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THE SITUATION ROOM

Controversial Hire: Hillary Rodham Clinton's Payroll; Giuliani's Speaking Fees

Aired February 15, 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.
Happening now, President Bush issuing a dire warning of new offensives by the Taliban and al Qaeda in Afghanistan and ordering more U.S. troops in advance. But no mention of the world's most wanted terrorist.

Why can't the United States find Osama bin Laden?

Also, Iran's role in Iraq -- who are the forces allegedly arming Shia militias?

Plus, we have some shocking new details of the rosy picture top U.S. military commanders were painting before the war.

And candidates and cash -- we're on the money trail, with details of endorsement deals and speaking fees playing a major role in the race for the White House.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

Top Pentagon officials speaking out only moments ago -- you saw it live here in THE SITUATION ROOM -- on Iran's role in Iraq and the growing controversy over whether top leaders in Tehran are directly arming Iraq's Shia militias.

Our senior Pentagon correspondent, Jamie McIntyre, joining us now with the latest details -- Jamie.

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: Well, Wolf, you -- you may not have been able to tell, but this briefing they had Sunday in Baghdad, in which this charge was made against the highest levels of the Iranian government clearly didn't meet the criteria set out by Defense Secretary Gates.

He said he wanted that briefing to be factual, hard facts, he said, with no adjectives, adverbs and no assessments. And clearly in that briefing, an intelligence officer offered the assessment that the highest levels of Iranian government were behind that. And, again, Secretary Gates and Joint Chiefs Chairman General Peter Pace reiterated that they do not know that to be the case, although they said it doesn't really change much in terms of who exactly in Iran is behind this.

Gates turned out to be quite quotable today. Asked about the failure to mention Osama bin Laden and whether the hunt was still on for him, he said: "If I were Osama bin Laden, I'd still be looking over my shoulder."

And as for the news that Muqtada al-Sadr has left Iraq and gone to Iran, Secretary Gates said: "I don't think he went there on vacation."

But he did say he wasn't absolutely sure where Muqtada al-Sadr was. He said the key there is while he's gone and while some people go to ground, to make sure that Iraqi security forces can set the security conditions so that reconstruction can happen before the -- before Muqtada al-Sadr or others come back -- Wolf.

BLITZER: Jamie, I take it both of these Pentagon leaders, the general and the defense secretary, they learned their lessons from all the hard and fast statements that were made prior to the war against Saddam Hussein in Iraq and they're unwilling to go further than what they believe they know for 100 percent sure?

MCINTYRE: Yes. In Bob Gates' words, he said: "We're very sensitive to that skepticism."

And that's why he insisted that he said he wanted this briefing to have hard facts. But when I asked him well, why did you use anonymous officials and then not allow the briefing to be tape recorded for a transcript so everyone knew exactly what was said, he said: "I don't know why that was done."

BLITZER: Jamie, thanks for that.

Jamie McIntyre monitoring all the developments over at the Pentagon.

Meanwhile, President Bush making some dire warnings and vowing action in Afghanistan, but making no reference to the world's most wanted terrorist.

Let's go straight to our other Pentagon correspondent, Barbara Starr, for the latest -- Barbara.

BARBARA STARR, PENTAGON CORRESPONDENT: Wolf, what may be the most interesting is what the president did not talk about today -- the hunt for Osama bin Laden.

(BEGIN VIDEO TAPE)

STARR (voice-over): President Bush talking tough about the war in Afghanistan.

BUSH: The Taliban and al Qaeda are preparing to launch new attacks. Our strategy is not to be on the defense, but to go on the offense.

STARR: But the president never mentioned the man who has eluded him for more than five years, Osama bin Laden.

The reality is the hunt for bin Laden is not a popular topic these days, for one reason.

LT. GEN. KARL EIKENBERRY, FORMER COMMANDER, U.S. FORCES- AFGHANISTAN: The intelligence has gone cold on Osama bin Laden.

STARR: Analysts aren't surprised.

