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The Situation Room
16 Bodies Pulled From Ocean; Chrysler Sale Delayed by Supreme Court; President Obama: Speed up the Spending
Aired June 08, 2009 - 15:59 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
WOLF BLITZER, ANCHOR, CNN: Rick, thanks very much.
Happening now, search and sorrow. Crews recovering human bodies after that Air France crash, and they're running out of time to find the so- called black boxes. All are clues into what brought the plane down.
The sentence: 12 years hard labor in a North Korean prison. Can the U.S. help free two American journalists, Laura Ling and Euna Lee.
And will she or won't she? Some Republicans are scratching their heads wondering if Sarah Palin will hand them a major snub.
I'll Wolf Blitzer in CNN's command center for breaking news, politics and extraordinary reports from around the world.
You're in THE SITUATION ROOM.
Families are in agony and crews agonizing over a difficult search mission. More bodies have been found in the Atlantic Ocean after the crash of an Air France plane. The latest count, 16 bodies recovered.
Loved ones hope the remains might provide some sense of closure. Transportation officials hope they might provide clues into how this plane went down.
Meanwhile, crews are combing a wide area with lots of wreckage. Two items they're desperate to find, the flight data and cockpit voice recorders.
Let's get the latest from CNN's Karl Penhaul.
(BEGIN VIDEOTAPE)
KARL PENHAUL, CNN INTERNATIONAL CORRESPONDENT: The Brazilian Air Force and Navy is clarifying today that the number of bodies so far recovered from the Atlantic Ocean is 16. Yesterday, they had said that 17 bodies have been recovered from that doomed Air France flight. That was due to confusion over the number of bodies that a French Navy vessel had recovered.
In addition to that today, the Brazilian authorities have released a new set of photographs showing the extent of the search effort. In those photos we can see Brazilian Navy divers and Brazilian Marines recovering a part of what Air France is saying is a tail section of that doomed flight 447. In addition to that, French authorities say that the U.S. Navy is on the way to the search area to help the French and the Brazilians with the search effort. We're also told that a French nuclear submarine is en route to the area and that should arrive on Thursday to help in the search for those all-important black boxes. But the task is a mammoth one.
The search area is at least 200,000 square kilometers, we're told by Brazilian authorities. That's equivalent of the U.S. state of Nebraska or the size of Great Britain. Authorities also tell us in that area that the depth of water is up to 8,000 meters, around 20,000 feet. That is sometimes impossible for even most sophisticated submarines to operate in, so it will represent a huge challenge, authorities say, to recover the black boxes.
Karl Penhaul, CNN, Recife, Brazil.
(END VIDEOTAPE)
BLITZER: Speed may have been a factor in how this plane crashed. Now a recommendation regarding the plane's speed sensors is being called into question.
Let's go straight to CNN's Brian Todd. He's been looking into this part of the story.
What are you discovering, Brian?
BRIAN TODD, CNN CORRESPONDENT: Wolf, investigators say the plane may indeed have been flying too fast or too slow through severe thunderstorms. Experts say what could have triggered that, could have, were faulty readings from airspeed sensors on the plane. Those sensors are called pitot tubes, and they've been known to be susceptible to icing, according to experts.
Now, a spokeswoman for Airbus tells us Airbus sent out a service bulletin last year recommending that the pitot tubes on Airbus 330s be upgraded to newer models. The 330, of course, is the plane in question in this incident.
Airbus says that recommendation was not a safety issue, but a reliability issue. That's their words, and they say the change was not mandatory.
Investigators say Air France had not replaced the pitot tubes on the A-330 that crashed. Air France would not comment on that, but a spokeswoman told us they had accelerated a program to replace those tubes -- Wolf.
BLITZER: Brian, how many U.S. airlines fly that specific aircraft with those tubes on it?
TODD: Well, we found out that US Airways has nine Airbus 330s. Delta flies more than 30 of them. Delta used to not fly any until they bought out Northwest Airlines last fall, but now they have more than 30. US Airways says it has begun replacing those tubes on those A-330s. It would not specify how many or how much work is yet to be done on that replacement.
Delta told us that it was working on getting that information, but they say that they could not get it to us really in time for this report. But they are working on getting us that information as to how many tubes are currently being replaced on those A-330s that it flies.
BLITZER: Lots of nervousness out there right now.
Thanks very much, Brian, for that.
Let's talk about this and more with Peter Goelz. He's the former managing director of the National Transportation Safety Board, here in Washington.
The fact that they found these bodies now, what, if anything, can that tell us about the nature of this crash?
PETER GOELZ, FORMER MANAGING DIRECTOR, NTSB: Well, the forensics people, the doctors, will look at each of these bodies and catalogue the injuries they've sustained. Some of them are going to be -- they'll look for were they blunt instrument, blunt force, which might mean that they were in the plane when it came down? If they were ejected from the plane, it'll be completely different kinds of injuries.
And they'll look for is there any burning, is there -- what are the hints from -- and they'll -- you know, this was a full flight. They will track where each one of the victims was seated, and they'll see who came out and why. Why are these people being recovered, why are others not? And it might give a hint on where the breakup of the plane started.
BLITZER: If we take a look at some of the pictures that we're getting right now -- take a look. I'm going to show you the picture of the tail fin.
GOELZ: Right.
BLITZER: That's what was recovered on the left part of the screen, and it shows on a regular Air France plane how high up the tail that would be.
What does it say to you, if anything, that that piece has now been recovered? It's a pretty significant piece.
