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Authorities Calling Terror Plotters In Miami Homegrown Terrorists; Bush White House Insists Program To Track Banking Records is Legal and Justified; James Woolsey Interview; Possible Election Day Implications of Alleged Terrorism Plot; Do Americans Feel Safe?

Aired June 23, 2006 - 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: Thanks very much, Ali.
To our viewers, you are 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 today's top stories.

Happening now, terror suspects face charges that they plotted to wage a war against the U.S. government. It's 4:00 p.m. in Miami, where new details are emerging about the alleged al Qaeda wannabes and how they were nabbed. We are covering all the legal and security angles and the political fallout and whether Americans feel threatened.

Also this hour, the treasury secretary defends a secret program tracking millions of financial transactions. Is it a vital tool in fighting terror or is it an invasion of privacy? It's 4:00 p.m. here in Washington, where there's renewed debate about domestic spying.

And wins, losses and the Iraq mission, Senator Hillary Clinton offers a vivid take on the Democrat's divisions over the war and accuses Republicans of monkeying around. I'm Wolf Blitzer. You are in THE SITUATION ROOM.

Authorities call them homegrown terrorists who came to view their country as the enemy. Five of the seven suspects in the alleged terror plot appeared in federal court in Miami just a short while ago, in chains and under heavy security. Last night federal agents swarmed into a warehouse in the Liberty City area of Miami, and busted the group described as al Qaeda wannabes.

It was the result of an elaborate sting operation. The suspects are accused of plotting to bomb the Sears Tower in Chicago and a federal building in Miami. Attorney General Alberto Gonzales says there was no immediate threat in either city because the group didn't have the materials needed. But he says the alleged plot could ultimately have been devastating.

(BEGIN VIDEO CLIP)

ALBERTO GONZALES, ATTORNEY GENERAL: These individuals wished to wage a, quote, full-ground war against the United States. That quote is from the investigation of these individual, who also allegedly stated the desire to, quote, kill all the devils we can. They hoped for their attacks to be, quote, just as good or greater than 9/11.

(END VIDEO CLIP)

BLITZER: Our national correspondent Susan Candiotti has been following this story since it broke last night. Susan's in Miami. What's the latest Susan?

SUSAN CANDIOTTI, NATIONAL CORRESPONDENT: Well, Wolf, it was a government sting, as you indicated, that involved an obscure religious group, that appeared inept at best, but the government says and claims that it has the goods against these seven individuals.

As you indicated, five of the seven appeared in court for a very brief hearing this afternoon. Only five of the seven because one of the other defendants is in Atlanta and the other one was arrested a few days before the main raids took place in Miami.

He is being held on state charges of a probation violation involving carrying a concealed weapon. Now that brief appearance ended up that way, because this hearing was only meant to assign attorneys to these people, who briefly testified that each one of them had no money, certainly no property and nothing with which to hire an attorney. So, they all got court-appointed lawyers or they will be represented by a public defender and there will be an arraignment next week, here in Miami, an arraignment on those indictments.

Now, relatives who have shown up outside the courtroom insist, perhaps not surprisingly, that their relatives couldn't possibly have done anything of the sort.

(BEGIN VIDEO CLIP)

ELIZENE PHANOR, MOTHER: My son, he don't have heart to kill people. I tell god, he don't have heart to kill people.

SYLVAIN PLANTIN, COUSIN: Whoever the feds talked to. That's the one that needs to get in trouble for, because this guy here, don't have anything to do with hit. The only thing he has to do with it is he was hanging around somebody that might have made plans to do something wrong which he never knew nothing about.

(END VIDEO CLIP)

CANDIOTTI: In fact, one relative told me that while her son, her brother rather, didn't like President Bush, doesn't like the war, but said he would never plan to carry out any terrorist attack and she insisted he never even uttered the word al Qaeda, let alone know how to spell them. In any case these people are in a heap of trouble at the present time. The question of course Wolf is whether the government does, indeed, have the evidence it needs to prove a conspiracy case against these men.

The government says they might not have had the means, they were perhaps aspirational than operational, nevertheless, the FBI insists that they did conspire to carry out a full-scale war against the United States. But whether they had the means to do it, again, is in question. Back to you.

BLITZER: Alright Susan, thanks very much, Susan Candiotti in Miami. The FBI director, Robert Mueller is pointing to those suspects in Miami and making a case that home-grown terrorism is a very real threat right now here in the United States. Mueller spoke today in Cleveland. He warned that domestic terror groups can be just as dangerous as al Qaeda, if not more so.

(BEGIN VIDEO CLIP)

ROBERT MUELLER, FBI DIRECTOR: While we have made great strides in disabling traditional terrorist models like al Qaeda, the convergence of globalization and technology has created a new brand of terrorism. Today terror threats may come from smaller, more loosely defined individuals and cells, who are not affiliated with al Qaeda, but who are inspired by a violent Jihadist message.

(END VIDEO CLIP)

BLITZER: In our next hour, our Homeland Security correspondent Jeanne Meserve will have a full report on that threat, potential threat of home-grown terror.

The Bush administration, meanwhile, is defending a newly revealed secret program to track people suspected of bank rolling terrorism. Treasury Department now acknowledge that in the weeks after 9/11 they obtained access to a massive international financial database. The program was disclosed late yesterday after several major newspapers rejected administration requests to keep it secret.