PETER BERGEN, CNN TERRORISM ANALYST: There's really no point in mentioning him if you -- it's very unlikely you're going to find him any time soon.

Why -- why bring him up?

STARR: The rhetoric was hot in the days after the 9/11 attacks.

BUSH: I want justice. And there's an old poster out West, as I recall, that said wanted: dead or alive.

STARR: U.S. officials say bin Laden is just too good at remaining out of sight.

At his confirmation hearings, the new secretary of defense questioned the al Qaeda leader's importance.

ROBERT GATES, SECRETARY OF DEFENSE: His ability to directly organize and plan the kind of attacks against us that hurt us so badly in September of 2001 is very limited now.

STARR: But experts say bin Laden hasn't receded into history.

BERGEN: When bin Laden calls for attacks on Saudi oil facilities, al Qaeda members in Saudi Arabia eventually will do that. When bin Laden calls for attacks on members of the coalition in Iraq, that's one of the reasons we had al Qaeda affiliates attacking in London and in Madrid.

(END VIDEO TAPE)

STARR: President Bush isn't the only one not talking about Osama bin Laden. None of the presidential candidates are making catching bin Laden a top campaign pledge -- Wolf.

BLITZER: All right, Barbara, thank you.

Barbara Starr reporting for us.

By the way, the United States is fighting another war in Afghanistan, as well, this one against opium production. That country produced 90 percent of the world's opium supply back in 2005 and the United Nations estimates that opium accounted for 52 percent of Afghanistan's gross domestic product that year.

This past growing season, more than 370,000 acres of opium producing poppies were harvested. That's up from 257,000 acres back in 2005. And according to the country's ministry for counter- narcotics, only 37,000 acres were eradicated this year.

It's a huge, huge problem in Afghanistan.

Let's turn to Jack Cafferty.

He's joining us now from New York with The Cafferty File -- Jack.

JACK CAFFERTY, CNN CORRESPONDENT: The House of Representatives, Wolf, is expected to pass that non-binding resolution tomorrow opposing President Bush's plan to add more troops to Iraq. The interesting part is it's not just the Democrats lining up behind this measure. Almost a dozen Republicans have come forward and say they're going to support it.

Republican Congressman Ric Keller from Florida, who compared Iraq to an ungrateful neighbor, said this: "You mow his lawn for him every single week. The neighbor never says thank you. He hates you, and sometimes he takes out a gun and shoots at you. Under these circumstances, would you keep mowing his lawn forever?"

And what could be even more interesting is what happens next if the Democrats decide to go beyond a symbolic opposition to the president's Iraq policy. Next month, they will debate Mr. Bush's request for another $93 billion for the war.

House Speaker Nancy Pelosi has said that this resolution is only the first step in using Congressional power to intervene in the war in Iraq.

So here's the question -- what impact will a House resolution opposing the president's strategy in Iraq have, do you think?

E-mail your thoughts on that to caffertyfile@cnn.com or go to cnn.com/caffertyfile -- Wolf.

BLITZER: Jack Cafferty, see you in a few moments.

CAFFERTY: OK.

BLITZER: Thanks very much.

ANNOUNCER: This is CNN breaking news.

BLITZER: We're getting a statement in from the Iraqi Ministry of the Interior. The Interior Ministry in charge of security, domestic security in Iraq, saying Iraqi police have wounded the leader of al Qaeda in Iraq and killed one of his top associates.

The spokesman saying Iraqi police encountered what they're calling an insurgent group on the road between Falluja and Samarra and in a firefight, they wounded Abu Ayyub al-Masri.

That would be Abu Musab al-Zarqawi's successor as the leader of Al Qaeda In Iraq. That according to the Iraqi Ministry of the Interior. The spokesman saying Iraq police have the body of the associate, would not make any comment on the whereabouts of al-Masri. The United States military, by the way, has no comment on this report.

