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THE SITUATION ROOM

Interview with Senator Jon Tester; Potentially Major Breakthrough in Stem Cell Research; Zalmay Khalilizad May Replace John Bolton

Aired January 8, 2007 - 17:00   ET

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


WOLF BLITZER, HOST: And to our viewers, you're in THE SITUATION ROOM, where new pictures and information are arriving all the time. Standing by, CNN reporters across the United States and around the world to bring you today's top stories.
Happening now, President Bush prepares to unveil a new strategy for Iraq.

Can an increase in U.S. troops suppress the sectarian violence or is that a strategy that's already failed?

We'll get a preview of what the president has in mind.

Newly empowered Democrats worry about an escalation in Iraq.

Will they try to tighten the purse strings?

I'll speak live with Montana Democrat, Senator John Tester.

And researchers say they've found a promising new source of stem cells in pregnant women.

Could that bring a cease-fire in the bitter political battle over the use of embryos?

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

It's been many weeks in the making now. With a feverish last burst of activity, the Bush administration is wrapping up its work on its new strategy for Iraq. The president will take the wraps off Wednesday night.

Sources say the plan will involved a lot more troops and a lot more money. Critics question whether it can work.

CNN's Brian Todd and Tom Foreman are standing by.

But let's begin our coverage this hour with our White House correspondent, Suzanne Malveaux -- Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, earlier this afternoon, President Bush met with a small group of Republicans, including Senator Gordon Smith. I spoke with him. You may recall, he shocked his colleagues when he went before the Senate floor saying he was at his end of his rope with the Iraq policy, a continually failed policy, he said, which perhaps would be absurd or even criminal to continue.

Well, he said he and the president have put that aside, but now he, like many lawmakers, has a new set of concerns.

(BEGIN VIDEO TAPE)

MALVEAUX (voice-over): While sectarian violence threatens to throw Iraq into civil war, President Bush is refining his new plan to fix it. Sources say it's called "A New Way Forward."

The president will officially unveil it to the nation in a 25- minute speech at 9:00 Eastern Wednesday night.

But sources familiar with the president's deliberations say Mr. Bush and his top advisers knows this is going to be a hard sell.

TONY SNOW, WHITE HOUSE PRESS SECRETARY: some may agree to agree, some may agree to disagree. I mean that's -- that's necessary. But I think if this can be conducted in a spirit of getting it done right, I think it'll be constructive for all concerned.

MALVEAUX: The most controversial aspect of it?

The call for sending at least 20,000 U.S. troops to Iraq and perhaps other areas in the region. Administration officials have been debating whether to send them in all at once as a big show of force or phase them in from month to month, depending on whether the Iraqis meet certain military and political goals.

Sources familiar with the deliberations say the phased in approach seems to be winning the day.

But lawmakers attending various meetings at the White House expressed reservations.

REP. GEORGE MILLER (D), CALIFORNIA: Any request for additional troops is going to have to be accompanied by a very, very strong justification and, in fact, a detailed plan as to what would the purpose of that escalation of those troops be.

MALVEAUX: the president is also considering sending some troops to Kuwait as a contingency force, as some Democrats have called for. The plan also includes a major economic component -- an expected billion dollar new job program to get Iraqis back to work; more State Department officials that will head to Iraq to coordinate reconstruction projects with Iraqi companies.

(END VIDEO TAPE)

MALVEAUX: And, Wolf, expect, after Wednesday, the big sell from this administration, a series of briefings, the president heading to Fort Benning in Georgia to address the troops, as well as Secretary Rice leaving some time on Friday to head to the Middle East and Europe to sell this plan -- Wolf.

BLITZER: Thank you very much for that, Suzanne.

We'll be watching it every step of the way.

And as new details emerge about the president's Iraq strategy, is there more or less to it than actually meets the eye?

Let's turn to CNN's Brian Todd, as we often do, for a reality check -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Wolf, with this windup to the big announcement and the key information we're getting on what the new plan will entail, an important word of caution -- watch what's not going to be said about the new direction of this war.

(BEGIN VIDEO TAPE)

TODD (voice-over): The president prepares to turn the corner. Sources tell CNN he'll line up at least 20,000 more troops for Iraq and will reaffirm his trust in the country's prime minister to go after those doing the sectarian killing.

What no one is saying, at the White House or the Pentagon, is how long the new American troops will stay.

ROMAN MARTINEZ, FORMER BUSH ADVISER: I don't think that it would be wise to announce a sort of a -- a, you know, a surge of limited duration that -- that allows everyone to know when -- when the good guys are going to be leaving.

TODD: Another key question not directly answered, will Iraqi troops confront Muqtada al-Sadr, the popular anti-American Shia leader, described as a kind of mafia don in clerical cover, whose Mahdi Army is blamed for killing large numbers of Iraqis and Americans?

Observers in Baghdad and Washington tell us this is where these two uneasy allies are in a vise. Nouri Al-Maliki was put in power with Sadr's backing. When I asked a top adviser to Maliki if Iraqi security forces will go after Sadr and his gangs, he said they would confront any illegal armed group.

When I asked if they consider Sadr's forces illegal, he said, "All militias are."

Iraq's national security adviser did the same dance in an on camera interview.

