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The Situation Room

Wall Street Reform Debate Could Start Soon; Florida Governor Quits GOP; Immigration Reform on Hold

Aired April 28, 2010 - 17:00   ET

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

WOLF BLITZER, CNN ANCHOR: Rick, thank you. Happening now, President Obama tries to sell Wall Street reform to main street America but here in Washington, are Republicans buying it? This hour we're watching the breaking news about the standoff in the Senate. Stand by for new information.

Also more breaking news. CNN learns the Florida governor Charlie Crist will bolt from the GOP and try to salvage his struggling U.S. Senate bid. We'll tell you what it means for Charlie Crist, for his opponents and for the Republican Party.

And a new attempt to burn off an oil spill that could become one of the worst in United States history. Stand by for an exclusive interview with the head of the company that leases the gushing oil well.

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

This hour, President Obama is center stage in Illinois as Democrats try to push forward with financial reform, but on Capitol Hill, debate over the legislation could begin soon.

Finally, the Senate has held three votes in three days to try to start debate, each time the Republicans held together to block it, but now GOP leaders say they won't stand in the way of debate any longer. However, that doesn't mean the two sides are necessarily any closer on the issue.

Our White House correspondent Suzanne Malveaux is standing by. She's with the president in Illinois. But let's go to our national political correspondent, Jessica Yellin, first for more on this apparent breakthrough that's going on.

Jessica, walk us through how this came about.

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: Wolf, bottom line, Democrats have been pounding Republicans all week. As you know they brought this issue to a vote three times and they're accusing Republicans of siding with Wall Street by blocking debate on Wall Street reform.

Now Republican leaders may have been willing to keep up this fight for sometime but plenty of other Senate Republicans thought that they were getting hammered in public opinion on this, and they didn't want to be accused of holding up the bill especially after that contentious Goldman Sachs hearing.

So Republicans say they're happy that heads of the banking committee -- Senators Dodd, a Democrat, and Shelby, a Republican -- were able to come to an agreement on some major points in this reform package, but they say OK, let's move ahead, we'll work out the rest of this on the floor of the U.S. Senate.

Probably debate will begin next weak -- Wolf.

BLITZER: There are some agreements but some sticking points as well. What are the sticking points?

YELLIN: OK. First, the areas of agreement. Let's talk about those. According to Senator Shelby, the Republican, the Democrats they say have agreed to get rid of that $50 billion fund.

Remember we heard so much about this alleged bailout fund that would be used to unwind failing firms? Republicans say that's out in a big concession.

Republicans also say they got new language on how to shut down failing firms like an AIG. So Republicans feel comfortable that no taxpayer money could be at stake. Again, a big concession.

But as you say there are still major differences on two areas. First, those ugly derivatives. Those are the risky investments that helped bring down Lehman Brothers and the -- and AIG.

And the other major sticking point is over this thing called the Consumer Financial Protection Bureau. Now this is a new division that would help the government regulate, for example, what's in your mortgage contract or your credit card contract, auto loans, the like.

This one affects everyone at home. Republicans say that bureau right now has too much power. Democrats, they say Republicans just want it to have no teeth. Expect this to be a big part of the debate next week.

BLITZER: So bottom line, the Democratic strategy of trying to embarrass the Republicans by having these roll call votes day after day after day seems to have worked. Is that fair?

YELLIN: Yes, it did work so far. Democrats definitely think so. Look, they're even running ads this week accusing Republicans of siding with Wall Street. Here's the latest ad from the Democratic National Committee. Check this out.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Republicans stood by as Wall Street ran wild. Now they are standing with the big banks again. Tell Republicans if they side with Wall Street over main street, you won't be siding with them.

(END OF VIDEO CLIP) YELLIN: OK, now Republicans clearly would take issue with that, but Democrats are so happy the debate is exactly where it is right now because, as that ad suggests, they think they have public opinion on their side, and boy, would they love to have a brawl next week especially over that consumer protection bureau I talked about. Their view is bring it on.

Republicans, now they vow to keep up the fight. They say, look, this bureau as conceived will actually hurt business, will hurt the economy. We're going to hear a lot more on that debate in the coming days -- Wolf.

BLITZER: Jessica, don't go too far away, thank you. Let's go to our White House correspondent Suzanne Malveaux. She's covering the president in Illinois -- Quincy, Illinois -- right now.

