology or prohibited items from West to the PRC" -- to communist China -- "or facilitate the movement of arms and other prohibited items to the Americas."

It's as if this government has surrendered intelligence, surrendered its capacity for analysis and judgment. It is absolutely at this point outrageous and inexplicable. BLITZER: Lou's going to have much more coming up on this story right after THE SITUATION ROOM, coming up 6:00 p.m. Eastern.

Lou, thanks very much for joining us.

DOBBS: Thank you, Wolf.

BLITZER: And remember, stay tuned to CNN day and night for the most reliable news about your security.

Congress is squaring off for what promises to be a knock-down, drag-out fight over immigration reform. The House has already passed hard-line legislation making it a felony for illegal immigrants to stay in this country. Right now, this fight is being play out across the country in the streets of cities with rallies and walkouts.

CNN's Chris Lawrence joining us now with the latest from Los Angeles.

Chris, what's happening there?

CHRIS LAWRENCE, CNN CORRESPONDENT: Well, you know, right now, Wolf, you know, a lot of people would like to see that bill die, obviously, here. A lot of people against that legislation.

Let me show you what's happening right now. These are -- standing right outside of a high school here in Los Angeles. Fairly quiet now. You know, you can see a live look, students outside. Very different picture from what happened earlier today.

Just after classes started, about 8:00 this morning, a large group, hundreds of high school students across a few high schools here in Los Angeles, got up and walked out of class. It was part of a planned protest to protest that legislation, that bill that cracks down on illegal immigrants and toughens the penalties for those who help them.

And what we're hearing is that in a lot of areas, you know, students are taught about immigration as kind of an abstract concept. Here in Los Angeles, it means something. It means something in the everyday life, and a lot of students are telling us that this will impact not only them, but their families, as well.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: It's going to affect our parents, our brothers, our sisters, everyone. And we are one people and we don't believe in borders. So why should we be called criminals because we are not going to turn in our relatives, our brothers and sisters, our friends, everyone?

UNIDENTIFIED FEMALE: If you're walking next to an immigrant, you are going to be arrested and that immigrant is going to be kicked out. What kind of country is that?

Didn't this country -- aren't we taught in our history classes it started with immigration? Who cares if they're legal, illegal. Was there such a thing in the beginning? Like, what about now?

(END VIDEO CLIP)

LAWRENCE: The students marched, you know, several city blocks to another school. They carried the Mexican flag. Some of them chanted "Brown pride." Others had signs that said, "Protect our rights."

It was an organized protest. We saw the flyer that had been passed around to let people know that they were going to walk out of class today. And of course everyone is trying to put pressure on the fact that this is coming up before the Senate very soon -- Wolf.

BLITZER: Chris, thank you very much.

Let's move on to some other news we're watching right now.

What went wrong in Iraq, what went right? The Pentagon has now drawn up a report on lessons learned from the war.

Let's go to our senior Pentagon correspondent, Jamie McIntyre -- Jamie.

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT: Well, Wolf, it's a fascinating volume, about 200 pages. And it's got a lot of nuggets in it. But one in particular is attracting a lot of attention.

(BEGIN VIDEOTAPE)

MCINTYRE (voice over): Among the thousands of documents examined by military historians, one sent to Saddam Hussein on March 24, 2003, just days into the war, contained intelligence on the U.S. war plans that the Russians claim came from their sources in the U.S. Central Command in Doha, Qatar.

BRIG. GEN. ANTHONY CUCOLO, IRAQ PERSPECTIVE PROJECT: There is a document that exists that shows that a Russian ambassador to Iraq passed intelligence to the Iraqi high command.

MCINTYRE: But the general tells CNN he has no corroboration that there really was a Russian mole inside CENTCOM and notes the intelligence had no impact because Saddam Hussein ignored it, as he did most of the advice he got.

The report concludes, "Saddam truly trusted only one person: himself." "Always wary of a potential coup," one senior Iraqi leader noted, "Saddam selected the uneducated, untalented, and those who posed no threat to his leadership for key roles."

Saddam was the one person not interviewed for the U.S. military study. But many Iraqi officials were, including deputy prime minister Tariq Aziz and the spokesman dubbed "Baghdad Bob," who, it turns out, may have actually believed all those false reports of Iraqi battlefield victories.

