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The Situation Room
President Obama Defends Terror Memo Release; Diplomats Walk Out on Iranian President; Why Pirates are Being Let Go
Aired April 20, 2009 - 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: And we're going to have a lot more on this story coming up.
Also happening now, racism and outrage. Diplomats walk out on a speech by Iran's president. Were the Obama administration's worst fears about this U.N. conference realized?
Plus, the gift that keeps giving. President Obama's critics still are pouncing on his close encounter with the Venezuelan leader, Hugo Chavez.
And the mystery surrounding those dead polo horses. We're following the investigation into why they collapsed shortly before a big match.
We want to welcome our viewers in the United States and around the world.
I'm Wolf Blitzer in CNN's command center for breaking news, politics and extraordinary reports from around the world.
You're in THE SITUATION ROOM.
Up first this hour, President Obama at America's spy headquarters in the midst of allegations that he, the president of the United States, may have compromised national security. At issue right now, Bush-era memos on interrogation tactics released last week and whether the information may have emboldened terrorists around the world.
Mr. Obama wrapped up remarks to CIA employees just a few moments ago.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Don't be discouraged that we have to acknowledge, potentially we have made some mistakes. That's how we learn. But the fact that we are willing to acknowledge them and then move forward, that is precisely why I am proud to be president of the United States, and that's why you should be proud to be members of the CIA.
(END VIDEO CLIP)
BLITZER: All right. Let's bring in our Senior White House Correspondent Ed Henry. He was listening to and watching the president very closely. The thrust of those remarks to employees, defending a controversial decision late in the week to release those top-secret memos justifying the enhanced interrogation techniques.
ED HENRY, CNN SR. WHITE HOUSE CORRESPONDENT: That's right, Wolf. The president had a clear message. He was trying to reassure the CIA employees who have sort have been caught in the crossfire here over this controversy that he doesn't believe they're to blame. They were following orders from the Bush administration. But also, another key part of this mission is to push back on Republican critics.
You saw General Michael Hayden, the former CIA director in the Bush years, for example, this weekend charging that releasing those memos made the country less safe. The president defending his actions, saying that he believes that dealing with this alleged torture issue up front will help the United States execute a smarter, better war on terror.
He also, though, is facing critics on the left who are wondering why he's not holding Bush administration officials accountable. He released the documents, but now is not planning to prosecute anyone who may have broken the law.
I pushed Robert Gibbs, the White House press secretary, on that earlier today.
(BEGIN VIDEO CLIP)
HENRY: The people in the CIA who followed through on what they were told was legal, they should not be prosecuted. But why not the Bush administration lawyers, who, in the eyes of a lot of your supporters on the left, twisted the law? Why aren't they not being held accountable?
ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: Well, the president is focused on looking forward. That's why.
(END VIDEO CLIP)
HENRY: So you can hear from Robert Gibbs what this White House believes is that if they got locked into a long battle about what happened in the Bush years, that's just going to distract them from dealing from the war on terror currently right now. But as you know, Wolf, there are a lot of liberals in Congress who are concerned that the White House, this White House, is not holding folks in the Bush administration accountable -- Wolf.
BLITZER: All right. Stand by, Ed, because we have a lot more on this story coming up. It's not going away.
Another important story we're following right now, very high drama this morning over at a United Nations conference on racism, a conference boycotted by the United States, the Obama administration, and several other allies. The Iranian president, Mahmoud Ahmadinejad, was the target of hecklers in wigs over at the conference. Then dozens of diplomats simply walked out on him as he ranted against Israel.
Let's go to CNN's Atika Shubert -- Atika.
ATIKA SHUBERT, CNN CORRESPONDENT: Well, Wolf, the United States and Israel boycotted this conference precisely because they feared it would become a platform for attacking Israel. And it now seems that Iranian President Mahmoud Ahmadinejad has used this conference for exactly that.
(BEGIN VIDEOTAPE)
SHUBERT (voice-over): The U.N. summit was widely expected to be controversial, and Iranian President Mahmoud Ahmadinejad certainly delivered, singling out Israel has a "cruel and racist regime."
MAHMOUD AHMADINEJAD, IRANIAN PRESIDENT (through translator): Following World War II, under the pretext of Jewish suffering and based on misusing the Holocaust, they resorted to military aggressions and made an entire nation homeless, and sent migrants from Europe, the United States and other parts of the world, and established a totally racist government in occupied Palestine.
SHUBERT: The strong comments prompted a walkout by dozens of diplomats, including those from France and Britain. Ahmadinejad went on to blame the western world for much of the world's woes, from racism to war and poverty, including the global economic crisis.
Earlier, the president of Iran had barely opened his mouth when he was targeted by hecklers in the crowd calling him a racist, but he also won several rounds of applause and cheers from delegates, especially from the Arab world, though Israel's policies against Palestinians are viewed as discriminatory. Ahmadinejad took it in stride, smiling throughout the tumult.
Critics say the divisive president should never have been given a platform to speak. The British ambassador to the U.N. in Geneva issued this statement after his delegation walked out. It reads, "The U.K. unreservedly condemns Iranian President Ahmadinejad's offensive and inflammatory comments. Such outrageous anti-Semitic remarks should have no place in a U.N. anti-racism forum."