The White House, I guess, must be happy with this late development, Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: You know, they certainly are, Wolf. I had a chance to talk to White House spokesman Bill Burton, really, just two minutes ago before the president took the stage to address the folks here and the president has had to make a last-minute change in the text of his speech.

Of course, Bill Burton saying that he was going to mention financial regulatory reform, but it was going to be very much along the lines of what we've heard over the last 24 hours which is essentially railing on Republicans for not going along with this, but the president will praise the Republicans in this latest development, this seeming breakthrough here.

Bill Burton even said he thought it was very encouraging what was happening. They're trying not to get ahead of themselves a little too much. They said OK, well, we'll wait for the vote to happen late tonight or early tomorrow morning, but clearly, Wolf, the White House strategy has been working.

We have heard this president even just a couple of hours ago when he was in Missouri saying that those few -- the irresponsible few on Wall Street are wreaking havoc on all of those on main street, on all Americans.

Yesterday he was saying that it was just downright irresponsible and wrong for the Republicans not to move forward on the debate. So they feel quite vindicated about all this and the president is doing it outside of Washington.

Outside of the beltway, kind of wrapping himself in these pictures of Americana and rule America. This is exactly, Wolf, what the White House was hoping.

BLITZER: All right, Suzanne. Thanks very much. The president in Illinois. He was in Iowa yesterday.

There's other breaking news we're following right now here in THE SITUATION ROOM. The governor of Florida, once seen as a possible Republican vice presidential prospect, turns his back on his own party.

CNN has learned that at this time tomorrow Charlie Crist plans to announce that he's dropping out of the GOP Senate primary and will run instead as an independent. Crist has been openly considering the move after falling more than 20 points behind his Republican primary opponent Marco Rubio.

Let's bring in our senior political analyst Gloria Borger.

Not a huge surprise, but still a very dramatic development.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: It is. And under the scenario that our colleague John King has been reporting and I have been reporting is that Crist has started calling his financial backers and letting them know that he intends to run under what's called a no-party affiliation label.

And it became very clear to his campaign that he could not beat Rubio. You said he was more than 20 points behind. They started putting negative ads on the air in Florida. That didn't seem to have any impact, but let's take a look at this.

When you look at a hypothetical polling, a three-way independent, if Crist runs as an independent, no party affiliation, 32, Rubio, 30 and the Democratic candidate, Kendrick Meek at 24 percent.

So he believes that that would give him more of an opportunity to stay in the game. The Republicans I talk to say no way. His money is going to dry up. His support is going to dry up and those independent voters he's looking for are not going to flock to him.

BLITZER: It will be interesting if he does get elected and if he is elected as an independent, if he comes to Washington, would he caucus with the Republicans or with the Democrats. It may be a little premature to start thinking about that.

BORGER: But it's a little -- it's a little premature.

BLITZER: Joe Lieberman, remember, ran as an independent caucuses with the Democrats.

BORGER: You know, it's obviously very premature to start talking about that, but he would be a very powerful United States senator, but Wolf, first, he has to get there and what he is telling his supporters in asking them to stay with him -- and by the way, the Republicans I talk to say they're going to run what was called to me a gigantic effort to tell his supporters, not only to not continue supporting him, but to take back their money.

But what he's telling them now to try and keep them in the fold is, look, I've been listening to Florida voters. Florida voters are tired of Republicans, they're tired of Democrats, I'm doing what the Florida voters want me to do.

When you talk to Republicans, they say actually it's more opportunistic than that.

BLITZER: We're standing by. Michael Steel, the chairman of the Republican Party, will be here in THE SITUATION ROOM. We'll get his reaction to this and a lot more. That's coming up later in THE SITUATION ROOM.

Gloria, thanks very much.

There's new pressure on the Obama White House to challenge Arizona's tough new immigration law. Political battle lines are being drawn right now over the federal government's response.

We have an exclusive interview with the key player in the debate. Senate Republican Lindsey Graham. He's speaking out on what's going on. We have the tape.

And we're learning that an Iranian Navy jet came closer than we realized to a U.S. carrier. What does this tell us about the military threat from Tehran?

And a U.S. Supreme Court decision ruling on a case we've been following involving a cross in the desert, and the separation of church and state.

(COMMERCIAL BREAK)

BLITZER: Jack Cafferty is here with "The Cafferty File." Jack.

