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The Situation Room

War Against the Drug Cartels/Clinton's Mission to Mexico/Cartels Torture and Kill in U.S./GOP Slams Geithner "Power Grab"

Aired March 24, 2009 - 17:00   ET

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

WOLF BLITZER, HOST: To our viewers, you're in THE SITUATION ROOM.

Happening now, Mexico's drug cartels bring torture and killings to U.S. communities far from the border. The violence is at a level right now never seen before.

How is the Obama administration fighting back?

He's already in the hot seat, but the Treasury secretary, Timothy Geithner, wants broad new authority to head-off another meltdown. Republicans are accusing him of a power grab.

And now playing on Air Force One -- the president's personal song list. We're going to tell you which artists he's listening to.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

A dramatic new effort by the Obama administration to combat the drug cartels which have killed thousands of people in Mexico and are now bringing brutal torture and murder to many corners of the United States. Hundreds more federal agents, officers, intelligence analysts will deploy along the border. There will be high tech surveillance of southbound traffic to check the flow of guns and money. And the U.S. will provide $700 million in aid for aircraft and technology to help Mexico fight the drug lords.

Listen to the Homeland Security secretary today, Janet Napolitano.

(BEGIN VIDEO CLIP)

JANET NAPOLITANO, HOMELAND SECURITY SECRETARY: Our goal is twofold. One is to provide assistance to the government of Mexico to break up these huge cartels which are funneling tonnage quantities of illegal drugs into our country on a regular basis and are conducting this war of violence within Mexico that has resulted in over 6,000 homicides, over 550 of which were assassinations of law enforcement and public official personnel.

The second is to guard against an increase in violence in the United States as a result of the actions undertaken in Mexico. (END VIDEO CLIP)

BLITZER: The secretary of State, Hillary Clinton, heads to Mexico tomorrow to deliver a message of U.S. support.

Our foreign affairs correspondent, Jill Dougherty, has the story -- Jill?

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: Wolf, on her third mission outside of the United States as secretary of State, Hillary Clinton takes with her to Mexico specific proposals on how to improve relations, accept responsibility on both sides of the border and fight narcotics traffickers.

(BEGIN VIDEOTAPE)

DOUGHERTY (voice-over): Secretary of State Hillary Clinton will say the U.S. plans to crack down on weapons and money flowing south, fuelling the drug cartels' war with Mexico -- a show of support for Mexico's president, Felipe Calderon, who says the U.S. bears some blame as what he calls: "the biggest consumer of drugs and biggest manufacturers of arms in the world." President Obama acknowledges it's a two-way street. His homeland security chief says it's time the U.S. takes responsibility.

NAPOLITANO: Who is supplying the big buck loads of -- I mean we're talking carloads of cash and mega weapons going into Mexico.

DOUGHERTY: A new Pentagon report warns: "Any descent by Mexico into chaos would demand an American response based on the serious implications for homeland security."

To keep the drug war from spreading, the Obama administration will propose moving U.S. federal agents, equipment and resources to the border; more intelligence sharing and military cooperation with Mexico; and tighter legal enforcement to go after drug trafficking money and money laundering.

Clinton also was trying to prevent a trade war -- with Mexico slapping tariffs on U.S. exports affecting some $2.4 billion in goods across 40 states -- payback for Congress banning some Mexican trucks from using U.S. highways.

(END VIDEO TAPE)

DOUGHERTY: Clinton is one of three cabinet secretaries who will fly to Mexico before President Obama visits there next month. One issue that may not be as hot button as usual, and that's illegal immigration. The numbers are going down as the U.S. economy worsens -- Wolf.

BLITZER: Jill Dougherty, thank you.

Jill is going to be traveling with the secretary to Mexico.

The Homeland Security secretary, Janet Napolitano, who will follow Hillary Clinton to Mexico, concedes that the drug war is reaching into this country.

(BEGIN VIDEO CLIP)

NAPOLITANO: We've seen some increase in violence between -- primarily between cartels themselves -- kidnappings, for example, in the Phoenix area and the Houston area. But what we want to do is to better secure the border area against further violence and make it a safe and secure area where, of course, the rule of law is upheld and enforced.

(END VIDEO CLIP)

BLITZER: But Mexico's drug cartels are already bringing horrific violence to cities and wealthy suburbs far from the border.

CNN's Samantha Hayes has the story.

(BEGIN VIDEOTAPE)

SAMANTHA HAYES, CNN CORRESPONDENT (voice-over): The live grenade tossed into this club near McAllen, Texas just a few weeks ago didn't go off. But federal agents who investigated matched the weapon to other grenades used in violent attacks in Mexico.