(on camera): So if the Mahdi Army shows up on the street, they'll be arrested?

MOWAFFAK AL-RUBAIE, IRAQI NATIONAL SECURITY ADVISER: There is going to be no differentiation between one militia and another militia.

TODD (voice-over): Some observers believe that includes Sadr. Others say the Iraqi government has no intention of taking him on.

The consequences for Maliki if he does?

ROBERT MALLEY, INTERNATIONAL CRISIS GROUP: The notion of having an all out confrontation between this Iraqi government and Muqtada al- Sadr and his militia is -- is not only an illusion, it's also a dangerous illusion, because that would not only, first of all, mobilize vast numbers of Shiites against the government, but lead to a civil war within a civil war; in other words, some Shiites against other Shiites.

(END VIDEO TAPE)

TODD: On the other side, some U.S. military and political leaders believe Sadr has to be taken out for Baghdad and other areas to be stabilized. But this is a man who controls several government ministries and dozens of seats in parliament. Maliki is, indeed, in a very difficult position here, and one White House source says the question of what Maliki will do with Sadr has been at the core of the struggle over how to turn around this conflict -- Wolf.

BLITZER: Good report, Brian.

Thank you very much.

Brian Todd reporting tonight.

So what exactly would this increase of troops look like?

CNN's Tom Foreman is here in THE SITUATION ROOM.

He's got some answers -- Tom.

TOM FOREMAN, CNN CORRESPONDENT: Let's take a look at Baghdad. This is Africa over here, Saudi Arabia. We move into a quick look at Baghdad, because this is where all of this is going to focus.

About 25 million people in the country, about five million of them living right here in Baghdad. This, right here, if you look at it very closely, is the palace that we talked about so many times in the past, in Saddam Hussein's days, right here down on the banks of the Tigris River.

There are many concern spots in Baghdad and by all accounts, those must be stabilized first.

Take a look at Baghdad up here on the wall. The airport up here to the north and down here, these are the areas that U.S. troops, coalition troops really have under firm control or what would be the firmest control we have.

But look at the trouble spots. These are areas where some of these different groups are focused that have to be brought under control.

This is a majority Shiite city, so there's these Shia militias at work there. Nothing bigger than Muqtada al-Sadr's group over here in Sadr City, which is right over here. That's where there going to have to be a real focus of effort, to see if the popular support there he has among Shia, who are very worried about the Sunnis of the country taking over, can be rooted out.

And, as you can see, that's block after block after block of very tight neighborhoods, the very kind of fighting that we've learned over and over and over again can only be done block by block and essentially man to man, some of the toughest kind of fighting where, really, many of the advantages of a great and extraordinary national army or military are offset, in large part, by smaller fighting, simply because that's the kind of fighting it is.

BLITZER: And, you know, it's a city of, what? Six million.

FOREMAN: Sure.

BLITZER: At least six million people, six-and-a-half million, at least that was the population. A lot of people have fled. A lot of refugees leaving Iraq right now.

But people don't really necessarily appreciate how difficult it is to control a huge city like this.

FOREMAN: Still plenty of people in all of these different neighborhoods that we're looking at here. Look, if we move in a little bit tighter, in all these very tight little neighborhoods, lots and lots and lots of people here. And this is, for every army in the world right now, one of the great challenges -- how do you fight in the middle of a civilian population when you're trying to stabilize the country and many of these civilians are saying you know what? I want the electricity to work. I want my kids to go to school and I want to feel safe as I go about my business. A very tough place to fight. And this is what would happen.

BLITZER: And a lot of these insurgents and terrorists, they put themselves in heavily populated civilian areas...

FOREMAN: Absolutely.

BLITZER: ... whether mosques (UNINTELLIGIBLE) or other areas like that, and the U.S. military has a tough time launching rockets into a facility like that.

FOREMAN: That's absolutely their specialty. And that's why it's such a difficult fight. Really, that's one of the reasons it's been so hard to stabilize so far.

BLITZER: Tom, thank you very much.

We'll keep watching this, together with you.

And this important programming note for our viewers.

CNN and the SITUATION ROOM will have special live coverage of the president's speech Wednesday night. I'll be right here, along with Paula Zahn and the best political team on television with everything you need to know about this major development in the Iraq War. That's Wednesday night. Our special coverage starts 7:00 p.m. Eastern.

Jack Cafferty is in New York with The Cafferty File -- Jack.

JACK CAFFERTY, CNN CORRESPONDENT: When the Democrats won control of Congress, the new House majority leader, Steny Hoyer, promised that things were going to change.

Remember?

He said members would have to work a five day week. Imagine that. Just like the rest of us. That's compared to the Tuesday through Thursday schedule that Congress worked during most of this past election year.

Last month, Hoyer told reporters: "We'll be working almost every day in January."

Well, that didn't last long. Democratic leadership sources tell CNN House Majority Leader John Boehner asked Hoyer not to schedule any votes today, the first Monday the new Congress would be in business. Boehner wanted the day off so he and some other members of Congress could go to a football game in Arizona, where Ohio State is playing Florida.

If the new Democratic-led Congress wants to improve its image, it's going to have to do a whole lot better than not scheduling votes so the members can go to football games.

Here's the question -- should the House of Representatives have taken the day off so Congressman John Boehner could go to a football game?