Some critics are likening the monitoring of private financial records to the National Security Agency's once secret monitoring of phone records. In a statement today, Democratic Congressman Ed Markey writes this, "Like the domestic surveillance program, exposed last December, the Bush Administrations efforts to tap into financial records of thousands of Americans appear to rely on justifications concocted without regard to current law."

The Bush White House insists that its program to track banking records is very legal and very justified. Let's check in with our White House correspondent Suzanne Malveaux. After the "New York Times" published this yesterday, what's the reaction at the White House today?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: As you can imagine, Wolf, the White House is really aggressively defending itself from a public relations standpoint, but also from a legal standpoint as well. We heard from both of the Snows today, that is Treasury Secretary John Snow as well as White House Press Secretary Tony Snow in twin press conferences about this issue. They make a number of points very similar to the argument they made in the NSA eavesdropping program, that controversy, defending that as well.

The first point they say is that this program only traces the financial transactions of those with suspected links to al Qaeda. The second thing they say is that this program has been reviewed by the Treasury Department, the Federal Reserve, other financial institutions, that there is no evidence of abuse.

They also go on to say that the president did not need to seek congressional authority, that it was carried out through executive order and the final point they make here, Wolf, is that they believe this has been a very effective program that has paid off.

(BEGIN VIDEO CLIP)

TONY SNOW, WHITE HOUSE PRESS SECRETARY: Here's what it has done. This is the concrete part, as opposed to the abstract, potential dangers. It helped capture Ham Bali, who was responsible for the Bali bombing, which killed more than 2,000 people. It's provided information on domestic terror cells, that's a good thing. It helped identify a Brooklyn man, convicted on terrorism related charges last year.

JOHN SNOW, TREASURY SECRETARY: It's based on appropriate legal authorities. It has built-in safeguards and controls. It's responsible government.

(END VIDEO CLIP)

MALVEAUX: And, Wolf, really, the calculus here at the White House, the political calculus is that Americans will support this program ultimately, because if you look back in February, take a look at all the polls that showed after that NSA eaves dropping program, very controversial, ultimately those polls showed that Americans were split, but they tended to side with the administration saying they believe the administration is doing the right thing, that this is a tough security measure.

BLITZER: Suzanne, thank you very much, Suzanne Malveaux at the White House. As we mentioned the White House did ask "The New York Times" not to publish the bank record story. Today the vice president, Dick Cheney called the newspaper's decision disturbing. More on that coming up.

So, were the newspapers right or wrong. We'll ask CNN's Howard Kurtz. That's coming up right here in THE SITUATION ROOM in the next hour.

SWIFT it stands for "The Society for Worldwide Inter-bank Financial Telecommunication." The Treasury Secretary John Snow, as we just heard, calls it an essential tool of fighting terror, but how exactly does SWIFT work? Let's bring in our internet reporter, Abbi Tatton.

ABBI TATTON, CNN INTERNET REPORTER: SWIFT tracks the global movement of money. It's not a bank itself, rather it handles the transfer of funds between banks and other financial institutions worldwide, some 8,000 of them. Every time one of these transactions take place, SWIFT sends a message of key information between the banks.

It handles about 11 million of them per day. Now, we're talking predominately about overseas transfers. If you were to send money from the U.S. to the U.K., for example, rather than routine activity like ATM withdrawals or that kind of thing.

A statement today on the Web site responds to these news reports. Swift says in the aftermath of September 11th, they responded to compulsory subpoenas for data from the U.S. Treasury Department. They also say they received significant assurances about the program -- Wolf.

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

Zain Verjee is off today. We're glad Fredricka Whitfield is joining us from the CNN Center for a closer look at some other important stories -- Hi, Fred.

FREDRICKA WHITFIELD, CNN ANCHOR: Hello to you, Wolf.

A Nevada man suspected of killing his estranged wife and wounding a Reno family court judge is in custody in Texas. Darren Mack turned himself into police in Mexico last night, and was flown to Dallas this morning. He's been on the lam since Judge Charles Weller was shot in the chest through an office window June 12th. Mack's wife Charla was found stabbed to death several hours after Judge Weller was hit.

In Iraq, the death toll soars on another bloody day of violence near Baqubah. Nine civilians died when a bomb detonated outside a Sunni mosque. In the southern city of Basra, a car bomb exploded near a market and gas station, killing two people and wounding 18 more.

And in Baghdad, an apparent sectarian firefight left four Shiite militiamen dead. Five bodies were found dumped in northern Baghdad today as well today. The victims had been shot.

More casualties today for U.S. forces in Iraq as well. Military officials say two soldiers with the multi-national division in Baghdad died when their vehicle hid a roadside bomb southeast of the Iraqi capital. Their deaths raise the total of U.S. military personnel who have died in the Iraq war to 2,515 -- Wolf?

BLITZER: Fred, thanks very much.

Some Democrats are trying today to move beyond their divisions over Iraq and whether there should be a timetable for bringing the troops home. Yesterday the Senate rejected two Democratic proposals to start withdrawing troops by the end of this election year. In a speech today, the Senator Clinton of New York conceded that Democrats are openly struggling with questions about the Iraq mission, but she says she believes her party will come out more united.

(BEGIN VIDEO CLIP)

SEN. HILLARY CLINTON (D), NEW YORK: I think that the Democrats may have somewhat different views about how we succeed in Iraq. But we are together unified in fulfilling our constitutional responsibility to engage in a legitimate debate, to ask the difficult issues and to offer honorable, responsible positions.