WILLIAM NEWELL, ATF SPECIAL AGENT: Their purpose is to come to the United States and take over. And the way they take over is very violent. We're seeing signs of people being tortured and brutally beaten all across the United States, not just along the Southwest border.

HAYES: In an affluent suburb of Birmingham, Alabama last August, five people were tortured and murdered inside this apartment in a dispute over missing drug money.

GREGORY BORLAND, DEA SPECIAL AGENT: What's new about it is it's -- it's at a level that we've never seen before. And quite, frankly, the violence is -- is just shocking.

HAYES: Also, alarming is the level of organization. Mexican cartel activity has been reported in places all across the country, from Miami to such unlikely destinations as Boise, Idaho and Anchorage, Alaska.

BORLAND: It's almost like the legitimate commercial world. There's every distribution model out there.

HAYES (on camera): It's corporate.

BORLAND: It is. It's extremely corporate.

HAYES (voice-over): Federal authorities say it works like this. The drugs are moved in bulk across the Mexican border to hub cities like Atlanta, where it's broken down in warehouses, shipped to other cities, then broken down again, where it's sold on the street. The cash goes back to the hub cities, where it's packaged and shipped back to cartel leaders in Mexico. RODNEY BENSON, DEA SPECIAL AGENT: As we put the pressure on, as availability decreases, as purity decreases, we're seeing continued violence as a result of it. And we're seeing people wanting their money paid on time and things like that.

HAYES: And when it's not paid on time, the cartels crack down on their own people. Last year, investigators found a man bound and tortured in the basement of this suburban Atlanta home -- startling neighbors.

BORLAND: It's -- it's among us. People -- people make themselves feel better by saying that's not really a part of my world. And, you know, one of my jobs is to say, no, it is a part of your world.

(END VIDEO TAPE)

HAYES: Wolf, in the process of doing research for this story, we talked to federal agents who were based all over the country. And many of them reiterated to us that they are getting more cooperation than before. They're working closer than ever before with the Mexican government.

But as you can see, this extend well beyond the Mexican border. And these Mexican drug cartels are well established in major cities in this country, with tentacles, really, that are going into smaller cities all across the country.

BLITZER: That's pretty terrifying.

Samantha Hayes, thanks very much for that report.

Let's bring back Jack.

He's got The Cafferty File -- Jack.

CAFFERTY: That's where the market for illegal drugs is...

BLITZER: That's amazing.

CAFFERTY: ...right here, right?

With the first few days of spring, there seems to be some sparks out there of hope on the economic front. A new Gallup Poll shows optimism about our economy at a 20 month high. Now, it's still relatively low. Only 27 percent of Americans say the economy is getting better. Sixty-seven percent say it's getting worse. But it's better than anything we've seen since July of 2007.

The groups with the biggest increase in optimism, not surprisingly, include Republicans and people making $90,000 a year or more.

Another silver lining the last few weeks has been the stock market. The Dow was up almost 500 points yesterday. The S&P 500 coming off its biggest two week gain since 1938. One investor told Bloomberg News a new bull market has begun and: "You have to be careful not to miss the opportunity." Another strategist calls it a "hell of a rally."

There's more. Existing home sales showed an unexpected increase in February, seen by some as a sign that the real estate market may be bottoming. The average price down more than 15 percent from the year before. But those lower prices, economists feel, might start to lure the bargain hunters in.

And if the housing market bottoms and the Treasury plan to get credit flowing at the major banks again works, well, we might start to see the beginnings of something good. That would mean that small businesses could get loans, mortgages would become more available and maybe Americans who've been holding off will finally work up the nerve to walk into that car dealership and plunk down a few dollars for a new set of wheels.

Here's the question -- are you feeling more optimistic about the economy these days?

Go to CNN.com/caffertyfile and post a comment on my blog.

It's kind of a natural thing, I guess, people's spirits turn up in springtime. But there are a couple of little signs around that maybe we're beginning to get some movement.

BLITZER: Yes. The market went up 500 points -- about 1000 in the last two or three weeks. It went down a little bit today, but, you know, we'll see.

CAFFERTY: No tree grows to the sky.

BLITZER: Yes. As they say, what goes up...

CAFFERTY: Does not stay up.

(LAUGHTER)

BLITZER: ...usually comes down.

CAFFERTY: That's right.

BLITZER: All right, Jack.

Thank you.

Republicans accusing the Treasury secretary, Timothy Geithner, of an unprecedented power grab. And some even go a step further.

(BEGIN VIDEO CLIP)

REP. MIKE PENCE (R), INDIANA: Well, Wolf, by way of full disclosure, I didn't think -- I didn't think Timothy Geithner should have been confirmed to begin with.

(END VIDEO CLIP)

BLITZER: But does Congressman Mike Pence think Geithner should resign?

I'll ask him.