GOELZ: It is a dramatic piece, and it shows that it really got hit by some heavy forces. That's a pretty strong part of the aircraft. And the issue was there was these messages sent out during the last four minutes of the flight. One of them was a rudder limiter (ph) message saying that that had failed. If that rudder, which is attached right to the end of the stabilizer, if that's swinging out more than it should, it's going to be torn off the plane. BLITZER: Where are those two black boxes? I know they're in the tail someplace, but if you take a look at the right part of the screen, where would the black boxes normally be?
GOELZ: They would be tucked down underneath the tail section. In an access point, you can get in through that back cargo hold and get at them.
BLITZER: And we only have about 20 or 21 days left before those batteries in those two black boxes, the flight data recorder and the voice recorder, those batteries are dead.
GOELZ: That's right. I mean, they will last a little bit longer, a little bit shorter, but about 30 days is the magic number. So, they've got to get the search out. And looking at a place, an area the size of Nebraska, is terribly challenging.
BLITZER: When you look at this picture of the tail fin, I know there have been comparisons made back to that American Airlines crash back in 2001 in Queens, in New York City. You remember that crash.
GOELZ: Yes.
BLITZER: What, if anything, can we -- is there a comparison that some people are beginning to make?
GOELZ: Well, not yet, I don't think. In the accident in the Rockaways in Queens, the tail broke off at the very base and snapped off because of pilot mishandling the rudder connections. In this case, it broke further up and we have no idea what the forces were yet. But certainly, boy, it's intriguing that they recovered it, it's intriguing that they found it where it was.
BLITZER: Given the fact that this search area is, what, the size of Nebraska that we just heard Karl Penhaul report from Brazil, you said the other day, looking for a needle in a haystack would be good.
GOELZ: That's a great assignment compared to this. I mean, this -- and...
BLITZER: Take a look at those pictures.
GOELZ: At the depth of water that they're in, the pingers will probably not -- that sound probably won't get much above 10,000 feet. So, it's going to be extraordinarily difficult for them to find it.
But the one thing we know is, from the Cold War, we know how to listen. And the idea that we're dropping in the most sophisticated Navy, and the French are bringing in a nuclear sub, we might have a chance.
BLITZER: We might never know for sure unless we recover those two black boxes. Right?
GOELZ: We will know what happened. We won't know why.
BLITZER: OK.
Thanks very much, Peter Goelz. Thanks very much for that report.
GOELZ: Thank you.
ANNOUNCER: This is CNN breaking news.
BLITZER: All right. Want to go to Deborah Feyerick right now. She's watching another important story.
A decision made by the United States Supreme Court on that sale of Chrysler, Deb. What are you learning?
DEBORAH FEYERICK, CNN CORRESPONDENT: Well, Wolf, this is what CNN is now reporting. It was close to a done deal, but the Supreme Court has delayed the sale of most of Chrysler's assets to the Italian automaker Fiat.
The justices issued a brief order Monday just before a temporary stay and they're willing to hear an appeal. What this means basically is three Indiana state funds representing police officers and teachers filed the emergency appeal late Saturday asking the high court to intervene. We are now being told that, in fact, they have those state funds, want more compensation for their share of Chrysler before it is sold, the $7 billion in secured debt.
The financially troubled automaker is expected to emerge soon from bankruptcy, but this was one of the things that was going on. They were really pinning their future on the company's restructuring and the sale to Fiat. But right now the Supreme Court delaying the sale of most of Chrysler's assets until they hear this appeal -- Wolf.
BLITZER: A setback to that transaction. All right. We'll stay on top of it, Deb. Thanks very much.
If you get sick or need ongoing care, what's the best way to provide it? Amid the push for health reform, Democrats have their ideas, but some Republicans are suggesting that could bring gloom and doom.
And broken but unbowed. Supreme Court nominee Sonia Sotomayor suffers an injury, but she keeps on moving.
And just hours from now, Sarah Palin could hand her fellow Republicans an embarrassing snub. It seems the entire political world wants to know what she'll do.
(COMMERCIAL BREAK)
BLITZER: We're following a major decision by the U.S. Supreme Court just moments ago delaying the sale of Chrysler to the Italian automaker Fiat, a decision that -- Justice Ruth Bader Ginsburg issued this delay, at least a temporary delay in going forward with what so many people thought was virtually a done deal.
Our Senior Legal Analyst Jeffrey Toobin, an authority on the U.S. Supreme Court, is joining us on the phone. What's going on here, Jeff?
JEFFREY TOOBIN, CNN SR. LEGAL ANALYST: Well, as you know, Wolf, the United States government, the Obama administration, really engineered the sale of Chrysler to Fiat and basically pushed through the deal to keep Chrysler alive. The question some of the bondholders have, some of the people who own some of Chrysler, is whether what the Obama administration did was legal, whether they muscled out the bondholders in this case.
I think most Supreme Court observers thought that the Supreme Court wouldn't get involved and they would simply let this deal go forward. But at least temporarily, Justice Ginsburg has stopped the deal, referred it to all nine justices, and we now may have a major new player in the bankruptcy of both Chrysler and General Motors.
BLITZER: One Supreme Court justice can delay a decision like that? Is that right?
TOOBIN: That's how it works, is that initially, when there is a very urgent situation, each justice is responsible for part of the country. Justice Ginsburg is responsible for New York, where this bankruptcy is pending, so the request for a stay, for a delay, goes first to Justice Ginsburg. She has granted it, and now the full court will take a look.