(END VIDEO CLIP)

BLITZER: After the speech, Senator Clinton told reporters Republicans were blindly following the president on Iraq like three monkeys: see no evil, she said, hear no evil, speak no evil.

Speaking of evil, that would be Jack Cafferty. He's in New York. He's joining us with "The Cafferty File." Hi, Jack.

JACK CAFFERTY, CNN ANCHOR: Hi, Wolf.

Another secret Bush administration program aimed at tracking terrorists. This time the Treasury Department is getting financial records from an international database and examining banking transactions that involve thousands of Americans.

Like the NSA spy program, officials did not seek individual court-approved warrants or subpoenas, but instead relied on broad administrative subpoenas of millions of records. The administration insists the program is limited and that choking off funds for the terrorists is one of the most important tools in the war on terror.

Not everybody agrees. Congressman Ed Markey in Massachusetts said, quote, "If the administration wants to fight terrorism legally, then it should ask for the authority it needs and then follow the law that Congress passes. Don't claim temporary emergency and then operate in secret for five years."

Meanwhile, the White House had begged the "New York Times" and "Los Angeles Times" not to publish the story, saying the program is legal and that news reports could hurt national security.

The question then is this: should the government have access to Americans' financial records? E-mail us at CaffertyFile@CNN.com or go to CNN.com/CaffertyFile -- Wolf.

BLITZER: Jack, thank you. And if you want a sneak preview of Jack's questions, plus an early read on the day's political news, what's ahead here in the SITUATION ROOM, sign up for our daily e-mail alerts. Simple way to do it, just go to CNN.com/situationroom.

Coming up, the political fallout behind the alleged plot to bomb the America's tallest skyscraper. Will the terror arrest make an impact on the mid-term elections? We'll go live to Capitol Hill to find out.

Plus, when it comes to combating terrorism, do you think you're safe? Our Bill Schneider finds out that simple question has two answers.

But up next, the former CIA director, Jim Woolsey, joins me live here in THE SITUATION ROOM to talk about the alleged plot and lots more.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK) BLITZER: Welcome back. America on security watch once again today after the arrest of suspected terror plotters in Miami. Let's talk about this threat of so-called homegrown terror.

Former CIA director James Woolsey is here in THE SITUATION ROOM. Mr. Director, thanks for coming in.

JAMES WOOLSEY, FORMER CIA DIRECTOR: Good to be with you, Wolf.

BLITZER: Sleeper cells involving Americans and al Qaeda. It's a very a worrisome potential threat, although in this particular case, we're told there were no actual contacts from anyone from al Qaeda.

WOOLSEY: Well, because the FBI stepped in and played the role. But I think that it's a very serious problem. We have, for example, substantial recruiting of terrorists in American prisons. The Wahabis (ph) of Saudi Arabia have funded a good deal of I think the organizational work that has lead to organizations naming imams in prisons that are effectively -- have the same ideology as al Qaeda, even if they're enemies for reasons of who they owe direct allegiance to.

But they're fanatically, some of these people, hostile to Christians, to Jews, to democracy, to other Islamic sects, such as Shiites. And it's terribly repressive of women. And that doctrine gets taught in some American mosques and certainly in some of our prisons.

BLITZER: Is this potential problem of domestic homegrown terror, not affiliated with al Qaeda, potentially a more serious threat to the United States than a bunch of al Qaeda guys coming in all on 9/11?

WOOLSEY: It's hard to say. It's a mixture. I think some of these groups are sort of like franchisees. They're not well-connected with what might be going on in a cave along the Afghan-Pakistani. But it doesn't take all that much sophistication to put together a bomb.

Timothy McVeigh showed that in Oklahoma City. So you can do an awful lot of damage, even if you're not real sophisticated and if you're just inspired by hatred. It's the ideology of hatred that is being propagated under the guise of being -- teaching of Islam. And it's a problem.

BLITZER: In this particular case, though, the al Qaeda operative was an FBI informant who was involved in this apparent sting operation. Do we have a problem with that?

WOOLSEY: Not as long as there are the real elements of a conspiracy present. This is the sort of prosecution one sees of the Mafia and so forth from time to time as well, if there's a real plan, a real conspiracy and an action taken pursuant to a conspiracy.

The fact that there was never really a contact with al Qaeda but they were trying to contact al Qaeda, would seem to me, at least, to state the elements of the crime. BLITZER: We have learned, thanks to the "New York Times," that there has been, since 9/11, a very secret program, classified program to monitor bank transactions, wire transfers. You read that long piece in the "New York Times" right now.

There was also in there an appeal to the "New York Times" from high government officials, Bush administration officials and they said also from some officials from other administrations, Democrats, don't report this because this could undermine the war on terror. Does the disclosure by the "New York Times" -- is it justified to help the American public know what's going on or, in your opinion, does it hurt the war on terror.

WOOLSEY: Well, these are international financial transfers. These are not, you know, all of our regular Americans' bank accounts. And these transfers are an important part of tracking terrorist financing. It's somewhat like the communications at the National Security Agency earlier, that has been apparently monitoring -- an earlier "New York Times" story -- between al Qaeda overseas, and individuals in the United States.

I think in cases like this, we have to come to terms with the fact that we are now on the frontlines. Certainly New York and Washington and a field in Pennsylvania are on the frontlines, and I am afraid the rest of us are now, too, in Miami now, in Chicago.