E-mail us at caffertyfile@cnn.com or go to cnn.com/caffertyfile -- Wolf.

BLITZER: It is a championship football game, Jack.

CAFFERTY: Oh, well, I guess that makes a difference. I don't know. It's...

BLITZER: Thank you.

Jack Cafferty will be back with your e-mail shortly.

Up ahead, the stage is set for showdown, with President Bush poised to announce a troop increase for Iraq.

Will Congressional Democrats go along? And if not, what might they do?

Also, word of a potentially major breakthrough in stem cell research that could shift the entire debate and the controversy. We're going to show you what researchers have discovered.

And a package at the Port of Miami testing positive for explosives. We'll show you what the bomb squad found.

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

(COMMERCIAL BREAK)

BLITZER: Welcome back.

Could a troop boost quell sectarian violence in Iraq?

Was a shuffle of officials and military commanders meant to quell misgivings about the new Iraq strategy?

Joining us now, our world affairs analyst, former defense secretary William Cohen.

He's chairman and CEO of The Cohen Group here in Washington.

Joe Lieberman, your former colleague, the now Independent senator from Connecticut, he spoke out earlier today.

I want you to listen to what he said.

WILLIAM COHEN, FORMER DEFENSE SECRETARY, WORLD AFFAIRS ANALYST: OK.

(BEGIN VIDEO CLIP)

SEN. JOSEPH LIEBERMAN (I), CONNECTICUT: If the president is going to increase the level of American troops, it has to be a substantial increase and one that is not time limited. It has to be mission directed.

(END VIDEO CLIP)

BLITZER: Like Senator McCain, Senator Graham, Lieberman says if you're going to do it, do it right, do a robust, substantive military troop escalation and just stay as long as necessary to win.

COHEN: Well, you have those on the right who will say it's too little, if you're talking 10,000, 15,000, or even 20,000; and those on the left who will say it's too late.

And so the question becomes what is the mission going to be?

And that has yet to be defined.

I think that Congress ought to ask some very serious questions of the administration, call General Abizaid, call General Casey and say tell us why you think a troop increase will not be successful. And then ask what has changed in terms of their analysis.

Bringing new people in is, you know, is always good, but General Petraeus now may have a different view.

What is that view based upon? What is it that they now see in the new people coming in that those on the ground don't see today? So those are the kind of questions that have to be asked before we make a judgment how many is too many or too few and how long should they be there.

BLITZER: General Abizaid, the military commander of the Central Command, he's going to be retiring.

COHEN: Right.

BLITZER: General Casey will be -- has been nominated to become a Army chief of staff. He's leaving his command position in Iraq.

Is that normal, to ask those who are leaving specific commands to come testify, let's say, before the Senate or House Armed Services Committees?

COHEN: I think any time they're on active duty, or even after active duty and retired, they should be called forward to testify. It's part of the confirmation process, when they have those four stars that they wear, that they come forward and give their honest truthful testimony. And Congress is entitled to that and I'm sure they'd be willing to do it.

BLITZER: Let's talk with Senator Barbara Boxer, Democrat of California, told me yesterday about this shift in military commanders.

Listen to this.

(BEGIN VIDEO CLIP)

SEN. BARBARA BOXER (D), CALIFORNIA: It looks like the president went shopping for a general who agreed with him. You know, Abizaid, retiring all of a sudden, he said every single commander on the ground there in November disagreed with the idea of a surge or an escalation.

(END VIDEO CLIP)

BLITZER: That's a strong charge from Barbara Boxer, that the president didn't like what he was hearing from General Abizaid or General Casey, so he went looking for new commands. Admiral Fallon coming in to take over the Central Command and David Petraeus going over to Iraq to be the overall commander there.

COHEN: Well, I think it does a disservice, certainly, to General Petraeus, to say that he is simply going to sing a song at the request of the administration that's inconsistent with his own beliefs. I don't believe that to be the case. I think what we have to hear is his own testimony in terms of his experience on the ground and that of his son, who was seriously wounded on the ground, to tell us why he thinks this new push may be successful.

The same is true with Admiral Fallon. I know Admiral Fallon and he's not someone's tool, as such, that's going to simply respond to pressure coming from the administration. This is a gentleman who has taken very forward looking positions in dealing with China. I have enormous confidence in him and his integrity, both gentlemen. So I think let's hear what they have to say. Let's not prejudge it. Go back to the issue. What is it that the commanding generals today see on the ground that they think will be unchanged by more troops?

Ask them for their opinion then measure that against what the new personnel may say in terms of their hopes that they may be able to achieve a different result.

BLITZER: And on top of all of this, Zalmay Khalilzad, the U.S. ambassador, going to the United Nations, assuming he's confirmed by the Senate.

There was some speculation he was irritating the Shiite leadership of Iraq because he wanted to do more to bring in the Sunnis.

COHEN: Well, it may be. But this is something -- going back to the Iraq Study Group -- this is something, I think, that the administration should have taken into account. We have got to have a balanced approach to this and one thing, it's -- we are caught in the middle of.

On the one hand, the Shia are concerned that the Iraq Study Group is recommending you bring the Sunnis into the process. On the other hand, those of us, myself included, feel that unless the Sunnis are brought into the police and military process, you'll not see an end to the sectarian violence.