Once again, a spokesman from the Interior Ministry in Baghdad saying they've wounded, wounded the leader of Al Qaeda In Iraq, Abu Ayyub al-Masri.

We'll watch the story and get more information.

Michael Ware, our reporter in Baghdad, is checking this out thoroughly. We're going to be speaking with him shortly.

Still ahead here in THE SITUATION ROOM, a stunning just declassified Pentagon report shows top commanders projecting the war in Iraq over by now, with only a fraction of the current number of U.S. troops.

Also, $100,000 a speech, and that's only just the beginning -- what likely Republican presidential candidate Rudy Giuliani gets for just giving a speech. The perks also might surprise you.

Plus, the landmark deal to end North Korea's nuclear program.

Will it stick?

I'll ask the chief U.S. diplomat who helped broker the deal, the assistant secretary of state, Chris Hill. He's standing by to join us live from the State Department.

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

(COMMERCIAL BREAK)

BLITZER: A landmark deal struck with North Korea to end its nuclear program. But critics increasingly concerned the country will repeat the past and fail to live up to its end of the bargain.

Joining us now, the assistant secretary of state, Chris Hill, the chief American negotiator. He's just back from those talks.

Mr. Secretary, thanks very much for coming in.

CHRISTOPHER HILL, ASSISTANT SECRETARY OF STATE: Sure.

BLITZER: It didn't take very long for the former United States ambassador to the United Nations to say this is a really bad deal for the United States.

Let's talk with John Bolton told us here in THE SITUATION ROOM.

(BEGIN VIDEO CLIP)

JOHN BOLTON, FORMER U.S. AMBASSADOR TO U.N.: It sends exactly the wrong signal to would-be proliferators around the world -- if you hold out long enough and wear down the State Department negotiators, eventually you get rewarded, in this case with massive shipments of heavy fuel oil, for doing only partially what needs to be done -- the complete dismantling of their nuclear program.

(END VIDEO CLIP)

BLITZER: Mr. Secretary, you want to respond to the former ambassador?

HILL: Well, look, he's a private citizen. He's certainly entitled to his views and I think the president spoke very clearly about this yesterday.

What I would say is that it's true this is only a first step. It's not the whole thing. I mean what we have is a 60 day agreement where they will shut down and seal this reactor, the reactor that has been continuing to produce plutonium up to this very day. And then they -- we will begin discussing with them a list and try to get -- run to ground all their other programs and go on from there.

BLITZER: Because...

HILL: So it is going to be a step by step process.

BLITZER: ... as of now, they get to keep -- at least for now -- the, what, six or eight nuclear bombs that they already have, and all the enriched uranium -- plutonium that they've already developed?

HILL: Well, you know, they don't get to keep anything in the sense that they've already agreed to a September '05 agreement in which they -- they say they will get rid of all of their nuclear programs.

So what we're going to try to do is do this in phases. And the first phase is going to be to shut down the reactor so that the problem of plutonium, which is on the order of some 50 kilos -- that is, 110 or so pounds -- that that problem doesn't get any bigger, and then we'll move from there.

So we're really doing this step by step.

BLITZER: They had a similar deal, as you remember, back in the Clinton administration in '94, in which they promised to not go forward in exchange for a lot of economic assistance, energy assistance.

But they were cheating on that deal.

What makes you think they're not going to cheat this time?

HILL: Well, you know, there's always the risk of cheating. And that's why you try to keep these on, you know, pretty short tranches. I mean if they cheat in this 60-day process, I mean we will know that pretty soon.

So there's always the -- the threat of that.

But I will say there's one big difference between this deal and the previous deal, which is this is a multi-lateral deal. China acts as a guarantor. They are one of the six parties and they are part of the deal.

And that's very different from the past, when it was a bilateral agreement between North Korea and the United States.

BLITZER: How much is this deal going to cost U.S. taxpayers?

HILL: Well, in the first tranche, what we're talking about in the first 60 days is a shipment of 50,000 tons of fuel oil. That's about $230 times 50,000 and it's shared among five nations. So you do the math. It's -- it's not a major amount.

