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House Lawyer Asked to Preserve Foley Computer Records; Sr. Congressional Aide Says He Alerted Hastert's Office Two Years Ago About Foley; Bob Woodward Discusses New Book

Aired October 04, 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. 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 today's top stories.
Happening now, is another shoe going to drop in the Mark Foley scandal? A congressional aide calling it quits and there's new finger-pointing right now at the No. 1 Republican in the House of Representatives. It's 4 p.m. here in Washington. We're following all the political fallout over Foley's messages to teenage boys.

Also this hour, tough questions for Bob Woodward. Some key figures disputing his reporting about the president's handling of the war in Iraq. I'll ask the veteran journalist about his new book and his premise that the White House is in a state of denial.

And campaigner in chief or drag on his party? We have some brand new CNN poll numbers on the president and his influence on the battle for the U.S. Congress. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

Federal authorities appear to be closer today to a full scale criminal probe of former Congressman Mark Foley. They're trying to make sure that electronic messages Foley sent to former pages are preserved. Senior Justice Department official confirming a letter was sent to a lawyer for the House of Representatives asking that all computer files and other records in Foley's office be secured right away.

Also today, a new political casualty of the Foley scandal. Congressman Tom Reynolds chief of staff resigned, even as the New York Republican was campaigning with the first lady, Laura Bush, in Buffalo. Reynolds, the House Speaker Dennis Hastert and some other top Republicans are facing serious questions about whether they missed or ignored early signs of Foley's clearly inappropriate contacts with teenage boys. Our Mary Snow is cover the fallout of Congressman Reynolds. But first let's go up to Capitol Hill. Dana Bash has the latest -- Dana?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well Wolf, we have a significant development here this afternoon. And that is Kirk Fordham, who was Mark Foley's chief of staff formerly, but most recently the chief of staff to Tom Reynolds of New York. He resigned just a short while ago this afternoon. Now Fordham had been a middleman of sorts between Foley and the Republican leadership. And in this statement of resignation, he denies some allegations, an ABC report, for example that he did not do enough, even tried to stop the Republican leadership from fully investigating allegations of Foley's e-mails and other potential problems in his conduct.

Now he says in his statement that he is resigning because he believes he's become a political liability of sorts for his boss. Until recently, until today, Tom Reynolds of New York, specifically he'd become a problem in Reynolds re-election campaign.

Now that is the first political casualty from the Foley fallout. And it comes on a day where there are new rifts inside the Republican leadership over all this.

(BEGIN VIDEOTAPE)

BASH (voice-over): The No. 3 Republican in the House is the latest member of the leadership to distance himself from House Speaker Dennis Hastert. Congressman Roy Blunt told reporters back home in Missouri he would have handled the Foley matter differently had he known about it. "You have to be curious. You have to ask all the questions you can think of," Blunt said.

TOM DELAY (R), FORMER U.S. REPRESENTATIVE: When we know all the facts, then you might think about those kinds of things. But to jump on people not knowing the facts is irresponsible.

BASH: That, as Hastert continued his damage control effort, calling into a radio show and blaming political opponents for timing revelations about Foley to come close to the election.

REP. DENNIS HASTERT (R-IL), SPEAKER: Somebody held information for one or two years or, I don't know how long, to drop out on the last day of the legislative session right before a big election to change the topic out there.

BASH: Hastert aides are relieved that, so far, no GOP lawmaker has called for his resignation. But Republican anxiety over the ramifications of the Foley scandal is still palpable. GOP candidates are being bombarded with questions all over the country about Foley's conduct and how Republican leaders handled it, from Florida...

REP. JEFF MILLER (R), FLORIDA: The first e-mails that came out have been described as overly friendly. I would say they were probably a little more than that.

BASH: To Tennessee...

REP. MARSHA BLACKBURN (R), TENNESSEE: If anybody participated in a cover-up, whether it was a member or whether it was a staffer or whether it was somebody who was holding e-mails, that individual needs to resign immediately.

BASH: To California...

REP. BRIAN BILBRAY (R), CALIFORNIA: It's just like when someone of the cloth or a teacher violates the trust, a congressman violating his trust is an outrage.

(END VIDEOTAPE)

BASH: Meanwhile, the speaker got a show of support from a key conservative lawmaker today. Mike Pence of Indiana is a young ambitious Republican who heads a very powerful conservative caucus in the House. He spent several days, Wolf, feeling out the mood of fellow conservatives, rank and file in the conference and also out and about around the country. And he came out today and said while he does have reservations about the way the Republican leadership handled the Foley incident, he said specifically Speaker Dennis Hastert should not resign.

But Wolf, the anxiety here I can tell you is not going away. And one of the reasons for that, according to one Republican lawmaker I spoke to today, is because there is anxiety over rumors that they're hearing that there could be another congressman that could get caught up in a sex scandal. Now, we need to make it clear that we don't have independent verification of that. But this Republican lawmaker said that that is a main reason why the GOP jitters are continuing, because these rumors continue to fly, Wolf.

BLITZER: All right Dana, stand by.

ANNOUNCER: This is CNN Breaking News.

BLITZER: The "Associated Press" moving potentially a very significant story right now. A senior congressional aide telling the "Associated Press" that the House Speaker Dennis Hastert's office two years ago was warned about the conduct of former Congressman Mark Foley, The conduct of Foley with teenage pages. According to Kirk Fordham, who was the chief of staff to Tom Reynolds, Kirk Fordham resigned today in the aftermath of this. Kirk Fordham also being for some 10 years a top aide to Congressman Foley.