JACK CAFFERTY, CNN ANCHOR: Arizona's tough new immigration law hasn't even been gone into effect yet and it's already working. Mexico has issued an alert for Mexicans traveling to Arizona. Mexico urging its citizens to be careful that they may be harassed and questioned without further cause at any time should they go to Arizona.

That's not the case at all, of course, but it's ironic, isn't it? Travel warnings usually work the other way around with various countries warning their citizens not to go to Mexico because of all of the drug-related violence there.

However, no good deed goes unpunished. The Obama administration says it might challenge Arizona's new law in court. They're apparently concerned the law would take away resources needed to target criminals.

How utterly absurd. There are 460,000 illegal aliens currently inside Arizona's borders, and the reason they're there is that the federal government refuses to enforce our immigration laws.

Meanwhile, seven members of the Los Angeles city council have signed a proposal to refrain from the city of Los Angeles -- to refrain from conducting business in Arizona. And San Francisco's mayor has imposed an immediate moratorium on city-related travel to Arizona.

That Arizona's governor Jan Brewer says she's not worried about possible boycotts and she points out the new laws about the safety of Arizona's citizens. And she's getting support from at least one legislator in Texas who wants the Lone Star State to pass a similar law.

Shouldn't President Obama be embarrassed by some of this? This is a federal job. They're not doing it.

Here's the question: Is it a good thing that Mexico is issuing a travel alert over Arizona's new immigration law? Go to CNN.com/caffertyfile and post a comment on my blog.

BLITZER: Get ready, Jack, you'll be swamped with a lot of comments.

CAFFERTY: Yes, we already got a lot, actually.

BLITZER: I'm sure you're going to be getting a lot more. Stand by.

CAFFERTY: Yes.

BLITZER: There's meanwhile a new backlash today over this tough immigration crackdown. That would be the law signed as we've been reporting by the Republican governor of Arizona last week.

Today House Democrats and Republicans held dueling news conferences asking the federal government to step in, but they want very different kinds of action.

Republicans are asking the president to send National Guard troops to the border with Mexico to protect Arizonans and others threatened by drug violence. Democrats want the Obama administration to challenge this new Arizona law in court and they're promoting comprehensive immigration reform on the national level.

Let's bring in our congressional correspondent Brianna Keilar to report on what's going on.

The notion of comprehensive immigration reform, is that likely to get off the ground any time soon?

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: Well, it's very much at a standstill right now, Wolf, and it has to do with an impasse between Democrats and Republican Senator Lindsey Graham. He's been really the only key Republican who has been talking with Democrats about immigration reform, but he is right now furious with Democrats for talking about moving forward with immigration reform legislation during this year.

He has basically said it is being set up for failure, it's not ready at this point, and CNN caught up with him for an exclusive interview today and he was asked if his decision had anything to do with his very good friend and colleague Senator John McCain of Arizona who is facing, really, a very tough primary battle with the challenger from the right, from within his Republican ranks.

And here is how Lindsey Graham responded to that question.

(BEGIN VIDEO CLIP)

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: The biggest loser bringing up this way is immigration reform's potential future because it has no chance of passing. Look at the Democrats who were taking a pass on this.

So to bring it up now would do a lot of damage to the future of immigration reform, something I care about, and it makes energy and climate impossible, and this doesn't hurt Senator McCain, it doesn't hurt Lindsey Graham. It hurts the country.

(END OF VIDEO CLIP)

KEILAR: Now Senator Graham has essentially accused Senate majority leader Harry Reid, the Democrat of Nevada, of playing politics with this, of putting this idea of immigration reform that he thinks is really half baked at this point, of putting it out there as a priority because Senator Reid himself is facing a very tough re- election battle in Nevada and he has essentially accused him of trying to really rile up Hispanic supporters so they'll come out for him in November.

But the other interesting side effect of all of this, Wolf, is that Lindsey Graham has also been sitting down with Democrats to talk about energy and climate change legislation, another huge priority here, and at this point he's walked away from the table on that issue because he's so upset over this issue of immigration reforms. So two big issues at a standstill -- Wolf.

BLITZER: So between now and November, the midterm elections realistically, and you've got your ear up there on Capitol Hill. One of the prospects that either of these pieces of legislation -- the immigration reform legislation or the energy legislation -- either one will really get passed.