Plus, a movie about Hillary Clinton is at the center of a U.S. Supreme Court battle with potentially huge fallout for the next presidential election.

And President Obama adds hip-hop to Air Force One. We're going to find out which artists are being added to the world's most exclusive play list.

(COMMERCIAL BREAK)

BLITZER: We're going to get to a stunning request to Congress from the Treasury secretary, Tim Geithner. He's been taking heat for his handling of the economic crisis right now. But he's also asking for some broad new authority on what's going on.

Let's go to Brian Todd.

He's working this story for us -- Brian, what are you seeing?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, right now, the federal government has the authority to take over troubled banks. Now, when a bank's capital gets down to about 2 percent of its assets, the government can step in instead of letting it get to zero. The FDIC can step in and arrange a sale to a healthy bank or it can pay depositors directly for their deposit accounts up to about the insured limit. They've already done that about 20 times this year alone.

But the Obama team has been frustrated that it couldn't do that with other companies -- outside companies like AIG. So it wants to take action.

(BEGIN VIDEOTAPE)

TODD (voice-over): Determined to prevent another AIG from spiraling out of control, scrambling to close gaps in regulation, the Obama team is seeking extraordinary new power -- the authority to seize companies like AIG if they're about to fail. Fed Chairman Ben Bernanke tells Congress if the government had had that power back in September, when AIG started to meltdown and threatened to bring the entire financial system down with it...

BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: This bonus issue would not have arisen because all the contracts could have been adjusted by the conservator.

TODD: Senior administration officials tell CNN with this new power, the government could impose its own limits on executive pay, could limit risky investments like those credit default swaps that got AIG in trouble, could make loans to the company and could sell or buy off its assets. This move stems from the frustration of officials like Bernanke, Treasury Secretary Tim Geithner and his predecessor, Henry Paulson, that they had no legal authority to: "Wind down AIG on their own."

But critics like the libertarian Cato Institute say this new idea gives too much power to the government and...

DAN MITCHELL, CATO INSTITUTE: You're going to be getting the same kind of what's known as moral hazard and imprudent decision-making because people know that if you roll the dice and you win, you collect all the profits. If you roll all the dice and you lose, the taxpayers pick up the tab.

(END VIDEO TAPE)

TODD: But those in favor of this idea say there's little alternative, when it comes to huge diversified companies like AIG, whose failure could have led to a worldwide economic collapse. A Treasury official says this would only be done in extreme cases. And supporters say it's better to at least keep these companies running than to allow them to go bankrupt and let private creditors to come in and hold out for every last dollar -- Wolf.

BLITZER: Brian, what are the chances of Congress giving the administration this power?

TODD: Well, House Speaker Nancy Pelosi said this afternoon that she supports this plan. But some key House leaders on both sides are wondering openly how it's going to work.

Republican leader John Boehner and Democratic Majority Leader Steny Hoyer both said today this is a lot of money and a lot of power in the hands of one individual. That person is probably going to be some kind of a receiver. They said they need to look at this more carefully. They might be able to do that soon, because a Treasury official told me the new legislation may make it to Congress as early as tomorrow.

BLITZER: Brian, thank you.

Not only are the Republicans opposed to Geithner's proposal, some say he shouldn't even be the Treasury secretary in the first place.

(BEGIN VIDEOTAPE)

BLITZER: And joining us now from Capitol Hill, Republican Congressman Mike Pence of Indiana. Congressman, what's wrong, if anything, you believe that the administration wants the Treasury Department to have the same kind of authority, together with the Federal Reserve, over non-bank financial institutions -- like AIG, for example -- they want the same kind of regulation that the FDIC has over banks. What's wrong, if anything, with that?

REP. MIKE PENCE (R), INDIANA

Well, I think the concern many House Republicans have of what would amount to, really, an extraordinary power grab by the federal government is what -- you know, what in -- what institutions are we really talking about? I mean there -- what we understand, at least so far -- and I want to give the administration's proposal a fair shake here. But what we understand so far is that the administration is looking for the authority to come in in a preemptive way and -- and be able to take over non-banking institutions, hedge funds and the like when there's a threat of systemic risk. We just -- you know, before you grant that kind of expansive authority to the Treasury Department, we're going to need to understand what the parameters of that are so that we protect the -- essentially, the freedom and independence of the free market itself, private property, but also, you know, that we protect the American taxpayer from more bailouts, more expansion of the federal government's role in the private sector.

BLITZER: What the Treasury secretary, Tim Geithner, and the chairman of the Federal Reserve, Ben Bernanke, what they argue is if the federal government would have had that authority back, let's say, in September of last year, this whole AIG disaster could have been avoided. They could have forced AIG, for example, to go into some sort of receivership and then had an orderly -- orderly dispersal of that -- of that institution without causing economic panic around the world.