So why was Ahmadinejad the first key speaker? U.N. organizers say the reason is simple. Iran was the only delegation to send their president as head of delegation. And according to U.N. protocol, heads of state are first to speak.
U.N. Secretary-General Ban Ki-moon was quick to condemn the Iranian leader's comments. He had pulled Ahmadinejad aside before the conference, appealing for unity. Clearly, the Iranian leader had his own ideas.
The countries boycotting the conference feared it would become a platform for anti-Semitism and Israel-bashing. U.N. Human Rights Commissioner Navanethem Pillay said the answer, however, was not to boycott. NAVANETHEM PILLAY, U.N. HUMAN RIGHTS COMMISSIONER: The best recourse for this type of event is to reply and is to correct, not to walk away, not to withdraw and boycott the conference. I mean, if that happens, who is going to provide a rational response to what has been said?
SHUBERT: But that is how the conference began, much to the dismay of conference supporters.
(END VIDEOTAPE)
SHUBERT: Now, some of those European delegations that walked out will be staying on for the rest of the conference. Britain, in particular, has said that it needs to monitor the conference but it will not support any document that is skewed, particularly against one country -- Wolf.
BLITZER: All right, Atika. Thanks very much.
Atika Shubert reporting for us.
Let's check in with Jack Cafferty right now. He's got "The Cafferty File" -- Jack.
JACK CAFFERTY, CNN ANCHOR: President Obama has gone abroad and gourd an ox, according to an AP analysis that examines how the president's challenging the deeply held belief that the United States doesn't make mistakes when it comes to dealing with other nations. In three months in office, Mr. Obama has been very vocal to our friends and foes about where the U.S. has gone wrong. The list includes admitting to Europe that the America deserves at least part of the blame for the global financial crisis; telling Russia he wants to reset relations that deteriorated the Cold War levels under President Bush; asking NATO for more troops for Afghanistan, and then not throwing a tantrum when he didn't get much help; lifting restrictions on Cuban-Americans traveling home and sending money to relatives; saying that America's hunger for illegal drugs and poor control of the borders over guns and money flowing into Mexico are partly to blame for the drug cartel violence south of the border; and shaking hands and accepting a book from the anti-American dictator, Venezuelan President Hugo Chavez.
The AP compares President Obama's rather hard-core efforts to change America's image abroad to former Soviet leader Mikhail Gorbachev, who pretty much scrambled nonstop to break the communist empire's image before it literally ran itself into the ground. President Obama says he's committed to telling the world that the U.S. is a powerful and wealthy nation, but just one among many that needs to respect other cultures and perspectives. Critics worry the new president might be making the U.S. vulnerable by so readily admitting mistakes and being so willing to talk to our foes and opponents.
So here's the question: When it comes to dealing with foreign countries, is President Obama moving too fast?
Go to CNN.com/caffertyfile and post a comment on my blog -- Wolf. BLITZER: Good question, Jack. Thank you.
There's a big hole in the U.S. plan to try to crack down on piracy. Why NATO crews are catching pirates and -- get this -- and then immediately letting them go. What's going on?
Plus, some big banks are sacking foreign workers even before they start their jobs. This woman and others are facing another string attached to the federal bailout.
And new health problems for the man who may be the world's greatest living scientist.
(COMMERCIAL BREAK)
BLITZER: As you saw live here on CNN, President Obama over at the CIA, the spy agency that critics say he has now undermined.
Let's get some more on our top story.
The president went to CIA headquarters in Langley, Virginia, outside Washington, D.C. And as we've reported, there's been a lot of criticism that he actually compromised national security after the release of those Bush-era memos on interrogation techniques.
Let's talk about that with Run Suskind. He's the journalist and the author of the books including "The Way of the World" and The One Percent Doctrine." He knows a great deal about this subject.
Ron, thanks for coming in.
RON SUSKIND, AUTHOR, "THE WAY OF THE WORLD": My pleasure.
BLITZER: Was it a mistake to actually release the Justice Department documents authorizing these enhanced interrogation techniques?
SUSKIND: The evidence clearly shows it wasn't. I mean, mostly people knew what was in those documents in terms of their basic nature. Beyond that, these were never techniques the CIA used until 9/11 and have never shown any worth. So this is not a sources and methods issue where you're dealing with real sources and methods that the CIA uses to get espionage...
BLITZER: The former CIA director only yesterday, General Hayden, said, "The facts of the case are that the these techniques against these terrorists made us safer. It really did work." That's what he said yesterday.
SUSKIND: The evidence that has come out and the evidence that I think will come out in the coming months shows that these techniques were not meaningfully successful, successful in terms of a bid or piece that they might have gotten through more traditional methods. But that issue of, was this something that worked that now we have abandoned really doesn't hold water. BLITZER: Because when I spoke to the vice president, Dick Cheney, only a few months ago, he said Americans are effectively -- he said Americans are alive right now because these techniques were used against Khalid Sheikh Mohammed and Abu Zubaydah.
