Return to Transcripts main page
The Situation Room
House Approves Tax Cut Package; Karl Rove in Legal Limbo; Porter Goss Receives Congressional Award; Late-Night Hosts Take Aim at President Bush
Aired May 10, 2006 - 19:00 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 are arriving all the time. Standing by, CNN reporters across the United States and around the world to bring you tonight's top stories.
Happening now, 7:00 p.m. here in Washington where Republicans suffer another blow in the polls. Can they win back voters with a tax cut bill? We'll tell you what it means. All of that, coming up.
Also, she once railed against a vast right wing conspiracy. Is Senator Hillary Rodham Clinton now finding common ground with conservatives?
And as the president's poll numbers go down, the number of jokes about him goes up. Our Jeanne Moos finds meaning in the late-night TV punch lines. I'm Wolf Blitzer, you're in THE SITUATION ROOM.
Just a short while ago, the House of Representatives approved a top presidential priority. A $70 billion tax cut package. Republicans pushed it through, hoping to get a political break in this election year. Our new polls suggest they could certainly use one. Democrats have a 14-point advantage over Republicans among registered voters, asked to name their choice for Congress.
And right now, President Bush's slump isn't helping his party's prospects. Another poll out today puts his approval rating at a record low of 31 percent. When the five latest surveys are averaged together, Mr. Bush gets only a 33 percent job approval rating. Our Bill Schneider is standing by. He will have more on all the polls. John Roberts is standing by. He has more on taxes. But let's begin our coverage, though, with our congressional correspondent Dana Bash. Dana, what has the House just done?
DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well, just within the last hour, Wolf, the House passed a $70 billion tax cut package, a Republican one. By 244-185. And not surprisingly, that was largely along party lines. Republicans say that extending tax cuts are crucial to keeping the economy humming. Democrats though, voted against it because they say that this was largely a gift to the rich, and irresponsible, at a time of record deficits and at a time of war, when a lot of federal money is going towards Iraq.
Now, this party-line vote though, is just fine, actually, with Republicans, because they are the first to admit they are wounded, very wounded and they need to get accomplishments under their belt. And this is one that they hope this will appeal to disillusioned Republican voters, and especially, Wolf, when you talk about the issue of tax cuts, they think this really unites all aspects of the Republican Party. It's really the mother's milk of the GOP, Wolf.
BLITZER: All right, Dana, thanks very much.
The question most taxpayers want answered right now, who will benefit from the tax cut bill making its way through Congress? Our senior national correspondent John Roberts, here in THE SITUATION ROOM with more on this. So who wins, who loses?
JOHN ROBERTS, CNN SENIOR NATIONAL CORRESPONDENT: Well, as Democrats say it's a giveaway to the rich, Republicans trying to say it's just the tonic t the economy needs. It's keeping unemployment low, the GDP is booming, the Dow is in record territory. So who's right?
Well, let's look at an analysis that was done on this by the moderately liberal Tax Policy Center, it found -- here's the numbers as it crunched it. That people who earn between $20,000 and $30,000 a year, they tax savings is going to be about $9 under this bill. Between $50,000 and $75,000, they get $110 taken off of their tax bill. Almost $1,400 if you make between $100,000 and $200,000 a year.
But take a look at this. If you make more than a million dollars a year, you are going to get back almost $42,000.
Now you're saying to yourself, how many people are benefiting from this tax cut, and how many people aren't?
Well, another study that was done by the National Women's Law Center, a liberal organization, looked at IRS records, overlaid those on top of the Tax Policy Institute numbers, and here's what they found. They found that 0.2 percent of American households, it's about 345,000 households would get that $42,000.
More than 70 percent of American households, 113 million making $75,000 or below would get back an average of $30. And here's the thing that critics are concerned about, Wolf. They say that, look, you pay more taxes, you should get more money back. But they say proportionally, people that make more money are getting more of their tax money back.
BLITZER: The president just issued a statement, praising the House of Representatives for going forward, continuing these tax cuts. Just a few minutes ago.
ROBERTS: It took all of about 30 seconds for that to come out. Again the president pointing to lower unemployment, robust growth in the gross domestic product. The stock market being robust. They are saying this is what's good for America, this is what's good for the American economy. But many critics of this plan say there is no direct evidence that a cut in the capital gains tax has anything to do, directly, with the growth in the economy.
BLITZER: John, thank you very much. Even if President Bush claims bragging rights in getting tax cuts extended, he has a lot of work to do to improve his standing with the American people. Check out this "New York Times"/CBS News poll.
Sixty eight percent of those surveyed say that the United States is worse off since Mr. Bush became president. Let's bring in our senior political analyst Bill Schneider. He's looking at all these numbers. These numbers are horrible for the Republicans, basically, in these latest polls.
WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: That's right. People do think things have gotten worse in the past six years under President Bush. Why? Well, they know that gas prices are skyrocketing, that more and more Americans are being killed and wounded in Iraq, with no end in sight. They are troubled by a flood of illegal immigrants, and, just as important, they remember the 1990s, at a time when a lot of people were making a lot of money. So, therefore, you get a lot of Americans now saying, they're worse off.