PENCE: Well, you know, I don't question their sincerity. But frankly, a reorganization bankruptcy was always available to AIG. I understand a number of members of the board of directors of AIG today, Wolf, actually believe that they would be better off today -- and I know the American taxpayer would certainly be better off today -- if they'd have actually gone through an orderly bankruptcy instead of this massive government bailout. It was $700 billion last fall. It's expanded into the automotive industry. Now we have a new expansion that the Geithner plan contemplates. And I just -- I'm someone who believes the existing institutions were there in our federal bankruptcy courts. And before we extend new authority, create new institutions on Capitol Hill (ph), we really need to understand what the need is, what the parameters are and how we can ensure the ongoing vitality of our free market system is not compromised.

BLITZER: Did the massive deregulation of the 1990s -- often supported, usually supported by Republicans like former Senator Phil Gramm, among others -- looking back on that deregulation of the financial institutions, was that a mistake?

PENCE: Well, I think some of it may have been a mistake, although it's hard to look at the Sarbanes-Oxley legislation as deregulation. I mean there was a -- there were instances under Republican leadership where you saw a large increase in regulation in boardrooms around America. But there's no question that some of these creative new instruments, the derivative swaps and the like, should have been regulated as securities. We need some new reasonable regulation, but we don't need just some massive new bailout, a massive new expansion of government authority without considerable forethought on what that's going to mean to taxpayers and what that's going to mean to the dynamism of our free market system in the 21st century.

BLITZER: Do you have confidence in Timothy Geithner, the Treasury secretary?

PENCE: Well, you know, Wolf, by way of full disclosure, I didn't think -- I didn't think Timothy Geithner should have been confirmed to begin with. I think it's sent the wrong message to the American people that someone who had not paid their taxes on several instances was put in charge of the department that's governed with collecting taxes. But, look, he's the Treasury secretary now. I'm not calling for his resignation at this point in time. But we are going to turn a very critical eye toward any effort by this administration to further expand the size and scope of government into what is -- with all the troubles we've gone through -- is still the strongest and most dynamic economic model on the planet.

BLITZER: Mike Pence of Indiana, Republican.

Thanks very much for joining us.

PENCE: Thank you, Wolf.

(END VIDEO TAPE)

BLITZER: America's largest foreign lender is certainly helping to keep the country afloat. But now China is getting nervous.

What happens if Beijing stops buying U.S. Treasuries?

Plus, a celebrity chef is tapped to cook the ultimate power dinner -- an eight course meal for the G20 summit.

(COMMERCIAL BREAK)

BLITZER: Zain Verjee is monitoring some other important stories incoming into THE SITUATION ROOM right now -- Zain, what's going on?

VERJEE: Wolf, Israel's Labor Party is joining the coalition government led by the Likud Party's Benjamin Netanyahu. The proposed agreement calls for Labor leader Ehud Barack to remain Israel's defense minister. It also broadens Netanyahu's bloc, made up mostly of right-wing parties. He's having a really hard time courting the moderates and now has less than two weeks to complete his coalition.

Al Qaeda's number two leader says Sudan's president is reaping what he sowed. In a taped message, Ayman Al-Zawahiri talks about the international arrest warrant issued for President Omar al-Bashir, accusing him of crimes against humanity in Sudan's Darfur region. Zawahiri says Bashir brought it upon himself by pandering to the U.S.

For the first time, the health insurance industry says it will stop charging higher premiums for sick people if all Americans are required to get coverage. The offer comes in a letter from America's health insurance plans and the Blue Cross and Blue Shield Association to key senators. The industry wants to avoid the creation of a competing government insurance plan.

And previous G20 summit dinners have been criticized as too lavish. So the British celebrity chef, Jamie Oliver, is being put in charge of the opening night dinner for next week's G20 summit in London. Oliver is known as a budget gourmet. He and a team of young apprentices will prepare an eight course meal -- Wolf, you'll like that -- for world leaders, including President Obama, at Number 10 Downing Street.

That's a good idea for top chef -- get a bunch of people, apprentices, to cook for world leaders -- Wolf.

BLITZER: Yes. I'd like to have one of those meals.

VERJEE: Yes, me neither.

BLITZER: By the way, I was just interviewed for that magazine, Jamie's magazine, about my cooking abilities.

VERJEE: Oh, really?

BLITZER: Which are rather limited.

VERJEE: What were they?

BLITZER: Rather limited, Zain.

(LAUGHTER)

BLITZER: But they did interview me and you'll be interested in seeing that interview once it's published. I spent...

VERJEE: You prefer eating than cooking.

BLITZER: Yes. Much -- it's much better.

VERJEE: Me, too.