And we are not used to fighting a war like that, where we have conflicts between civil liberties issues, and fighting the war effectively. These are real conflict. These are very important, tough questions.

My own judgment would be that on something like this, where there was apparently some members of Congress were informed, and you could establish a way to have congressional oversight to this, that it's not right to publish it. I certainly don't think the "New York Times" should be punished for publishing it, but as a matter of judgment, no, it wasn't a good decision.

BLITZER: Had you still been the CIA director, and this situation would have come up, would you have gone to the editor of the "New York Times" and appealed to that editor don't publish?

WOOLSEY: Certainly. I went to senior media people two, three times when I was director. And in each case, they were willing to eliminate one or two facts that were not really important to a story, but could have betrayed a source or a method. I had good relations with the press exactly along those lines when I was ...

BLITZER: And did they listen to you?

WOOLSEY: Yes, they did.

BLITZER: Let's talk about North Korea for a moment. William Perry, the former defense secretary during the Clinton administration -- he served at the Pentagon when you served at the CIA -- together with Ashton Carter, wrote a piece in the "Washington Post" saying, among other things, this: "If North Korea persists in its launch preparations, the United States should immediately make clear its intention to strike and destroy the North Korean missile before it can be launched. Diplomacy has failed and we cannot sit by and let this deadly threat mature." Do you agree with that?

WOOLSEY: Yes, I do. Bill Perry and Ash Carter are very serious, able men. I served with them both in the Clinton administration. I have known them both for many years. This is a responsible article. We simply should not let North Korea have an intercontinental ballistic missile that has nuclear weapons.

BLITZER: So you go in and you knock out the missile on the location before it can even take off.

WOOLSEY: As they say in their op-ed piece in the "Washington Post," it would by relatively easy to do, a few submarine launched cruise missiles, not nuclear, simply high explosives, could take this out very easily. It's a fully fueled, thin-skinned missile sitting on a pad. It would be a very simple task.

BLITZER: It would be -- for every action there's an equal and opposite reaction, as they say. The South Koreans are very nervous, as you know. There's still 20,000 or so U.S. troops along the DMZ. What if the North Koreans decided to respond?

WOOLSEY: We would not, I think, need to involve South Korea in this at all. If North Korea attacked South Korea, for any reasons, we would emerge victorious from that conflict, and I think it could be a relatively short conflict.

But North Korea wouldn't, I don't think, do something that suicidal as attack South Korea. They really are sitting there very vulnerable. They are trying to get attention for themselves. They are ruled by this crazy fool, Kim Jong-il, who's sort of a cross between Caligula and Baby Doc Duvalier. I think that we simply can't let them have an intercontinental ballistic missile to go along with their nuclear weapons and put the United States at risk.

BLITZER: James Woolsey, thanks for coming in.

WOOLSEY: Thank you.

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

Up next, the political battle over the war on terror. We'll go live to Capitol Hill. Our Dana Bash will join us.

Members of both parties responding to the arrests in Miami. We will have the latest.

Plus should the Treasury Department have access to financial records? I will ask Bill Press and Terry Jeffrey. No surprise, they strongly disagree on this subject. The "Strategy Session" -- all that, still to come. Stay with us.

(COMMERCIAL BREAK)

BLITZER: Welcome back to THE SITUATION ROOM. I'm Wolf Blitzer in Washington.

Let's get back to our top story, the alleged terrorist plot to wage war on the U.S. government busted in Miami. Some Republicans and Democrats are looking beyond the security issues right now. They're thinking about possible implications of all of this on Election Day.

Let's go to our congressional correspondent Dana Bash. She's on Capitol Hill -- Dana.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Hi, Wolf.

We know Democrats who represent the Chicago area wrote and sent this letter to the Homeland Security secretary, essentially saying that he needs to implement recommendations from the 9/11 Commission about their city's security.

Also Senator Bill Nelson, a Democrat from Florida where the terror suspects were arrested, he responded as well. He praised local law enforcement. But for the most part, Wolf, it was Republicans responding on an issue they believe is a political winner.

(BEGIN VIDEOTAPE)

BASH (voice-over): Shortly after the government announced an alleged plot to bomb Chicago's Sears Tower, the vice president, who was in the Windy City for a political fundraiser, noted the news and wove it into his stump speech.

DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: It is critically important that we keep these issues of national security at the top of the agenda in this election year. The president and I welcome the discussion.

BASH: House Speaker Dennis Hastert was more direct, making a political promise. "House Republicans will not be shaken in our resolve to keep the global war on terror off our streets," he said.

Word of the alleged Miami terror cell comes on the heels of other terrorism-related headlines, 2003 plans for a New York subway gas attack, and the death of Iraq's most wanted terrorist, sobering news Republicans believe could help them on Election Day.

ANDREW KOHUT, PEW RESEARCH CENTER: If terrorism is a more pressing concern, it's good for President Bush. It's good for the Republican Party. It's the issue -- it's the single issue that the Republicans do best on.

BASH: "I can make you safer" was the president's signature issue in the 2004 campaign. But, since then, his advantage has slipped.

Just after he was reelected, six in 10 Americans said they approved of the way Mr. Bush was fighting terrorism. Now it's 11 points lower, just 49 percent. Republicans have been working hard to regain traction. In two weeks of congressional debate, GOP lawmakers tried to link the war in Iraq to the war on terrorism.