KEILAR: Yes, and let's not forget as well that there's a Supreme Court nominee that Democrats are aiming to confirm as well this year before the August recess, and so right what we're hearing from Democratic sources is that they expect it would be very tough to move either of these. Either immigration reform or energy and climate change legislation -- Wolf.

BLITZER: They've got their hands full right now. Let's see what they do.

All right, thanks very much for that, Brianna Keilar.

The Florida governor Charlie Crist. He's leaving the Republican Party. We've been following the breaking news. He will run for the U.S. Senate as an independent.

How will that play with the GOP leadership? The chairman of the Republican Party, Michael Steele, is here in THE SITUATION ROOM. We'll get his immediate reaction to that and a lot more. And what's prompting the Iranian president Mahmoud Ahmadinejad to apply for a United States visa. He wants to come to the United States! We're getting answers.

(COMMERCIAL BREAK)

BLITZER: Lisa Sylvester is monitoring some of the other top stories here in THE SITUATION ROOM.

Lisa, what do you have?

LISA SYLVESTER, CNN CORRESPONDENT: Hi there, Wolf.

Well, despite positive signs of improvement in the U.S. economy, the Federal Reserve says it's not enough to begin raising interest rates any time soon. The Fed cut -- the Fed, rather, cut its key interest rate to near zero percent back in December of 2008 in the hopes of jumpstarting an economic recovery. It's remained there ever since.

And the U.S. Supreme Court has ruled that this cross which sits on National Parkland in the Mojave Desert does not violate the constitutional separation of church and state. In the 5-4 decision, the justices said that a lower court went too far in ordering the removal of the congressionally-endorsed war memorial.

The cross had been covered with plywood for the last several years following previous court rulings.

And first it was accelerator trouble for Toyota. Now a defect that causes some vehicles to hesitate or slowdown at low speeds is prompting new problems for the car giant. The company is recalling 50,000 2003 Sequoia SUVs because of an issue with their vehicle's stability control systems. There have been no reports of injuries or accidents as a result of this defect.

And new concerns about the air that we are all breathing. A new report for the American Lung Association says more than half of Americans are living in cities with unhealthy air quality. But it cites new initiatives like cleaner diesel engines as helping reduce soot and dust levels. The report names -- no surprise here -- Los Angeles as having the nation's worst ozone pollution. And among the cleanest cities? Fargo, North Dakota.

Fargo, North Dakota. Not a bad place to live. I think they have one of the lowest unemployment rates, too, Wolf.

BLITZER: Fargo is a nice -- it's a very, very nice place and a lot of open skies up there.

SYLVESTER: Yes --

BLITZER: That's why they have the clean air. Thanks very much for that, Lisa.

Guess who's coming to the United States of America? The president of Iran. He has now officially applied for a visa. You'll find out why Mahmoud Ahmadinejad is coming to New York. Stand by.

And speaking of Iran, a very close encounter between an American war ship and an Iranian fighter jet. You're going to hear what happened.

Plus, in the middle of the debate over Arizona's new law. What's being done to secure the border?

(COMMERCIAL BREAK)

BLITZER: You're in THE SITUATION ROOM.

Happening now, it's a race against time as crews struggle to prevent gallons of gushing oil from reaching shore after that massive rig explosion. Now we're getting exclusive reaction to the blast from the CEO of the company that used that rig, BP.

And new -- new details unfolding right now in the case of that former Air Force intelligence specialist who allegedly claimed to have explosives on board a transatlantic flight. We have the details. That's coming up.

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

Only moments ago President Obama welcomed the news that the U.S. Senate is now set to move forward and debate financial reform legislation. The president has been touting the overhaul in Illinois this hour.

Senate Republicans now have agreed to stop blocking debate, but the behind-the-scenes negotiations between the two sides have fallen apart at least from now.

Listen to the president only moments ago.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The partisan issue. Everybody. Republicans and Democrats and independents were hurt by this crisis, so everybody should want to fix it.

So I'm very pleased that after a few days of delay, it appears an agreement may be in hand to allow this debate to move forward on the Senate floor on this critical issue.

(CHEERS AND APPLAUSE)

OBAMA: I'm very pleased by that. And I want to work with anyone, Republican or Democrat, who wants to pursue these reforms in good faith. And there can be some legitimate differences on certain issues, but the bottom line is consumers have to be protected.