Fordham telling the "Associated Press" that when he was told about Foley's inappropriate behavior towards pages, he had more than one conversation, a direct quote with senior staff of the highest level of the House of Representatives asking them to intervene. The conversations took place long before the e-mail surfaced, inappropriate e-mail between former Congressman Foley and a teenage page who had been working on the Hill.

Let's go back to Dana Bash on the Hill. Dana, this is a very significant development. If Kirk Fordham did in fact warn people, the staff of the House Speaker some two years ago about Mark Foley's inappropriate conduct with congressional pages, that ratchets up this story to a whole new level.

BASH: To a whole new level, for sure, if that's true because what we've heard in terms of the timeline of this is that nobody in the Republican -- no Republican lawmaker certainly in the Republican leadership knew about any improper conduct until this spring and the Republican head of the page board went to him at the end of 2005.

But in putting this in context of what I was just talking about, Kirk Fordham has been under fire in the last day or so for allegations by some. There was a report on ABC's Web site today that he actually tried to stop the Republican leadership from looking into Foley's conduct in a proper way.

So what you're seeing now, apparently -- and again this is just coming into us from the "Associated Press," is Kirk Fordham speaking out and defending himself saying that is simply not the case, that he didn't try to stop it and going a lot further, according to the AP, saying that he actually tried to get in touch with the Republican leadership and give them warnings about this. This obviously could potentially change the story in a dramatic way, Wolf.

BLITZER: All just to be precise, Fordham telling the "Associated Press" he informed the office of the House Speaker, it doesn't necessarily say that he spoke directly with the House Speaker. All right, stand by, Dana, I want to continue on this story.

Mary Snow is up in New York state. A key U.S. Congressman involved in all of this, Tom Reynolds of western New York, up in Buffalo. He's playing a significant role in all of this as well. And Mary, you're watching this part of the story.

MARY SNOW, CNN CORRESPONDENT: Yes, Wolf. And shortly before word came of Kirk Fordham's resignation, Congressman Tom Reynolds was at a campaign event with First Lady Laura Bush. There was no mention of the scandal.

Now the chief of staff to Tom Reynolds, Kirk Fordham issued a statement saying "It is clear the Democrats are intent on making me a political issue in my boss' race and I will not let them do so." He also went on to say, "When I sought to help Congressman Foley and his family when his shocking secrets were being revealed, I did so as a friend of my former boss, not as Congressman Reynolds' chief of staff."

Now Fordham had previously worked for Foley for 10 years. He recently said he had reached out to the Foley family. He said he did so as a good friend. Now on Friday before Foley resigned, a spokesman for ABC News says that Fordham contacted ABC to try and prevent Foley's text messages from being made public in exchange for the exclusive story of Foley's resignation. ABC declined.

We were unable to reach Fordham directly. He told the Associated Press that he disputed ABC's account, saying he was trying to keep only the most graphic messages from the public for the sake of Foley's family. Now this as Congressman Tom Reynolds finds himself on the fence.

Today, as I mentioned, he got help from first lady Laura Bush in his re-election campaign in Buffalo. He has been questioned about whether he did enough after learning last Spring about what he described as an overly friendly e-mail exchange between Foley and a former page, a teenage boy.

Now Reynolds says he told House Speaker Dennis Hastert last Spring about this. Hastert says he doesn't recall the conversation, but he doesn't deny it. Reynolds is facing a tough re-election race against Democratic businessman Jack Davis.

We'll have more in the next hour, including questions about a contributions Foley made to the National Republican Congressional Committee, which Reynolds chairs, Wolf.

BLITZER: That would be about $100,000 that is raising all sorts of red flags. Mary, thanks very much. Mary Snow and Dana Bash are part of the best political team on television.

I was in Buffalo only yesterday and that race is getting very, very close. Tom Reynolds was not necessarily going to have a hard time. He's having a very hard time right now. More on this story coming up.

Also lots more on the breaking news that we're following right now. The Associated Press reporting that this former aide to Tom Reynolds, Kirk Fordham having suggested that as far back as two years ago, he was informing members of the staff of the House speaker about the inappropriate behavior of Congressman Foley with teenage pages on Capitol Hill.

Two years ago this issue came up. Fordham insisting that he had, quote, more than one conversation with senior staff at the highest level of the House of Representatives, asking them to intervene.

We're watching this story and we'll, of course, update you as we get more information. Potentially a very significant development.

There's also new information today about a red flag raised about Mark Foley's behavior months ago. A Washington watchdog group gave copies of Foley's electronic messages with former congressional page to the FBI back in July, but government officials tell CNN the group did not provide enough information to pursue a case.

The group, Citizens for Responsibility and Ethics in Government, has questioned whether there was a cover-up of Foley's conduct. The group has asked the Justice Department's inspector general to investigate why the FBI didn't take action this past Summer.

Let's check in with Zain Verjee. She's watching several other important stories making news, Zain.

ZAIN VERJEE, CNN ANCHOR: Wolf, a federal appeals court in Ohio says the Bush administration may continue conducting surveillance without a warrant while appealing a judge's ruling that the program is unconstitutional. President Bush insists that the program's necessary to fight the war on terror. Critics say it flies in the face of constitutional boundaries on free speech, privacy and executive powers.