SEN. JON KYL (R), ARIZONA: They are going to fight wherever the point of the battle is, based upon their choosing. Today, they choose that battle to be in Iraq.

BASH: Republican pollster David Winston believes talk of a terror threat at home could add to what he calls a key shift.

DAVID WINSTON, REPUBLICAN POLLSTER: The reconnection of the war on terror and the war in Iraq, I mean, that has given Republicans the -- back the initiative on this issue. And it's very important.

(END VIDEOTAPE)

BASH: But it's a delicate line for Republicans to walk.

Some political observers warn that voters are more skeptical now of using terrorism as an election-year tool. And so, they say, if Republicans are seen as exploiting this issue, it could backfire -- Wolf.

BLITZER: Dana Bash on Capitol Hill.

Dana Bash and, as you saw earlier, Suzanne Malveaux are part of the best political team on television -- CNN, America's campaign headquarters.

As Dana mentioned, the national security issue as an issue helped Republicans at the ballot box in 2002 and 2004. Will it happen again in 2006? I will ask Bill Press and Terry Jeffrey. They're standing by live in today's "Strategy Session."

Plus, a member of the president's Cabinet says, so long. We will tell you who is leaving and why.

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

(COMMERCIAL BREAK)

BLITZER: Welcome back.

In our "Strategy Session," terrorism in the headlines -- suspects charged in an alleged plot to bomb the Sears Tower in Chicago and other targets, and a secret Bush administration program to track financial data revealed.

Joining us now, Democratic analyst Bill Press and Terry Jeffrey, the editor of "Human Events Online."

The FBI indictment writes that Narseal Batiste, one of those alleged suspects, detailed his mission to wage a full ground war against the United States "in order to kill all the devils we can, in a mission that would be just as good or greater than 9/11."

This is good news, that these guys are arrested, I suspect you agree. BILL PRESS, RADIO TALK SHOW HOST: I think it's good news that they're arrested. And, this morning, I thought, well, this is really scary, and this is a great job that the administration has done, saved us from a great threat.

The more I read into it, and the more I look at it, the less I am convinced of that, Wolf. I mean, I think these guys were amateurs, at best. I mean, these were -- the Miami seven, they sound like the Keystone Cops. I mean, they wore uniforms; they wore turbans. They bragged to their neighbors about what they were doing. They stood guard outside of their warehouse.

I mean, they were hardly sophisticated terrorists or effective terrorists, if they were -- if they were terrorists at all. I think this whole thing smells of politics. I think this is the administration ratcheting up the war on terror again in the midterm elections. And it's no coincidence that this arrest came the same day that the bank records story appeared in the "New York Times..."

BLITZER: Well, we are going to get to that.

PRESS: ... and Dick Cheney went to Chicago.

BLITZER: Well -- but what you are saying is, this whole thing is concocted to score political points for the Bush administration?

PRESS: I smell a rat. That's what I'm saying.

BLITZER: Well, that's a serious charge.

Let's let Terry respond, but also respond in the context of what the attorney general, Alberto Gonzales, said today, among other things.

(BEGIN VIDEO CLIP)

ALBERTO GONZALES, ATTORNEY GENERAL: We felt that the combination of the planning and the overt acts taken were sufficient to support this prosecution. And -- and that's why we took this action. There is no immediate threat.

(END VIDEO CLIP)

BLITZER: All right, Terry, respond to what we just heard from Bill...

TERRY JEFFREY, EDITOR, "HUMAN EVENTS": Well...

BLITZER: ... because there are career prosecutors out there involved, FBI agents, senior officials who are obviously deeply involved in this operation.

JEFFREY: Right. You have the joint terrorism task force in that area of the country that went after these guys, Wolf.

But, really, I think to say that seven people who had taken a pledge to al Qaeda and were intent on killing many, many, maybe thousands, of Americans were amateurs were not a threat, and the whole thing was concocted by the administration for political purposes is, on the face, ludicrous.

How many people could seven amateur killers kill, Wolf, especially if they simply went down and bought guns? These people were talking about blowing up the Sears Tower, the highest office building in the United States of the America.

By the way, it reminds me a lot of the Portland seven case, where you had homegrown Americans who were disaffected with the country. They joined a fundamentalist mosque. And they, in fact, did come in contact with a member of al Qaeda. They first tried to go through China, to Afghanistan, to kill Americans here. They came back, and they plotted to go after either Jewish schools or synagogues and kill Americans there.

The FBI and the joint terrorism task force in Oregon got them first.

BLITZER: All right.

(CROSSTALK)

PRESS: What I'm saying, Wolf....

JEFFREY: We needed to roll these guys up before they kill...

(CROSSTALK)

PRESS: Listen, I'm glad they're in jail.

What -- what I am saying is not that the administration put it up to them, Terry. I didn't say that. I think the administration is exaggerating the importance of this, and timing the arrests today for political purposes.

JEFFREY: Well, Bill...

PRESS: And wait.

We have seen...

(CROSSTALK)

JEFFREY: They should have arrested them next week?

PRESS: Listen, we have seen...

(CROSSTALK)

JEFFREY: I mean, should they have waited until October to arrest them?

PRESS: Terry, let me finish a sentence.

JEFFREY: How many...

PRESS: Whoa. Whoa. Whoa. Wait.