SUSKIND: I think that's Cheney doing his own legacy project. The evidence, again and again, shows that that's not the case, that plots were not foiled based on what was gained from these interrogation techniques.
BLITZER: We know that the current chairman of the Senate Intelligence Committee Dianne Feinstein of California, she's going to have an investigation now. They're going to go back and see which techniques worked and which techniques didn't work. So we'll get the final result, presumably, from the Senate Intelligence Committee down the road.
SUSKIND: Well, you know, there's more that's going to come out. We have transparency now, we'll have more of it. Accountability is going to be much more difficult.
Frankly, the president and the vice president were involved directly in the interrogation issues, were pushing them forward. They're not to be prosecuted as far as I see. And so what we're now dealing with is the president saying, look, we have this stuff out, it hurts like hell, CIA, but I'm here behind you.
BLITZER: You're an authority on all of this because you've written extensively about it. When you read the documents that were actually released last week, that the president of the United States authorized the declassification of these top-secret Justice Department memos, what did you learn?
SUSKIND: Well, I didn't learn much that was new, but it's painful to read. It's painful to think of these things happening under the stars and stripes...
(CROSSTALK)
BLITZER: Did you learn anything new?
SUSKIND: Well, you know, some of the techniques, how they were used, some of the ways they lined them up in a progression to get what they thought would be a value. Ultimately, though, what you're seeing here are many things that were tried over the objections of many, including the FBI, who has long experience here as to what works, and they did not yield the kinds of things that kept...
(CROSSTALK)
BLITZER: You saw and listened to the president and his remarks over at CIA headquarters just now. He seemed to be pretty much, when addressing this sensitive subject, on the defensive.
SUSKIND: Well, you know, look, the president understands this is one tough audience at CIA right now. They're very dispirited. These are people who make great sacrifices, mind you. Of course, CIA does deception to get the truth, that's their business. But right now people are saying, should I be risking my life, in many case, to maybe some day be caught in a whipsaw like this that's largely political in terms of what a political leader ordered us to do that now we'll be held accountable for?
Obama is saying to them we need an intelligence service not only as good, but better than it's been for the modern age. And I want to support you.
BLITZER: Because even Leon Panetta, the new CIA director, he recommended against releasing these documents.
SUSKIND: Well, you know, Obama -- he did recommend against it, and I think Obama said, look, I'm going to split the middle here. We have got to at least show what happened, but I'm not going to cross the line to push for prosecutions. And without Obama's support, we're not probably going to get anything that looks like jurisprudence here.
BLITZER: Ron, thanks very much for coming in.
SUSKIND: My pleasure.
BLITZER: We're also following what could be the trial of the decade. It involves the hijacking of an American-flagged ship almost two weeks ago. The pirate who surrendered in that standoff is now on his way back, actually for the first time to the United States.
Defense officials tell CNN he's being taken to New York City where, reportedly, he'll be put on trial. The U.S. has previously turned to Kenya for such trials, but he's on his way right now, should be landing fairly soon.
The Obama administration is also trying to plug a gaping hole in its efforts to crack down on piracy. Pirates captured in a foiled attack on a Norwegian tanker were actually let go. What was going on?
Our Pentagon Correspondent Chris Lawrence has more.
(BEGIN VIDEOTAPE)
CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT (voice-over): When pirates attacked a Norwegian tanker this weekend, a Canadian ship raced to the rescue, forcing the pirates to back down and sail away. A NATO crew boarded the pirates' boat. It tossed guns, ladders and scaling equipment overboard.
Did they arrest them? No. Hand them over for trial? No. They let the pirates go, because NATO crews have no power to hold them.
HILLARY CLINTON, U.S. SECRETARY OF STATE: The minister and I agreed that we will take this matter to NATO.
LAWRENCE: The U.S. has an agreement with Kenya to turn over pirates for prosecution, but NATO leaves it up to each nation's own laws, which sometimes don't even allow crews to detain pirates they catch.
CLINTON: NATO has not provided that authority, so we need to coordinate this, we need to move very quickly to do so.
LAWRENCE: Not fast enough for a Dutch NATO crew which rescued 13 hostages Saturday, then let every pirate go free.
SEAN CONNAUGHTON, FORMER U.S. MARITIME ADMINISTRATOR: The pirate are going to quickly realize that most of the navies out there will not take action against them. And so they're just going to continue doing this until things escalate even further.
LAWRENCE: Sean Connaughton was President Bush's top maritime official. He says navies are catching pirates red-handed, then looking back to their home countries for guidance on what to do next. Too often the answer is nothing.
CONNAUGHTON: You can't all of a sudden take nice, neat laws that are perfect for dealing with criminal situations in the streets of Washington or the streets of Ottawa and apply them off the coast of Somalia.
(END VIDEOTAPE)
LAWRENCE: Now, in the past the U.S. Navy has also had to release pirates, but normally that's been because the crews said they didn't have enough evidence to keep them -- Wolf.
BLITZER: So, Chris, is it just going to keep on going and going and going?
LAWRENCE: Well, what Secretary Clinton and others are pushing for are universal rules of engagement, meaning every ship, no matter if it's sailing under the EU, NATO, a task force, would have the authority to arrest pirates and then hand them over for trial.