New developments in the aftermath of Monday's deadly shooting rampage at a Pennsylvania Amish school. The condition of one of the five survivors has been upgraded to serious. Three girls are now listed in critical condition. A deputy coroner says the scene after the shootings that killed five other young girls was, in a word, horrible, with blood and bullet-riddled bodies. The teacher says that she sensed trouble when Charles Roberts wouldn't look her in the eye before he began his siege.

British Prime Minister Tony Blair says he embraces a panel of experts' conclusion that the Irish Republican Army is abandoning its terrorist underpinnings. The so-called Independent Monitoring Commission published findings that the I.R.A. has shut down key violence-related units, opting instead for nonviolent politics. Now the report itself concludes that the I.R.A. no longer believes that it can overthrow Northern Ireland by force.

Iran and its president remain in a nuclear standoff with the west. European Union negotiator Javier Solana says endless hours of talks have produced no progress towards suspension of Iran's nuclear program. Iran's president Mahmoud Ahmadinejad warns the west that sanctions are not going to stop his government from enriching Uranium. Solana said today that if the talks end, the stalemate should be handed over to the U.N. Security Council.

And Secretary of State Condoleezza Rice vows that the U.S. is going to redouble its efforts to help the Palestinians. Rice made the declaration after a meeting today with the Palestinian President Mahmoud Abbas in Ramallah on the West Bank. Rice is in the region, hoping to revive the dormant peace efforts there. The visit is the third leg of a Middle East tour aimed essentially at bolstering moderate Arab leaders, Wolf.

BLITZER: Lots of news unfolding today. Zain, thank you very much.

Let's check in with Jack Cafferty. He is in New York. He has got the Cafferty File, Jack.

JACK CAFFERTY, CNN ANCHOR: At a time when security is needed more than ever, the Iraqi government is taking a brigade of up to 700 police off the streets of Baghdad. Why? Because members of the Iraqi police are suspected of conspiring with the death squads. This follows a mass kidnapping earlier this week in Baghdad. The top U.S. military spokesman in Iraq says the policemen will have to be retrained and recertified. It's long been a concern that Shiite death squads have infiltrated the police. Apparently they have.

Meanwhile, the killing continues. Three bombs went off in a shopping district in a mostly Christian neighborhood in Baghdad today, killing at least 12 people and wounding 70 more. In Ramadi, insurgents set off a suicide truck bomb at the Iraqi army headquarters.

And the U.S. military says that two more American soldiers were killed, bringing the total number of American troops killed this month to 15. Today is October 4th. The total number of American military personnel killed since the start of the Iraq war, 2,729.

Here's the question: What does it mean if death squads have infiltrated the Iraqi police? E-mail your thoughts to CaffertyFile@CNN.com or go to CNN.com/CaffertyFile, Wolf.

BLITZER: Pretty scary stuff over there Jack. Thank you very much.

And coming up, we'll have more on the violence in Iraq. I'll speak with our man in Baghdad, Michael Ware. That's coming up in the next hour.

Plus the Foley scandal and the impact on the campaign trail. Two political pros, James Carville and Bay Buchanan, they're standing by to join us in today's Strategy Session.

But up next, some tough, serious questions for Bob Woodward. The White House slamming parts of his new controversial book. The veteran journalist, the author of "State of Denial," standing by to join us live, right here in THE SITUATION ROOM. That's coming up next.

(COMMERCIAL BREAK)

BLITZER: Bob Woodward's new book offers a gripping portrayal of the Bush administration, dysfunctional and in denial about the war in Iraq. Some key figures have come forward to dispute or to question parts of Bob Woodward's account of the troubled relationship, miscommunications, misleading information.

Joining us now the veteran "Washington Post" journalist, the author Bob Woodward. Thanks Bob for coming in.

BOB WOODWARD, "THE WASHINGTON POST": Thank you.

BLITZER: Before we get to this Mark Foley scandal, you've been around Washington, I've been around Washington a long time, does this story have the kind of legs that -- I'm not suggesting like Watergate, when you were investigating Watergate with Carl Bernstein -- but what is your take on it?

WOODWARD: I've done no original reporting. But of course, the question in something like this, when there's misbehavior, particularly something that's so sensitive as these allegations against him, the question is the old Nixon question: what did he know, and when did he know it? Not Foley, he's resigned. But the leadership in the House, and as Ben Bradley (ph) says, the truth will emerge, probably slowly.

BLITZER: And now we're getting drips and drabs everyday. This new development today, this breaking news, the A.P. -- that you've heard reporting, we've reported it here, that this former aide to Tom Reynolds of Buffalo, also a former aide to Mark Foley, Kirk Fordham, saying he notified the speaker's office two years ago about the inappropriate contact between Foley and congressional pages.

So that moves it up to a new level, but you're right, with the FBI investigating, with all these other investigations, you know what happens, they start subpoenaing individuals, witnesses, and you never know where this thing winds up.

Let's talk about "State of Denial", the number one bestseller, your new book. Some people are coming forward and, I don't know if they're denying, but they're raising questions about some of the treatment, some of the scenes you depict.

WOODWARD: But that actually has evaporated over time. But go through the specifics...