Now, this may last only a few hours or it may last days or even weeks. But the court is now a major player in the resolution of this case.
BLITZER: And the theory being, Jeffrey, if it lasts a few weeks or months, Fiat may say, you know what, never mind, and this sale, which has been so critical in helping Chrysler get out of bankruptcy, could be over.
TOOBIN: Well, absolutely. And as you know better than I, this has been a very delicate negotiation with Fiat, and Fiat has had, it appears, cold feet at times. They are only a semi-willing partner, it appears, in this deal. With this major new development, Fiat may have second thoughts.
Most people, I believe, did not think the court was going to get involved. So, all the cards are back in the air, I would suggest, at least for the time being, in at least the Chrysler bankruptcy, and this may have implications for General Motors, as well.
BLITZER: Let's talk a little bit about the political fallout from this Supreme Court decision. Gloria Borger, our senior political analyst, is here in THE SITUATION ROOM.
Certainly, it's a setback for the Obama administration, which, in effect, is running Chrysler and GM right now, at least overseeing both of those U.S. automakers. They wanted this deal to go through to Fiat quickly.
GLORIA BORGER, CNN SR. POLITICAL ANALYST: Sure, it's a setback. It may just be a temporary setback, we don't know, but also, this speaks to the questions of viability of Chrysler, because this Fiat deal was a very, very important part of GM and making GM viable. So, I think that, you know, this is -- this could be a real setback for the administration's plan.
BLITZER: Because you have to assume, and Jeffrey Toobin will, I'm sure, concur, that if this goes to the Supreme Court for Chrysler, someone is going to follow suit involving GM, and it could go to the U.S. Supreme Court as well.
BORGER: And this sale was a very important part of the administration's plan to essentially save General Motors.
BLITZER: Given the urgency of the economic crisis right now, how much pressure will there be on all nine justices, Jeff, for them to reach a speedy decision and not let this thing drag out for weeks or months?
TOOBIN: Well, one of the things about the Supreme Court is they don't react too well to pressure. They operate at their own pace. Most people thought that they would never get involved in the 2000 election, and as I think we all know, Bush v. Gore wound up deciding the 2000 election.
If they think an issue is important, if they think an issue raises legal questions that merit the attention of the United States Supreme Court, they will act relatively quickly, certainly by their standards. Where they take months to decide a case, they won't take months, but they could easily take a week, two weeks. And given the pace at which this transaction has gone, a week could be an enormous amount of time and change a lot of factors.
BLITZER: It shows, Gloria, the wildcards that are out there in terms of the economic recovery, the U.S. involvement in bailing out, whether automakers or insurance companies or big banks. There's some unexpected development that could...
BORGER: Sure.
BLITZER: ... prove to be a huge setback for what officials in the White House would like to see move along smoothly.
BORGER: And as we know, there was a debate internally in the White House about what the right move was to make vis-a-vis General Motors. And some folks who didn't want this to occur may be saying right now, look, we knew that this could be -- this Fiat deal could be challenged in court, and that's exactly what's occurring right now.
BLITZER: Tom Lauria is a lawyer who represents those bondholders who filed this motion with the U.S. Supreme Court. He's joining us on the phone right now.
Tom, what was the specific issue that you want the Supreme Court, all nine justices, to consider?
TOM LAURIA, REPRESENTS GM BONDHOLDERS: Well, there's more than one. The first issue is whether or not TARP can be used to bail out an automobile manufacturer. As you probably know, if you've taken a look at the law, it specifically provides for the government to be able to buy troubled assets from financial institutions. And, in fact, former secretary of Treasury Paulson recognized it didn't work for the auto companies and went to Congress in support of further legislation to authorize financing for auto companies.
That legislation got through the House but didn't get past in the Senate. And so, we think there's a real question of first impression there as to whether or not TARP is even an appropriate vehicle for bailing out the auto companies.
On the bankruptcy side...
BLITZER: Here's what's a little confusing to me, Tom. You represent bondholders who have a lot at stake as far as the future of Chrysler is concerned. The assumption that so many of the experts have if Fiat takes over, Chrysler will survive, but if Fiat doesn't take over, Chrysler will die, potentially, and your bondholders are going to wind up with nothing.
Well, let me just clarify the facts for you a little bit.
LAURIA: Fiat is acquiring a 20 percent ownership interest in a new company that will own the current assets at Chrysler, and for that 20 percent interest is putting in non-exclusive licenses of intellectual property. Nobody really know what is that stuff is worth, but it's not a major contribution by Fiat in any event.
So, you know, we think the characterization of this transaction of Fiat buying Chrysler is just not really in keeping with facts of the transaction. Fiat could be in this deal or not be in this deal. It would have very little impact on the Chrysler business anytime in the foreseeable future.
BLITZER: So, you're hoping what? You're hoping that the Supreme Court decides when all nine justices reach a conclusion to kill this deal?
LAURIA: No. We're hoping that the Supreme Court interprets and applies the law, and we assume that if Chrysler is worth saving -- and a lot of people say that it is -- that it will then be saved in a lawful fashion.
The problem we have with this deal on the bankruptcy side is the transaction, in essence, distributes $22 billion of value to creditors but only gives $2 billion of that to the first lien lenders who were owed $7 billion. We think that that's not in keeping with our contractual rights and it's not keeping with the priority scheme and the bankruptcy code. We believe it would be very easy to implement this restructuring, but to simply require that the proceeds of the transaction be allocated as required by law rather than pursuant to an ad hoc priority scheme cooked up by somebody at Treasury when they were trying to be clever and beating up the first lien lenders.