BLITZER: Chris Lawrence, thanks very much.
Chris Lawrence is our Pentagon correspondent.
Gangs of lawless pirates are often in search of blood and treasure. They have been active in waters near Somalia. There have been 79 recent attacks in the region, 17 ships are being held, and get this -- 300 hostages are still in the pirates' hands.
Twenty-one horses are dead and investigators are trying to figure out why. The polo match mystery playing out in Florida, we have details.
And with the shake of a hand, did President Obama give U.S. foes a tool for propaganda? We're following the backlash against his encounters with the Venezuelan president, Hugo Chavez.
(NEWSBREAK)
(COMMERCIAL BREAK) BLITZER: To our viewers, you're in THE SITUATION ROOM.
Happening now, an investigation into a bold hijacking attempt. An armed man storms onto a plane, robs passengers, and holds people on the plane hostage. Wait until you hear what happened and how it all ended.
A bizarre mystery. How did 21 horses simply drop dead just before they were supposed to compete in a prestigious U.S. polo tournament? Investigators want to know if this was by accident of the horses were poisoned.
And U2 is known for advocating a cleaner, greener Earth. So why do some fear the guitarist known as The Edge might cause an environmental disaster? Wait until you hear what he wants to do in California.
I'm Wolf Blitzer. You're in THE SITUATION ROOM.
President Obama says he's not worried about the political fallout from his friendly encounters with one of America's fiercest critics, the Venezuelan president, Hugo Chavez. Analysts, though are having a field day reading into every gesture and smile over at the Summit of the Americas.
Our Brian Todd is joining us now.
Brian, some of the Republicans flatly accusing the president of being irresponsible.
BRIAN TODD, CNN CORRESPONDENT: That is one word they're using, Wolf. The Republicans believe the president is legitimizing someone who's long been an antagonist to U.S. interests in the region.
(BEGIN VIDEOTAPE)
TODD (voice-over): Two cordial handshakes, the gift of a book, and serious talk of reestablishing ambassadors in their respective capitals leads to trouble for President Obama at home.
SEN. JOHN ENSIGN (R), NEVADA: I think it was irresponsible for the president to be seen kind of laughing and joking with Hugo Chavez.
TODD: The message from Republican Senator John Ensign and former House speaker Newt Gingrich, President Obama shouldn't be cordial with a man they call a dictator, who Gingrich says has "... systematically been anti-American for his entire career." Gingrich says the president is showing weakness toward America's enemies, a notion Mr. Obama flatly disputes.
OBAMA: It's unlikely that as a consequence of me shaking hands or having a polite conversation with Mr. Chavez, that we are endangering the strategic interests of the United States.
TODD: But Chavez has been an antagonist. Venezuelans have legitimately elected him multiple times, but he's often accused of repressing his opposition. He's openly called former President Bush "The Devil," forged a close partnership with the leaders of Cuba and Iran, threatened to leverage his oil resources against the United States, and just last month said this about President Obama...
HUGO CHAVEZ, VENEZUELAN PRESIDENT (through translator): At the very least, you could say he is a poor, ignorant man.
TODD: Analysts say despite those words, Chavez and others in the region will likely show more pragmatism.
JOSE RAUL PERALES, WOODROW WILSON CENTER: For many Latin American countries, the fate of the U.S. economy and how the United States rebuilds its economy is of paramount importance to the region, whether they are U.S. allies or not.
(END VIDEOTAPE)
TODD: And U.S. officials do say, before ambassadors can be reestablished in the respective capitals, they need to see what one official called a stop to the -- quote -- "rampant and tasteless anti- Americanism" that Chavez has shown over the years.
Analysts also say the U.S. might also look for more cooperation against drug-trafficking than Venezuela has given. But U.S. officials are very clear, Wolf, a handshake and a smile does not mean a new relationship.
BLITZER: Good point, Brian.
That book that he -- that Chavez gave the president of the United States was also clearly a tweak, not only at the president, but at the United States.
TODD: He certainly seems to be saying, look, you have to read what your region has done to my region over the years. The title of this book is "Open Veins of Latin America," written 38 years ago, published 38 years ago, a history of the continent from early colonial times up to the 1970s.
The book asserts that European and later North American interests led to the pillaging and impoverishment of the region. Two of the titles entitle "Gold Fever" and "Silver Fever," but it's -- this has done wonders for the book's sales. On Friday, it was number 60,280 on Amazon.com's sales list. Now, since President Chavez's public show of generosity, it's number two on that list -- Wolf.
BLITZER: Amazing how things -- things happen.
(LAUGHTER)
BLITZER: All right.
TODD: Right.
BLITZER: Thanks very much, Brian. Let's talk about this and a lot more, Newt Gingrich's criticism of the Obama-Chavez handshake in particular, the former House speaker, as you say, suggesting U.S. foes will use these images as propaganda.
Our senior political analyst, Gloria Borger, is here.
Gloria, I'm going to play a little clip of what the former speaker said on "The Today Show" earlier today.