BLITZER: Another set of key numbers, Bill, involves the situation in Iraq. Americans were asked in this poll, who would better be able to handle Iraq, who would better be able to keep gas prices low and who shares your moral values. Look at this, Democrats win on all of these key, key issues. It's pretty amazing.
SCHNEIDER: It is. And it is very impressive. You know, Democrats, a little surprising. Democrats, what's their plan for getting out of Iraq? And yet the voters prefer the Democrats to the Republicans. The answer is if people are angry about something, and they are angry about Iraq, they'll vote for something else, even if they're not sure what it is. The number of gas prices is impressive. A very big margin. By 66 to nine, voters told that poll that oil companies, in their view, have more influence over Republicans than Democrats. Remember, the president, vice president, former oilmen. So on gas prices, they trust the Democrats.
But perhaps most surprising of all, values. Remember all the debate about values in the 2004 election? It turns out values are not just matters of sexual morality. They're also things like peace, economic justice and public integrity.
BLITZER: Bill Schneider, our senior political analyst, thank you very much.
And with only, less than six months before congressional elections, Democrats probably are feeling heartened right now by all of these new poll numbers. Take a look at it once again. Democrats have a 14-point lead over Republicans among registered voters asked about their preference for Congress. Our senior analyst Jeff Greenfield is taking a closer look at the battle for control of Capitol Hill. Jeff?
JEFF GREENFIELD, CNN SENIOR ANALYST: Wolf, by every traditional standard, historical patterns, the president's low approval ratings, current congressional polls, the Democrats ought to feel optimistic about taking back both houses of Congress. But look more closely at the Senate, and you'll see why that optimism may be premature. (BEGIN VIDEOTAPE)
GREENFIELD (voice-over): In the Senate today there are 55 Republicans, 44 Democrats and one independent who lines up with the Democrats. To take the Senate, Democrats need to win six seats. Their targets include Pennsylvania, where pro-life Democrat Bob Casey now leads Senator Rick Santorum. Rhode Island. Where maverick Republican Lincoln Chafee faces both a primary fight and a heavily Democratic electorate. Montana, where Senator Conrad Burns faces questions about his ties to lobbyist turned felon Jack Abramoff.
Ohio, where Senator Mike DeWine may be burdened by a state Republican party tainted by scandal. Tennessee, where Senate majority leader Bill Frist is retiring, the likely Democratic contender, Representative Harold Ford, could benefit from a divisive GOP primary.
Democrats are also eyeing Missouri and Arizona as possibilities to complete that six-pack. But this math assumes Democrats will hold all of their seats, and that may not be so easy. Consider, New Jersey, where a Republican hasn't been elected to the Senate in 34 years. Democrat Robert Menendez, appointed by now Governor Jon Corzine to fill Corzine's Senate seat is trailing in the polls, behind Tom Kean, Jr., son of a popular former liberal Republican governor.
Look at Maryland, which hasn't elected a Republican to the Senate in 26 years. There, Lieutenant Governor Michael Steele has a chance of running a very competitive race to replace retiring Democrat Paul Sarbanes, especially if a bruising Democratic primary fight between Representative Ben Cardin and ex-NAACP chief Kweisi Mfume leaves the party split.
A footnote, back in 2002, Maryland elected its first GOP governor since Spiro Agnew in 1966. Or look at Washington State. Where Senator Maria Cantwell faces a well financed challenger in former Safeco CEO Mike McGavick. Or Minnesota. That state is a lot less blue than it once was. George W. Bush narrowly lost the state twice and Republicans are unified behind Representative Mark Kennedy against likely Democratic nominee Amy Klobuchar.
(END VIDEOTAPE)
GREENFIELD (on camera): One more point about the Senate. Back in '94, the Republicans won it by winning six open seats that had been held by retiring Democrats. But this year there is only one open GOP seat that can really be called competitive, Tennessee. So, to win the Senate, Democrats will so to beat at least five incumbents, which is usually a tougher task than picking up an open seat.
That's why the Democrats chances in the House, with a number of vulnerable Republicans in the blue states of New England, may be a better bet. Assuming, of course, you are foolish to bet on an election that is six months away. Wolf?
BLITZER: Still a long time, Jeff. You're right. Thank you very much. Jack Cafferty is watching all of this from New York. He has got "The Cafferty File." Jack? JACK CAFFERTY, CNN ANCHOR: Wolf, President Bush says his brother Jeb would make a great president. The president told Florida reporters that Jeb's been an excellent governor in Florida and is well suited for another office once he leaves the governor's mansion.
He says he's pushed his brother pretty hard to figure out his intentions but he doesn't know yet what he'll do. Jeb Bush's term as Florida governor is ending. He can't run again because of term limits. So here's the question.
What would you think of a third President Bush? E-mail us at CaffertyFile@CNN.com or go to CNN.com/CaffertyFile. Wolf?