BLITZER: You're getting way, way above all of our heads, Tom. I know you've got a good legal case there, and the Supreme Court is ready to consider it. It's getting a little confusing.
Jeffrey Toobin, our legal analyst -- Jeff, do you have a question for Tom Lauria?
TOOBIN: Well, I think just -- it's interesting, this historical parallel here, that in the 1930s, the last time we had economic problems this big, the administration, the Roosevelt administration, had the early days of the New Deal, which was in many respects repudiated by the Supreme Court. The Supreme Court became a big impediment, and that led Franklin Roosevelt to start his ill-fated court-packing plan.
Here we may have a conservative Supreme Court thwarting a Democratic president once again. I don't want to get too far ahead, but certainly that is the risk that the Obama administration now faces.
LAURIA: Well, let me just add to that, you know, there was a more recent example that's very comparable here. If you'll recall in the '50s, in the early '50s, the steel industry fell into collapse, and Truman ordered the takeover of many of the large steel companies.
In Youngstown Sheet and Steel (sic), the Supreme Court said the executive office has no legislative or constitutional authority to take over the steel companies and had to back off. We think that there is a very close parallel to what's happening here.
BLITZER: All right. Let me ask Jeffrey Toobin what the ramifications potentially are for GM as a result of this decision by the Supreme Court today.
TOOBIN: Well, it's a very similar legal setting in that there's bailout money being used by the U.S. government, and some people are being paid and some people aren't. Some creditors of Chrysler were paid, some creditors of Chrysler weren't. This gentlemen represents some of the people who weren't paid.
GM, it's a very similar situation. You have only a certain amount of money to go around, and some people aren't getting what they wanted. They are very likely to go into court, especially if the bondholders with Chrysler are making progress in this case.
BLITZER: Tom Lauria, do you have any idea when the justices will reach a final decision on this matter?
LAURIA: We don't. The order that was issued today is a very simple one. It simply stays the existing transaction and indicates that there will be further orders coming from the court. So, we anxiously await our further direction from the Supreme Court.
BLITZER: Tom Lauria, one of the attorneys representing the bondholders who wanted this deal between Chrysler and Fiat to be put on hold, joining us on the phone.
Tom, thanks very much.
Gloria, it does underscore that the president of the United States, as popular as he might be, as powerful as he might be, can't always get his way.
BORGER: He can't always get his way when it comes to the Supreme Court. It's not a political club.
And I think that right now you have the question in front of us of the viability of Chrysler, because Chrysler has said effectively that any delay in this deal -- any delay could cut scuttle the deal with Fiat. And scuttling the deal with Fiat raises questions about the future of that company.
Gloria's going to stand by. Jeffrey Toobin is going to stand by. We're going to continue to follow the breaking news.
Thanks very much.
Other news we're following includes the mayor of New Orleans. He's been quarantined. Chinese authorities are holding Ray Nagin in a hotel.
And new comments just in from the secretary of state, Hillary Clinton, about those two American journalists being held in North Korea.
(COMMERCIAL BREAK)
BLITZER: You're in THE SITUATION ROOM.
Happening now, two American women sentenced to 12 years hard labor in North Korea. The huge political stakes involved and the high-level figures ready to step in. The human dimension as well.
An often antagonistic president on the defensive. What Mahmoud Ahmadinejad is preparing to do on live TV.
CNN's Christiane Amanpour, she's in Iran. We're going to be speaking with her.
And waiting to see what happens next. Will Sarah Palin snub Republicans?
I'm Wolf Blitzer. You're in THE SITUATION ROOM.
Six hundred thousand jobs in the next 100 days -- President Obama says that's the goal for the next phase of his so-called roadmap to recovery. The president today unveiled a plan to speed up spending of the $787 billion stimulus plan.
Our White House Correspondent Suzanne Malveaux is following all these developments for us.
What happened today, Suzanne?
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, it's really no surprise, the timing of all of this. The administration is under increasing pressure to prove that this big investment is really worth it. And so, what you have is critics saying that these shovel- ready projects are far from ready. They also say by the time this money gets to the pipeline to hire folks, that the economy will have already adjusted and improved on its own. And so the administration is trying to fast-track these projects.
(BEGIN VIDEOTAPE)
MALVEAUX (voice-over): President Obama is promising to put more Americans back to work this summer.
BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES: The goal here is that we're going to create or save 600,000 jobs over the next 100 days.
MALVEAUX: Whether Obama can deliver on this promise is another story.
TAMI LUHBY, SR. WRITER, CNNMONEY.COM: The information that we're getting now, the 150,000 jobs they said were created in the first 100 days and the 600,000 jobs they're estimating will be created in the next 100 days, those are based on formula, so that's fuzzy math at this point. They don't really know yet how many jobs have actually been created.
MALVEAUX: Vice presidential economic adviser Jared Bernstein disputed that.
JARED BERNSTEIN, CHIEF ECONOMIST TO VICE PRESIDENT JOE BIDEN: This is an absolute tried-and-true economic methodology.
MALVEAUX: But the administration has already had to do some backpedaling.
Back, in January, when the president was selling his $787 billion economic stimulus package, he promised to save or create between 3.5 million to four million jobs over the next two years. That was based on an assumption that unemployment wouldn't go above 8 percent.