BLITZER: Well, let's go through it, because our Larry King interviewed the first President Bush, 41. And he was asked about your suggestion in there that he was finding Condoleezza Rice, the National Security Advisor, now the Secretary of State, a disappointment.

Let's listen to what the first President Bush told Larry.

WOODWARD: Sure.

(BEGIN VIDEO CLIP)

LARRY KING, CNN ANCHOR: How about when you're -- like in the Woodward book, they quote you as not liking Condoleezza Rice, or you didn't think she was up to par.

GEORGE H.W. BUSH, FORMER PRESIDENT OF THE UNITED STATES OF AMERICA: Well, if that's a quote, it's a lie. I can't make it any more clearer than that. I like Condoleezza Rice. She worked for me. I have great respect for Condoleezza. But I can't believe Woodward -- I haven't read the book -- that he actually said I said that.

KING: I think someone says you said it. I don't have it in front of me now. But it's quoted as saying you didn't think she was equal to the task.

BUSH: Well, that's crazy. I talked to her yesterday, I guess there were some hurt feelings, the day before she went to this trip.

KING: She was hurt?

BUSH: Well -- she called me and said don't -- there's something in this book.

KING: That's what it is.

BUSH: But she didn't say what it was, that I didn't like her. She said there's remarks in there attributed to you. I don't believe it. And I said, well, I don't know what they are.

KING: The passage from the book is "even the president's father had confided that he was unhappy with Rice. 'Condi is a disappointment, isn't she?... She's not up to the job.'"

(END VIDEO CLIP)

WOODWARD: And he said that to Brent Scowcroft, who was his National Security Advisor. And I reported that out thoroughly, and, as you see, there's a kind of vagueness in the, well, I don't know what's said in the book. I like her.

Well, I didn't say he didn't like her. I said that he told Brent Scowcroft, who's one of his closer friends and aides... BLITZER: His former National Security Advisor.

WOODWARD: Exactly... That Condi, well, "she's a disappointment, isn't she?"

BLITZER: All right. So you're not going to dispute that part.

WOODWARD: Well, I am.

BLITZER: I mean, you're not going to back away from what you wrote on that part. That's what I meant to say.

By the way, the full interview with the first President Bush will be tomorrow night on "LARRY KING LIVE".

There's another clip I want to play for you, speaking of Brent Scowcroft from this interview that Larry did with the first President Bush. Listen to this.

WOODWARD: Sure.

(BEGIN VIDEO CLIP)

KING: Brent Scowcroft is quoted in the Woodward book, in "State of Denial" as describing you -- this is now Brent describing you as "anguished" and "tormented" by the Iraq war and its aftermath.

BUSH: Is that a question? Or...

KING: Yes.

BUSH: And what's the question?

KING: Were you anguished and tormented?

BUSH: No, not anguished and tormented.

KING: So the quote by Brent is either Brent's wrong...

BUSH: Well, it's the quote by Brent, because I've heard, before I came down here where it talks about, you know, talks about that David Thoran (ph) said to somebody, you know, it's all kind of secondhand. I don't think Woodward is quoting. I don't know. I haven't read the book.

KING: But you haven't talked to Brent about it?

BUSH: No.

(END VIDEO CLIP)

BLITZER: Here in the book you wrote, "most distressing to Scowcroft was to see his good friend and former leader Bush senior, 41, as Scowcroft called him, in agony, 'anguished' and 'tormented' by the war and what happened afterward. It was terrible." WOODWARD: You saw the silence when Larry King asked him that question. And how could you not be anguished and tormented about the war in Iraq? I think everyone in this country is, I mean, it's going on for three and half years, and it was supposed to be easy. And here is the man who is the father to the president of the United States who made that decision.

BLITZER: You know, some of the people who have come forward, they haven't really disputed what you have written, but they're clearly in an awkward, embarrassed position because some of the words you attribute to them aren't necessarily flattering to the current President Bush, like Henry Kissinger.

I interviewed him Sunday on "LATE EDITION", and I asked him about a passage in the book where you suggest that he felt that this President Bush, 43, as he's called, didn't really have a system of national security policy, decision making, Kissinger sensed wildliness (ph) everywhere in Iraq.

And he basically said, that is not my view. But I take it you're not backing away from that?

WOODWARD: Well, of course not. And I reported on it, in fact, what I say in the book -- and again, it is the precision that Kissinger felt, that in the White House, they did not have a system of examining the downsides of decisions that had already been made. And I think anybody who looks at it would realize that that's the case. There's nothing stunning about that.

BLITZER: What was stunning to a lot of us who read the book and have been following this, was the portrayal of Kissinger as a major outside, informal, but serious advisor to the president and the vice president. That was news.

WOODWARD: Well, and I think Kissinger -- I don't know...

BLITZER: He didn't dispute it. He said to me, basically what you wrote, that whenever he's in town, every six weeks or so, he drops by.

WOODWARD: Right. But that amounts to -- and he has said elsewhere 15 to 20 times, at least, meeting with the president. As you know, Henry Kissinger has very strong views. And it's quite clear his hardline approach in all of this, which is victory is the only meaningful exit strategy, is essentially a strategy that Bush and Cheney adopted last year.

BLITZER: Abbie Karr (ph). The whole scene in here showing that there were several top officials who thought it was a good time to get rid of the Defense Secretary Donald Rumsfeld, Andy Card, Condoleezza Rice, among others, including Laura Bush.