BLITZER: Thank you, Jack.
Coming up, Karl Rove in legal limbo. President Bush's senior political adviser waits for word from a very tough prosecutor.
Plus, Hillary Clinton moves to the right. She's making friends in some unlikely places. But will her new allies turn off her old supporters?
Also a nuclear crisis, a preference to Jesus and a letter from Iran. Should the U.S. reply or return to sender? Former Secretary of State Lawrence Eagleburger, he's always outspoken, he's here in THE SITUATION ROOM. Stay with us.
(COMMERCIAL BREAK)
BLITZER: President Bush's top adviser Karl Rove is in legal limbo. Tonight, he's waiting for word on a possible indictment from the grand jury investigating the CIA leak case. We're going to hear from our senior legal analyst Jeff Toobin in a moment. First though, let's go to our Brian Todd. He's in the newsroom with the latest information we're piecing together. Brian?
BRIAN TODD, CNN CORRESPONDENT: Wolf, some real nervousness at the White House over this. But as for predictions on Rove's fate? A tough call.
(BEGIN VIDEOTAPE)
TODD (voice-over): With a decision possibly within days, one source with knowledge of the Karl Rove case tells CNN, Rove's side does not expect he'll be indicted by a federal grand jury. That's at odds with other indications CNN has received that Rove's team is nervous about possible charges.
SCOTT FREDERICKSEN, FMR. INDEPENDENT COUNSEL: You know, the pressure in these kinds of cases is huge because you're talking about indicting one of the highest-ranking members of this administration. Perjury may be the key charge, but obstruction of justice may also be an important charge.
TODD: It comes down to whether prosecutor Patrick Fitzgerald feels he can prove Rove knowingly misled the jury when he initially failed to disclose to the panel his conversation with "Time Magazine" reporter Matt Cooper about former Ambassador Joe Wilson's wife, Valerie Plame working at the CIA.
This is what Rove said publicly about Plame.
KARL ROVE, WHITE HOUSE ADVISER: I didn't know her name and didn't leak her name.
TODD: But Rove had been involved in a White House campaign to refute Wilson's criticism of the president's case for war in Iraq. After his first testimony, Rove's attorney was told by another "Time" reporter, Viveca Novak, that Rove was Cooper's source. Rove's attorney dug round and discovered an e-mail from Rove indicating that conversation with Cooper did occur.
Rove's side went to Fitzgerald with the e-mail and claimed Rove simply didn't remember the conversation, and the e-mail jogged his memory. Rove has since been back before Fitzgerald's grand jury four times.
FREDERICKSEN: He's going to look at that evidence and say, is that believable that he forgot that conversation if he was centrally involved in combating those press attacks, if he was going out and having those conversations? Or is this something that someone normally could forget months later?
(END VIDEOTAPE)
TODD (on camera): After a period of near hibernation, Rove has been moved out of his top White House policy job. Literally had to move offices. He's back at the top political strategist, but it's not clear how effectively he'll help the administration get through a very tough midterm election campaign. Wolf?
BLITZER: Brian, thank you very much. Let's bring in our senior legal analyst Jeff Toobin. He's watching all of this unfold. What do you make of this legal limbo that he's in right now?
JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: You know, for Karl Rove, no news is good news. Every day that passes is good for him, because criminal cases never get better with time. The longer he -- Patrick Fitzgerald agonizes, the more time there are to think about doubts in the case. It's no guarantee one way or another, but certainly, delay is better than an indictment.
BLITZER: It all boils down to intent. Did he intentionally lie or mislead or cover up. Is that right?
TOOBIN: You know -- it's not only true in the Rove case, it's almost always true in white collar cases. The facts are usually not that much in dispute. This is what Rove said, this is what the facts are. That's pretty much known. The question is what was in his head. What was trying to mislead? Was he lying, or was he simply mistaken, having a memory problem? That's very difficult, as a prosecutor, to prove what's in someone's head. So you look at the surrounding circumstances. You look at why did he come forward? Did he come out of genuine remorse, recognition that he was wrong, or, did he come forward because he knew he was going to get caught anyway? These are the kinds of questions you look at as a prosecutor.
BLITZER: The prosecutor, and you are a former federal prosecutor, whether you a prosecutor or an FBI, they take this business of lying or covering up or withholding information very, very seriously, don't they?
TOOBIN: They do, especially given the subject matter. See, one of the big debates, if we recall, in the Clinton presidency, and, when Bill Clinton lied about his relationship with Monica Lewinsky, many prosecutors said, look, we wouldn't prosecute that, because it really didn't matter, you know, lying about whether you had an extramarital affair, that wasn't lying about a crime.
This is the central issue in Fitzgerald's investigation. Did he lie about his relationship with reporters, his conversations with reporters? Those are the kinds of things prosecutors look at. It's the context of the lies, as well as simply true and false.
BLITZER: Jeff Toobin, thanks very much for that analysis.