(END VIDEOTAPE) MCINTYRE: Again, pressed by CNN, the U.S. military says it has nothing to confirm that there actually sources inside CENTCOM providing information to the Russians. But the document makes that claim. The general says simply the document has to stand for itself.

However, it did serve to confuse Saddam Hussein, apparently making him think that the main thrust from the south might just be a diversion -- Wolf.

BLITZER: Thanks very much, Jamie, for that.

Given the harsh rhetoric from both sides, it may seem a bit improbable, but the Bush administration says talks with Iran are a matter of when, not if.

Let's get some more specific details. We'll turn to our national security correspondent, David Ensor -- David.

DAVID ENSOR, CNN NATIONAL SECURITY CORRESPONDENT: Wolf, as you say, the U.S.-Iranian talks on Iraq have yet to be scheduled, but both sides say they want them, and Secretary of State Rice said today that she's sure those talks will go ahead.

(BEGIN VIDEOTAPE)

CONDOLEEZZA RICE, SECRETARY OF STATE: It's important that we not have any miscommunication or misinformation, and so it's important that we have a chance to talk about our concerns.

ENSOR (voice over): In an interview with "The Washington Post," U.S. Ambassador Zalmay Khalilzad, the man authorized to talk to the Iranians about Iraq, outlined some of the points he wants to make. And notably, he didn't just talk about evidence Iran is training and arming Shiite militias or supplying IEDs -- that's improvised explosive devices -- Iraqis. He also complained that Iranian agents are working closely with Sunni insurgent groups such as Ansar Al Sunna (ph), groups that have been blamed for many of the deadly attacks on American soldiers, as well as Shiite civilians.

"Our judgment is that training and supplying, direct or indirect, takes place." he told the Newspaper.

It is perhaps not surprising that Shiite Iran helps Iraqi Shiite militias, like the one tied to Muqtada al-Sadr, the outspoken cleric. But if they're aiding Sunni insurgents as well, even groups that kill Shiite civilians, that suggests to some analysts a highly cynical policy, one that could be intended to stimulate civil war.

(END VIDEOTAPE)

ENSOR: The U.S. wants to confront Iran on this and other matters face to face. And the hope may be to watch Iranian body language closely during the presumably inevitable denials -- Wolf.

BLITZER: David, thank you very much.

David Ensor reporting.

Let's go to New York. Jack Cafferty standing by again with "The Cafferty File."

Hi, Jack.

JACK CAFFERTY, CNN ANCHOR: Hi, Wolf.

So how long does the United States plan to remain in Iraq, you ask? We're still in Germany 60 years after World War II. We're still in Korea 50 years after that war ended.

Now comes word in a story in the "Los Angeles Times" the United States is spending hundreds of millions of dollars to build large military facilities inside Iraq, military bases that may well create a permanent U.S. military presence in that country. The House of Representatives passed an emergency spending bill last week that includes funding for these bases.

Now lawmakers want the Pentagon to explain what exactly it plans to do with them. Representative Ron Paul of Texas says long-term U.S. bases in places like Iraq are the kind of thing that incites terrorism. He's cosponsoring a bill that would make it official policy not to maintain such bases in Iraq.

State Department and Pentagon officials say these bases will eventually be handed over to the Iraqis.

Here's the question, then. Should the United States establish a permanent military presence inside Iraq? E-mail us at CaffertyFile@CNN.com, or go to CNN.com/CaffertyFile -- Wolf.

BLITZER: Thanks, Jack, very much.

Up ahead, will he live or will he die? There are new developments now on the fate of that Afghan Christian who converted from Islam and could be put to death because of that decision.

And our Larry King scores a King-sized interview. He talks with one of the president's personal VIPs about the war and the road ahead. That would be Mr. Bush.

And it's a startling allegation. Did the American Red Cross mismanage aid that should have gone to victims of Hurricane Katrina?

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: There are some new developments this hour in the case of an Afghan man who's been threatened with execution because he converted from Islam to Christianity. Our White House correspondent, Elaine Quijano, is standing by.