What comes in the second tranche is much more. That would be on the order of $230 million, because it's -- it's a million tons of fuel oil, of heavy fuel oil. Again, it's shared among five states. And, again, we talk about fuel oil, but it actually can be humanitarian or economic assistance.

BLITZER: And what guarantee do you have that the North Koreans are actually going to destroy their existing nuclear weapons arsenal?

HILL: Well, in this first 60 days, we've got to sit down with them and go through the list of what they're finally going to declare to the international community. And on that list, we need to make sure that we've run to ground our concerns, that they are -- that they have a highly enriched uranium program.

So we're going to sit down with them and go through what we have on that and see if we can figure -- figure that out.

And after -- after we have done this list, in this next tranche, they are required to put together a declaration, and it has to be all of their programs, not some of their programs.

So when we finally see that declaration, we can decide whether we think it's all rather than some.

BLITZER: And the point that former ambassador made that this sends a horrible signal to countries like Iran that the U.S. is willing to go ahead and provide enormous amounts of economic assistance, even if you don't fully destroy your nuclear arsenal, what about that point?

HILL: Well, North Korea is a country that has very little electricity and very little, frankly, heating fuel. Many North Koreans are in the dark and they're cold. So, really, what we're doing is providing what is essentially some humanitarian assistance in return for them taking steps to get rid of these terrible nuclear programs.

I think if this succeeds, if we're able to do this on a step by step basis -- and, again, I cannot emphasize enough the importance of getting China with us. That was not the case when the earlier program went through.

So having China, having Russia with us, having Japan, South Korea -- this is -- this is quite a powerful coalition. And if we can pull this off, frankly, I think it would be a good sign for other countries.

BLITZER: The U.S. ambassador, the chief negotiator, Chris Hill, joining us from the State Department.

Mr. Secretary, thanks very much.

HILL: Thank you.

ANNOUNCER: This is CNN breaking news.

BLITZER: And we want to check out what's going on in Baghdad right now. A report that the top al Qaeda leader in Iraq has been wounded.

Michael Ware is our correspondent on the scene.

We take it there's a statement from a spokesman for the Interior Ministry -- Michael, saying that Abu Ayyub al-Masri has been wounded.

What do we know about this story?

MICHAEL WARE, CNN CORRESPONDENT: Well, Wolf, it's 20 minutes past 1:00 in the morning, and the details of this claim from the Ministry of Interior are sketchy, to say the best.

However, as it stands, we have an official Ministry of Interior spokesman saying on the record that in a firefight just -- almost two hours ago, shortly before midnight local time, as Iraqi police, in a city just north of the capital, Baghdad, engaged a group of al Qaeda fighters. It is claimed that they killed an aide to the leader of Al Qaeda In Iraq and wounded Abu Hamza, as al Qaeda calls him, or Abu Ayyub, as the Americans call him, the leader of Al Qaeda in Iraq, in this firefight.

So the Ministry of Interior is saying they killed the aide and they have his body and they are firmly of the belief that they have wounded the leader of Al Qaeda in Iraq.

The U.S. military so far has absolutely nothing to say on the matter. And we must caution that this terrorist leader of al Qaeda has already been reported dead once in the past, in October of last year, a claim by the U.S. military that they soon had to retract.

But for now, the Ministry of Interior here in Iraq is claiming that it has wounded the leader of Al Qaeda In Iraq.

BLITZER: And they're not commenting, though, on the whereabouts of Abu Ayyub al-Masri. They simply say they've wounded him, but they're not saying if they have him under their custody.

WARE: That's correct, Wolf.

They are confirming that they have the body of his aide, but they are not commenting in any way on -- as to whether they have al-Masri in custody or if he is still at large. All they are saying is that he has been wounded in a firefight north of the capital, Baghdad.

BLITZER: All right, we'll watch this story to you -- with you -- and update our viewers as we get more information.

Michael, thanks very much.