And still to come tonight here in THE SITUATION ROOM. Does Iran's president deserve a response from President Bush? The former secretary of state Lawrence Eagleburger weighs in on the controversial letter and the nuclear standoff with Iran. Is there a military option?
And the jokes on President Bush, over and over and over again. Are the late night comics responding to Mr. Bush's poll numbers, or helping to drive them down? Our Jeanne Moos will have a closer look. She's going to find some humor in all of this. Stay with us. You're in THE SITUATION ROOM.
(COMMERCIAL BREAK)
Welcome back. Zain Verjee is joining us once again from the CNN Center with a quick look at some other news making headlines. Hi, Zain.
ZAIN VERJEE, CNN ANCHOR: Hi, Wolf.
A dead horse in a broken tree. Flattened cornstalks and a torn off roof on the ground. Eerie evidence of tornadoes in Texas. Right now there's a tornado warning near Houston, this after two twisters tore through northern parts of the state. Three people are dead. Two of them an elderly couple killed in their home. The third, a teenager crushed under debris from his destroyed home. At least 25 homes have been destroyed.
He's already faced his victim's families and now he faces prison time. Sentenced in Rhode Island today, Daniel Biechele is to serve four years in jail, followed by three years probation. He's the man responsible for a deadly fire at a Rhode Island three years ago at a nightclub. A hundred people died in the blaze. Biechele admitted lighting the on stage fireworks as the band he managed performed. Before being sentenced, Biechele cried and told the court that he's deeply sorry for his actions.
The Russian president compares the Bush administration to a wolf that eats without listening. President Vladimir Putin made the remarks during his state of the nation address. He discussed a wide range of issues but he was especially critical of what he suggested is an aggressive U.S. course in global affairs. This after Vice President Cheney accused of Moscow backsliding on democracy last week. Blasting back, Putin suggested the Bush administration often puts its political interest ahead of democratic ideals.
And more rough words from around the world, aimed at the U.S. Britain's attorney general says the U.S. prison camp at Guantanamo Bay is a discredit to the American ideals of freedom and should be shut down. Today, General Lord Goldsmith said, quote, "The existence of Guantanamo Bay remains unacceptable." Wolf?
BLITZER: Tough words from a close U.S. ally. Zain, thank you for that.
Just ahead, could sanctions lead Iran to give up its nuclear ambitions? Will the U.S. have to resort to military force against Iran? I'll ask tough questions to the former secretary of state, Lawrence Eagleburger. He's always outspoken.
And they used to be one another's favorite targets. Is Hillary Clinton now finding unlikely allies among conservatives? Stay with. You're in THE SITUATION ROOM.
(COMMERCIAL BREAK)
BLITZER: Welcome back to THE SITUATION ROOM. I'm Wolf Blitzer in Washington. President Bush today said he won't reply to that very long letter from the Iranian president, Mahmoud Ahmadinejad, but he does say it fails to meet the concerns of the international community about Iran's nuclear program. The Iranian leader today dismissed those concerns as a big lie, and said Iran won't back down. Will the U.S. have to resort to military force? Earlier, I put that question to a long-time diplomatic troubleshooter.
(BEGIN VIDEOTAPE)
BLITZER (voice-over): Former secretary of state Lawrence Eagleburger is a veteran of many international crises. He is joining us now live from Charlottesville, Virginia. Mr. Secretary, welcome to THE SITUATION ROOM. Always good to have you on the program.
LAWRENCE EAGLEBURGER, FORMER SECRETARY OF STATE: Thank you, Wolf.
BLITZER: Is this smart, not to respond directly, the president, not to reply to the President Ahmadinejad, to that 17-page letter?
EAGLEBURGER: I don't think the president has anything to gain by replying, if, from what I've seen of the 17-page letter, it wanders all over the place and doesn't really focus in on the issues that are particular critical to us. So I think he's wise just to leave it alone.
BLITZER: As you well know in the course of diplomatic nuance, the U.S. actually received the letter through the Swiss embassy which represents U.S. diplomatic interests in Tehran. The fact that the United States even accepted it, received the letter, should we read into that?
EAGLEBURGER: No -- I have to back up, I guess. What you should, I think, assume from this is that the administration was interested in finding what the president of Iran had to said, but I don't think it goes much beyond that, and certainly the president -- President Bush's remarks since then would indicate, that, well, we read it, and that's it, we don't take much from it.
BLITZER: One of your colleagues, former secretary of state Madeleine Albright was here in THE SITUATION ROOM last week, and she said this, I want you to listen to what she said about Iran.
MADELEINE ALBRIGHT, FORMER SECRETARY OF STATE: What is important is for the international community to act together and take action in the Security Council but I have also come to the realization that it is very important for us to have direct talks with Iran.
BLITZER: Is that a good idea for the U.S. and Iran to establish direct talks on the nuclear issue?
EAGLEBURGER: No. It seems to me -- and I respect the secretary, but this is not the only time she's ever been wrong.