I want you to listen to what our Andy Card told our John Roberts earlier in the week.

Listen to this. WOODWARD: Sure.

(BEGIN VIDEO CLIP)

ANDY CARD, FORMER WHITE HOUSE CHIEF OF STAFF: I think it was a little bit of a misrepresentation that there was a campaign to remove Don Rumsfeld. That's not what I was looking to mount. And we were trying not to have a campaign. But I did offer quiet counsel to the president.

(END VIDEO CLIP)

BLITZER: What do you make of that?

WOODWARD: OK. I've talked to Andy Card since the book has been out. And he affirms all of the quotes in the book. As the book reports, he made at least three efforts with the president to get Rumsfeld replaced and offered a specific replacement, namely Jim Baker, the former secretary of state.

He affirms, contrary to what the White House said, that he talked with Laura Bush about it. He encouraged the speech writer Michael Gerson to go to the president and say that Rumsfeld should be replaced. Now that's at least six times over 18 months.

I know the deep feelings that Andy Card had about this, and they're quoted in the book which he has affirmed now. In fairness to him, he says that's not a campaign. When somebody does that much over 18 months, to me that's a campaign. People can judge whether it's a campaign or not. He felt very strongly about it.

BLITZER: As you know, there was also this sensitive moment before 9/11, on July 10, when George Tenet, the then CIA director, came over to the White House with Cofer Black, one of his top aides over there involved in intelligence gather, a veteran CIA officer.

And they wanted to convey to Condoleezza Rice, then the National Security Advisor, how urgent the Osama bin Laden, al Qaeda threat was to the United States. And the picture we get is Condoleezza Rice listened to them, but sort of ignored it.

Is that a fair assessment?

WOODWARD: Well, they felt they got the brush-off. Now, when I -- when this book was published, the first reaction was no, there was no such meeting. Do you recall that? It couldn't have happened.

And then they said, yes, there was a meeting. And they have affirmed that Tenet and Cofer Black, who was the Chief of Counterterrorism for the CIA -- now this is two months before 9/11, got in the car at CIA headquarters, started racing toward the White House. Tenet calls from the car and says, I have to see you right away.

How many times does that happen? They then present this information -- and now they've revealed, which I did not know, that Rice then asked Tenet, in fact, ordered him to give the briefing to Don Rumsfeld and John Ashcroft, who was then attorney general. I know of no other incident where she requested or ordered that a briefing be given to those two officials.

So obviously, there was a seriousness to it. Tenet and Black wanted to move faster. It's also reasonable, her position, which is reflected in the book; namely, they didn't come in and say, hey, there's going to be a terrorist attack in 60 days; this is how they're going to do it, and these are their targets. They did...

BLITZER: But they wanted to raise some alarm bells?

WOODWARD: Well, raise some alarm bells. And the idea was to get a covert action plan going immediately in Afghanistan to try to go get Osama bin Laden and his people.

We now know, from 9/11, afterwards, the CIA was well poised to do this.

BLITZER: We're getting out of time, but I want to raise this issue.

The Saudis are denying two points that I found fascinating in the book that I did not know.

WOODWARD: Yes.

BLITZER: One suggestion that Prince Bandar, who was then the Saudi ambassador, the longtime...

WOODWARD: Right.

BLITZER: ... Saudi ambassador -- effectively, in 2004, the Saudis agreed to increase the export of oil, so that the price per barrel would go down, and potentially help President Bush get reelected. And the Saudis are saying they would never do anything like that.

WOODWARD: OK. But I had that in the book two years ago, "Plan of Attack." And there was lots of rumbling about it. And it turns out that Prince Bandar visited the White House between when I was working on that and when the book came out, and came out publicly. And you can find clips in which he announced that they are going to keep the price of oil down...

BLITZER: Well, they're suggesting...

WOODWARD: ... as much as possible.

BLITZER: They're suggesting to prevent global recession, not to help Bush get reelected.

WOODWARD: Come on. Get real.

BLITZER: I'm just telling you...

WOODWARD: OK.

(CROSSTALK)

BLITZER: ... what the Saudis are saying.

(CROSSTALK)

(LAUGHTER)

BLITZER: And one final question.

When President Bush became the first U.S. president to endorse a two-state solution to the Middle East crisis, Israel and a new state of Palestine, what you report, and I did not know -- and fascinating -- is that this was the result, effectively, of an ultimatum that the Saudis delivered to President Bush: You better do this. And you better do it right now.

WOODWARD: Or we're not going to have relations with you, the Saudis said.

Now, that has been reported before. But I got the memos and the notes of the meetings. And they're very detailed. And you see how Bandar...

BLITZER: You actually saw those documents?

WOODWARD: You see how Bandar lays down an argument. And, of course, the president then eventually came out for a Palestinian state.

But I have found, like in the case of Andy Card, he goes around and says I'm an excellent reporter. He has no argument with me. And, as he has acknowledged, we interviewed a lot, actually, for seven hours, 207 pages of transcript. That's lots of detail. And the other major characters and people have been interviewed in the same way, or their aides.

BLITZER: You have done a lot of work. I know you have.

"State of Denial," Bob Woodward's new bestseller.

Thanks very much for coming in.

WOODWARD: Thank you.

BLITZER: Congratulations.

WOODWARD: Thanks.