(BEGIN VIDEO CLIP, "THE TODAY SHOW")
NEWT GINGRICH, FORMER SPEAKER OF THE HOUSE: The president bows to the Saudi king. The president is friends with Venezuela, whose biggest impact on us is that they sell us a lot of oil.
And I just think that there is a shallowness about how they analyze things. It does matter to the world if the United States tolerates a vicious anti-American propaganda campaign, and then smiles and greets the person who's systematically been anti-American for his entire career.
UNIDENTIFIED FEMALE: But...
(END VIDEO CLIP)
BLITZER: All right, Gloria, so Newt Gingrich, effectively, at least right now, becoming the spokesman for the GOP?
GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Yes.
I -- I spent my day today talking to Republicans about their sense of this. And their sense is that he's jumping in to fill a void. And let me share with you something that one Republican pollster, Tony Fabrizio, said to me.
He said, politics abhors a vacuum. Newt recognizes the opportunity and understands there's a real vacuum in the Republican Party right now. And that's because, he says, there is. You have a controversial chairman. You have Republicans who have performed unevenly on the Hill. And you have a very popular president.
And he is quite good at jumping in and giving those sound bites we just heard, picking his issues carefully, and getting Republicans to rally behind him.
BLITZER: What about the Republican leadership in Congress?
BORGER: Well, they have had a performance that hasn't been greatly rated. Right now, their public approval rating is at 28 percent.
And I think the question that people have is, going forward, what are their alternatives going to be, Wolf, on -- in any areas like health care and energy, because those are going to be the debates that people are going to pay attention to? You can't just say no. People, if they want a choice, they have to know what the other party stands for.
BLITZER: So, I guess it's not -- never too early to ask the question.
(LAUGHTER)
BORGER: A little early.
BLITZER: Is Newt Gingrich serious -- seriously thinking about running for president?
BORGER: I talked to a couple of his friends today, who said, yes.
Of course, you never know what is going to happen, because it is so early, as you say. But they also point out that he does have a group called American Solutions, which is a grassroots advocacy and research organization. And that can become a base for a presidential campaign.
BLITZER: I can't tell you how many White House officials in recent days and weeks have said to me, if Newt Gingrich is the spokesman for the GOP, or Rush Limbaugh is the spokesman of the GOP...
BORGER: Right. Bring it on.
BLITZER: Yes, they're thrilled, because they think that can only help the Democrats.
BORGER: Right. And, you know, there's a question of who is going to be the next nominee. If Mitt Romney decides not to go for it, then Newt is standing there.
BLITZER: Well, there are others waiting in the wings as well.
BORGER: Oh, yes. Oh, yes.
BLITZER: We will see what happens.
All right, Gloria, don't go away.
Members of Congress are back at work here in Washington after their spring break. And they may not be feeling the love from voters who sent them here.
Let's go to our senior political analyst, Bill Schneider.
Bill, do voters still have confidence in the Democratic-led Congress?
WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well, they do, but the thrill is gone.
(BEGIN VIDEOTAPE)
SCHNEIDER (voice-over): Congress is back. How excited are we? Um, a little.
Congress's job approval rating hovered in the 20s for more than two years after the Democratic takeover in 2006, which is to say pretty miserable. And now it's up, all the way to 35 percent -- glimmers of hope, just like the economy.
January, inauguration month, was a time of buoyant optimism about the Democratic Congress. The public preferred to see Democrats, rather than Republicans, in control of Congress by a huge 25-point margin. We haven't seen that much confidence expressed in either party for at least 15 years.
And now? The Democratic lead has narrowed to 15 points. The thrill is gone. Still, Republicans have not made much headway. The new Congress has failed to show much bipartisanship. Who's to blame is, of course, a partisan issue.
Republicans blame President Obama.
SEN. MITCH MCCONNELL (R-KY), SENATE MINORITY LEADER: I'm disappointed. After two months, the president has not governed in the middle, as I had hoped he would. But it's not too late. He's only been in office a couple of months.
SCHNEIDER: Democrats say Republicans won't give the president a chance.
JERRY BROWN (D), CALIFORNIA ATTORNEY GENERAL: I wish those Republicans would give him -- you know, give some more support. And then, you know, in a year or two, they can then jump more toward the opposition side.
SCHNEIDER: Is President Obama doing enough to cooperate with the Republicans in Congress? Americans say he is, but that number is down a bit from February. Still, a hefty majority, 62 percent, believe President Obama is reaching out. An equally hefty majority believe Republicans in Congress are not.
(END VIDEOTAPE)
SCHNEIDER: The thrill is gone. Reality has set in. To paraphrase something Hillary Clinton said during last year's primaries, the sky is not opening, celestial choirs are not singing, and the world is not perfect.
Governing is tough. But we knew that -- Wolf.
BLITZER: Bill Schneider, thanks very much. I remember those comments from the now secretary of state.
Americans are desperate for bargains these days, but Wal-Mart is suffering a startling setback. Anyway, ahead, the discount giant's new fall, what's going on?
And in our "Strategy Session": John McCain's daughter is warning of a war brewing within the Republican Party. Is Meghan McCain right? And, later, how a hijacker got past airport security and on to a plane in Jamaica -- could it happen here in the United States?