Now let me -- here's the point. If we go into this alone with Iran, number one, unless you believe, and I don't, that the Iranians really intend to find some solution to this thing, all it's going to do is keep us talking and keep things going, and at the same time, keeping us from doing anything deliberate with the rest of the world and particularly with our other allies to begin to bring pressure on Iran if it's possible to do that.
And I think it seems to me therefore that if we're going to talk with the Iranians, it has to be in the company of the Germans and the French and the British. And I don't know who else but at least it needs to be more than one country, more than us.
And I think we need to accept from the beginning that it's highly unlikely that we're going to be able to do anything through diplomatic channels to turn this president of Iran and his subjects into a more sensible course. I think we have to take into consideration what he said. And he has said more than once they're going to go ahead with all this. And I think he means it.
BLITZER: Here is what the former Israeli Prime Minister Benjamin Netanyahu, a man you know well, said here in THE SITUATION ROOM last Friday. Listen to this.
BENJAMIN NETANYAHU, FORMER ISRAELI PRIME MINISTER: The current prime minister of Israel was right when he called Ahmadinejad a latter day Hitler because they share the same fanaticism and the same mentality. But if this regime will be armed with nuclear weapons, then the danger for the entire world will be enormous.
BLITZER: Do you agree with that comparison to Hitler?
EAGLEBURGER: More or less. I think -- well, again, comparisons of this sort don't necessarily take you very far. I think there's no question that this man, the head of Iran -- I can't even pronounce his name, so I leave that to you. But there's no question in my mind that he has very clear intentions to build these weapons.
And I think he has very clear intentions to shake up the world at least in his neighborhood, and try to do what he can to dominate that part of the world. I think he's a dangerous man, but I also have to tell you that the man who follows him might be just as dangerous.
The issue here is whether Iran can build nuclear weapons or not. And if they do and are successful at it, I think we will all pay a price in the future that will be very unpleasant. And that doesn't mean that we don't have to be tough now, but what it does mean if we're not tough, that it's going to be much worse when we do get tough.
BLITZER: Does the U.S. have a viable military option?
EAGLEBURGER: Yes. Not viable -- it has a military option that could succeed, I think. And that is not to say I am at this stage advocating it. But what I am saying is that all is not lost in the sense that if nothing else works to persuade the Iranians to stop what they're doing, I do think militarily we could stop them from what they're doing. But I don't think we could invade Iran. But I think from the air and so forth, we could probably make it so unpleasant for them that they would have to stop.
BLITZER: Lawrence Eagleburger is the former secretary of state. Mr. Secretary, always good to have you here in THE SITUATION ROOM.
EAGLEBURGER: My pleasure, Wolf.
(END VIDEOTAPE)
BLITZER: The CIA shuffle got a bit more interesting today and perhaps a bit more awkward as well. General Michael Hayden, the president's nominee to lead the spy agency was on Capitol Hill once again to try to make his case to lawmakers.
Also on the Hill today, the outgoing CIA director, Porter Goss, who abruptly announced his resignation last week. Goss was there to receive a Congressional award. CNN's Deirdre Walsh caught up with him afterward, an encounter you'll see only here on CNN.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Director Goss? Director Goss?
DEIRDRE WALSH, CNN: Some of your friends on the Hill feel like you go a raw deal. Do you agree? PORTER GOSS, CIA DIRECTOR: Let me put it this way. I'm glad to have so many friends on the Hill. Thank you very much. It's been a wonderful day here.
WALSH: Do you have any advice for your successor, Director Goss?
GOSS: I'm sure whoever my successor is will be very good at the job.
WALSH: Any plans to run for the Senate, sir?
GOSS: Right now I'm going home to my beloved floor (ph) to get some sleep and ask me when I wake up, OK?
WALSH: Thank you, Director Goss.
(END VIDEO CLIP)
BLITZER: Anderson Cooper is in Salt Lake City, Utah, working on a story. What are you working on, Anderson?
ANDERSON COOPER, CNN ANCHOR: Wolf, we are looking into the hunt for fugitive polygamist sect leader Warren Jeffs tonight on "360." We are devoting the entire two hours to this FBI manhunt. He, as you know, Wolf, was recently put on the FBI's Ten Most Wanted List.
We have actually come here to Utah, because he has a community here in Utah, as well as one in Arizona, also in Texas, also ones in Canada. We have reporters fanned out across the map. We're going to take you deep inside Warren Jeffs' sect.
We're going to show you what life is like in one of his communities. We'll actually talk to some women who are polygamists -- who are wives to a man in that community, and we're talk to a former polygamist himself who is now on the hunt for Warren Jeffs and trying to stop the spread of polygamy here in Utah, Wolf.
BLITZER: A fascinating two hours coming up on "A.C. 360," 10:00 p.m. Eastern tonight. Thanks, Anderson, for that.
Up ahead, in THE SITUATION ROOM, politics making some strange bedfellows. Hillary Clinton looks to the right for some unexpected allies. We'll tell you what's going on.
And President Bush and late night comics. They've been getting lots of laughs at his expense. But are they turning him into a laughing stock? Jeanne Moos takes a unique look. Stay with us.