But let's go to Fred at the CNN Center in Atlanta. She's got some more specific details -- Fred. FREDRICKA WHITFIELD, CNN ANCHOR: Well, Wolf, just hours from now, the Afghan cabinet is to meet to discuss the case of Abdul Rahman, who converted to Christianity years ago and recently returned to his native country. Local prosecutors want him executed for violating Islamic law there.

At Friday prayers, top clerics agreed. But just a short while ago, an Afghan government official said Abdul Rahman should be released "in the coming days." This follows intense pressure from the Bush administration from the president on down.

(BEGIN VIDEO CLIP)

RICE: We've made very clear in the strongest terms that this principle of religious freedom and the right to religious conscience is at the core of democratic development and at the core of democracy. We are working with the Afghans, and we look to a favorable resolution of this case. It needs to be favorably resolved.

(END VIDEO CLIP)

WHITFIELD: Secretary Rice also said while in Mexico that Afghanistan is a young democracy but suggested it must act like a democracy -- Wolf.

BLITZER: Fredricka Whitfield.

Thanks very much.

Heavy pressure, indeed, from the Bush administration asking Afghanistan to settle the convert's case.

Let's get some more details from our White House Correspondent Elaine Quijano -- Elaine.

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: And Wolf, that pressure coming from President Bush himself. It was earlier this week that he said it was deeply troubling that a country the United States helped to liberate would now hold a person to account because of his religious believes. Of course a fundamental principle of democracy, a violation of that.

Now, the president, in West Virginia earlier this week, actually aimed his comments directly at Hamid Karzai, Afghanistan's president, saying that the United States certainly has influence in Afghanistan and intended to use it. Now, that in the follow-up this week is what we saw.

We heard from Secretary Condoleezza Rice just a short time ago, from Fred, where she called Hamid Karzai, we are told, seeking that favorable resolution of this case. Now, a spokesman for Secretary Rice also says that she made clear it is also important the Afghan people understand that religious freedom is indeed observed in that country -- Wolf.

BLITZER: Elaine, thank you very much. And we still don't know whether this man is going to be allowed to stay in Afghanistan, live his life there as a Christian, or whether he will be allowed to leave the country, live as a Christian outside of Afghanistan. We're waiting to get more specifics on that. We are watching this story very closely.

Stay in THE SITUATION ROOM for late-breaking developments.

Coming up, they're disturbing allegations, very disturbing allegations about the American Red Cross and Hurricane Katrina aid. We are going to tell you why the Red Cross is now launching a massive probe.

And sun and fun make Hawaii a popular destination for tourists. But why might Hawaii also be a place for workers to go? We're going to tell you what's going on.

(COMMERCIAL BREAK)

BLITZER: Hamburger chain Wendy's is once asking, where's the beef? Except this time, it concerns coffee, doughnuts and dollars for a major IPO.

Ali Velshi is joining us now with the "The Bottom Line."

(BUSINESS REPORT)

BLITZER: Don't forget to watch Ali this weekend as he hosts "ON THE STORY." That program airing Saturdays, 7:00 p.m. Eastern. Replayed Sundays, 1:00 p.m. Eastern. "ON THE STORY," before a studio audience at George Washington University here.

Ali and all of our reporters coming up this weekend. You'll want to watch that.

Also coming up here, CNN's Larry King often scores major interviews with powerful people. Now he scores a probing and personal interview with one person President Bush heavily relies on. That would be Mrs. Bush. And we're going to have a preview.

And the president often says he will not set a timetable for getting out of Iraq. But how long do you think U.S. troops will remain there? Should America establish a permanent military presence in Iraq? Jack Cafferty has your e-mail.

(COMMERCIAL BREAK)

BLITZER: Welcome back.

Joining us here in THE SITUATION ROOM, our own Larry King.

First of all, Larry, welcome to Washington.

You had quite a day over at the White House today. Tell us about the interview you had with the first lady. LARRY KING, CNN ANCHOR We did an interview with the first lady in advance of my cardiac foundation dinner tonight. You know, she's become chairman of a lot of causes that deal with heart disease. She's become the red dress lady.