Stay with us. You're in THE SITUATION ROOM.
(COMMERCIAL BREAK)
BLITZER: "Fortune" magazine is now out with its latest Fortune 500 list. And you may be surprised which company the magazine says is now on top and how it broke another company's six-year winning street.
Let's find out from our chief business correspondent, Ali Velshi. He's standing by.
The winners and the losers, Ali?
ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Hey, Wolf.
Well, the number-one company in America, now ExxonMobil. That's the most valuable company, as calculated by the Fortune 500. It had been, as you said, Wal-Mart for six years in a row. But you will remember, last year, while it seems so distant now, last year was a year of almost $150 a barrel for oil. So, Wal-Mart -- ExxonMobil is now in the number-one spot on the Fortune 500, up from number two last year.
Last's number one is Wal-Mart. It's number two this year. But take a look at the rest of the top list, Chevron and ConocoPhillips, again two oil companies, rounding up four and five. Let's take a look at some more of these. General Motors -- I'm sorry -- General Electric was number six last year. It's moved into the number-five spot. General Motors was number four last year. It's down to number six. Ford is in the same place that it was last year at number seven, AT&T coming in at the 10th spot.
But here's the interesting thing about this, Wolf. The earnings for these companies last year was down to $99 billion, collectively, for all of them. That's an 85 percent drop from the year before. And that's the biggest drop that's been seen in the Fortune 500 since it was measured, starting in 1955.
So, across the board, America's companies are less valuable. They're smaller and less profitable than they have been since -- or we have seen as big a drop as we have seen since we first started measuring this...
(CROSSTALK)
BLITZER: Ali, just back up a little bit. I can understand ExxonMobil and Wal-Mart.
VELSHI: Yes.
BLITZER: But GM is on the verge of bankruptcy right now. Ford, while not on the verge...
VELSHI: Right.
BLITZER: ... of bankruptcy, is in deep trouble. Yet, they're in, what, the top eight of these companies?
VELSHI: That's right, very good question, because these are still very valuable companies in terms of all their assets that they have, in terms of the number of shares that they go -- that they have out there.
So, they are still companies where a lot of stuff goes through. These are all major brands. If you look at these, these are the brands that you would think of. So, that's an interesting point you make. Despite the fact that we're talking about General Motors possibly being on the brink -- brink of bankruptcy, it still remains now possibly the second biggest automaker in the world, after Toyota, but it was -- in 19 -- in 2008, it was still the world's biggest automaker.
BLITZER: All right, Ali, thanks very much.
Ali, we're going to have more on this business story coming up.
By the way, the Dow Jones industrials today dropping 289 points. We will have some analysis later on what happened on Wall Street.
Meanwhile, some foreign workers hoping to work for certain banks may want to reconsider. Those banks are telling them, we would like to hire you, but we can't.
Our senior correspondent, Allan Chernoff, is joining us from New York with more on this story.
What is going on, Allan?
ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Well, Wolf, the TARP bailout funds come with restrictions on hiring foreigners. And some of these people were offered jobs before the restrictions were imposed.
(BEGIN VIDEOTAPE)
CHERNOFF (voice-over): University of Pennsylvania senior Nazli Oguzsimsaroglu, a citizen of Turkey, thought that her Wall Street career plan was on a fast track. After interning with Merrill Lynch two consecutive summers, the company offered her a contract to become an investment banker. She signed, glad to have landed her dream job and not to be job-hunting her senior year.
NAZLI OGUZSIMSAROGLU, HAD BANK JOB OFFER RESCINDED: You know, I wanted to be loyal to my firm, and I wanted to genuinely work there.
CHERNOFF: Then the world changed. Merrill Lynch sold itself to Bank of America, which then accepted $45 billion in federal bailout funds. The money carries restrictions on hiring people from overseas, including foreign students like Nazli, who need a special visa, an H- 1B, to work in the U.S.. So, Bank of America withdrew Nazli's job offer.
OGUZSIMSAROGLU: I was in shock.
CHERNOFF: Bank of America told CNN: "Recent changes in legislation made it necessary for Bank of America to rescind job offers to students requiring H-1B sponsorship. We had very much looked forward to these individuals joining the company."
Nazli won't say if she's angry at Bank of America.
OGUZSIMSAROGLU: I am not going to answer that question.
(LAUGHTER)
CHERNOFF: But she does feel she is an innocent victim of Congress' effort to hold jobs for Americans at companies receiving bailout funds.
OGUZSIMSAROGLU: It is unfair for people, for top -- qualified people who attend, you know, like the best universities in the nation, and who are granted a job offer to have their offers rescinded in this way.
CHERNOFF: But legislators who enacted the hiring restrictions on banks getting bailouts have little sympathy for Nazli, when so many Americans are out of work.
SEN. CHARLES GRASSLEY (R), IOWA: If you're getting taxpayers' money to keep your company running, you have even more responsibility to look out for American workers, particularly in times of high unemployment.