(COMMERCIAL BREAK)
BLITZER: Welcome back. Guess who's coming to breakfast? A man disliked by many liberals and a woman feared and loathed by many conservatives. Now, many people in those groups are saying that a certain place known for being very, very hot has officially frozen over. Our Mary Snow is in New York. She's got details -- Mary. MARY SNOW, CNN CORRESPONDENT: Well, Wolf, a very unlikely alliance, indeed. Late today Rupert Murdoch called Senator Hillary Rodham Clinton a, quote, "effective and good senator in New York." He said his support will be modest for her Senate reelection only. But many political observers say given the history of the two, and the fact that Hillary Clinton could run for president in 2008, Murdoch's support is noteworthy.
(BEGIN VIDEOTAPE)
SEN. HILLARY RODHAM CLINTON (D), NEW YORK: I am worried about being targeted by Republicans?
SNOW (voice-over): Senator Hillary Clinton makes light of a question about Republican foes, and now one of those foes is a new and unlikely ally.
Conservative media mogul Rupert Murdoch will host a fundraiser for Senator Clinton. She's been a frequent target of Murdoch's media companies.
HOWARD KURTZ, CNN'S RELIABLE SOURCES: Murdoch's media companies -- "The New York Post" most famously, the Fox News Channel -- beat up on Hillary for years. She was a big, fat, juicy target when she was first lady.
SNOW: She fired back at Republicans, going on NBC's "Today Show" telling Matt Lauer in 1998 the right wing raged a battle against her husband.
CLINTON: The great story here for anybody willing to find it and write about it and explain it is this vast right wing conspiracy that has been conspiring against my husband since the day he announced for president.
SNOW: Smack in the middle of that battle, say political observers, was Murdoch's media empire. Of Murdoch's support now, Senator Clinton says, "I am very gratified that he thinks I am doing a good job." With Murdoch's praise comes criticism towards Clinton.
BEN SMITH, NY DAILY NEWS POLITICAL COLUMNIST: Liberal bloggers are saying she's sold her soul to the devil.
SNOW: Others say it's a move towards moderation. Much in the same way she's formed alliances with Republicans such as Senator Lindsey Graham, former House speaker Newt Gingrich and Senator John McCain.
HANK SCHEINKOPF, DEMOCRATIC STRATEGIST: Proves again she's a consensus build that is not extraordinarily ideological and not a polarizer.
SNOW: The question is, will it effect the news coverage of Hillary Clinton at Murdoch's media companies? Some media observers say The New York Post is taking a gentler tone with Clinton, especially after 9/11. Others doubt the coverage will change dramatically.
PAUL WALDMAN, MEDIA MATTERS FOR AMERICA: They know beating up on Clinton is part of their bread and butter. I can't imagine them stopping now.
(END VIDEOTAPE)
SNOW: Political observers credit Murdoch with getting Tony Blair elected as Britain's prime minister in 1997, when the Murdoch owned tabloid, The Sun, endorsed Blair and the Labor Party and not conservatives. Wolf?
BLITZER: Mary, thank you. Good report.
One group Senator Hillary Clinton may need to court should she run for president, that would be the Latino community. Now, there's new data showing surging Latino population growth, possibly setting the group up for lasting political impact in this country. CNN's Chris Lawrence is in Los Angeles, watching the numbers. He's joining us live. Chris?
CHRIS LAWRENCE, CNN CORRESPONDENT: Yes, Wolf. Nationwide, the number of Hispanic and Asian children has grown by double digit percentages this past decade. Look ahead 20 years, that has huge political implications.
(BEGIN VIDEOTAPE)
LAWRENCE (voice-over): The latest census report shows minority groups make up about a third of the U.S. population. But nearly half the children under five years old are racial or ethnic minorities. Most of that growth is fueled by a booming Hispanic population.
PROF. MARK SAWYER, UCLA: Immigrants are no longer clustering on the coasts. They are moving into the Midwest, Illinois, Iowa, states like that are taking large numbers of immigrants.
LAWRENCE: And they are going south to Florida and North Carolina. Red states like Georgia and Texas are receiving some of the largest numbers.
SAWYER: They are concerned about education, health care. They believe the government should play a role in it. That potentially means that many red states may turn blue, particularly those that still have a large African-American population.
LAWRENCE: UCLA professor Mark Sawyer says demographics change, so does the way politicians get elected.
SAWYER: On the West Coast, you see African-American politicians making a concerted effort to reach out to Hispanic, Latino communities.
LAWRENCE: These demographic changes are years away from having their full impact. But it effects today's political strategy. Especially among Republicans. Some of whom favor a crackdown on immigration.
SAWYER: Others are saying they need to be more careful, because they are worried they may alienate a large group of future voters.
LAWRENCE: Sawyer says Republicans running in November will have a tough choice. Appeal to today's registered voters or worry about tomorrow's.
SAWYER: Facing the issues of Iraq, the corruption, they need issues that appeal to their base. So, it's going to be difficult to see weather they choose short-term or long-term.