(END VIDEOTAPE)

BLITZER: And up next: President Bush out on the campaign trail. Is he helping or hurting the candidates he's stumping for? Our brand- new poll numbers provide some clues.

And later: the fallout from Mark Foley. Will the scandal that is rocking Washington change votes across the country? I will ask James Carville and Bay Buchanan. They're standing by live for today's "Strategy Session."

Stay with us.

(COMMERCIAL BREAK)

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

In Arizona today, a new attempt by President Bush to show Republicans are tough on illegal immigration -- he signed a homeland security funding bill that includes money for hundreds of miles of fencing along the border with Mexico.

Mr. Bush also attended a fund-raiser for Arizona Congressman Rick Renzi. And he renewed his charge that Democrats are soft on terror. The president is pressing hot-button issues as he wraps up a three-day campaign swing.

But the voters are responding in ways he may not necessarily want.

Let's bring in our senior political analyst, Bill Schneider. He is watching this story for us.

There are some brand-new poll numbers we're getting, Bill.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Yes, Wolf.

You know, you're a Republican candidate this year. President Bush says he's coming to your district. Question: Is that good news or bad news?

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): If it's Monday, this must be Reno.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: And Dean Heller is the right person for the United States Congress.

(CHEERING AND APPLAUSE)

SCHNEIDER: Tuesday, hello, Stockton.

BUSH: I'm proud to be here on behalf of Richard Pombo.

SCHNEIDER: Republican candidates had better consider this question: Is Bush a drag? He certainly wasn't in 2002, when the president barnstormed the country, and Republicans unexpectedly gained House seats.

But, this year, most Americans say they would be more likely to vote for a candidate who opposes President Bush than one who supports him. So,, Bush is a drag, right? It could be more complicated.

Bush clearly rallies the Republican base. Eighty-four percent of Republicans say they would be more likely to vote for a candidate who supports the president. But he also rallies the Democratic base. Ninety-two percent of Democrats say they would be more likely to vote for an anti-Bush candidate.

PATRICK MURPHY (D), PENNSYLVANIA CONGRESSIONAL CANDIDATE: I'm Patrick Murphy.

SCHNEIDER: Democrats all over the country are trying to make President Bush the issue.

MURPHY: Whether it's the war in Iraq, whether it's stem cell research, privatizing Social Security, the things that President Bush wants to happen, my opponent goes along.

SCHNEIDER: Republicans believe their base can overwhelm the Democratic base, because Republicans have the edge in money and organization.

What about swing voters? Bad news for Republicans. By a huge margin, independents say they prefer a Bush opponent to a Bush supporter.

Republicans have to reassure themselves that, if 2006 is the usual low turnout midterm election, most independents won't bother to vote.

(END VIDEOTAPE)

SCHNEIDER: Rallying the base works only if swing voters don't count -- Wolf.

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

I want to recap the breaking news we have been following this hour. A senior congressional aide who worked once for Congressman Mark Foley, more recently for Congressman Tom Reynolds of Western New York, both Republicans, now suggesting that he alerted the House speaker, Dennis Hastert's office some two years ago about inappropriate contacts between former Congressman Foley and congressional pages. We're watching the story -- lots more coming up on it, our "Strategy Session" as well.

Also, how is this scandal playing out in the air wars?

Much more of our coverage right after this.

(COMMERCIAL BREAK)

BLITZER: In the wake of the Mark Foley scandal, there's new -- new emphasis in the battle for Congress on protecting children. New ads are on our "Political Radar" this Wednesday.

Check this one out from Virginia. (BEGIN VIDEO CLIP, AD)

NARRATOR: While Thelma Drake is preoccupied with partisan politics in Washington, who is looking out for our children?

As a father of two, Phil Kellam knows protecting our children is more difficult than ever. That's why, in Congress, Phil Kellam will stand with parents.

(END VIDEO CLIP)

BLITZER: Democratic challenger Phil Kellam raising questions about Republican incumbent Thelma Drake and her commitment to protecting youngsters.

This ad comes a day after this issue was spotlighted in a House race in Minnesota. Democratic challenger Patty Wetterling emphasizing her credentials as an advocate for children in a race against Republican Michele Bachmann. Wetterling now is scheduled to give the response to President Bush's radio address on Saturday, and focus on child protection, in response to the Foley scandal.

Senator John McCain also weighing in on the Foley scandal -- the Arizona Republican calling for a group of former senators to lead an investigation into how the House of Representatives handled the matter. McCain says, "People who are credible need to quickly reach conclusions about who may have dropped the ball, and offer serious recommendations to try and fix the problem."

And remember, for the latest campaign news at any time, you can check out our political ticker. Simply go to CNN.com/ticker.

Coming up: the latest bombshell in the Mark Foley scandal, a new report that a senior congressional aide told the House speaker's office about Foley's questionable contact with teenage pages two years ago. Will this force Dennis Hastert to step down as speaker?

James Carville and Bay Buchanan, they're standing by for our "Strategy Session."

Also, the Foley fallout and the battle for Congress, and another apparent burden for Republicans -- that would be President Bush.

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

(COMMERCIAL BREAK)

BLITZER: Repercussions are ringing throughout the U.S. Capitol in the growing scandal surrounding the former Florida congressman, Mark Foley, and his computer messages with House pages.