We have to end bailouts. We've got to make sure that these trading practices are out in the open. We've got to make sure that people have a say in terms of how these firms operate so they're more accountable. So as long as we're adhering to those clear principles, then I feel OK. What I don't want is a deal made that is written by the financial industry lobbyists. We've had enough of that. We've had enough of that.

I want to listen to what they have to say, but I don't want them writing the bill. I don't want Democrats and Republicans agreeing to a bill written by them for them. I want a bill that's written for you. For the American people.

(END OF VIDEO CLIP)

BLITZER: Our senior political analyst David Gergen for some perspective.

David, can we now simply assume that there will be Wall Street reform?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: I think so, Wolf. There are a couple of contentious issues still to resolve. Consumer protection and derivative, both very important. But this bipartisan agreement today will end the filibuster.

CNN has learned that Republican Senator Susan Collins will now vote to end the filibuster. I'm sure other Republicans will join her. That will really pave the way not only to a debate, but final passage of a bill, and the biggest -- the biggest reform of the financial industry since the Great Depression.

BLITZER: Can they clean up their act, if you will, and do the kinds of things that will prevent what happened a year and a half, two years ago?

GERGEN: That's a very important question. Nobody knows the answer, Wolf. What we do know, Hank Paulson when he was treasury secretary said we'll have disruptions in the financial markets about every four or five years. That's just the nature of capitalism. The question is are they now putting the safeguards in place to prevent the next disruption or the one after from turning into a great recession and throwing so many people out of work. The hopes are that they will and that they've done a lot of good things and this is a very dynamic, capitalistic system and things, you do have sort of these eruptions, periodically and you can't be absolutely certain, but the country backs us, Wolf. Notably some banks. We've learned now that Citigroup as well as UBS and Morgan Stanley backed these financial reform and most economists say that it will make us safer.

BLITZER: We are told, by the way, that the vote on the Senate floor to move forward and allow this debate to actually begin on the Senate floor will happen within the next hour. We'll of course, watch that closely, David. So the Obama administration and the Democrats get health care reform. They're probably going to get some sort of financial reform right now, but when you look towards November and the midterm elections, doesn't the economy and jobs, don't that really represent the top priorities that the Democrats need to make sure they don't do as bad as some expect? GERGEN: Absolutely, on that issue, the jury is still out. We still have a very stubbornly high unemployment rate. We'll be watching those numbers very closely in the months ahead.

BLITZER: David Gergen will be watching with us every step of the way. David, thanks very much.

We're also learning right now this about Iran. It's flexing its military muscle, shockingly close to a U.S. naval carrier. Our pentagon correspondent, Barbara Starr has the details for us. Barbara, tell us what you know because it's pretty alarming.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: You know, Wolf, this is not the story that the pentagon wants to talk about, but we've been digging around and that we have now learned last Wednesday morning, just one week ago, 5,000 sailors onboard the aircraft carrier "Eisenhower" out in the Middle East got an unexpected wake-up call when an Iranian navy patrol aircraft, unarmed, but nonetheless on the move, came very close to the Ike, to the Eisenhower.

Here are the details. The Iranian plane flew 1,000 yards close to the ship, 1,000 yards off the deck of the ship, 300 feet in altitude. The U.S. navy had a number of radars tracking the aircraft; in fact, they were on alert watching this. They tracked it for 100 miles, as it came out of Iran into the Gulf of Oman. That is outside the Strait of Hormuz. That essentially, is an area where aircraft carriers operate to conduct their flight operations over Afghanistan, for the war in Afghanistan. The Iranians came out to have a look. The navy says not provocative, no big deal, not a threat, but they were watching this all very closely. Any time there is an interaction between the U.S. military and the Iranian military, it certainly gets everyone's attention.

BLITZER: It certainly does. Easily, if that plane could have gotten any closer I wouldn't be surprised if the troops aboard that aircraft carrier would have used firepower to knock it out of the sky if they got much closer than that, but here's the question, the timing of this incident. What are they saying to you about that?

STARR: Well, let me just go back on one point. This was all in international airspace. Nonetheless, aircraft carriers don't like anybody getting too close to them that they don't know, that isn't one of their airplanes to be sure. The reason the timing of this was so interesting is it was just the day before Iran in that piece of water of the Persian Gulf, right in that neighborhood was beginning a series of major war games and major exercises. The U.S. military was already watching that 24/7. Now they see the Iranians coming out and having a look at a U.S. navy aircraft carrier, all very non-provocative, we're told, all very non-threatening, but this is a very narrow piece of territory, if heaven forbid things go bad, they'll go bad very quickly and that's what everyone wants to avoid and at least in the U.S. navy they're not looking for troubles.