So, the fact that you might alienate the Shia would not be a cause for the president to withdraw him from that area and bring him into the U.N. I think that he's shuffling people, but that's normal in an administration. I don't think that -- I don't think we should judge that without more evidence.

BLITZER: Thanks very much, Secretary, for coming in.

COHEN: Thank you.

BLITZER: And coming up, how will Democrats react to a proposed troop increase in Iraq?

I'll ask the new senator from Montana, Democrat John Tester. He'll join us live.

Plus, a bad smell in the Big Apple.

What's that odor that's been hanging over Manhattan, at least earlier in the day?

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

(COMMERCIAL BREAK)

BLITZER: Let's check back with Carol Costello for a closer look at some other important stories making news -- Carol. CAROL COSTELLO, CNN CORRESPONDENT: Hi, Wolf.

Hello to all of you.

A scare at the Port of Miami, where a package that was supposed to be loaded onto a cruise ship tested positive for explosives. A bomb squad blew it up. It turns out that it only contained fire sprinkler parts. The port has since been given an all clear and normal operations are resuming.

Officials here in New York City still trying to figure out what's behind a mysterious smell that's been lingering over Manhattan. Mayor Bloomberg says it's a small gas leak and he's assuring everyone there is no danger. But utility officials say they haven't been able to pinpoint the source and they're not convinced it's a gas leak. You could smell it all the way to New Jersey, where several people have complained of breathing problems.

One person is dead and about a dozen injured after an explosion at a coal burning power plant in Beverly, Ohio. That's about 100 miles southeast of Columbus. A delivery driver who was unloading hydrogen was killed in the blast, although it's still not clear if it was the hydrogen that exploded. It's used as a coolant for steam generators.

President Bush is declaring a state of emergency in parts of Colorado, Nebraska and Kansas socked by back to back blizzards. That clears the way for federal aid money to go to dozens of counties that were literally snowed in for days. The funds will help reimburse local governments for shelter operations, police over time and, of course, snow removal.

Back to you -- Wolf.

BLITZER: Thank you, Carol, for that.

Workers in Vancouver hope to begin repairs by midweek on that deflated stadium dome we showed you on Friday. The official cause of the tear is still being determined, but bad weather may have been a factor.

The Internet is also giving us a fresh look at the extent of the damage.

Let's go back to Abbi Tatton.

She has some details -- Abbi.

ABBI TATTON, CNN CORRESPONDENT: Wolf, we're now seeing eyewitness video appear online of just how this happened. This from Duncan Shields. He works nearby at BC Place Stadium and he was on hand to record a huge tear that appeared there on Friday afternoon during bad weather.

A spokeswoman for BC Place Stadium said that after that tear appeared, they then did a controlled deflation. You can see on this one the stadium being deflated afterward. They still don't know the exact cause, although they do think the bad weather was a factor.

There has been more damage over the weekend. The stadium is still deflated. Shield says he now is seeing workers on the roof of that stadium. His video has been viewed tens of thousands of times online on the site YouTube.

BC Place Stadium in Vancouver is the proposed site for the opening and closing ceremonies of the 2010 Winter Olympics -- Wolf.

BLITZER: Abbi, thank you very much for that.

Coming up, details of a stem cell discovery that could shift the entire debate. Researchers now say there's a way to get stem cells without destroying embryos.

And will Congress Democrats give President Bush the money to send more troops in Iraq?

I'll ask Senator John Tester. He's standing by to join us live.

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

(COMMERCIAL BREAK)

BLITZER: To our viewers, you're in THE SITUATION ROOM, where new pictures and information are arriving all the time. Happening now, President Bush expected to announce an increase of U.S. troops in Iraq, but it won't be the first time. We're going to show you what's different this time and what commanders have learned from past failures.

And how will Democrats react to the president's plan? Will they give him the money he needs to increase the U.S. mission in Iraq?

I'll ask freshman Senator John Tester of Montana. He's standing by to join us live.

Plus, a stem cell discovery that potentially could shift the entire debate. Researchers now say there's a way to get stem cells without destroying embryos.

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

The violence in Iraq rages on with unrelenting fury. Gunmen today ambushed a bus carrying workers to Baghdad's airport, killing at least four and wounding nine. In southern Baghdad, six members of a Shiite family were simply ambushed and killed by gunmen and at least four people died in a pair of Baghdad bombings.

Could a U.S. military troop increase help end this kind of violence?

As the Bush administration prepares to unveil its new strategy, let's turn to our senior Pentagon correspondent, Jamie McIntyre -- Jamie. JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: Well, Wolf, we've seen this strategy before -- with the security situation deteriorating, send in more U.S. troops to get things under control.

The question is how will this time be any different?

(BEGIN VIDEO TAPE)

MCINTYRE (voice-over): Operation Together Forward, the joint U.S.-Iraqi plan to take back Baghdad, was highly touted when it was announced last summer. But within just a few months, it was an acknowledged failure.

MAJ. GEN. WILLIAM CALDWELL, SPOKESMAN, MULTI-NATIONAL FORCE-IRAQ: Operation Together Forward has made a difference in the focus areas, but it has not met our overall expectations of sustaining a reduction in the levels of violence.