We have seen them do this before. What about those color-coded terror alerts that we used to have?

JEFFREY: Well...

PRESS: Every time there was bad news for Republicans, you would have had a color-coded terror alert.

JEFFREY: Bill...

PRESS: This was timed...

JEFFREY: Let me ask you a simple question.

PRESS: ... to distract attention from the bank records story.

JEFFREY: When should they have arrested these seven people pledged to kill Americans?

PRESS: Maybe...

JEFFREY: When? When? When?

PRESS: Maybe when they first found out about them...

(CROSSTALK)

JEFFREY: Not this year, because it's an election year?

PRESS: No, no, maybe when they first found out about them, instead...

JEFFREY: In December.

PRESS: ... of timing it for Dick Cheney's visit to Chicago and to deflect...

JEFFREY: Well, wait a minute.

PRESS: ... deflect attention...

JEFFREY: Right.

PRESS: ... from the bank records story.

(CROSSTALK)

PRESS: You can't tell me that this...

JEFFREY: Let...

PRESS: ... administration has never exploited...

(CROSSTALK)

PRESS: ... the war on terror...

BLITZER: All right.

PRESS: ... for political purposes.

BLITZER: Go ahead, Terry.

JEFFREY: Well, one of the reasons, in an investigation like this, they will detect a person they think is involved in terrorism, it takes a few months, or maybe several months, before they round them up, is, they want to make sure they get the entire cell.

They want to make sure they get everybody involved. They want to make sure they collect the evidence, so they actually can convict them in court.

For Bill to say that Alberto Gonzales manipulated the timing, come up with evidence of that, Bill.

PRESS: Listen...

JEFFREY: When -- you are saying that today...

PRESS: I...

JEFFREY: ... was the optimum day, politically, for these people to be arrested?

PRESS: I...

JEFFREY: Therefore, the Justice Department went forward? Are you seriously saying that?

PRESS: I am telling you, if you go back over the last -- since 9/11, this administration -- we just heard it on the piece before we came on here.

This administration, they have got one issue. They have got fear, fear.

BLITZER: All right. Let...

(CROSSTALK)

PRESS: And every time...

BLITZER: Let's...

PRESS: ... there's a political crisis, they ratchet up the war on terror.

(CROSSTALK)

JEFFREY: Well, Bill... PRESS: They have done it for five-and-a-half years.

JEFFREY: So, all of the FBI...

PRESS: They are doing it again today.

JEFFREY: ... the U.S. prosecutors, the Justice Department people, the local law enforcement that were involved in this, they were all corrupted in a conspiracy...

BLITZER: All right.

JEFFREY: ... by the Bush administration?

PRESS: No. Don't put words...

JEFFREY: ... to affect the election?

PRESS: No, no, no.

JEFFREY: They weren't all corrupted?

PRESS: Don't put words in my mouth.

JEFFREY: Well, who was corrupted, Bill?

PRESS: The attorney general is a political clone of George W. Bush.

JEFFREY: He was corrupted.

BLITZER: All right.

Let -- let's talk about this other story, somewhat related, all part of the war on terror, monitoring these wire transfers, these bank transactions.

The treasury secretary, John Snow, explained it this way:

(BEGIN VIDEO CLIP)

JOHN SNOW, U.S. TREASURY SECRETARY: This terrorist tracking program, administered through the Treasury Department and Undersecretary Levey, is really government at its best. It's responsible government. It's effective government. It's government that works.

(END VIDEO CLIP)

BLITZER: I suspect you disagree with him on that.

PRESS: Well, I just have to say, I think, Republican or Democrat, liberal, conservative, it's not government at its best when government is getting all of our phone records without a court warrant, without a court order, illegally. It's not government at its best when government is getting all of our bank records without a court order. It's not government at its best when you have got Big Brother unleashed, with no congressional approval and no court approval. I think it's government at its most scary and its most disgraceful.

BLITZER: I want you to respond.

Ed Markey, congressman from Massachusetts, Democrat, issued a statement, saying, "Like the domestic surveillance program exposed last December, the Bush administration's efforts to tap into the final -- financial records of thousands of Americans appear to rely on justifications concocted without regard to current law."

JEFFREY: Well, his argument, just like Bill, is based on distorting the facts.

Not everyone's phone record was taken by the NSA. Not everybody's financial transactions were picked up by this program. They were narrowly targeted at people with suspected links to al Qaeda.

Now, here's a fact. "The New York Times" this morning, in its report, named two al Qaeda terrorists that were rolled up with the help of this program, Hambali, who planned the Bali resort attack, and a person in New York who laundered $200,000 for al Qaeda.

"The New York Times" story, Wolf, did not name a single American who was harmed by this program. It's simply a theory that this program is harming Americans. It's a fact that it tracked down al Qaeda.

PRESS: If they were breaking the law, it's harming the government. If there's probable cause -- read the Fourth Amendment. You know, I believe...

(CROSSTALK)

BLITZER: The administration says that members of Congress were briefed on this...

(CROSSTALK)

PRESS: Briefing is not approval, Wolf.

And the -- and, by the way, Congress does not take the place of a court. Read the Fourth Amendment. We have a right to be secure in our persons, our homes, our papers, and our offices, unless there's probable cause.

JEFFREY: Reasonable...

PRESS: If there's probable cause, go get a court warrant. If there's not...