BLITZER: It's a sensitive issue. Thanks very much, Barbara. We're working this other story related, the Iranian president Mahmoud Ahmadinejad applying for a visa to come to the United States. We're getting details. Stand by for that.

Also a stunning shift as Republican Governor Charlie Crist leaves his party. We're getting reaction from the Republican Party Chairman Michael Steele. He's coming into THE SITUATION ROOM. We'll discuss that and a lot more.

And why is the former first lady Laura Bush raising the possibility that she and her husband were actually poisoned, poisoned during a 2007 visit to Germany? We'll have details from her brand new book.

(COMMERCIAL BREAK)

BLITZER: Let's check back with Lisa. She's monitoring other top stories in THE SITUATION ROOM. Lisa, what else is going on?

SYLVESTER: Hi, Wolf. Iranian President Mahmoud Ahmadinejad could be coming to the United States next week. The state department says Ahmadinejad has applied for a U.S. visa to attend the nuclear non-proliferation treaty conference at the United Nations. The department also says that United States normally grants visas to delegations coming for official business. No word yet, though on whether the visa has been approved.

The execution of a Utah inmate sentenced to die next month by firing squad could be put on hold. Attorneys for Ronnie Lee Gardner have filed a motion to stay the execution while they appeal his case. The state opposes any delay. Gardner was sentenced to death in 1985 for murder. If executed he would be the first person to die by firing squad since 1996. He requested a firing squad instead of lethal injection.

And the man behind the controversial arrest of Harvard professor Henry Lewis Gates, he's making headlines again. Cambridge Police Sergeant James Crowley will take on the role of grand marshal at a Rhode Island parade this Sunday. His arrest of Gates last summer prompted a debate on racial profiling. President Obama later invited the two men to the white house for a beer. There you see it there Wolf, the famous beer summit.

BLITZER: There it was. Joe Biden enjoyed a glass of beer himself. Thanks for that, Lisa.

We seeing and is hearing all sorts of backlash to Arizona's tough new immigration law. Is the law really a license for racial or ethnic profiling as the critics claim and should President Obama and Congress step in? Just ahead, a debate, a Democratic Congressman and an Arizona sheriff. They are on very different sides of this issue. We'll discuss with them when we come back.

(COMMERCIAL BREAK)

BLITZER: Right now the state of Arizona is facing the threat of a boycott over its new very tough immigration law, and that's just one of the ideas being tossed around by opponents who say the law would violate civil rights and open the door to racial profiling. Joining us now, Congressman Xavier Bacerra of California, he's one the House Democrats urging President Obama to challenge the law and to promote comprehensive reform. Also with us, the Pinal County sheriff in Arizona, Paul Babeu. He's a vocal supporter of Arizona's new law. Gentlemen, thanks to both of you for coming in. Congressman Becerra, has the Obama administration done enough to protect the borders with Mexico?

REP. XAVIER BACERRA (D), CALIFORNIA: Wolf, they've done more than any president has in the past, but certainly we can continue to do more because there is growing violence emanating from Mexico. I don't think anyone thinks we've done enough. Certainly this president has done more than any president before him.

BLITZER: Do you agree with that, Sheriff?

SHERIFF PAUL BABEU, PINAL COUNTY, ARIZONA: Absolutely not. In fact, President Bush had deployed 6,000 soldiers to the border and I was honored to serve as one of them and that's why Senator McCain and John Kyl proposed 3,000 soldiers to the border and in fact, that's exactly what we need. You want to have sheriffs and law enforcement leaders actually calling for troops to help us address a crime situation in our state, if that wasn't the case.

BLITZER: The argument, Congressman Bacerra, that they're making the supporters of the new law in Arizona, is just a dangerous situation. The violence along the border, illegal immigrants coming in and the federal government not doing enough. They had to take the ball into their own court. What's wrong with that argument, Congressman?

BACERRA: Well, there's nothing wrong with an argument if you want to protect yourself or do something to help protect your citizens. It does become a problem when you do it in a way that is unconstitutional. It would be an unconstitutional invasion of people's privacy rights and also a violation of the fourth amendment. So there's nothing wrong with Arizonians trying to protect themselves lawfully and nothing wrong with local law enforcement trying to protect its citizens. It's just when you try to go into federal law and you want to create racial profiling and implement this.