BLITZER: Thanks, Zain.

Populist push back -- the anger at AIG keeps growing.

Could America's sour mood last into the next election campaign?

Paul Begala and Alex Castellanos -- they're standing by.

Plus, it's a scathing anti-Hillary Clinton film that was released during the campaign season.

But was it really just a political attack ad?

The U.S. Supreme Court will decide.

And President Obama picks the music on Air Force One. We're going to tell you which artists are on his personalized play list.

(COMMERCIAL BREAK)

BLITZER: To our viewers, you're in THE SITUATION ROOM. Happening now, one funeral leads to many after a suicide bomber targets Kurdish mourners in Northern Iraq. At least 23 people died. Many more were injured, raising new fears of new tensions between Iraq's Kurds and Iraq's Arabs.

Also, the openly gay Congressman Barney Frank calling the U.S. Supreme Court justice Antonin Scalia a homophobe. We're looking at what prompted the remark and we're getting reaction.

And North Korea on the verge of a controversial missile launch. A potential crisis for the Obama administration facing few options and huge ramifications.

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

All that coming up.

Let's get to the continuing anger over AIG. Let's go to our senior political analyst Bill Schneider.

Bill, the furor over AIG bonuses, it's certainly likely to become a campaign issue, isn't it?

BILL SCHNEIDER, CNN SENIOR POLITICAL ANALYST: It certainly is. It already is this year.

(BEGIN VIDEOTAPE)

SCHNEIDER: When nearly 60% of Americans claim to be outraged, you've got an issue. That's how the public feels about the AIG bonuses. It's populism, pure and simple. Us versus them.

The issue is showing up in this year's campaigns. Three democrats are vying to become governor of Virginia. In the span of one hour, all three democrats released online petitions demanding that AIG executives give back the money. The issue also is front and center in this month's special election in New York to fill the house seat vacated by Hillary Clinton's successor. In New York, the republican candidate is making an issue of the AIG bonuses.

UNIDENTIFIED FEMALE: He supported a loophole letting AIG executives keep their bonuses with our money. AIG and Murphy. He's one of them.

SCHNEIDER: Us versus them. President Obama insists he's with us, not with them.

PRES. BARACK OBAMA (D), UNITED STATES: I am outraged, too.

SCHNEIDER: Republicans charge that the loophole allowing the bonuses is in his economic stimulus bill.

REP. JOHN BOEHNER (R), MINORITY LEADER: If President Obama had not signed the bill, AIG executives wouldn't be getting $165 million in bonuses funded by American taxpayers. SCHNEIDER: The white house is proposing a partnership with private investors to rescue the banks. But it got a skeptical reception from a democrat on the house floor.

UNIDENTIFIED MALE: It involves 1,000 times as much money as AIG executives received in bonuses. And it would make the American people 1,000 times as angry.

SCHNEIDER: A partnership with Wall Street? That could lead people to wonder, is the president with us or with them?

(END VIDEOTAPE)

SCHNEIDER: Populism is neither liberal nor conservative. It's anti-elitist. Democrats attack Wall Street, republicans attack Washington. But the wave of public anger is real and both parties are trying to exploit it.

BLITZER: Good point, Bill Schneider. Thanks very much.

Let's get to our democratic strategist, the CNN political contributor, Paul Begala and our republican strategist, the CNN political contributor Alex Castellanos.

Paul, there's a downside to this fomenting of this populism for the president, isn't there?

PAUL BEGALA, DEMOCRATIC STRATEGIST: Well yes. I don't know that it's fomenting. I think it's authentic. I think Bill's piece was very interesting. I think quite accurate. But I do think the roots of this are much deeper. Ordinary working folks in America, with the exception of the Clinton years in the '90s have gone 30 years without a pay raise while productivity has doubled. Where has that extra money gone? Workers have been more productive but they aren't getting paid more. It's gone CEOs and big executives. So we need a rebalancing.

I think what President Obama wants to do is rebalance why lifting working people up rather than cramming business people down. He's in the sort of positive sunny side of populism where he wants to take folks like he himself. When he was a child he was on food stamps. And give folks a leg up so we empower people from the bottom up rather than punishing from the top down.

BLITZER: The republicans have a phrase what they call that, don't they, Alex?

Class warfare.

ALEX CASTELLANOS, REPUBLICAN STRATEGIST: It is class warfare. But, you know, I'm sorry Paul hasn't seen any change in America's prosperity in the last 30 years and Americans don't have better technologies, iphones, better health care, larger homes. I think most people have seen the internet, a little bit of progress for the last 30 years. It's not always reflected in salaries. But, no, class warfare is a dangerous -- it's the double-edge sword. One of the things I think the challenge tonight for President Obama is he appears very comfortable with the Harvard elite. He's been there. He's comfortable with the Chicago streets, the lower class. What he has not been very comfortable with, like someone I think Paul worked for, Bill Clinton, middle class. Has he been part of America's middle class? Does he feel their pain like Clinton does? He's a little detached and removed, almost Reagan-like in that sense.