But, with unemployment at a 25-year high of 9.4 percent, Bernstein acknowledged they had incomplete information, and got it wrong.
BERNSTEIN: Our forecast seemed reasonable. Now, looking back, it was clearly too optimistic. What I...
MALVEAUX: But the White House is continuing to shop the silver lining, this on the latest unemployment numbers:
OBAMA: This was the fewest number of jobs that we have lost in about eight months. So it was about half of the number lost of just a few months ago. And it's a sign that we're moving in the right direction.
(END VIDEOTAPE)
MALVEAUX: President Obama also defended his administration, what some see as a slow start in getting that money to those projects, Wolf. But the president said that he would rather be transparent, that these projects are sound, than throw a whole bunch of cash and waste taxpayers' money on what he called potential boondoggles -- Wolf. BLITZER: But they are acknowledging at the White House that the spending of the money, the nearly $800 billion, it's happening a lot more slowly than they had hoped for?
MALVEAUX: You know, it's one of the things where they said they hope that it happens faster, that this is something that's on the fast track. Obviously, there is a lot of pressure here.
They want -- Jared Bernstein, the -- the guy who was mentioned in the peach -- piece there in the vice president's office, saying that they are a little bit ahead of schedule, but there is a lot of frustration, Wolf, for these projects to get that money as quickly as possible.
BLITZER: Suzanne Malveaux is over at the White House.
Thanks very much.
Let's go to Capitol Hill right now. Our congressional correspondent, Brianna Keilar, is following the Republicans.
A lot of anger up there, and -- and a lot of accusation being hurled at the White House right now, Brianna.
BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: Yes, Wolf.
Republicans say, speeding up the spending of stimulus dollars is just wasting money more quickly.
(BEGIN VIDEOTAPE)
KEILAR (voice-over): As the president announced plans to jump-start job creation by spending stimulus dollars more quickly, Republicans said the White House is trying to distract from dismal job numbers.
REP. ERIC CANTOR (R-VA), HOUSE MINORITY WHIP: When we spend money in Washington, we have got to have results. There just has not been any sustainable job creation started in this country. And I think this is what the administration is trying to do, is to put some type of cover on what it is that's actually gone on.
KEILAR: And that, says Congressman Eric Cantor, the number-two Republican in the House, is a waste of $787 billion of your taxpayer dollars.
REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: The bill is passed.
KEILAR: In February, it was Democrats who pushed the stimulus through Congress, with almost no Republican support. Republicans opposed to unprecedented government spending are calculating that, if the stimulus falters or fails, voters will blame Democrats.
(BEGIN AUDIO CLIP)
SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: I'm very skeptical that the spending binge that we're on is going to produce much good, and, even if it does, anytime soon. And I think the economy is just as likely to begin to recover on its own, wholly aside from this, before much of this has an impact.
So, I'm very skeptical.
(END AUDIO CLIP)
(END VIDEOTAPE)
KEILAR: Republicans are also minimizing the types of jobs the White House promised to create today, for instance, for law enforcement, teachers, summer employment for young people. Congressman Cantor says, it's small businesses where -- that are being ignored, and that is where jobs need to be grown -- Wolf.
BLITZER: Already, Brianna, thanks very much.
Want to go back to Deborah Feyerick. She is monitoring some comments just made moments ago by the secretary of state, Hillary Clinton, on North Korea -- all of this happening as two American journalists have been sentenced to 12 years in hard labor there in North Korea -- Deb.
DEBORAH FEYERICK, CNN CORRESPONDENT: Hey, Wolf.
Well, you know, this sentence was even higher than many officials expected, 12 years hard labor for U.S. journalists Lisa (sic) Ling and Euna Lee. The trial was held behind closed doors. It's not clear whether these two women even had any sort of legal representation.
Today, the U.S. secretary of state responded to the proceedings.
(BEGIN VIDEO CLIP)
HILLARY RODHAM CLINTON, U.S. SECRETARY OF STATE: Obviously, we are deeply concerned about the length of the sentences and the fact that this trial was conducted totally in secret, with no observers.
And we're engaged in all possible ways, through every possible channel to secure their release. And we, once again, urge North Korea to grant their immediate release on humanitarian grounds.
(END VIDEO CLIP)
FEYERICK: Now, North Korea is infamous for its prison camps, which human rights advocates equate to some of Hitler's worst concentration camps during World War II. An estimated 200,000 North Koreans are actually kept in these prison camps -- Wolf.
BLITZER: We will stay on top of this story for our viewers.
Thanks very much, Deb Feyerick.
The mayor of New Orleans is under a quarantine right now in China. The reason? Swine flu concerns. The mayor's spokeswoman says Chinese authorities quarantined Ray Nagin, his wife, and a security guard.
Let's go to CNN's Sean Callebs. He's working this story for us in New Orleans. What do we know, Sean?
SEAN CALLEBS, CNN CORRESPONDENT: How about that? The mayor of New Orleans seems to make news, generate some controversy, no matter what corner of the globe he -- he is in.
What happened, he was flying to China, taking part in an economic development meeting that was going on there, flew Friday from Newark to China. When he arrived, apparently, he, his wife, and that member of the security detail were sitting near someone who had symptoms that Chinese officials say looked a lot like swine flu.
So, they quarantined all the people in those areas. Now, there were other members of Nagin's entourage. They apparently weren't sitting near the mayor. They are fine. They're staying where they want to.
What we're told by the mayor's office is that, basically, the Chinese officials have taken over hotel and turned it into like a medical facility. And that's where all the quarantined patients are being held.