MCINTYRE: Despite committing close to 10,000 additional U.S. troops, including a Stryker Brigade moved to Baghdad instead of being sent home, violence in the Iraqi capital only got worse. In retrospect, U.S. commanders concede the flaws in the Together Forward plan were glaringly obvious: too few Iraqi troops to keep the peace after U.S. forces did the heavy lifting, and too much focus on the Sunni insurgents while ignoring Shia death squads.

The top ground commander in Iraq, Lieutenant General Ray Odierno, told reporters in Baghdad, "We overestimated the availability of Iraqi security forces initially. So we were able to clear areas, but we were not able to hold the areas."

Odierno says this time the U.S. will have a more balanced approach, going after both Sunni and Shia extremists. And U.S. troops will stay to protect the people.

Frederick Kagan is one of the outside advisers President Bush is listening to.

FREDERICK KAGAN, AMERICAN ENTERPRISE INST.: We're talking about a longer-term operation where we stay in the neighborhoods that we've cleared, partnered with Iraqi units. It's a very different concept from what went on in Together Forward.

MCINTYRE: Pentagon sources say the Army is participating in initial increase or plus-up, as the Pentagon is calling it, of three brigades, roughly 10,000 soldiers, including, perhaps, a brigade of the 82nd Airborne Division, which has just arrived in Kuwait. In addition, sources say, a Marine regiment will likely have its tour extended in neighboring Anbar province, while another fresh regiment is sent in, adding about 4,000 troops there. Two additional Army brigades would be held in reserve either in Kuwait or in the U.S.

(END VIDEOTAPE)

MCINTYRE: Pentagon sources say the additional troops could begin moving in to Baghdad as soon as a week after President Bush's statement Wednesday night about the new strategy, but what no one can say, Wolf, is how soon those troops might be ale to come out.

BLITZER: Jamie McIntyre for us at the Pentagon.

Thank you, Jamie.

And nine days after Saddam Hussein was executed, the trial resumed in the killing of 180,000 Kurds during the Iraq-Iran war of the 1980s. The late dictator's seat was empty, but six co-defendants still face charges of war crimes and crimes against humanity for their roles in the military campaign, which was code-named Operation Anfal.

The White House acknowledges that the president's new plan for Iraq will be a tough sell. And Democrats, who now control both houses of Congress and the purse strings, have some serious doubts about the troop boosts, as well as a boost in funding.

Joining us now is a new member of the United States Senate, Democrat Jon Tester of Montana.

You stepped right in to it, Senator. Welcome to Washington.

SEN. JON TESTER (D), MONTANA: It's good to be here, Wolf. Thanks.

BLITZER: Well, what do you think? By all accounts, the president is going to ask for a troop increase. Are you going to go along with him? Do you support this?

TESTER: Well, what I'm going to do is I'm going to hear what the president has to say and analyze it from there. I will tell you that, you know, up to now we haven't seen a plan and really no end in sight to what's going on in Iraq. I'm going to be looking forward to hearing what the president has to say about the surge, and then I'll make my mind up after I hear what he has to say, whether I'm going to support it or not.

BLITZER: So you have an open mind basically right now? You haven't met with the president yet or any of his top advisers? They haven't given you a little advance word?

TESTER: No, absolutely not. No.

I will hear probably for the first time Wednesday evening what the president has to say and what he has to offer as far as a plan goes. And then, like I said, we'll make -- we'll make our analysis of what he has to say at that point in time.

BLITZER: We've heard some Democrats already start talking about the purse strings, the power of the purse, which Congress controls. The new House speaker, Nancy Pelosi, is hinting at using that if the president goes ahead with a troop increase.

I spoke with Senator Barbara Boxer of California yesterday. She was hinting at that as well.

Lindsey Graham, the Republican senator from South Carolina, he's very passionate on saying to Democrats, don't do that. Listen -- listen to this.

(BEGIN VIDEO CLIP)

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: The stakes are extremely high. Please, Congress, understand what you're proposing when you say cut off funding or capping troops. You're proposing defeat.

(END VIDEO CLIP)

BLITZER: All right. What do you think? If you're not happy with the strategy the president lays out, the clarity that you want, that you're seeking, are you going to use this power of the purse to try to stop sending more troops in to Iraq?

TESTER: Well, I think that there has to be -- we have to have the ability to come together and work together on this thing. I mean, the president, who is commander in chief, hopefully will come to us and find out, you know, our thoughts on this whole thing before we have to do something that drastic because, quite frankly, I don't -- from my perspective, I don't know if we cut funds, if those funds would actually be cut in Iraq or somewhere else, if the money would be shifted around.

My goal is, right now, the people are pretty unhappy with the way things have gone. They don't see -- they don't see an end in sight to what's going on in Iraq.

Like I said, I'll give the president his due, have him tell us what his vision is. And -- but the fact is this can't go on forever. I mean, we can't afford it. We're losing young folks right and left.

The military has done and continues to do a great job in Iraq under unbelievable circumstances, but yet I've not seen a plan.

BLITZER: Montana is a big state geographic, not a big state population-wise. Has this war affected your state based -- you traveled all over trying to get elected the U.S. senator from Montana. Has it really had an impact out in Montana?