So, we spent about half the time discussing heart disease as it affects women, and the other half her general life and some politics. And she was charming and very, very well-spoken. And it was the first interview she has ever done on television in her office.

BLITZER: In her own office...

(CROSSTALK)

BLITZER: ... over at -- on the East Wing of the White House.

KING: In the East Wing. We were actually in her office, which is a small office, by the way.

BLITZER: I'm familiar with that office.

I want to play for our viewers a little excerpt. You got into the issue of Iraq, which is such a -- such a powerful, passionate, sensitive subject. Listen to this.

(BEGIN VIDEO CLIP)

LAURA BUSH, FIRST LADY: It's very difficult to watch on television and see the loss of our soldiers in Iraq and to get the idea that the Iraqis don't care, that they don't want us there, that it's a sacrifice they don't respect or regard.

I do think they do. I think the people in Afghanistan -- I know the people of Afghanistan, from when I have been there, say: "Don't leave. You know, don't leave us yet. Let us build our democracy. Let us get all of the institutions of -- of democracy into place before you go."

There are many, many countries that want the help of the United States, and that get the help of the United States. And I hope the American people can feel proud of that.

(END VIDEO CLIP)

BLITZER: She is really emotional.

What was -- what did you walk away with? Because you were getting her, I guess, body language, if you will...

KING: She is...

BLITZER: ... on this whole subject.

KING: I would say, Wolf, she is as committed as the president.

BLITZER: To this cause? KING: Yes.

Now, he may be more vibrant in stalking the stages and making all these speeches, but I think she's just as committed. I don't think there's a doubt in her mind that they're doing the right thing. I think she's a little puzzled -- maybe everyone in the White House is a little puzzled as to public reaction.

I don't think they expected it to be this negative. And I -- in some ways, I don't know that they believe it.

BLITZER: I don't think they expected it to be as difficult three years into this war as it clearly...

KING: No.

BLITZER: ... has become. Forget about the public reaction, the actual war.

KING: The actual war and the reaction, I think, are both surprises to this White House. But she totally, in my opinion, supports her husband.

BLITZER: You also got into the issue of 2008 and beyond. She is still a young woman. I want to play this other clip from the interview. Listen to this, Larry.

(BEGIN VIDEO CLIP)

KING: Would Secretary Rice make a good President?

BUSH: She would make an excellent President, but I don't think we can talk her into running.

KING: No?

BUSH: I don't think so. I think she sincerely does not want to run, but I wish she would.

KING: Want to go back to college?

BUSH: I think she probably wants to move back to California and have a wonderful and -- you know, life, post-secretary of state. But she is a wonderful secretary of state for our country, and she would be a great President.

KING: There's this story she wants to be commissioner of the National Football League.

BUSH: Well, I heard that she said he didn't want to now, that she was still going to continue to be secretary of state.

(END VIDEO CLIP)

BLITZER: That's a good job, being commissioner of the NFL...

(CROSSTALK)

KING: You're not kidding.

BLITZER: ... as you and I know, Larry.

KING: Pays better, too.

BLITZER: It would be a lot of fun.

(CROSSTALK)

BLITZER: You get paid to watch football games.

KING: What is surprising about that was, that was pretty close to an endorsement.

BLITZER: Yes.

KING: She would make a wonderful president, and she would like to see her run, in a sense, hope she changes her mind.

I think they're not supposed to endorse, but that was ringing.

BLITZER: Well, what was clear, also, this is a first lady who would like to see women in more prominent positions. She clearly wanted a woman in the Supreme Court. That didn't work out for her husband.

She loves Condoleezza Rice, as you know. And...

KING: I asked her about her daughters. And I said, would she like both of them, or one, to be first lady. And she said, why not run? Why not run for office? Why just first lady?

BLITZER: She's going -- she's an ambitious woman.

KING: Yes.

BLITZER: Talk a little bit about the dinner you went to. You have your own dinner tonight we are going to talk about in a second, but the dinner...

KING: Yes.

BLITZER: ... you were at the White House last night.

KING: I got invited to this dinner. It was only 63 people there. And it was not a formal dinner. It was only seven tables.

BLITZER: It was not black-tie.

KING: Was not black-tie.