BLITZER: Can you do it without racial profiling?

BABEU: Absolutely. With due respect to our Congressman, this is a mirror copy of the federal law that we just made as a state law. And it's a class one misdemeanor here in Arizona. How we work in law enforcement, we do not profile. Every day our officers across America respond to emergencies or calls for service and we put all those building blocks of reasonable suspicion and probable cause in order to respect the fourth amendment and our constitution, and we take lawful action.

BACERRA: So, Wolf --

BABEU: My staff, which are Hispanic and a third of our population. So clearly, we're going to do so with due regard as protectors of our community. BLITZER: Congressman, you disagree with that. Go ahead.

BACERRA: I respect the sheriff and I applaud him for his service and I thank him for his service because we need folks who will stand up to help protect the citizens, but sheriff there is no way you will tell me that you will determine that someone is unlawfully in the country without profiling. There is nothing to try to determine whether someone has the right on walk on a street or not. The law permits any law enforcement official in the state of Arizona who makes contact, lawful contact with an individual. That means we could be crossing paths on a street, making contact so long as they don't do it illegally allow the officer to ask questions, on what basis? We don't know and while he may not have concerns about it, maybe he will enforce the law. We know that this is far from constitutional and we've gone through things like separate, but equal and other things that people say they're OK and still be constitutional.

BLITZER: Go ahead Sheriff.

BABEU: Here in Arizona, we've been stopping cars and for a primary purpose and just last night, we have the deputies stopping vehicles for speeding or for other violations and when we have contact, here's what reasonable suspicion is. If I ask you for your driver's license, registration and proof of insurance as we do with every motorist, it now, if you don't give us an Arizona or another state's driver's license ask say it's a Mexican national driver's license or I.D., that gets us to the point now, that's a clue in law enforcement when we can ask, hey, where are you from, do you have permanent precedence here?

BLITZER: But Sheriff, let me though out a hypothetical to you. You have a bunch of guys who are standing in a street corner, day laborers can you just go over there? They're peaceful and standing by waiting for a truck, let's say, can you go over there and ask for their papers?

BABEU: Well, here that always there's a lawful purpose and a contact that for us to go out there and do, that that's a little bit of a stretch and here.

BACERRA: That's a lawful contact, Sheriff.

BABEU: It is a lawful contact. In fact, we have border patrol on.

BACERRA: That gives people the right to ask people who are standing whether they are here legally or not. Why ask someone standing as a day laborer and not standing in front of Macy's department store. What's the difference?

BABEU: Here's where Arizona happens to be a border state and when we've had literally hundreds of thousands of people who are here illegally, and this is the key word.

BACERRA: I respect that. I don't contest that, Sheriff. We agree with you on that and we understand the frustration and the fear of folks in Arizona, but that doesn't give us the right to violate citizens' constitutional right. I want you to go after the folks trying to harm the citizens of Arizona and the citizens of California, but to do it lawfully.

BABEU: Absolutely, and we do everything lawfully.

BACERRA: But you can make a lawful contact at any point.

BABEU: People put out all of the time referring to law enforcement here in Arizona as Jack boot thugs and all these other extreme --

BACERRA: I never said that.

BABEU: You haven't said that, absolutely and this is where we ask people that --

BLITZER: I want to be precise, Sheriff. On the hypothetical, it's a hypothetical, a bunch of guys standing on a street corner waiting to get a job and hoping that some guy will pull up with a truck and say we'll go out and do this work, is that reasonably suspicious enough for you to say I want to see your papers?

BABEU: It's reasonable enough to have a conversation with a person and to establish, absolutely, for here in Arizona, where this is -

BLITZER: Even if they're peaceful and not doing anything wrong? They're just standing there?

BABEU: There are laws currently in Arizona for people standing on the street and this is where we've had issues like this throughout Arizona, where there could be ten, 20 people who are standing that it's a law currently that people cannot go and pick up illegal immigrants and take them to jobs or to work, and this is where -- why are we here in this situation, in this crisis?

BLITZER: Congressman ...

BABEU: Here in law enforcement people trust us with doing everything from making an arrest and to suspend someone's law enforcement.

BACERRA: Sheriff, no one challenges your good faith. That's not the point here and we want you to do what we can to avoid the death of another rancher in Arizona or the harm to any Arizonan.