(END VIDEOTAPE)
LAWRENCE: Yes, here in California, the Republican Party says it's trying to win the next election, not looking 20 years down the road. Officials say, you don't even know what issues will be on the table then. By contrast, the California Democratic Party says this census report was a wakeup call. They're trying to look for new outreach activities to compliment tactics they are using like registering voters at their swearing in ceremonies. Wolf?
BLITZER: Chris, thank you very much. Chris Lawrence and Mary Snow, part of the best political team on television. CNN, America's campaign headquarters.
Up ahead, are you ready for a third President Bush? Jeb Bush gets a push from his little brother. Jack Cafferty is taking your e- mail.
Plus, late-night laughs. Is it all in good fun or serious politics? Jeanne Moos takes a closer look.
(COMMERCIAL BREAK)
BLITZER: Check in with Ali Velshi and "The Bottom Line."
ALI VELSHI, CNN ANCHOR: Hey, Wolf. Federal Reserve was at it again today. A 16th straight interest rate hike, pushing lending rates to the highest level in five year. The fed-funds rate, which is what banks charge each other on loans is at five percent. In response, commercial banks upped their prime lending rate to eight percent, and that will push rates that are tied to the prime rate, things like credit cards, other loans higher.
Today's move was expected, but is the Fed finally done raising interest rates? As always, the news release from the Fed is unclear. Bernanke and company said that some further policy firming may yet be needed to address inflation risks.
I'll finish the rest of it off in English. What they are saying is the timing of any further rate increases will depend on how the economy is doing and weather inflation is under control because that's the Fed's job.
Investors didn't seem to quite know how to react to the Fed. After flatlining all day, the Dow eked out a tiny gain, just two points. That of course means the Dow is 80 points shy of the all-time closing high of 11,722. I will come to work with this thing until it gets there. The Nasdaq was down 17 points and oil up more than a dollar to $72 a barrel. Wolf?
BLITZER: Thank you, Ali, for that. The New Orleans Lower 9th Ward, a staircase at ground zero, two locations hit by two of the biggest American disasters in history. Today the National Trust for Historical Preservation is working quickly trying to make sure these areas remain preserved. Jacki Schechner is watching the details.
JACKI SCHECHNER, CNN INTERNET REPORTER: Wolf, this staircase was used by hundreds of people on September 11th to escape the World Trade Center. The National Trust wants to make sure it is preserved.
`They want this incorporated into new designs for towers being built on the site. It's one of 11 places named on the most endangered places list. Among those Confederate President Jefferson Davis' home in Biloxi, Mississippi, destroyed during Hurricane Katrina. They are also talking a look at New Orleans where they say there are 20 historic districts. They want the area rebuilt with the same cultural diversity and richness that it had before.
Perhaps the most colorful on the list, The Doowop Motels along the Jersey Shore in Wildwood, New Jersey. There is also The Smithsonian Institute Arts and Industries building on the National Mall. They would like to find a financially viable tenant for this building. It's been empty since 2004.
BLITZER: Jacki, thanks very much. Let's check in with Jack. He's in New York with "The Cafferty File." A moment ago, Jack, I confused the two Bush brothers, Jeb Bush is the little brother, George Bush is the older brother, but go ahead.
CAFFERTY: But Jeb Bush is the bigger brother, physically.
BLITZER: He's taller.
CAFFERTY: And heavier, and, yes -- and younger. All right. The reason we're yakking about this is President Bush said today that his brother Jeb would make a great president. Term limits prohibit him from running for Florida governor. So we asked, what would you think of a third president Bush?
Richard in Springfield, Missouri, says he's a lifetime Republican voter, a former lifetime Republican voter: I'd rather be run over by a large truck. I'd rather come down with a fatal, painful illness. I'd rather have my ex-wife be awarded the final 10 percent she didn't originally get. Do you get the point? The last thing this country needs is another Bush.
Carl in Spokane, Washington: I'd rather brush my teeth with barbed wire than have another Bush in the White House.
Rob in Cambridge, Massachusetts: The only thing scarier than a third President Bush is a second President Clinton. This trend toward dynastic rule in both major parties should make Americans start considering third parties more seriously.
Chris in Denver: I think I want a third Bush like someone wants a third heart attack.
Troy in Battle Creek, Michigan: Another stupid question to answer. What the hell is wrong with you? The Bushes are a reflection of the things that are wrong in America, and you don't change that by continuing to give them opportunities to be cast in a favorable light.
Gregg in Eugene, Oregon: A third President Bush? Hopefully the American people will keep their sadomasochism where it belongs ... in the bedroom.
T. in Omaha, Nebraska: If you knew what I think about the present George Bush, you would understand that if there were a third, I would pray that I'd drop dead instantly.
And Gurpal in Livingston, California: What would you think of a third President Bush? Only if it's Anheuser-Busch.
Wolf?
BLITZER: Jack, thank you very much. Let's stay in New York and find out what's coming up at the top of the hour on "PAULA ZAHN NOW." Hi, Paula.