They had the Marine, you know, playing a little music. And -- and it was in honor of Ben Franklin's 300th birthday. And since Ben has been such a frequent guest on our show... (LAUGHTER)

BLITZER: You know Ben Franklin.

KING: I know him.

(LAUGHTER)

BLITZER: He's -- I got him booked for THE SITUATION ROOM.

(LAUGHTER)

KING: I thought that that's why I was invited.

And it was a wonderful dinner. My wife sat with the president. And I sat with Andy Card. And the conversation was not political. It was all just fun. The president asked questions, as my wife told me, like, "What are you reading now?"

BLITZER: She was at his table.

KING: Yes.

What are you currently reading? And she answered that she's currently reading her -- her diary. She keeps a running, you know, events of her life. And then they got into a whole discussion in that table about why that's a wise thing to do.

And, then, they had a guy who looked like Ben Franklin, acted like Ben Franklin, and who makes a living playing Ben Franklin all over the country. And he got up and spoke. He did some Franklinisms.

BLITZER: And he did it well?

KING: Very well.

BLITZER: Tell us about the foundation, your dinner tonight, because...

KING: Yes.

BLITZER: ... a lot of your viewers -- first of all, how this started, the personal history you had, and how it has grown over the years.

KING: In 1987, in February, I had a heart attack. Subsequently, in December, I needed heart surgery. I had quintuple-bypass surgery.

And we were sitting around one day, about a year later, and someone asked what it cost. And I said I didn't know. Insurance covered it. CNN insurance covered it. And they said, well, what about people who can't afford it?

And, so, we started investigating. And there is a lot of people not insured, not covered for something like heart disease. Now, I think that's wrong. I think everyone should -- if you need heart surgery, you should be able to get it in a country as rich as ours.

That being the case, we started this charity. We hold two dinners a year, one in Los Angeles, one in Washington. My son is the president. My wife is the chairman. We have great entertainers come. We have had Celine Dion, Ricky Martin, great comics. We have just a wonderful time. And we do it as a party.

And we salute people. Joe Robert, your friend, is being saluted tonight. And we sell out. And we raise a lot of money. And it's a party. We don't have the long speeches. We have a lot of fun.

The next one is September in Los Angeles. Neil Diamond will be the entertainer. That's not bad.

BLITZER: I love Neil Diamond.

KING: And it all goes to helping people.

So, we have helped close to 200 individuals get new procedures, like a new heart, or heart surgery...

BLITZER: And you could...

(CROSSTALK)

KING: ... or bypass surgery.

BLITZER: They're alive today in part...

KING: Because of us.

BLITZER: ... because of what you have done.

KING: And I cry every time. You know, when I get to make the call -- I don't run the foundation. But I get to make the call, when they select someone, doctors select. And I get to call up and say, Mrs. Jones -- once they hear it's me, they know they're going to get it, you know, that we are going to have...

(CROSSTALK)

BLITZER: That they have won this -- they won the lottery.

KING: You don't get a bigger joy.

The biggest joy I get is making that call, is helping someone live.

BLITZER: Larry...

KING: There's no bigger joy, Wolf.

You're the...

(CROSSTALK)

KING: If you get involved with something, it almost controls you.

BLITZER: Well, thanks for the good work.

And I'm sure there are a lot of people out there who are grateful to you.

Tonight, the interview airs, 9:00 p.m. Eastern, "LARRY KING LIVE," with the first lady, Laura Bush.

KING: And I must say, one of my dreams of my life is to be with you in THE SITUATION ROOM.

BLITZER: That dream has come true.

KING: What a situation this is.

(LAUGHTER)

BLITZER: No one like it.

KING: Thanks, Wolf.

BLITZER: Larry, thanks very much.

(END VIDEOTAPE)

BLITZER: Still to come here in THE SITUATION ROOM, in our 7:00 p.m. Eastern hour, he's an Arab-American Democrat running for office in New Jersey. So, why are some members of his own party now shaky in their support for him?

And tired of having to fiddle with a BlackBerry, cell phone, laptop, MP3 player? New technology may merge all those separate devices into one. We are going to show you what is in the future.

(COMMERCIAL BREAK)

BLITZER: They are truly startling allegations. Did some Red Cross volunteers act improperly, even criminally, in the early days after Hurricane Katrina?