BLITZER: Let's get to some I-reports. We asked our viewers to send us these video questions, what they would like to ask the president of the United States if they were in the white house for that news conference later tonight. Jim Van Matre of San Diego says he voted for President Obama. He asked this.

JIM VAN MATRE, I-REPORTER: Mr. President, if you could stop the torture of our enemies with just one signature, how is it that you can't stop the torture of our own lesbian and gay citizens who can't get married in this country.

BLITZER: How should the president answer that kind of question, Paul?

BEGALA: I think torture is a little bit hot. I do think it's an equal treatment. I think where the president is I don't speak for him. But my own view is the word marriage is usually a religious ceremony. But the civil unions, the civil rights have to be the same. And they're not right now. Right now, gay Americans are discriminated against in a thousand different ways and that discrimination needs to end. I think President Obama is more progressive on this than perhaps Mr. Bush was. And I think that's a legitimate point. It's unfair to say torture. I remember my friend Kinky Freedman running for governor in Texas. People asked him if he's for gay marriage. He said I'm for it. They should be just as miserable as we are. So there's other people that view marriage as a form of torture. I'm not one of them because my wife sometimes watches this broadcast.

BLITZER: Another question, Alex, we got from Robin Savage of California who voted for President Obama.

ROBIN SAVAGE, I-REPORTER: Do you think our country is prepared for the increase in violence because I feel like with the drug lords coming across the border and our border is really not being enforced the way they should be, you know, I think we're all at risk here in our country?

BLITZER: How should the president answer a question like that, Alex?

CASTELLANOS: The president has a tremendous political opportunity tonight and I think to the republicans' disadvantage and to the democrats' advantage. If the president tonight emphasizes what he's actually doing to secure our borders, which is a pretty impressive program. He's putting more border agents, more money into border security, if he does all of those things that democrats say attack republicans for and attack John McCain for during the campaign, he's going to really solidify himself in the middle of the political spectrum and on the right and win a lot of friends across the aisle. Friends he needs to get his economic program through. So, yes, I think you're going to see the president tonight and in the next few weeks respond very positively to this question.

BLITZER: We'll leave it on that note. Paul and Alex, thanks very much.

Tomorrow, by the way, the National Urban League releases its annual report on the state of black America. We'd like to hear from you. What is your assessment of the state of black America today? Submit your video comments or questions to ireport.com/situationroom. Tomorrow, watch my interview with Mark Muriel, the president of the National Urban League. We'll get his assessment. The National Urban League's assessment of the state of black America.

A legitimate documentary or simply a political attack ad?

UNIDENTIFIED FEMALE: We should stand up and say we are Americans, and we have a right to disagree with any administration.

BLITZER: That movie now at the center of the Supreme Court battle and the ruling could have a huge impact on the next race for the white house.

Plus, Kanye West on Air Force One, at least his music. What other artists is President Obama adding to his in-flight playlist?

Plus, a judge leaps off the bench and tackles a domestic violence suspect. It's a real life courtroom drama all caught on tape. We'll share it with you right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: A critical film about Hillary Clinton released during the campaign season. A court ruled it was little more than a political attack ad restricted by campaign finance laws. Now the nation's highest court is going to be deciding that issue. Let's go to CNN's Mary Snow. She's here working the story.

There's a lot at stake in this decision by the U.S. Supreme Court.

MARY SNOW, CNN CORRESPONDENT: Very wide ranging ramifications. If there was any doubt, the Supreme Court justice Stephen Breyer noted today, "Hillary, the Movie" was not a political comedy. What's being put to the test here is Congress' right to regulate campaign finance versus free speech.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: Who is Hillary Clinton?

SNOW: It's called "Hillary the Movie." It's now the star of the Supreme Court battle. Hillary Clinton herself has nothing to do with it. This 90-minute film made by a conservative group, Citizens United, features outspoken Clinton critics. UNIDENTIFIED MALE: Hillary is really the closest thing we have in America to a European socialist.

SNOW: The film ran in theaters but Citizens United also wanted to run TV ads and air the film on cable TV video on demand while Mrs. Clinton was running for president in 2008. The Federal Elections Commission challenged it running during the primary season because they refused to disclose corporate sponsors.

DAVID BOSSIE, PRODUCER, "HILLARY, THE MOVIE": We should not have to have a burden of saying to the American people, this is a political ad when, in fact, our ad did not say vote for or vote against Hillary Clinton.