TESTER: Well, I think on a couple different fronts. We continue to lose young people daily. I got notification today of another one that was killed in battle. And that, along with the cost of the war financially, I think, concerns Montanans.

BLITZER: Do you have confidence in this Iraqi government, of Prime Minister Nuri al-Maliki, that he and his colleagues are going to step up and end the death squads, the Shiite militias, the Sunni militias, that they're going to go after Muqtada al-Sadr, this radical Shiite cleric? Do you have confidence that they have the guts, the willingness to do that?

TESTER: I would hope they would, but I haven't seen that. I mean, that's -- that's the bottom line as you go by what's occurred in the past and apply it to the future. And it hasn't happened as of yet.

BLITZER: The whole notion of this war, to a lot of critics it's becoming like Vietnam. What do you think?

TESTER: Well, I think that, you know, I mean, politically, to be honest, Wolf, it hasn't been handled very well. And we put our troops in a situation where it has become to look a lot more like Vietnam. And, you know, that's why I say, I want to hear what the president has to say tomorrow night.

Maybe -- maybe he's going to lay out a pretty concise plan for Iraq, and maybe it will be a change in position. I haven't -- like I said, I haven't got the preliminary speech or anything like that. So I don't know at this point in time. But as commander in chief and president of the United States, I think I owe it to him to hear him out.

BLITZER: The speech is Wednesday night.

TESTER: Or Wednesday night.

BLITZER: They still have -- they still have time to reach out to you. I suspect you might be getting a call from someone at the White House, just knowing how they operate under these kinds of circumstances.

Let's talk about the fact that you're a freshman United States senator right now. You've come in with the Democrats in the -- in the majority.

What do you make of the opportunities that you have to do something not only for Montana but for the country?

TESTER: Well, I think we have got tremendous opportunity. I think there's a lot of things in this country that need adjustment, whether it's this country achieving energy independence, or whether it's healthcare policies, or whether it's foreign policy. Or whether it's a policy on ethics that we've talked about today and we're going to be dealing with early on in this 110th Congress.

So I think there's tremendous opportunity. And in the Senate, you know, I'm one of 100. I have the opportunity to give input, and when appropriate we will be giving input and affecting the process.

So I look forward to this session. I think we've got some great opportunities to help working families and small businesses.

BLITZER: A lot of Democrats are grateful to you because you won in Montana and the Democrats are in the majority as a result.

Senator Tester, thanks very much for coming in.

TESTER: Thank you, Wolf. Appreciate it.

BLITZER: Hope you'll be a frequent guest here in THE SITUATION ROOM.

TESTER: I look forward to it.

BLITZER: And CNN and THE SITUATION ROOM will have special live coverage of the president's speech Wednesday night. I'll be here, along with Paula Zahn and the best political team on television, with everything you need to know about this major development in the Iraq war.

Our coverage starts 7:00 p.m. Eastern in THE SITUATION ROOM.

Just ahead, U.S. diplomats play musical chairs. We'll look at the ambassador picked by the president to move from Iraq to the United Nations.

And could there soon about truce in the bitter political batter over embryonic stem cell research? Scientists say they found a promising new source for these biological building blocks.

Stay with us. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: Welcome back.

There's word of a potentially major breakthrough in stem cell research that could shift the entire debate over the subject. It comes as congressional Democrats are poised to try to increase federal funding for controversial research.

Let's turn to CNN's Mary Snow. She's watching all of this in New York. She's got details of the discovery and the possible ramifications -- Mary.

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, it's a discovery that could provide an alternative to embryonic stem cell research. While it won't alter legislation proposed later this week, many say it will factor into the debate. And the debate is fierce.

(BEGIN VIDEOTAPE)

MICHAEL J. FOX, ACTOR: As you might know, I care deeply about stem cell research.

SNOW (voice over): Michael J. Fox's election campaign ads this fall are perhaps the latest example of just how heated the debate over embryonic stem cell research can get. Fox supports the research to help unlock potential treatments for diseases like Parkinson's, from which he suffers. Critics argue embryos should not be destroyed for research.

But could science be moving toward eliminating the controversy? Researchers at Wake Forest and Harvard say they've drawn stem cells from amniotic fluid that don't require destroying an embryo.

DR. ANTHONY ATALA, WAKE FOREST UNIVERSITY: These cells actually -- not human embryonic stem cells, not adult stem cells, but they do have qualities of both. So it's a new stem cell class, if you will.

SNOW: A new stem cell class, but one that is just being learned about. Researchers say preliminary tests in patients are years away.

Embryonic stem cell opponents are wasting no time in applauding the discovery.

DAVID PRENTICE, FAMILY RESEARCH COUNCIL: You do away with the ethical problems associated with embryonic stem cells, but you get all of the positives that most scientists say they want.

SNOW: Other scientists say, not so fast, and argue that embryonic stem cells are unique and hold the power to potentially cure many diseases.

JOHN GEARHART, JOHNS HOPKINS MEDICAL INST.: They're the only ones we know about that can form all 220-some different cell types that constitute the human body. Now, that's remarkable.

SNOW: The new stem cell research comes as House lawmakers plan to introduce a bill Thursday to expand stem cell research. One of its sponsors says the latest study won't alter the debate.