Let's get some specific details about these accusations.

CNN Gulf Coast correspondent Susan Roesgen joining us now live from New Orleans.

Susan, what's going on?

SUSAN ROESGEN, CNN GULF COAST CORRESPONDENT: Well, you know, Wolf, for months, the Red Cross has been asking Americans to open their wallets for Katrina victims.

Now the Red Cross and the Senate Finance Committee want to know how much money might have been wasted.

(BEGIN VIDEOTAPE) UNIDENTIFIED MALE: American Red Cross serving hot meals in the neighborhood, folks.

ROESGEN (voice-over): In the New Orleans area, the Red Cross says it's still delivering 8,000 meals a day.

Volunteer Elaine Mann from Wolverine, Michigan, loves serving people in need. In all, the Red Cross says it took in more than $2 billion in Hurricane Katrina donations, and helped more than three million people.

But some Red Cross volunteers say the organization has done a lousy job of keeping track of where exactly that help went. This is the 300-page whistle-blower report. The Red Cross says volunteers complained to an hot line that distribution centers lost track of donated items, and that managers didn't bother to find out if people who applied for free meals or money were actual Hurricane victims.

The interim head of the Red Cross, Jack McGuire, says the organization is investigating all the allegations, and he says that $2 million in misspent donations has been recovered and put back into the relief effort.

JACK MCGUIRE, CEO & INTERIM PRESIDENT, AMERICAN RED CROSS: Donors have given us a lot of money to help people. And if the money is going to things other than helping people, then we need to do something about it.

ROESGEN: McGuire says the Red Cross will turn over any evidence of criminal activity to law enforcement. In the meantime, Elaine Mann says, every meal she serves is accounted for.

ELAINE MANN, AMERICAN RED CROSS VOLUNTEER: When I pass a meal out this window, I give people a meal. I give them a -- one little snack pack. And, if there's children, of course, I give them extra stuff. But, other than that, how other vans do it, I don't know. I only know how we feel to -- that's the right way to be done.

(END VIDEOTAPE)

ROESGEN: Now, Senator Charles Grassley, the chairman of the Senate Finance Committee, which oversees tax-exempt organizations, like the Red Cross, says the whistle-blowers have uncovered a real need for serious reform, Wolf. And he says he wants to see a top-to- bottom review of how the Red Cross operates.

BLITZER: Susan, thank you very much -- Susan Roesgen on the scene for us in New Orleans.

Also possibly susceptible to fraud, almost 200,000 customers of Fidelity Investments -- the mutual fund manager is now confirming, someone stole lap -- a laptop containing the names, addresses, birth dates, and Social Security numbers. The computer contained information on Hewlett-Packard employees who have retirement accounts with Fidelity.

More and more, we are learning of these security breaches involving laptop computers.

Let's get some more details from our Internet reporter, Abbi Tatton -- Abbi.

ABBI TATTON, CNN INTERNET REPORTER: Wolf, this is a site that tracks these security breaches of this type, the Privacy Rights Clearinghouse.

They list 31 cases, just in the last year, of laptops lost or stolen, containing hundreds of thousands of records, personal data of individuals. Fidelity tells us, it's not usual for one of their laptops to have this level of data on one of them, almost 200,000 records.

However, sometimes, it is unavoidable. They are certainly not the only large company to have a laptop stolen. At the end of last year, Boeing lost a laptop with some 161,000 records on it.

Fidelity tells us that there is no evidence right now that any of this data has been misused. They have also contacted every single individual involved. But it might be an idea to go to one of these sites that track these security breaches and have a look if any company you know of is involved in it, because not every state in the country -- only about half the states in the U.S. actually have laws that require companies to notify their customers in a -- in the event of a security breach -- Wolf.

BLITZER: Abbi, thanks very much.

For thousands of cruise passengers, it will be a vacation to remember, for all the wrong reasons -- sleeping passengers abruptly awakened by the smell of smoke and the sound of fire alarms. That's after a fire broke out on a cruise ship owned by Carnival Cruise Lines.