A top congressional aide has just resigned. And the House speaker, Dennis Hastert, finds himself in the crosshairs. Should any more congressional heads roll? Will they?

Joining us now in our "Strategy Session," our CNN political analyst and Democratic strategist James Carville, along with our CNN political analyst Bay Buchanan, the president of American Cause.

This is turning out to be one of these, I guess, unexploded land mines, if you will.

What do you make of what's going on right now, James?

JAMES CARVILLE, CNN POLITICAL ANALYST: I -- what I honestly make of it is, Speaker Hastert is not going to last the week.

And it's a thing called the rule of holes. When you have dug yourself a hole, the first thing is to stop digging. And every day, it -- the hole is getting deeper and deeper. So, I think they're going to, like, take the shovel.

(CROSSTALK)

BLITZER: Do you think he will resign before the election?

CARVILLE: Oh, by the -- I think he's going to resign by the end of the week. I don't think there's any doubt about it. I mean, they got to get the shovel out the man's hand.

BLITZER: But, even as we speak, this Kirk Fordham, a former aide to Tom Reynolds, is now suggesting that he alerted the speaker's office two years ago about this Mark Foley problem.

BAY BUCHANAN, CNN POLITICAL ANALYST: Wolf, if that's true, I think the speaker will be gone by the end of the day.

I mean, he can't sustain this now. There are Republicans already talking on the Hill, talking amongst themselves, what they should do. Many of them do believe he should step down. Others are remaining loyal.

I think this kind of revelation tells them he has to go. He has to go now. And I think the speaker himself will realize that.

BLITZER: Even if someone on his staff was informed two years ago, and he necessarily -- perhaps maybe he didn't know anything about it.

CARVILLE: Right.

BLITZER: He -- what I hear you saying is, he's the guy responsible, and he should bite the bullet?

BUCHANAN: He has to.

There's no -- he should bite the bullet because of what he did know -- and that we're certain he knew -- six months ago, at least, which is that there was a predator in his midst, amongst his colleagues, who were preying on high school boys.

You have to step forward. You have to stop that. Americans, all Americans, Republicans in particular, expect that of their leaders. And, so, that, in itself, says, he must go. (CROSSTALK)

BLITZER: And she's not a Democrat speaking.

CARVILLE: No. No.

(CROSSTALK)

BLITZER: She's a good conservative.

(CROSSTALK)

CARVILLE: I think Bay and I -- my friend Senator Alan Simpson, a Republican from Wyoming, once said, in Washington, you go from being the toast of the town to toast.

Speaker Hastert is toast.

BUCHANAN: Yes.

CARVILLE: And that's just what it is.

I mean, it's not -- I don't think this is -- and I think Bay, everybody, understands. I think the Republicans in Congress are saying, Mr. Speaker, our majority is in serious jeopardy.

BLITZER: But, James, it wasn't just the speaker who knew about this.

CARVILLE: Right.

BLITZER: It was the House majority leader, John Boehner, was...

CARVILLE: Right.

BLITZER: ... told months ago that there was a problem.

Tom Reynolds...

(CROSSTALK)

BLITZER: ... who chairs the Republican Congressional Campaign Committee...

CARVILLE: Right.

BLITZER: ... he was told about this. Should they go as well?

CARVILLE: You know, I think what the -- from just being -- trying to being -- help -- being an analyst here, without being too much of a partisan, I think what these guys are going to try to do is say, look, we have served up the biggest head that we can do. Let's investigate this and focus on issues that really matter to people.

Do I think it is going to work? Maybe not. But I think their strategy is going to be, the biggest guy has to go to try to stop this hemorrhaging.

And hemorrhaging, they are, right now.

BLITZER: Well, what do you think about -- and you -- I know you think the speaker should resign...

BUCHANAN: Definitely.

BLITZER: ... by the end of today.

BUCHANAN: Yes.

BLITZER: That's what you said. He gives him at least a week to make that decision.

BUCHANAN: A week is one week closer to the election.

BLITZER: But what about the other...

(CROSSTALK)

BLITZER: ... the other Republican leaders, who knew about at least some inappropriate...

BUCHANAN: I think...

BLITZER: ... contact, "Send me a picture," and that e-mail?

BUCHANAN: I think every single one of those congressmen who knew the basic contents of the e-mail that said "Send me a picture," that alone was a -- as I said before, that tells you there's a predator.

They had to do everything in their power to stop the predator. They have to put the children first and stop the man.

What did they do? I understand, in fairness to Boehner, he said he never knew the contents. He knew there was some kind of e-mail. And he went to the speaker. And he said to the speaker: Look, is there a problem here?

And the speaker said: I have resolved this. I have turned this over. It has been resolved.

Well, to me, that would have been doing enough, because he checked it out. He didn't know the contents.

BLITZER: I want to ask you about the...

BUCHANAN: If he knew the contents, then, he, too has to go.

BLITZER: ... the impact among the conservative base in a moment.

But what about the suggestion that Foley, who was a very ardent campaign...

CARVILLE: Right. BLITZER: ... fund-raiser, gave the Republican Congressional Committee...

CARVILLE: Right.

BLITZER: ... $100,000 over the past several months? Is that a factor in this, do you suspect?

CARVILLE: Sure, it's going to be.