We don't know when the mayor is going to be released. We do know, according to his staff, he's not shown any symptoms. You remember General Russel Honore? He is the person that showed up right after Hurricane Katrina, the general that came in and really put the -- this city in order, really restored order in those chaotic days right after the storm.
Well, he has been in e-mail contact with the mayor. And he passed on an e-mail exchange to us.
In it he said: "How are you doing with the flu? Are you OK?"
And the response from the mayor said: "I am doing good. No symptoms. Chinese officials are extremely cautious. Hope to get out this evening or first thing this morning."
Well, right now, Wolf, it is in the early morning hours in China. It is Tuesday there. He is supposed to be going on to Australia to take part in a -- a climate conference that is going on there. We don't know when he's going to be released. Clearly, he is eager to move on, says he has no symptoms of swine flu -- Wolf.
BLITZER: Has he been talking to local media in New Orleans on the phone, explaining what is going on? I'm sure they're all really anxious to speak with him.
CALLEBS: You know, you're exactly right. That has -- that has been a big topic of discussion: Have you heard about the mayor? What's going on? Is he sick?
He has had no communication -- very little communication with even his staff, and his staff has only -- only transferred on very little information. In fact, when I read that quote from General Honore, the mayor's spokesperson, Ceeon Quiett, says, "I can't even confirm that" -- so, a lot of people simply in the dark about their mayor, who, right now, in quarantine in China.
BLITZER: If you learn anything new, you will let us know. Thanks very much.
Sean Callebs is our man in New Orleans.
A broken health care system needs fixing. Democrats have their ideas. Some Republicans are suggesting that could bring doom and gloom. And some Republicans are also wondering about what will happen in the next few hours. Will Sarah Palin join them or hand them a huge snub?
And her husband is not talking, but Laura Bush is. She explains why George Bush won't publicly criticize President Obama and why she -- she thinks Dick Cheney is.
(COMMERCIAL BREAK)
BLITZER: Battle lines now appear to be hardening over an issue of major importance to all of you. That would be health care -- on the one side, Democrats, with their ideas for health reform -- on the other, Republicans suggesting doom and gloom if Democrats get their way.
Let's go straight to CNN's senior congressional correspondent, Dana Bash. She's working the story on Capitol Hill.
What's going on, Dana?
DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, you know, for months, Wolf, there really has been a genuine bipartisan effort among key players trying to tackle this complex issue of reforming our health care system. But the atmosphere is now changing fast, as we are seeing details of Democrats' plans.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: I do want to thank you so much for coming.
BASH (voice-over): In this Virginia living room...
UNIDENTIFIED MALE: This is a time in history when there may be a chance to change things.
BASH: ... President Obama's foot soldiers recruiting grassroots help for his looming battle -- health care reform.
(BEGIN VIDEO CLIP, ORGANIZING FOR AMERICA AD)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: To get this done, I need your voice to be part of the debate.
(END VIDEO CLIP)
BASH: But, even as Democratic organizers start to rally thousands of activists across the country, Republicans are firing a warning shot, calling the president's push to expand health coverage with a new government insurance option a deal-breaker.
SEN. ORRIN HATCH (R), UTAH: There are a lot of people in my party, on the Republican side, who want to work with Democrats, who want to get this done, but who are totally against public plan.
BASH: Orrin Hatch is one of nine Republicans on the powerful Senate Finance Committee who wrote the president arguing, a government-run program competing with private insurers, would -- quote -- "inevitably doom true competition."
GOP senators insist, that would jeopardize quality.
HATCH: There is no way that we can be for a public-plan option, because that will put the government between you and your doctor.
BASH: But many Democrats, from the president on down, argue, Americans will benefit from a public plan that gives private insurers competition.
SEN. TOM HARKIN (D), IOWA: It is both about coverage and cost, because we believe, you know, with a public-option plan, that will act as a crosscheck on the insurance companies. And I think that's a good thing.
BASH: So far, Ted Kennedy is the only key Democrat to draft health care legislation. It would require all Americans to have health insurance and create a government-run insurance program that would offer essential benefits, including doctor and hospital care and prescription drugs.
(END VIDEOTAPE)
BASH: Now, most Democrats say they like Kennedy's plan, but most also know that it has virtually no chance of getting bipartisan support.
So, more moderate Democratic senators are trying to work on a plan that does allow for a public option, but perhaps to scale it back a little bit, with the hopes of maybe getting some Republicans on board, Wolf. And the idea would to -- be to put guarantees in to make sure that a public plan would compete fairly with private insurance companies -- Wolf.
BLITZER: This debate is only just beginning. It's going to be hot this summer.
Thank you, Dana.
A look at some of the numbers shows how badly health care reform is need. The most recent numbers show at least 46 million Americans were without health insurance. How much money was spent on their health care? Look at this, $116 billion. While most of that came from the uninsured patients themselves, government programs and charities, about $43 billion came from you, because that amount made its way to premiums charged by private insurance companies to businesses and individuals. In another story we're following right now, Sarah Palin often dubs herself as a maverick, but will she buck her own party just hours from now? Her political moves are being very closely watched and analyzed, as she moved around parts of New York this weekend.
Our Mary Snow has more -- Mary.
(BEGIN VIDEOTAPE)
MARY SNOW, CNN CORRESPONDENT: Wolf, Governor Palin's events were low- key, but there was no shortage of speculation about whether or not she's gearing up for round two on the national political stage.