(END VIDEOTAPE)
CHERNOFF: About 50 other foreign students had their career plans cut short at Bank of America. Now, other major banks on Wall Street, such as Goldman Sachs and Morgan Stanley, they're trying to place the foreign students they recruited in offices overseas, where those restrictions do not apply -- Wolf.
BLITZER: Allan, thanks very much -- Allan Chernoff on that story.
Just as the U.S. and Iran appeared to be taking some steps towards improving the relationship, the conviction of an Iranian- American journalist is stirring up old tensions. We're going to have the latest on her fate, what is going on.
And, later, horses dead just before an important polo match -- why did so many die at once? And could it happen again?
(COMMERCIAL BREAK)
BLITZER: Let's get to our "Strategy Session" right now.
Joining us, the Democratic strategist Steve Hildebrand, and the Republican strategist Nancy Pfotenhauer.
Guys, thanks very much for coming in.
(CROSSTALK)
NANCY PFOTENHAUER, REPUBLICAN STRATEGIST: Thank you.
BLITZER: The daughter of John McCain -- and you worked for John McCain during the most presidential campaign -- she has some fighting words for Republicans right now.
I want to play a little clip of what she told Log Cabin Republicans -- these are gay Republicans -- over the weekend.
(BEGIN VIDEO CLIP)
MEGHAN MCCAIN, CONTRIBUTOR, THEDAILYBEAST.COM: I think we're seeing a war brewing in the Republican Party right now. But it's not between us and the Democrats. It's not between us and liberals. It's between the future and the past.
I believe most people are ready to move on to that future.
(END VIDEO CLIP)
BLITZER: Not just her. You know, Steve Schmidt, who was the chief strategist for McCain...
(CROSSTALK)
BLITZER: ... also suggested Republicans endorse same-sex marriage, for example.
What's going on here within -- within the GOP?
PFOTENHAUER: Well, I think it's a new window on an old tension, if you will.
I mean, within the Republican Party, you have always had the social conservatives, the economic conservatives. And, then, kind of a right-wing of the economic conservatives is the libertarians. And they have always been strongly supportive of gay marriage.
The one thing I can say is that the Republican Party will welcome this debate. We have never really shied away from one. I think it's -- it's incumbent on anybody who has a strong feeling on this one to step forward and too engage in that debate as respectfully as possible.
BLITZER: And you're an outsider looking in on the GOP, Steve. But it's healthy for the Republicans to do some soul-searching in the aftermath of their major setbacks in the last two elections.
STEVE HILDEBRAND, FORMER OBAMA DEPUTY CAMPAIGN MANAGER: Well, I think, on gay marriage, Wolf, Democrats also need to do some soul- searching as well. And I would love Meghan McCain to go deliver that same message to Democrats, who have resisted...
BLITZER: Including the president of the United States?
HILDEBRAND: I think anybody, Wolf.
This is -- Meghan McCain, I will give her a lot of credit. She's developed a strong voice in this country, not just in the Republican Party. But she's part of the millennium generation, that is going to be the most activist generation of its kind.
And they care about gay rights. They care about the environment. They care about a lot of issues that affect their future. They're a more accepting generation. And we ought to learn, myself included, from this next generation. And Meghan McCain, she can be a great voice for that generation.
BLITZER: Because the Democrats have certainly done well with a lot of these young -- younger voters out there. The Republicans have some work to do.
PFOTENHAUER: Well, I think so.
And -- the -- what I have seen and what I'm witnessing is that people are willing to roll up their sleeves and do that work. Now, you -- I have always believed that thoughtful people can disagree, and that it's much better to not to question the motives of the person you're disagreeing with, but, rather, to go at the actual disagreement, and see whether you can reach some resolution.
This is a tough one, because you have got folks who are very respectful of each other's position. But, in the social conservative movement, they do believe that marriage is a sacrament. They do not believe that -- that this is something that's negotiable, if you will.
And, like I said, the libertarians are -- are -- are individual liberty, individual rights. They didn't like the profligate spending of the last -- the last administration. And they didn't like the Patriot Act, to be perfectly honest.
HILDEBRAND: But this -- this -- this isn't about religion. Gay marriage shouldn't be about religion.
It should be about government and whether or not the government is going to treat me the same as Nancy is treated with her husband. And it's -- it's -- it's a fairness issue. And it's an issue that Democrats and Republicans together should embrace, not one political party over the other, and not be about...
(CROSSTALK)
BLITZER: But do you see any -- any prospect that the number-one Democrat right now, the president, is going to come around and support your position?
HILDEBRAND: He has...
BLITZER: He supports civil unions, but he opposes same-sex marriage.
HILDEBRAND: He also opposes writing into a state or a federal constitution discrimination which, which this would do.
And, you know, there needs to be progress. I hope he will make just as much progress as -- as I would hope he would. I don't tell him what to do. The bottom line is, Meghan McCain and her generation are right. They know this stuff better than people my age and older.
BLITZER: Saul Anuzis, he's the chairman -- was the chairman of the GOP in Michigan. He wanted to be the RNC chairman. He -- he got defeated by Michael Steele, as you remember.