REP. DIANA DEGETTE (D), COLORADO: I do think that the study is fantastic news and I welcome it, but it's not a substitute for embryonic stem cell research. This research is going on around the world and has been for seven or eight years.

SNOW: But some conservative observers say this latest science only further heats up the debate.

RAMESH PONNURU, SR. EDITOR, "NATIONAL REVIEW": I think conservative groups are going to embrace the potential of stem cell research using amniotic fluid.

(END VIDEOTAPE)

SNOW: Now, last summer, President Bush vetoed a bill to increase federal money for embryonic stem cell research. The bill has bipartisan support. The question is, if there's a veto this time, will there be enough votes to override it?

Wolf.

BLITZER: Thanks very much, Mary, for that. An important story we're watching.

The California governor, Arnold Schwarzenegger, is unveiling a sweeping plan for university health insurance in his state. It would cover the estimated 6.5 million uninsured Californians, subsidizing the poorest and spreading the costs between the private and public sectors. Schwarzenegger estimates his plan will save $10 billion a year in healthcare costs, but he's sure to meet stiff opposition.

Up ahead, giving girls a chance to live their dreams. Oprah Winfrey speaks with CNN's Anderson Cooper about the school she's built in Africa. That report coming up in our 7:00 p.m. Eastern hour.

But up next, he's represented the United States in the battlegrounds of Afghanistan and Iraq. Now he's being named to another tough post, the United Nations. We'll take a closer look at Ambassadors Zalmay Khalilzad when we come back. (COMMERCIAL BREAK)

BLITZER: Welcome back.

Let's check in with Lou Dobbs to see what's coming up right at the top of the hour -- Lou.

LOU DOBBS, HOST, "LOU DOBBS TONIGHT": Wolf, thank you.

Coming up at the top of the hour here on CNN, all of the day's news. We'll be reporting as well tonight on absurdity on absurdity, whether it's Governor Arnold Schwarzenegger's plan to give benefits to illegal aliens paid for by taxpayers, of course, or whether this administration's plan to give Social Security benefits to illegal aliens, also paid for, of course, by taxpayers.

Also tonight, will President Bush fulfill his father's vision of a new world order by sacrificing American national sovereignty? We'll have that report.

And we'll hear from a Middle East scholar and a former U.S. military commander in Iraq who both agree that a troop surge is an awful idea whose time has long gone.

Also tonight, Democrats were going to save the day with a five-day workweek. Well, not yet, and not soon. They took the day off so they could watch a little football.

Please join us for all of that and a lot more coming up at 6:00 p.m. Eastern right here on CNN.

Please join us.

Wolf, back to you.

BLITZER: I assume, Lou, you're going to be covering this federal report on all of these illegal immigrants that are arrested, they're picked up, then they're released, then they're arrested again. Sometimes three, four, five, six times. You followed this story.

DOBBS: I have followed this story. And as a matter of fact, we have been reporting on the recidivism, if you will, of illegal alien felony criminals in this country for the past four years.

It is good to see, again, further confirmation and validation of exactly what we've been reporting here for some time. It's -- one hopes that at some point the mainstream media will awaken to the reality, to the facts, and to an empirical basis for their rather peculiar view on what is important in this nation.

BLITZER: Lou Dobbs coming up in a few minutes at the top of the hour, about 10 minutes from now.

Lou, we'll be watching. Thank you.

DOBBS: Thanks, Wolf. BLITZER: More shuffles in the Bush administration ahead of the president's major announcement of a new Iraq strategy Wednesday night. Secretary of State Condoleezza Rice today confirmed that the president will nominate his currents ambassador to Iraq, Zalmay Khalilzad, to replace John Bolton as the U.S. ambassador to the United Nations.

Let's turn once again to CNN's Carol Costello. She's got more now on who this man is, Zalmay Khalilzad, and what he brings to the table -- Carol.

COSTELLO: Well, he would be the first Muslim in the cabinet, that's for sure -- in anyone's cabinet.

If Zalmay Khalilzad is confirmed as U.S. ambassador to the United Nations, he'll have to deal with a rambunctious organization grappling with a lot of hot-button issues, issues Americans care deeply about. Just one, Iran nukes and how the world can control them.

(BEGIN VIDEOTAPE)

COSTELLO (voice over): His friends call him Zal and say in personality he's the polar opposite of the man he may replace, John Bolton. Whereas former ambassador Bolton was in-your-face blunt, Khalilzad is known to be charming, slick. A U.S. citizen born in Afghanistan, schooled in Beirut, and understanding of the Middle Eastern culture.

Sources say he is a back-room wheeler-dealer and knows how to deal with tribesmen and ethnic factions. As the United States special envoy to Afghanistan after the fall of the Taliban, he helped to establish the U.S.-backed government of Hamid Karzai.

CONDOLEEZZA RICE, SECRETARY OF STATE: Zal played much the same role as our ambassador to Afghanistan, where he helped the people of his ancestral homeland to step out of the shadows of conflict and to begin building a new future.

COSTELLO: Zal has another quality the Bush administration requires: loyalty. A longtime associate and adviser to Dick Cheney, Donald Rumsfeld and Paul Wolfowitz...

ZALMAY KHALILZAD, U.S. AMB. TO IRAQ: Well, we're delighted to be in Baghdad.