Abu Ayyub al-Masri, the al Qaeda leader, supposedly wounded. That according to the Iraqi Interior Ministry. He was the successor to Abu Musab al-Zarqawi, the al Qaeda leader who was killed, as many of you remember, last year.

Still to come here in THE SITUATION ROOM, a key endorsement and a lucrative contract. We're following Senator Hillary Rodham Clinton's money trail in the race for the White House.

And roads and highways across much of the East iced and dangerous. We have some shocking video of a semi actually crashing into multiple cars.

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

(COMMERCIAL BREAK)

BLITZER: Let's check in with Carol Costello for a closer look at some other important stories making news right now -- Carol.

CAROL COSTELLO, CNN CORRESPONDENT: Hi, Wolf.

Hello to all of you.

An Egyptian accused of masterminding the Madrid train bombings says he had no involvement in the deadly attack. He took the stand today, on day one of his trial. He and 29 other suspects are on trial. He spoke to his lawyer, but refused to answer questions from prosecutors.

The bombings in 2004 killed 191 people and wounded 1,800. The attacks targeted morning rush hour commuter trains in Madrid.

Syria's president is coming to the aid of the estimated one million Iraqi refugees living within his country's borders. An Iraqi government news release says President Bashar Al-Assad agreed today to help improve the conditions of those refugees. During a meeting with Iraq's parliamentarian speaker in Damascus today, he also discussed the importance of Syria's role in supporting Iraq's political process.

Surprising news about the teenager who shot and killed five people at a mall in Salt Lake City this week before police killed him. He was from Bosnia. His relatives said his early life was marked by war and upheaval. They say during the war in Bosnia, he survived the massacre of 8,000 Muslim in Srebrenica. And they say his grandfather was killed in that massacre.

And updating a story we first brought you yesterday -- you'll remember this one -- JetBlue Airways is dealing with more cancellations and irate customers. So far today, 150 of JetBlue's 565 nationwide flights have been canceled because of icy conditions. Yesterday during the winter storm, hundreds of passengers spent up to eight hours stranded on planes at New York's JFK Airport. Hundreds of passengers at JFK are hoping to board flights that should have left yesterday, but there is a huge backlog and they're not having a good time of it today -- Wolf.

BLITZER: What a mess. That mess continuing.

Carol, thank you.

By the way, icy roads leading to this dramatic accident on the 71-75 Interstate near Cincinnati. Check it out. A police dash camera recorded the scene as a FedEx semi skids out of control, slams into a car, which then hits the cruiser. Amazingly, in all of this, no one was seriously hurt.

Ice and snow are lingering this -- across much of the East this afternoon, as well, even as the storm tends to move on.

Buffalo, New York buried under 16 inches of new snow. And the schools there are closed for the second day in a row.

To the northeast, up to three feet of snow fell on parts of Vermont. Schools, businesses, government offices all shut down yesterday and treacherous driving conditions left roads virtually deserted.

And the National Guard to the rescue on Interstate 78 in eastern Pennsylvania. Seven inches of snow topped by three inches of ice left the road all but impassable, creating a 50-mile backup and leaving hundreds of cars, trucks and the people inside stranded overnight.

Coming up, if he becomes the leader of the free world, he'll likely be taking a huge pay cut -- Rudy Giuliani. We'll tell you about the staggering speaking fees he commands.

And stunning revelations that have some asking how could they have gotten it so wrong?

Before the war, some top U.S. military commanders privately predicted just 5,000 U.S. troops would be in Iraq at this point.

Did they over -- did this overly rosy scenario fuel the discussion to go to war?

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, the top al Qaeda leader in Iraq is hurt and his top aide has been killed. That's according to a spokesman for the Iraqi Interior Ministry. The official says it happened after Iraqi police engaged in a firefight with insurgents between Falluja and Samarra.

The showdown continues this weekend. Senators will spar over an Iraq resolution on Saturday. That according to the majority leader, Harry Reid. It would be a procedural vote over whether or not to debate the non-binding measure that's now in the House.