BABEU: Or police officers.

BACERRA: We'll be happy to give you more police officers, the cops on the beat program.

BABEU: No, you haven't.

BACERRA: What I don't want my father to be for my father to be pulled over, he grew up in Mexico and his English is still broken and he probably has an appearance that might cause someone to say he may not be here legally.

BLITZER: Hold up for a second because we are out of time, but a quick question to the Congressman Bacerra. Do you support a boycott of Arizona?

BACERRA: If the Arizona politicians think this is courageous leadership, then I am one of those who believes that Arizona, its leadership is telling me it doesn't want my business.

BABEU: Congressman, what's your solution to this?

BACERRA: We have to have sensible laws to vote to the business of arresting people who are harming folks in your community and go after the crime in your community and let us deal with, as you said, beefed up border enforcement.

BABEU: Are you going to send soldiers to the border to stop the flow of hundreds of thousands of people who are coming across our unsecured border in Arizona?

BACERRA: We need to send you more law enforcement authority to take care of the border, absolutely. That way you can focus your taxpayer-funded police officers on crime in your community, absolutely.

BABEU: That's why we have done this. In the absence of federal action.

BACERRA: And Wolf there is the answer. I'm not going to judge what the sheriff and others are trying to deal with. They are dealing with the frustration and anger that's out there and the fear. We have to take care of that. That's why we need to act here now to resolve these broken immigration laws.

BABEU: Congressman, then I asked you to support the Senator McCain and Kyl plan that literally brings it. This is more important than Senate bill 1070 in my opinion. If we stop the flow, then some day we can have a more meaningful discussion about what we do with the 13th bus.

BLITZER: We have to leave it here, but it's a good discussion and we would love to have you both back if you are willing. Appreciate it very much.

BABEU: Absolutely.

BACERRA: Thank you. Thanks sheriff.

BLITZER: The man accused of making a false bomb threat aboard a Paris to Atlanta flight is going to court. We have new information just coming in. I will ask the Republican Party Chairman Michael Steele where he stands on that Arizona immigration law. Stand by.

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BLITZER: Let's get right back to Jack for "The Cafferty File." CAFFERTY: The question this hour: Is it a good thing that Mexico is issuing a travel alert to citizens over Arizona's new immigration law? Got a lot of mail.

Bruce in Oregon: "It sure as hell won't hurt Arizona. Our fellow citizens there have been put to the test and then some, thank God they have the guts to stand up for themselves when the federal government has essentially abandoned them. Thanks Arizona for showing us what protecting our country is all about."

John in Arizona writes: "The viewers are interested in why we in Arizona are so fed up with the lack of border security. Visit the legacy of Janet Napolitano and others to interview the illegal criminals who are jamming our prisons, jails and courtrooms. We are drowning in the sea of illegal aliens who have no problem being fed and housed at taxpayer expense."

Scott in San Diego: "This is not good for California. The illegal immigrants will just come here, raise our crime rate and bankrupt our state further. Our taxes can't be raised high enough to cover the burden they place on our budget. I think a move to Arizona is probably in the near future."

Chris in Iowa writes: "It's a good sign that it's being taken seriously. The Arizona law itself is probably unconstitutional and rings dangerously of jack boots. But the motivation behind it is right. Immigration is out of control and people rightly are scrambling for any effective solution."

Greg in Phoenix writes: "I love it. First, Arizona steps up to the plate to actually attempt to keep illegal immigrants out. Now Mexico issues a warning. You'd think our federal government would have some nerve, some elan, some zeal for protecting the United States from illegal immigrants. Tough bounce for the ACLU politicians in general and any other offended dweeb who doesn't like it."

Luke writes: "I believe Mexico's being proactive, preparing its citizens for what is inevitable. I hope Canada, Latin America and South American countries are getting ready, preparing their citizens as well. The entire world goes on notice. Be prepared to be stop and harassed by the Americans."

Jeff writes: "Now if only Mexico would issue a travel alert from the other 49 states, we would be in business."

If you want to read more on this, we have a couple thousand letters like that. Go to my blog, CNN.com/CaffertyFile.

BLITZER: Thanks Jack. Will do. Appreciate it.

It's a CNN Exclusive. We are going one on one with the CEO of the company that used that oil rig blown that was blown apart by a massive explosion. You're going to want to hear what he is saying and why he is so angry about this blast.

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