BLITZER: Terry... PRESS: ... they have no business in our business...

BLITZER: ... you're a journalist. Did "The New York Times" do the right thing...

PRESS: ... in our private affairs.

BLITZER: ... in disclosing the details of this program?

JEFFREY: No. I -- they had a right to do it. I think they made a mistake. I agree with Woolsey. There was a judgment call here.

We are in a congressionally authorized war against al Qaeda. And it's analogous to this. If a "New York Times" reporter was traveling with a group of al Qaeda terrorists, and he knew American forces over there were hiding and they were going to ambush these al Qaeda guys, should he tell al Qaeda the Americans are over there?

Effectively, what "The New York Times" said is, here's a covert, secret means by which the United States...

(CROSSTALK)

JEFFREY: ... of America is tracking you down.

(CROSSTALK)

BLITZER: Very quickly.

PRESS: Very quickly.

"The New York Times" -- forget "The New York Times." You and I knew about this ahead of time. You know why? We read Ron Suskind's book. So, why all the attention at "The New York Times"? Politics, Wolf. That's all it is.

JEFFREY: We have a right...

PRESS: Direct...

JEFFREY: ... to keep our tactics...

PRESS: Deflect attention.

BLITZER: All right.

JEFFREY: ... secret from an enemy in time of war. Al Qaeda is our enemy...

PRESS: Print...

JEFFREY: ... in a congressionally authorized war.

PRESS: Print the truth. Print the truth. That's the job of "The New York Times."

JEFFREY: But do it with moral..

BLITZER: All right.

JEFFREY: ... responsibility.

BLITZER: We got to go.

Bill Press, Terry Jeffrey, good discussion. Thanks very much.

Coming up next: How safe are we? A better question may be, how safe do you think -- how safe do Americans think we are? It all depends on who you ask -- Bill Schneider looking into this.

And, later, one of President Bush's initiatives, baseball with a capital T -- today on the White House lawn.

Stay with us.

(COMMERCIAL BREAK)

BLITZER: Welcome back.

Federal authorities say Chicago and Miami were not in any immediate danger from terror suspects arrested in Florida last night. But many people in those cities and across the nation can't help but wonder today if they are at risk.

Let's bring in our senior political analyst, Bill Schneider -- Bill.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Wolf, ask people how safe you think you are, and you get one answer. Ask people how safe you think the country is, you get a different answer.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): Do Americans feel safe? That question has two answers. You heard both on the streets of Chicago yesterday, where the Sears Tower was identified as a potential target. On the one hand:

UNIDENTIFIED FEMALE: And Whether it's from outside or inside, I think something will happen.

SCHNEIDER: On the other hand:

UNIDENTIFIED FEMALE: It doesn't shake me, because I don't think there's safer places.

SCHNEIDER: Ask people whether they are worried about future terrorist attacks against the United States and more than three- quarters say they are. Ask them whether they are worried that they or their families will become victims of terrorism, and 57 percent say they're not.

In other words: I'm OK. You're not. How reassured do people feel when they hear public officials say:

MICHAEL BLOOMBERG (R), MAYOR OF NEW YORK: We are not going to leave the people of New York City unprotected.

SCHNEIDER: It depends on how well educated they are. Most Americans who did not go to college say they worry a great deal about terrorist attacks. Those who went to college worry less. Only a quarter of Americans with post-graduate degrees say they worry a great deal about terrorist attacks. They believe public officials who try to reassure them. Are they fools?

UNIDENTIFIED FEMALE: Honestly, I'm not sure any government can keep us safe. I mean, there's too many people out there trying to do what they want to do.

(END VIDEOTAPE)

SCHNEIDER: Most Americans believe something bad is likely to happen, but it's not likely to happen to me -- Wolf.

BLITZER: Bill, is the public, based on all the research that you have done, likely to feel outraged by disclosure from "The New York Times" now that the government has been going through international financial transactions, these money transfers?

SCHNEIDER: Well, Wolf, the best clue is the public's reaction to the reports that the government was wiretapping overseas calls by suspected terrorists without a court order. You know what? The public was divided over that.

BLITZER: And, so, you are saying the public might be divided over this disclosure as well?

SCHNEIDER: I would guess so.

BLITZER: All right, Bill, thanks very much. I assume we are going to be polling on this in the days and weeks to come -- Bill Schneider, part of the best political team on television -- CNN, America's campaign headquarters.

Here in Washington, the Bush administration defends its financial tracking program. Meantime, AT&T and the Justice Department in -- are in San Francisco, trying to get the federal court to dismiss a case involving its eavesdropping program. The class-action lawsuit alleges, AT&T gave the National Security Agency access to a vast amount of customer e-mail and phone calls.

Abbi Tatton standing by with the story -- Abbi.

TATTON: Wolf, the lawsuit was brought by the Electronic Frontier Foundation, on behalf of AT&T customers, against AT&T.

The director of national intelligence said that this suit could do grave damage to national security. And, today, lawyers for the Department of Justice were in court, arguing that the entire lawsuit needs to be dismissed on account that it relates to state secrets. This is an argument the government has made in similar lawsuits -- the judge also hearing today from representatives of news media outlets.

They want key documents in the case unsealed. Some of the documents out there are online, but they are heavily redacted. AT&T has not commented on this litigation. But they do say they respect customer privacy and operate within the law.

We have just heard, Wolf, that the hearing has wrapped up -- no decisions issued by the judge today -- Wolf.