Talking terrorists, but not about the world's most wanted terrorists. Regarding Afghanistan, President Bush warns the Taliban are likely to put on a deadly spring offensive, and he says U.S. and NATO forces will stay on the offense. But Mr. Bush did not mention anything about Osama bin Laden or where he might be.

And an upbeat assessment. Fidel Castro's son -- his son says his father is doing well and is expected to get better. The son says he believes the 80-year-old Cuban leader will see a total recovery.

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

Presidential hopeful Hillary Rodham Clinton insists she's in it to win, but how far will she go to win? That's what some are asking right now amid a controversy causing them to question if her campaign is paying for support.

CNN's Brian Todd is joining us with more on this story -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Wolf, the question stems from a deal Mrs. Clinton's campaign has just reached with a politician in South Carolina who has the ability to deliver a crucial voting bloc.

(BEGIN VIDEOTAPE)

TODD (voice over): Hillary Clinton's political clout in the South reels in a big catch -- South Carolina state senator Darrell Jackson, a plugged in, popular leader among African-American voters there. He endorses Senator Clinton for president, but about the same time that deal is reached, there's another. The Clinton campaign hires a P.R. firm owned by Jackson to work the primary season and beyond. Jackson says for at least $10,000 a month.

DARRELL JACKSON (D), SOUTH CAROLINA STATE SENATE: I personally believe she is the best candidate. It is not about the contract. It is not about the money.

TODD: Jackson tells CNN he was courted by other top Democrats, including Barack Obama and John Edwards. One of them offered his firm more money than Mrs. Clinton's campaign, he says, and the firm turned that down.

Jackson points out he does not draw a salary from his firm, and there's nothing illegal about a candidate hiring the firm of a politician who has endorsed them. But one analyst says that arrangement make's Jackson's endorsement less effective.

ROGER SIMON, POLITICO.COM: The endorsement doesn't work because people want to believe endorsements are sincere. And perhaps this is sincere, but once you take cash at around the same time you make your sincere statement, people say, wait a second.

TODD: A spokesman for Hillary Clinton's campaign says up front they went after Jackson. The spokesman says Jackson's support and his firm are highly sought after by many campaigns and says, "It's insulting to him to think there's anything shady about this."

Jackson has another concern.

JACKSON: What is somewhat offensive is for anyone to imply that the only reason a prominent African-American will endorse Senator Clinton is because he is being paid off.

(END VIDEOTAPE)

TODD: Challenged by state senator Jackson, we found at least one other similar case in the same state. Former South Carolina House majority leader Rick Quinn, who's white, is supporting John McCain for president. Quinn's father tells us his son's mail processing firm and his own P.R. firm have been hired by McCain in the past and will likely be again. We should point out, however, Quinn has been out of the state legislature for about two years now -- Wolf.

BLITZER: All right, Brian. Thank you for that.

A hundred thousand dollars, a private jet, not bad for a single speech. And that's just what some likely Republican presidential candidate -- in this particular case, Rudy Giuliani -- commands right now.

CNN's Mary Snow is watching this story from New York. She's joining us -- Mary.

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, with Rudy Giuliani hitting the campaign trail, his life as corporate citizen is coming under the microscope. At the same time, he's scaling back his appearances on the speaker circuit.

(BEGIN VIDEOTAPE)

SNOW (voice over): He's best known as "America's mayor". And since leaving public office, Rudy Giuliani has capitalized on that, giving motivational speeches like this one in San Diego Wednesday.

RUDY GIULIANI (R), PRESIDENTIAL CANDIDATE: We had to cover up the buildings that we thought were going to be attacked.

SNOW: Giuliani can command $100,000 for an event. That's how much the Student Speaker's Bureau at Oklahoma State University paid him last March. Plus, another $47,000 for a private jet.