Our national correspondent, Bob Franken, is in Fort Lauderdale, Florida. He's talking with passengers coming home from the cruise -- Bob.

BOB FRANKEN, CNN NATIONAL CORRESPONDENT: Wolf, the ship had left from here on the 19th, and will eventually return, but, at the moment, it is docked in Montego Bay, as investigators try to sort out exactly what happened that caused the fire that resulted in damage to about 100 of the cabins -- of course, it's a massive ship -- but, also, the death of one passenger, who suffered a cardiac arrest as he went through the drill that followed discovery of the fire.

Meanwhile, the passengers who have been waiting there are being flown back as quickly as transportation can be arranged. And, as they trickle back to Miami and Fort Lauderdale, they talk about their ordeal by sea.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: It was an ordeal I would rather not go through again. UNIDENTIFIED FEMALE: We were -- when we saw the lifeboats coming down, we thought, oh, boy. We were out at sea. But we were...

(CROSSTALK)

UNIDENTIFIED FEMALE: We were good.

(END VIDEO CLIP)

FRANKEN: The company is going all out to try and please the passengers. There will be airfares provided, a full refund. And, as a matter of fact, the Princess line is offering a 25 percent credit on another cruise -- Wolf.

BLITZER: Bob, thanks very much.

BLITZER: And now an update on another tragic accident involving cruise ship passengers.

The coffins containing the bodies of a dozen Americans who died Wednesday in a bus wreck are on their way back to the United States. All of those killed were passengers aboard the Celebrity cruise ship Millennium. They died when the bus they were riding on plunged over a cliff.

Fredricka Whitfield joining us once again from the CNN Center in Atlanta with a closer look at other stories making headlines around the world -- Fred.

WHITFIELD: Hello again, Wolf.

There are 15 new princes of the Roman Catholic Church. At a ceremony at Saint Peter's Square today, Pope Benedict XVI gave the new cardinals their traditional crimson hats. They will receive their cardinal rings during a mass tomorrow -- among the newly elevated princes, Pope John Paul II's long-time private secretary. There are now 193 cardinals.

An explosion at a chemistry college in Eastern France has killed a professor. A female student was also seriously injured. The blast blew out windows and spewed debris outside the building. It's not known what caused the explosion. But school officials say it was an accident.

Canada's controversial seal hunt is set to begin at dawn tomorrow. That's despite pleas to Canada's government by celebrities and protesters, including former Beatle Paul McCartney. Atlantic fishermen say they are just trying to maintain their way of life and make a living. But animal-rights activists call the clubbing and shooting of seal pups barbaric -- Wolf.

BLITZER: Fred, thank you very much.

Up ahead, he's an Arab-American running for an obscure county office in New Jersey. But some of his comments have raised eyebrows and tempers with his comments about terrorism. In our 7:00 p.m. Eastern hour, here in THE SITUATION ROOM, our Mary Snow will tell us what all the fuss is about.

And you have been unloading your e-mail for the past hour on our Jack Cafferty about the U.S. military presence in Iraq. He will be along in just a few moments to share some of that e-mail with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: There he is, Jack Cafferty. He has got your e-mail -- Jack.

CAFFERTY: Indeed, I do. Thank you, Wolf.

"The Los Angeles Times" reports this morning, the U.S. is spending hundreds of millions of dollars to build large military installations in Iraq, bases that could well create a permanent U.S. military presence inside that country. State Department and Pentagon officials, though, insist these bases are being built and eventually will be handed over to the Iraqi government.

The question is: Should the United States establish a permanent military presence in Iraq?

William in Baton Rouge, Louisiana: "Surely, you jest. Some of our military bases are more permanent in Iraq than many of the facilities here in the states. It's likely Iraq will become the DMZ for the Middle East."

Bill in Leesburg, Florida: "If we are there until we defeat terrorism, we might as well award Iraq statehood."

John in Paterson, New Jersey: "We should not keep bases in Iraq. They will become major sources of conflict, symbols of American imperialism, in the Middle East."

Patrick in Manhattan Beach, California: "Yes, we should and will. We must have these bases in both Iraq and Afghanistan, in order to provide a protective umbrella over the entire region. Nobody in the media or Congress has a clue as to the strategic importance of oil resources from this area. The grownups in the executive branch are fully aware of this and will take care of this, in spite of the media and Congress."