I mean, you know, obviously, the Democrats are going to make this an issue. And why wouldn't they? Also, Foley has $2.8 million in his campaign account. I guarantee you that the Democrats are going to make it an issue if he tries to turn it over to Republicans. I seriously doubt if he will. I don't know what the law is, whether he can use it for his legal fees or not.

But, yes, the -- and the fact that Foley was the chairman of the subcommittee on exploited children. Yes, the Democrats -- and a very legitimate issue, by the way. You see this guy in the Virginia 2nd is using it. And it's not like it's unfair.

BLITZER: What is it going to do to the Republican turnout, the Republican base, this issue, come November 7?

BUCHANAN: It's not good news, Wolf.

I mean, I can't tell you that they are going to be excited because their leaders allowed a predator to remain in the Congress.

Now -- but the key here is, if they take quick action, if the other Republicans say: "Look, we take care of our own. We recognize this was wrong. We recognize our speaker, a good man, made a bad judgment call. We're moving him aside. We're bringing in fresh faces, where the -- you know, and we are going to move ahead," then, they have a chance.

But, if they wait a week or two, until the polls tell them they have to, then they don't look nothing like -- any better than the speaker himself, living by the polls, rather than doing by their natural instinct, as men and women who care about children.

BLITZER: All right.

CARVILLE: It is clear Hastert is not going to last the week. I don't think he will go this afternoon. But I think that people are going to see him right now. And I think he understands the position...

(CROSSTALK)

BLITZER: Who goes -- who tells him that? Who...

CARVILLE: I don't -- I'm not one of them.

But I suspect that... (LAUGHTER)

CARVILLE: You know what I mean? That -- you know, people from the White House, people from the Senate leadership. I mean, I have no idea. People from K Street.

BUCHANAN: Congressmen who would like to remain as congressmen.

CARVILLE: Congressmen -- people -- yes, people in these difficult districts.

(LAUGHTER)

CARVILLE: Somebody is going to say, I'm getting...

(CROSSTALK)

BUCHANAN: There's no question there's people in Congress...

BLITZER: All right.

BUCHANAN: ... who are polling this, talking to the others. And there's somebody representing the majority.

BLITZER: We have got to leave it there.

CARVILLE: Thank you, Wolf.

BLITZER: James and Bay, thanks very much. We will watch this story. We're not going to leave it for very long.

Remember, James Carville and Bay Buchanan are part of the best political team on television.

Up next: Jack Cafferty -- he is back with your e-mails. Hundreds of Iraqi police are off the streets and under suspicion. And Jack wants to know, what does it mean if death squads are now infiltrating the Iraqi police force?

And, later: He's never at a loss for words, and he pulls absolutely no punches. I will go live with comic and commentator Bill Maher. That's in our next hour. That's coming up. This is an interview you're going to want to see.

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

(COMMERCIAL BREAK)

BLITZER: Let's check back with Jack Cafferty. He has got "The Cafferty File" -- Jack.

CAFFERTY: Wolf, thank you.

The question is: What does it mean if death squads are infiltrating the Iraqi police?

(COUGHING)

CAFFERTY: Excuse me

That's not good.

What is good is, a guy named Jerry is writing to us from Bagram Air Force Base in Afghanistan. He says this: "It means we have again failed. The Iraqi police are primarily Shiite Muslims, the majority that was under the thumb and brutalized by the Sunni Muslim regime of Saddam Hussein.

Iraqi police assisting in the death squads means that, despite Bush's claims to the contrary, civil war is raging in Iraq, and it won't stop any time soon. Removing police from the streets and starting over with them means we are going to be there much longer."

Susan in Florida writes: "It means there are no surprises in countries which claim or pretend to be democracies. Corruption abounds. Sound familiar?"

Joe in Las Cruces, New Mexico: "It means we wandered unprepared into quicksand to help people who are now placing weights on our shoulders. Cut and run is no longer an option. Now it is sink or swim. Think how awful it would be if the mission was not accomplished."

James in San Diego: "Jack, it means that 'As they stand up, we will stand down' is not a strategy. It's a recipe for continuing the butchery, hoping for a less and less likely miracle to happen."

Paul in Kentucky: "It means this is the direct result of Paul Bremer's lunacy, which put hundreds of thousands of armed Iraqis on the streets, when he fired the Iraqi army and police. It also means the thesis of Bob Woodward's book is 100 percent correct."

And Bill in Michigan writes: "Simple, Jack. Death squads in Iraq made up of Iraqi police, no less, means this peace process has as much of a chance at working as does a fund-raiser for Mark Foley."

(LAUGHTER)

CAFFERTY: Wolf.

BLITZER: All right, Jack, I will see you in a few moments.

Just want to remind our viewers, we're following the breaking news out of Capitol Hill. We have been following it now for the past hour -- a senior congressional aide saying that he alerted the office of the House speaker, Dennis Hastert, two years ago about Congressman, now former Congressman Mark Foley's improper contacts with congressional pages -- fast-moving developments on the Hill. We are going to go there in a few moments.

Also, still to come: another wild and woolly day on Wall Street and another all-time high. When we come back, what is that that's pushing the stock market up and up and up? And will it stay there? Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Another record day on Wall Street -- the Dow Jones industrial average closed today at its highest point ever. And the S&P 500 and the NASDAQ also surged. So, what is going on?

CNN's Ali Velshi is joining us now to fill us in -- Ali.

(STOCK MARKET REPORT)

BLITZER: Ali, thanks very much.

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