John Harwood, writing today in "The New York Times" today, in his column, suggesting that he's been calling the president of the United States someone who supports economic fascism. And then he said this. He says: "We have -- we have so overused the word socialism, that it no longer has the negative connotation it had 20 years ago or even 10 years ago. Fascism, everybody still thinks that is a bad thing."
Are some there elements of the GOP getting carried in trying to go after the president's economic policies?
PFOTENHAUER: Well, I'm glad he put the term economic in front.
BLITZER: Because you're an economic analyst.
PFOTENHAUER: I was going to say, I'm glad he put the term economic in front of the term fascism.
Again, I don't think those things are really constructive. I think there is plenty to work with here, if you want to challenge directly, as I do every chance I get, the direction that Congress is taking this country and the administration is blessing.
I mean, I think it is an unbelievable aberration from the past, when our country thrived because we didn't have government intrude at this level into the -- into the economy. And, in fact, it ties a little bit -- it's analogous, roughly, to the earlier topic. It's, what the role of government? What should the level of intrusion be?
And let's just go ahead and have a discussion about that, without tagging people with names.
BLITZER: And I think it's fair to say -- and I think you will agree -- that it was certainly unfair for people on the far-left to be throwing words like fascism against the former administration, just like it's -- it's unfair to be throwing words like fascism out against the current administration.
HILDEBRAND: Absolutely, the best leaders in this country and in this world, frankly, are going to be the leaders who can debate topics on their merits, and not throw around harsh criticism.
PFOTENHAUER: Yes. HILDEBRAND: I have to disagree with Nancy on the fact that Republicans don't intrude on economic issues in government, because they certainly do, health care being one of them.
PFOTENHAUER: Oh, I -- I believe they do. I just believe -- think they intrude less than the Democrats do.
(LAUGHTER)
HILDEBRAND: That's fine, but they definitely intrude on social issues in a very, very significant way to make up for what you suggest they don't.
BLITZER: We have got to leave it there, guys.
(LAUGHTER)
BLITZER: Nancy, thanks very much.
PFOTENHAUER: Thank you.
BLITZER: Steve, thanks to you as well.
HILDEBRAND: Thank you.
BLITZER: Tomorrow, both chambers of Congress will be back here in session in Washington. The Senate returned from break today. The House returns tomorrow.
What's the most important issue you want to see Congress tackle in the weeks ahead? Submit your video questions to ireport.com/situationroom, and tell us what you think. We will try to get some of your thoughts on the air tomorrow.
We all saw the president's now famous handshake with Hugo Chavez. Is Mr. Obama moving too fast in trying to reach out to Venezuela and some other countries? That's Jack's question. Stand by for "The Cafferty File."
Plus, a dangerous security breach -- a hijacker makes it on to a plane in Jamaica. So, what went wrong?
And we will also hear from a top cleric in Afghanistan, the man behind a law that strips women of some basic rights. He's responding to critics who say the law simply allows a man to rape his wife.
(COMMERCIAL BREAK)
BLITZER: Let's check in Jack Cafferty for "The Cafferty File" -- Jack.
CAFFERTY: The question this hour is, when it comes to dealing with foreign countries, is President Obama moving too fast?
Paul in Ontario: "The U.S. makes up four percent of the world's population, yet, during the Bush era, no one else seemed to matter. Obama knows how the U.S. has been perceived abroad and is now doing damned good work trying to change that."
Bill in Michigan says: "I rather like his approach: Speak the truth and deal with it. It's so much more refreshing than the arrogant ambiguity and denial of the previous administration. The only problem is, not everyone can handle the truth."
Susan in Idaho: "You get more flies with honey, honey. How can we assess any of these encounters without time to tell us what did and didn't work? We know for sure the past administration didn't make us approachable or well-loved."
Lance writes: "Yes, he is moving way too fast. He doesn't yet know the repercussions of what he is doing. Next, he will be meeting bin Laden in his cave for tea and biscuits."
Bruce says: "President Obama admitting to the world that U.S. foreign policy has been less than perfect is a breath of fresh air. Clinging to ill-conceived policies out of nationalistic pride is why international disputes go on for generations."
Michelle in Philadelphia says: "Considering that the prior administration put our global reputation down the toilet, a little honesty from President Obama can't be such a bad thing. I think we have gotten so used to lies and cowboy-style foreign policy, we have forgotten what diplomacy can look like when it's backed by integrity."
And Kathy in Georgia says: "How can you move too fast when you are eight years behind?"
If you didn't see your e-mail here, you can go to my blog at CNN.com/caffertyfile, and look for yours there, among hundreds of others -- Wolf.
BLITZER: Thanks, Jack.
And, to our viewers, you're in THE SITUATION ROOM.
Happening now: new roadblocks to President Obama's efforts to improve relations with Iran, that country's president sparking diplomatic outrage with his latest tirade about Israel.
Also, a hijacking drama -- almost 200 people on board this plane terrorized by a gunman for eight hours, before the ordeal comes to a dramatic end.
And a horrifying spectacle -- almost two dozen polo ponies suffering agonizing deaths, all within hours of one another. Now the effort to solve the mystery -- were they deliberately killed? And, if so, by whom?
I'm Wolf Blitzer. You're in THE SITUATION ROOM.