BLITZER: Thank you, Abbi, for that.

On our "Political Radar" this Friday: The only Democrat in the Bush Cabinet is calling it quits. The transportation secretary, Norm Mineta, will resign next month. The White House says Mineta wasn't forced out, but he wants to pursue other challenges after five-and-a- half years on the job.

Mineta is one of three original members of the Bush Cabinet. He oversaw a huge buildup in transportation security after the 9/11 attacks. Mineta previously served as commerce secretary in the Clinton administration. And he served some 20 years as a United States congressman from California.

The Texas secretary of state is deciding whether to let Richard "Kinky" Freedom -- Friedman, that is -- use the name Kinky on the November ballot. The entertainer was declared eligible yesterday as an independent candidate for Texas governor. Independent candidate Carole Keeton Strayhorn qualified as well. She's trying to get keep -- get her nickname, Grandma, on the ballot -- the stage now set for a crowded fall contest to try to unseat the Republican incumbent governor, Rick Perry.

And President Bush kicked off the 2006 T-ball season on the White House lawn. The baseball fan in chief welcomed little league teams representing McGuire Air Force Base in New Jersey and the Naval submarine base in Groton, Connecticut.

Good luck to all those players.

Up next: Jack Cafferty irked with the latest White House- sanctioned snooping. The question of the hour: Should the government have access to American's financial records?

Stay with us for that.

And, later: Will North Korea launch a missile test? If it does, how might the U.S. respond? That's coming up right here in our next hour.

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

(COMMERCIAL BREAK)

BLITZER: We're getting a new tape in, courtesy of Al-Jazeera, from al Qaeda's number-two man.

Let's go to CNN headquarters in Atlanta. Fredricka Whitfield is monitoring.

This just coming in to CNN; is that right, Fred?

WHITFIELD: That's right, Wolf.

Just two weeks after the killing of al Qaeda in Iraq leader Abu Musab al-Zarqawi, now the deputy of al Qaeda overall, Ayman al- Zawahiri, is expressing in a new videotape that he grieves the loss of that leader of the terrorist group in Iraq.

He is describing the death of Zarqawi as a -- a great travesty. He hails the slain terrorist as a soldier, as a martyr, and as a hero.

And coming up later on in THE SITUATION ROOM, we will be reading in with our editor, senior editor of Arab affairs, Octavia Nasr, who will give us more in-depth, thoroughly, translation of exactly what's being said in this videotape.

BLITZER: And look at this videotape, Fred. It's very -- it has got the English subtitles. They got Ayman al-Zawahiri making the statement with the machine gun right behind him, and, then, in the background, Abu Musab al-Zarqawi, the now deceased, the dead leader of al Qaeda in Iraq.

Octavia Nasr, as you point out, is going to have more.

But you want to make another point?

WHITFIELD: Well, Zawahiri is saying that he deeply grieves the loss of al-Zarqawi. And, hopefully, we will get a better translation of what more, what will be said.

BLITZER: And it goes to show you how quickly they can turn around these tapes. He's hiding someplace, supposedly in a cave along the Afghan-Pakistan border, someplace in a tribal area. But they obviously managed to get a pretty sophisticated videotape out rather quickly.

Thanks very much, Fred, for that.

We are going to take a quick break -- Jack Cafferty right when we come back.

(COMMERCIAL BREAK)

BLITZER: Jack Cafferty is in New York with "The Cafferty File."

Hi, Jack.

CAFFERTY: Reports of another secret government program -- this time, the Treasury Department getting financial records from an international database and examining banking transactions involving thousands of Americans, all without a court order. That's the way they do things.

The administration says the program is limited, insists it's legal. The question is: Should the government have access to Americans' financial records without a court order?

Janie in Raleigh-Durham, North Carolina: "Jack, as a young girl, I read the book '1984.' It's frightening to see how much of that novel, which was fiction at the time, has become fact under the Bush administration. Orwell had a sinister view of our future. Today's news that involves the lack of privacy in connection with banking issues brings us one step closer to making '1984' a book about reality."

Mike in Florida: "Under the RICO Act, all money transfers over $10,000 have been monitored for several years now. Following the money trail is an important tool for the government to detect wrongdoing. I'm by no means a Bush administration fan, but I will give them this one."

Alex in Madison, Wisconsin: "No. Even if they're only half as incompetent as the credit reporting companies are, it still spells disaster. If you think it's fun trying to get incorrect information removed from your credit report, wait until the government starts arresting people based on incorrect financial information."

Curtis in Arkansas: "The president can break any law he wants, as long as it's in the name of terrorism? I know the American people are easily manipulated, but I expect more from the media. Elections are near. The GOP is in trouble. And here come the terror arrests and alerts."

Curtis in Portland, Maine: "Jack, isn't that what the IRS is for and isn't that enough access?"

Amy in Burlington, Kansas: "If by look at my financial records they can see what an actual balanced budget is supposed to look like, I'm all for it."

This weekend on "IN THE MONEY" we'll look at why the laws against illegal aliens in this country are virtually ignored by the government, why a lot of Americans have an aversion to taking a vacation -- I'm not one of those -- and the dangerous interest rate game being played by the Federal Reserve. "IN THE MONEY" airs Saturdays at 1:00, Sundays at 3:00 Eastern -- Wolf.

BLITZER: Jack, thanks very much.

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