(CHEERING AND APPLAUSE)
(voice-over): She traveled thousands of miles to mark a page in Alaska's past. Governor Sarah Palin paid tribute in Upstate New York to William Seward, who negotiated the purchase of her home state in 1867.
But it was her political future that became a focus in the crowds. And she made clear she's watching Washington.
GOV. SARAH PALIN (R), ALASKA: We know decisions being made lately, we believe, are not in the nation's best interests.
SNOW: And Palin took aim at the Obama administration over proposed cuts to Alaska's missile defense network.
PALIN: Reducing Alaska's defense readiness in these perilous times is a show of weakness. It's not a sign of strength.
SNOW: Palin's political action committee paid for her New York trip that took her to a Yankees game with fellow Republican Rudy Giuliani, an autism walk, and a fund-raiser for an organization dedicated to the disabled, where Palin talked about her 1-year-old son, Trig, who has down syndrome.
PALIN: Just because our ticket placed second, second out of two...
(LAUGHTER)
PALIN: ... you still have an advocate for the cause.
SNOW: She took no questions from reporters, but at least one New York Republican is wading into her trip.
REP. PETER KING (R-NY), HOMELAND SECURITY COMMITTEE RANKING MEMBER: I think she's testing the waters. But that's just my own opinion. I think she wants to get -- get the feel for how it is out there.
SNOW: A recent CNN/Opinion Research Corporation poll shows, in a hypothetical Republican presidential race in 2012, she's virtually tied with Mike Huckabee and Mitt Romney.
Palin, says Republican Congressman Peter King, will have to overcome unfavorables and fill in gaps such as foreign policy. But, he says, he's urged her to get out there.
KING: She has star quality. And not many people in our party have it today.
SNOW (on camera): And before she headed to Washington, there was behind-the-scenes drama over the weekend between her camp and organizers of tonight's congressional Republican fund-raiser about whether or not Governor Palin would speak. In the end, it was decided she would not -- Wolf.
(END VIDEOTAPE)
BLITZER: Thanks very much, Mary.
And we're getting some more information, even as we speak, from Peter Hamby, our political producer. He said, Palin is expected to attend this event tonight. She will be sitting with Senator John Cornyn and his wife at their table. He runs the committee that's in charge of trying to get Republicans elected to the Senate.
It's not expected -- not expected -- she will make any formal remarks. She will be, though, recognized. But we will watch it closely to see what actually happens. It's a sensitive issue for the governor of Alaska.
Former President Bush may be staying silent, but the former first lady is now talking -- what Laura Bush says about the criticism President Obama is getting.
And we have heard the U.S. side of the story on the husband-and-wife team accused of spying for Cuba. Now hear what Fidel Castro is saying.
(COMMERCIAL BREAK)
BLITZER: Former first lady Laura Bush is now speaking out.
Let's discuss what is going on in our "Strategy Session."
Joining us our, CNN political contributor the Democratic strategist Paul Begala, and Republican strategist Nancy Pfotenhauer.
Here's what Laura Bush told ABC. Listen to this.
(BEGIN VIDEO CLIP, "GOOD MORNING AMERICA")
LAURA BUSH, FORMER FIRST LADY: I think that's his right, as a citizen of the U.S. And I think he also feels obligated. And, so, I -- you know, I understand why he wants to speak out.
On the other hand, George feels like, as a former president, that he owes President Obama his silence on issues, and that there's no reason to second-guess any decisions that he makes.
(END VIDEO CLIP) BLITZER: Pretty interesting, defending Dick Cheney's right to go ahead and speak out, but explaining why George Bush has decided to remain silent.
PAUL BEGALA, CNN POLITICAL ANALYST: And I think she's got it about right. I will also note that she praised Judge Sonia -- Sonia Sotomayor, called her a winner, which was, I think, probably welcomed by...
(CROSSTALK)
BLITZER: She likes the fact that a woman is going to be on the Supreme Court.
BEGALA: Absolutely.
So, I think -- I -- and I think she's got it right. If the president doesn't want to speak out, that's OK. I never liked this tradition by which we tried to tell these officeholders to shut up. And now we have some results of the debate between Dick Cheney and President Obama.
Democracy Corps, my pal, yours, James Carville helps to run it. It's a nonprofit. They asked people, who has better ideas for keeping America safe? Brand-new poll. Fifty-four to thirty-nine, they prefer President Obama, by 15 points. Then they asked who did a better job, who do you trust more, Bush or -- President Bush -- or President Obama?
President Obama wins by 22 points. So, the debate is being resolved. I think it's been healthy for the country, but it's also been healthy, frankly, for President Obama.
BLITZER: Nancy, what do you think?
NANCY PFOTENHAUER, REPUBLICAN STRATEGIST: It all comes down to how safe this country stays.
But I -- and I -- and I do agree with former first lady Bush, particularly -- you know, it's probably not smart politics, actually, for the former vice president to step forward and put -- and be out there talking about these things right now. But some things are more important than politics, and the safety of this country is certainly one of them.
And...
BLITZER: Because you know Dick Cheney. I assume you know him.
And I know you know him.
And I covered him for many years. If he's being hammered, if he's being criticized, it's not in his nature to remain silent, and -- and let that go unanswered.
PFOTENHAUER: Well, and it's just -- it comes down to, you know, can we keep this country safe? Whether you agree or disagree with the policies of Bush years, how many of us, post-9/11, would have predicted that we would go this long without a violent attack on our land?