COSTELLO: ... he's publicly stuck to the company line.

This is what he said a day after being confirmed as the U.S. ambassador to Iraq.

KHALILZAD: Iraq faces great challenges. Iraq must succeed. The stakes are great for Iraqis, for the United States, for the region and, indeed, for the world. America's commitment to Iraq is strong and unshakable.

COSTELLO: But he is leaving Iraq still struggling to end sectarian violence, even though he's credited for convincing the Iraqi government to come up with a U.S.-friendly constitution.

Challenges he faces if confirmed, Iraq, Darfur, North Korea, and especially Iran. He has advocated talking to Iran directly, but CNN's Liz Neisloss, at the United Nations, asked Iran's ambassador how their country will see him.

LIZ NEISLOSS, CNN SR. U.N. PRODUCER: He says it depends. It depends on whether he wants to deal with the realities or whether he wants to make a name for himself.

COSTELLO: In other words, he can't be like his predecessor, John Bolton, if he wants to ease the nuclear crisis.

(END VIDEOTAPE)

COSTELLO: And analysts tell me the choice of Khalilzad may signal a slight shift. In other words, while the administration feels a need to reform the United Nations, it also needs it to accomplish its international goals. As I said, perhaps Khalilzad won't be as confrontational with the world body as John Bolton had been in the past -- Wolf.

BLITZER: We'll watch the next chapter in his career, together with you, Carol.

Thank you very much.

Carol Costello in New York.

Up next, Jack Cafferty wants to know, should the House of Representatives have taken the day off so Congressman John Boehner could go to a football game? Jack's standing by with "The Cafferty File."

And you're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Here's a look at some of the "Hot Shots" coming in from our friends over at The Associated Press. Pictures likely to be in your hometown newspapers tomorrow.

Northeast of Baghdad, suspected terrorists are rounded up by U.S. and Iraqi forces after a raid.

In the West Bank town of Ramallah, a street vendor sells DVDs on the life of Saddam Hussein.

In London, postal workers re-create the cover of the Beatles Abby Road album. They're commemorating the release of new Beatles postage stamps.

And at Disney World, in Florida, a 1-year-old baby rhino named Tom checks out his new home.

Some of today's "Hot Shots," pictures often worth 1,000 words. Let's check back with Jack Cafferty in New York for "The Cafferty File" -- Jack.

CAFFERTY: You know, most babies are cute, but that's an ugly little thing. Rhinoceros.

BLITZER: It's a rhino. It's a rhino.

CAFFERTY: Yes. I mean, they're not even cute when they're little.

BLITZER: The mother rhino loves that baby.

CAFFERTY: Well, and she's maybe the only one.

You know, they make it too easy, sometimes, Wolf.

The question, should the House of Representatives have taken the day off so Congressman John Boehner could go to a football game?

Kathy in Chicago, "One way or the other the Democrats will be screwed on this. If they schedule votes they'd be uncooperative. It they don't, they're going back on their word. So it begins. So much for working together and trying to get along."

Michael in Fort Wayne, Indiana, "Work ethic and leading by example are missing here. What's more important, working to get our country back on track or going to a game that will be out of the headlines in two days?"

Jeff in Seattle writes, "It did seem like a convenient bear trap set by the Republicans. Request the day off, and then when it's granted in the spirit of bipartisanship, the right pulls the rug out from under the Democrats and goes to the right wing echo chamber (i.e., 'The Drudge Report') to claim the Democrats are going back on a campaign promise."

J.R. in Washington, "What would be media be saying if the Democrats had denied Boehner's request? Oh, I can hear the name-calling now. It must be nice to be outraged no matter what the politicians do."

It is.

Vicki in Cincinnati, "The concept that you're failing to grasp here is that those of us who are blue in a red state are ecstatic to have that man out of Washington. Damage control, if you will."

"Can you find out something for me? Just where does Mr. Boehner hang out to get that suntan? Certainly not here in Cincinnati, his home district. Us working stiffs are all pale as ghosts. Go, Bucks."

And Jordan in Ohio writes, "Maybe we should ask the terrorists to take February 5th off so that our troops can watch the Super Bowl. I mean, they'd understand that. Right?"

If you didn't see your e-mail here, you can go to cnn.com/caffertyfile and read more of them online -- Wolf. BLITZER: See you back here in an hour, Jack. Thank you very much.

And this final note: Elvis fans are all shook up over a new exhibition at the Richard Nixon Presidential Library in southern California. It features memorabilia from their now famous White House meeting back in December 1970. Among the items on display, the outfits both men wore and a .45 caliber Colt revolver the king gave to the president.

By the way, today would have been Elvis Presley's 72nd birthday.

Tomorrow we'll set the stage for the president's speech with Senator Ted Kennedy. He'll talk about his call for congressional action to stop an increase of U.S. troops in Iraq, tomorrow, right here in THE SITUATION ROOM, 7:00 p.m. Eastern, Senator Ted Kennedy.

We're here weekdays afternoons 4:00 to 6:00 p.m. Eastern, back at 7:00 p.m. Eastern.

Until then, thanks very much for joining us. I'm Wolf Blitzer in Washington.

"LOU DOBBS TONIGHT" starts right now.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.voxant.com

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