SNOW: The FEC ruled the underlying message was Hillary Clinton is unfit to be president. Its lawyers argued the ads should be subject to disclosure laws or voters will be unable to know who is funding the ads. A three-judge panel agreed. The Supreme Court now is examining a case that is built on the McCain/Feingold act of 2002 which made revisions to campaign finance rules.

LARRY NOBLE, FORMER FEC GENERAL COUNSEL: It's about money, it's about speech and it's about the ability of corporations to influence elections through the direct use of the treasury money.

SNOW: The consequences --

JEFFREY TOOBIN, CNN SR. LEGAL ANALYST: If Citizens United wins this case it will mean independent groups, like Citizens United, will be able to do more negative campaigning, more advertising, more campaign activity closer to elections than they've been able to do in recent years.

(END VIDEOTAPE)

SNOW: Now another question that was raised, what about other forms of media like the internet or electronic books? And an attorney representing the government today suggested that additional media could be subject to future regulation. And that, of course, can open up a whole new host of questions.

BLITZER: We'll see how the U.S. Supreme Court decides on this matter in the coming weeks. Thanks very much, Mary.

The U.S. dollar certainly has been the world's reserve currency for more than half a century. That's how the world does much of its business and how it prices commodities like oil. But China right now, the largest holder of U.S. dollar assets, wants to change all of that. At least potentially. Let's go to Tom Foreman. He's got some specific details.

Tom, what's going on?

TOM FOREMAN, CNN CORRESPONDENT: Well, Wolf, really what we're talking about here is a two-part problem if you look around the world. First, you look at countries like China and others that have a lot of money invested in the United States and they want to make sure those investments are solid. Look at some of the investment levels here. Brazil, $133 billion roughly. Something like that. The United Kingdom here, $124 billion. The third largest, oddly enough is oil exporting countries. $186 billion. Who are we talking about? It's quite a long list, Ecuador, Bahrain, Saudi Arabia, on it goes, many of them Central American countries. They're heavily invested in the United States as well. Japan over here. A big investor. $634 billion. But the biggest one of all is the one you mentioned first, Wolf. China, $739 million invested in the United States. They are worried that if the United States starts printing more money to solve our economic problems, the value of their dollars will go down. That's one of the reasons they are sounding this alarm and saying maybe the world should have a different standard for trade instead of the dollar. Wolf?

BLITZER: So is that effort likely to succeed based on what we know?

FOREMAN: There's a U.N. council that is also going to recommend doing this. Russia would like to see it happen. It doesn't look like it's going to happen precisely because of what you said Wolf because this has lasted for more than 60 years as the standard. When you buy oil, do big commercial commodity deals around the world you base it all on the standard of the dollar at the time. Another way of measuring it, though. They call it the Big Mac index. It's a good way to look at how the dollar is holding up. A Big Mac in the United States about $3.54. If you go to the European area, the same Big Mac costs about $4.38. If you go over here to Russia, you'll find a Big Mac for $1.73. That's a pretty good deal. Australia, it's $2.19 and in China, up here in the corner, the Big Mac about $1.83. This index or any other index you want to look at, Wolf, will give you some idea of how the dollar is holding up against other currencies. It's done pretty well for more than 60 years and will take a lot to knock the world off of this standard. Big Macs not withstanding.

BLITZER: Thank you Tom Foreman.

Caught on camera, a judge leaps off the bench and tackles a domestic violence suspect. We have the video. We'll show you what happened.

Plus, NASA wants the public to help name a new part of the space station. But did Comedy Central's Steven Colbert manage to rig the online poll?

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

(COMMERCIAL BREAK)

BLITZER: I want our viewers to get ready to watch this dramatic video in Broward County, Florida. We are getting the video of a courtroom brawl where, get this, the judge tackles an unruly domestic violence suspect. Our internet reporter Abbi Tatton has this for us.

Abbi, walk us there through what happened. ABBI TATTON, CNN INTERNET REPORTER: Wolf this is quite amazing video. From 11:30 this morning from this Florida courtroom, I want you to look at two people before I press play on this. Watch these people carefully. Watch the judge himself, one is the circuit county judge Ian Richards behind his bench. The other is the suspect dressed in black in the far left of your screen. The suspect is before the judge on a domestic violence charge.

Watch as I push play. The police officer approaches the suspect and seems to take off hand cuffs. Now watch him go all the way around his desk, going after a woman who had just testified against him. You can see that's the judge just let down. I'm going to play that part again for you so you can see what the judge then does coming up over the bench, all the way across, trying to come to the rescue of the woman who in a statement from the Broward County courthouse says the suspect was pummeling her with his fists, going after her after she just testified against him.