And Darryl in Eagle Point, Oregon: "Of course we will need military bases in Iraq. How else can we protect our oil? Besides, it will probably incite terrorism, and then we can bomb some more of the Middle East, and then we will set up more bases to protect more of our oil. See how it works?" -- Wolf.

BLITZER: I see. Thanks very much, Jack. See you in an hour, back here in THE SITUATION ROOM.

And, up next, you have got your cell phone? How about your BlackBerry, your Filofax? You can't go anywhere without your laptop. If this is just all too much to carry, we're going to show you how you might one day, in the not-too-distant future, get everything these different gadgets do in one dream device.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Can't live with them, can't live without them, cell phones, BlackBerrys, laptops -- in today's edition of "Welcome to the Future," CNN's Miles O'Brien shows us the future of combining all of these devices into one.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Yes, it's funny, because each of these things is supposed to save me time. But, because I have to use them all, it actually winds up costing me time.

Well, I have got two cell phones. Neither one does everything that I need it to. They both have their pluses and minuses. But, unfortunately, there's no way to combine the best aspects of each phone. The systems aren't compatible. If there were just some way to combine them into one device I could carry around, I would be set.

To me, the most important thing is to be able to do everything that I can do on a computer on a handheld device. And the technology is out there to do it. I'm just waiting for it.

MILES O'BRIEN, CNN CORRESPONDENT: And so am I. But the single device-solution for phone calls, e-mail, Web-surfing, pictures, organizer, you know, the gadget that does it all, remains the digital Holy Grail. And I'm beginning to wonder if it will ever be discovered.

(voice-over): You bet, says technology analyst Rob Enderle. He says the answer may lie in a new breed of fourth generation, or 4G, mobile devices.

ROB ENDERLE, TECHNOLOGY ANALYST, THE ENDERLE GROUP: And the cell phone is trying to evolve into a personal communications device, but something less than a laptop, in terms of size, but encompassing all of that in terms of the device.

O'BRIEN: Due out by 2010, 4G comes with promises of full Windows XP capabilities, broadband Internet speeds, and a set of worldwide service standards. I will believe it -- and buy it -- when I see it.

ENDERLE: It's really supposed to bring everybody together in some type of a kumbaya environment, and things will work. But be aware, we have had this promise before, so, I probably wouldn't hold my breath.

(END VIDEOTAPE)

BLITZER: And, just moments ago, the Falcon 1 rocketed towards space off a small island in the Pacific. The rocket is a commercial reusable rocket, intended to launch smaller payloads into space.

But the Associated Press now reporting that, just moments after takeoff, the rocket failed, and has now fallen back to Earth.

Our Internet reporter, Jacki Schechner, is following the story online -- Jacki.

JACKI SCHECHNER, CNN INTERNET REPORTER: Wolf, we wanted to show you this video.

This was the static fire launch, the video available at the Web site of the company SpaceX.com. This succeeded a few days ago, but the launch scheduled for today did not. They say, according to the AP, they got about a minute of powered flight before it didn't -- it didn't succeed.

What it was going to do was send a -- a satellite into low orbit. And that satellite was going to study space plasma. That's a phenomenon that can interfere with GPS, global positioning systems, and other communications. That was developed by the Air Force Academy.

This is a company that has privately developed this rocket. They have money funded from the Pentagon. And this client, Wolf, was the Department of Defense.

BLITZER: Jacki, thanks very much.

Let's close with a few of the "Hot Shots" coming in from our friends over at the Associated Press -- pictures likely to be in your hometown newspapers tomorrow.

Baghdad: Iraqis shouting anti-American and anti-terrorism slogans during a demonstration.

Kiev, Ukraine: A young couple joins thousands of others in a simultaneous kiss in support of the nation's Green Party.

New Orleans: An artist paints a star on an American flag atop the roof of a Baptist church near the 17th Street levee.

And Athens, Greece: A double rainbow arches across the sky, after a brief rain shower.

That's it for us -- some of the "Hot Shots."

I will be back in an hour.

"LOU DOBBS TONIGHT" starts right now.

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