PAULA ZAHN, CNN ANCHOR: Hi, Wolf, thanks so much. Coming up in about eight minutes from now, the dramatic ending of a trial in Rhode Island. The man who set off the pyrotechnics that burned down a nightclub, causing the deaths of 100 people was sent to prison. But does the punishment fit the crime?
Also, a woman who says the pastor of her church abused his power and pressured her into having an affair. We're going to examine the power clergymen have and the potential dangers facing women in their congregations. Hope to see you at the top of the hour. Wolf?
BLITZER: Thank you, Paula, see you then.
Still ahead in THE SITUATION ROOM, a good laugh or a laughing stock? Late-night comics poking fun at the president a little more than usual. Are the jokes taking a toll? Jeanne Moos has the story, stay with us. You're in THE SITUATION ROOM.
(COMMERCIAL BREAK)
BLITZER: Welcome back. As we reported at the top of the hour, President Bush's poll numbers remain at rock bottom. Another new poll today puts his approval rating at a record low of 31 percent. While the five latest surveys are averaged together, Mr. Bush gets a 33 percent job approval rating. As the president's poll numbers sink, the number of late-night jokes seem to be going up. Our Jeanne Moos lets us in on all the laughs.
(BEGIN VIDEOTAPE) JEANNE MOOS, CNN CORRESPONDENT (voice-over): Those plummeting polls must leave the president feeling in limbo. He may be less popular with the public, but he's more popular with comedians.
JAY LENO, TALK SHOW HOST: President Bush.
DAVID LETTERMAN, TALK SHOW HOST: President Bush.
MOOS: More than twice as popular, someone is actually counting President Bush jokes.
LENO: He said catching a seven and a half pound fish was his best moment since becoming president. You know the sad thing? A lot of historians would agree with that.
MOOS: The nonpartisan Center for Media and Public Affairs say they've counted Bush jokes in the monologues of Conan, Letterman and Leno. And they've doubled in the first three months of this year, compared to last.
LETTERMAN: They say that President Bush actually can speak Spanish. But not very well. In other words, about the same as English.
MOOS: Not only have the jokes doubled...
ROBERT LICHTER, CENTER FOR MEDIA AND PUBLIC AFFAIRS: Over a third of all the jokes about President Bush are about his intelligence.
MOOS: And the president has to put up with them, even when he's sitting right there.
STEPHEN COLBERT, HOST, THE COLBERT REPORT: Guys like us, we're not some brainiacs on the nerd patrol.
MOOS: So which comes first? Do the jokes make the polls fall, or do the falling polls lead to jokes?
LICHTER: Comedians are going to make jokes about people that the audience is ready to laugh at.
MOOS: Night after night, David Letterman has been showing great moments in presidential speeches.
FRANKLIN DELANO ROOSEVELT, FORMER PRESIDENT OF THE UNITED STATES: The only thing we have to fear...
JOHN F. KENNEDY, FORMER PRESIDENT OF THE UNITED STATES: Ask what you can do for your country ...
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Tell people why -- I mean, a -- I think...
MOOS: But great moments like that come at a price.
LICHTER: The danger is that when you become a laughing stock, it can create a downward spiral.
MOOS: Great moment after great moment. They add up to not such great moments for the president.
LICHTER: Making a president into a laughing stock will make it more difficult for him to govern.
MOOS: The Bush jokes in late-night monologues are now coming at a pace of more than 100 a month. And though it's true that Bill Clinton was the butt of even more jokes, those were about sex, not intelligence.
LETTERMAN: Clinton poses for his annual "Interns I've Slept with Photograph."
MOOS: Joking's enough to make a commander in chief say...
UNIDENTIFIED MALE: I really don't want to be president anymore, Dick.
MOOS: Then you would never have any of those great moments.
BUSH: But as specifically about our position on prostitution -- I'm going to have to talk to the secretary about it.
MOOS: Jeanne Moos, CNN, New York.
(END VIDEOTAPE)
BLITZER: Leave it to Jeanne Moos. Let's take a closer look at some of the hot shots coming from our friends at "The Associated Press," pictures likely to be your hometown newspapers tomorrow. Check these out.
Westminster, Texas, look at this. A pickup truck at a house destroyed by a tornado that ripped through the town overnight and left at least three people dead.
In Romania, a new report charges the government with the warehousing mentally ill and retarded children in adult institutions with truly squalid conditions.
In Indonesia, molten lava flows in the crater of Mount Merapi's, which scientists say may be about to erupt.
And look at this, in Afghanistan, free ride. These girls check out the sights as they catch a lift in the trunk of a car.
That's it, some of today's hot shots, pictures often worth a thousands words.
And that's it for us here in THE SITUATION ROOM. Remember, we're here weekday afternoons from 4-to-6 p.m. Eastern, back again for one hour at 7 p.m. Eastern. Until tomorrow, thanks very much for joining us. I'm Wolf Blitzer in Washington. Coming up next, "PAULA ZAHN NOW," she's standing by in New York. Paula? TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