I -- I certainly was hopeful, but wasn't confident about it. And, so, that's really the legacy. And that -- that's something that President Obama has to prove over time.
BLITZER: Because if -- God forbid, if something does happen, you know that folks are going to say, it's President Obama's fault, that he wasn't vigilant enough.
BEGALA: Well, of course, the 9/11 attacks happened on Mr. Bush and Mr. Cheney's watch. Scurrilously, last week, he defamed Dick Clarke, who was the counterterrorism czar under Reagan, Clinton, Bush I and then Bush II.
And he said that -- and I quote -- I'm quoting here -- he said, "He missed it" on 9/11.
Well, that's not true. There's ample documentation that Dick Clarke briefed the vice president personally. He was running around. His hair was on fire was the phrase people were using.
So, I think it's a healthy debate. And dissent it always patriotic. So, good for Dick Cheney on that. But it's really wrong for him to smear Dick Clarke, as he did last week.
BLITZER: As far as the economic stimulus money -- and the criticism is, not enough of it has been spent yet, there was an urgency to get it approved, and what is the delay in -- in -- going on?
The proof will be in the pudding. If the economy gets better, then it will have worked. If the economy gets worse, then it will have failed.
PFOTENHAUER: Well, it's also -- but it's more than that, because the economy is actually quite resilient. It's the question of, well, how many jobs could have been created under one set of policies vs. another?
You know, one thing that's of concern to me, frankly, is, even if -- the numbers that are being quoted are "jobs created or saved" -- -- quote, unquote. Only in Washington could you get away with that. That's like saying, if I spend significantly more money, but not as much as I wanted to, that's somehow a cut.
Well -- but, even if you give the administration and Congress credit for those 150,000 jobs ostensibly saved at the same time our employment -- unemployment rate went up to 9.4 percent, it still costs out at about $300,000 per job.
I would rather cut them all a check for $200,000 and -- you know, and save the taxpayers some money.
BEGALA: Well, of course, we spent trillions of dollars on tax cuts under George W. Bush, and had essentially no job growth, so we were spending a trillion dollars a job under Mr. Bush. So, I don't know that Nancy wants to get into that comparison.
PFOTENHAUER: I would love to.
(LAUGHTER)
BEGALA: But I think this point about the metric is right. I think the White House has been very clever here.
PFOTENHAUER: Right.
BEGALA: "Jobs created or saved," well, that's not an accepted economic...
(CROSSTALK)
BLITZER: Because, created, we understand...
BEGALA: Right.
(CROSSTALK)
BLITZER: ... if job numbers go up.
(CROSSTALK)
BLITZER: But the saved, some say, well, that's like voodoo economics. You know...
(CROSSTALK)
BEGALA: Look, I think that it's a convenient self-metric.
(CROSSTALK)
BEGALA: But it's not what people will judge it by.
I think Nancy's point is right, that if we -- if the economy is starting to move in the right direction, then people will have more and more faith. Now, look, unemployment is up, and it's up higher than White House predicted. The real-world economics here should be helped by this acceleration...
(CROSSTALK)
BLITZER: Because it's almost 9.5 percent.
(CROSSTALK)
BLITZER: They thought it was up to 8 percent.
(CROSSTALK)
BEGALA: They thought it would be 8.
BLITZER: And, so, there's a problem there...
(CROSSTALK)
PFOTENHAUER: It's European levels, and it's because we have embraced a European approach to policy. High spending, high taxes, high regulation, you're going to get high unemployment.
BLITZER: We will leave it there, guys.
(LAUGHTER)
BLITZER: Thanks very much.
An Army vet fighting the don't ask/don't tell law, what happened today after he took his challenge to the U.S. Supreme Court?
Plus, Iran's president on the defensive -- what he's getting ready to do only hours from now on live TV. CNN's Christiane Amanpour is there in Tehran. She will take us inside.
And Fidel Castro is now speaking out -- what he has to say about that married couple right here in Washington accused of spying for Cuba.
(COMMERCIAL BREAK)
BLITZER: Deborah Feyerick is monitoring some other important stories incoming to THE SITUATION ROOM right now.
Deb, what's going on?
FEYERICK: Well, Wolf, a veteran challenging the law that bans gays from serving openly in the military had his case rejected by the Supreme Court. The court refused to hear his appeal, without comment. The former Army captain was dismissed over the don't ask/don't tell law. He and 11 other veterans sued the government.
During the presidential campaign, candidate Barack Obama said he supported throwing out the law, but has taken no action.
And get ready for the return of El Nino and a possible climate change worldwide. Forecasters say there are signs the weather phenomenon is developing for the summer. An El Nino pattern can lead to more Eastern Pacific hurricanes, fewer Atlantic hurricanes, and wetter- than-normal conditions for the mountains of the U.S.
And an old elevated rail line is being converted to a landscaped public park in New York. It's called the High Line. And the first section opens to the public tomorrow. It takes advantage of views of the Hudson River and landmarks like the Statue of Liberty -- just in time for summer.
BLITZER: Deb, thanks very much.
To our viewers, you're in THE SITUATION ROOM.
Happening now: It may be a valuable clue in the crash of Air France Flight 447 -- the plane's tail section found floating in the Atlantic. But, right now, speculation on the cause of the disaster is focused on a much smaller part of the airliner.
The gloves are off in Iran -- President Mahmoud Ahmadinejad forced to defend himself in live televised debates. With only days to go before a high-stakes election, CNN's Christiane Amanpour takes us inside Iran to check