As the video goes on, you see a bailiff arrives, two police officers trying to break up this brawl. The suspect was back in custody within a couple of minutes. Not just on a domestic violence charge, now also resisting arrest and domestic battery. You can see the judge then returning to his bench. The right way, not over the top, around the rest of the courtroom there. Returning to his bench there after breaking up the brawl. Wolf?

BLITZER: All right. I suspect the suspect is going to be in deep, deep trouble.

TATTON: Three charges now.

BLITZER: What do you think?

JACK CAFFERTY, CNN CORRESPONDENT: Why would they take the hand can you haves off a domestic violence suspect in the courtroom where the woman he is accused of committing the violence against just finished testifying against him? Who made that decision?

BLITZER: Maybe those are the rules, I don't know.

CAFFERTY: Those are not the rules. If they are, they will change them after this.

The question, are you feeling more optimistic about the economy these days?

Greg writes, "I'm cautiously optimistic. I believe it is teetering. Could go either way. A small jump in home sales and a little creep up in the stock market doesn't mean much these days."

Steve in Illinois writes, "Sold some stuff on e-bay, had a good job interview, stocks went up 500 points on a Monday. How could one not feel better about that?"

Jason in Hawaii, "I can tell from the massive hordes of irritated tourists in the grocery store by my house that the economy is not as bad as the media is saying."

Melissa says, "The stock market appears to have bottomed out and is now hovering in and around the same numbers. The housing market experienced a boom in comparison to three months ago. No massive layoffs have been announced so far this month. That's an important observation. We were giving those numbers daily. I'm feeling optimistic we'll see a turn around by tend of this year."

Jeff in Minnesota, "Don't get ahead of yourself, Jack. The market is up for now, it is likely to be a yo-yo. Companies will begin to report lousy financial results. I think there are surprises out there to catch people for the next year."

Anthony in New Jersey, "I'm feeling more confident we dodged a depression by this administration's swift and apparent successful initial strategies."

Josh in Chicago writes, "Hi, Jack, I'm feeling more optimistic about the economy or I will feel more optimistic after I get a job."

If you didn't see your email here, you can go to my blog at CNN.com/CaffertyFile and look for yours there among hundreds of others.

BLITZER: Can't be too much in the market, the numbers went up 500 points yesterday. Down 115 today.

CAFFERTY: The significance of the market move over the last two weeks is the S&P 500 is up more than it has been in a two-week period since 1938. That's not insignificant.

BLITZER: I think you are right. Jack, thank you.

Criticism of the U.S. Supreme Court justice from a powerful member of Congress. Barney Frank is calling Antonin Scalia a homophobe.

Plus, President Obama requests his favorite music on Air Force One including Kanye West.

(COMMERCIAL BREAK)

BLITZER: Consider it a perk of the job. Most flights offer in- flight music, air force one gives the president a custom playlist. CNN entertainment correspondent Kareen Wynter has details.

Kareen?

KAREEN WYNTER, CNN ENTERTAINMENT CORRESPONDENT: Hi, Wolf. Who says you can't mix business with pleasure, even if you are the president of the United States.

(BEGIN VIDEOTAPE)

WYNTER: Air Force One will soon be flying high with the new makeover courtesy of this California production company. TENA CLARK, CEO, DMI MUSIC: You are not just pleasing the president, but everybody else that may be on there as well.

WYNTER: A tall order for DMI Music CEO Tena Clark who has been programming musical playlists for presidents for more than a decade.

CLARK: One time we got a call from somebody that was with air force one that said President Clinton, he has been listening to the same music and wanted to know if we could change the playlist. We also during the Bush administration got a call from someone, a senior on Dick Cheney's staff, he had noticed there was a piece of music that he liked and that it was not listed in the playlist.

WYNTER: A playlist based on the president's personal taste with six channels covering various genres music. The playlist is assembled in Dublin, Ireland encoded and sent to Andrews Air Force Base in Maryland. So what will Barack Obama and the first family be rocking out to? Along with Gavin Rossdale, artists like Beyonce, Kanye West, Pussycat Dolls and Rihanna.

GAVIN ROSSDALE, SINGER: The president and his family want to be enjoying it and finding something in it is obviously wild.

WYNTER: R&B singer Eric Benet also made the cut.

ERIC BENET, SINGER: If you didn't know this was a new day and a new dawn when you have Force MDs and Idly Brothers playing on air force one and Eric Benet, there's a new sheriff in town, that's for sure.

WYNTER: A commander in chief whose affinity for music will take on new heights and it will all be at his fingertips.

(END VIDEOTAPE)

WYNTER: The playlist changes every 60 days, so if there's something on there the first lady or little Sasha and Malia aren't too crazy about, well, they can have it removed right away. Wolf?

BLITZER: Thank you.