In a contract obtained by CNN, Giuliani's travel requirements were quite specific. The private aircraft must be a Gulfstream IV or bigger. He didn't end up using them, but also requested in the contract were five hotel rooms, including one for Giuliani, that was to be a large two-bedroom nonsmoking suite with a king-size bed on an upper floor with a balcony and view if applicable. Political strategists say these type of contracts are not uncommon.

DAVID WINSTON, REPUBLICAN STRATEGIST: I don't think it's anything out of the ordinary. However, having said that, he's a presidential candidate. Everything he's done in the past is going to come under scrutiny.

SNOW: By comparison, former president Bill Clinton averages about $150,000 per speech. Former secretary of state Colin Powell was paid $75,000 at a speaking event last year.

A Giuliani campaign spokeswoman confirms a "Washington Post" report that Giuliani is now holding off on taking any more fees while his camp consults with the Federal Election Commission. Under FEC rules, candidates who don't hold office can accept money for speeches as long as they're not campaign-related.

Years before Giuliani became a candidate, some of his speeches attracted attention, including one to the South Carolina Hospital Association in February 2005. After signing on, the event was changed to a fund-raiser for victims of the tsunami that hit Asia. Giuliani was reportedly paid $100,000 to speak and donated $20,000 of it to charity. A local Republican lawmaker protested.

TRACY EDGE (R), SOUTH CAROLINA STATE HOUSE: I really thought that just on that one night for a charitable of that magnitude, he could have charged nothing. I think that would have been the noble thing to do.

SNOW: A Giuliani aide tells CNN following the controversy, Giuliani felt badly about the whole thing and wrote another check for $60,000 to the charity.

(END VIDEOTAPE)

SNOW: Now, Giuliani's speaking fees are just a small part of his larger business, Giuliani Partners, sure to come under examination as he continues on the campaign trail. A Giuliani aide says, "People understand Rudy Giuliani has been in the private sector. They understand the difference between public and private" -- Wolf.

BLITZER: Does he still have some of these paid speaking engagements on his schedule?

SNOW: He does, Wolf, and these were engagements scheduled before he announced his exploratory committee, and this is what his campaign is now looking at with the FEC about how to go forward.

BLITZER: Mary Snow reporting for us.

Thank you, Mary.

So what about the rest of the field? Former senator John Edwards and former governors Mitt Romney, Mike Huckabee and Tom Vilsack are among the other private citizens making the run for the White House. The rest are al public officials.

Senators like Hillary Clinton, Barack Obama, John McCain, as well as the rest of the members of the Congress running for president are prohibited for accepting speaking fees. And state officials like New Mexico governor Bill Richardson also faced strict limits on earning cash for their speeches.

Up ahead, you can't always get what you want. Before the war, top U.S. military planners predicted the Iraq war would mostly be over by now, with only 5,000 U.S. troops left there. That's from a startling new revelation that has many wondering how their predictions could have been so wrong.

And no peace, even after death. There are new developments regarding the fierce fight over the body of Anna Nicole Smith. We'll have the latest.

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

(COMMERCIAL BREAK)

BLITZER: It's a stunning disconnect between what the United States had hoped for and what's actually happening now. It concerns some overly rosy scenarios for Iraq.

Our senior Pentagon correspondent, Jamie McIntyre, once again joining us -- Jamie.

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT: Well, Wolf, you know, before and during the war, Defense Secretary Rumsfeld and his top generals played it close to the vest, never saying how much they thought the war would cost or how long it would last. Now we learn that they were operating under what turned out to be some overly optimistic predictions.

(BEGIN VIDEOTAPE)

MCINTYRE (voice over): In his public appearances just prior to the 2003 invasion of Iraq, U.S. central commander General Tommy Franks gave every indication he was planning for the worst.

GEN. TOMMY FRANKS, COMMANDER, U.S. CENTRAL COMMAND: I think one doesn't know the duration that we may -- that we may face. I may have an opinion, the secretary may have an opinion, but it is, in fact, unknowable.

MCINTYRE: But newly declassified briefing slides from seven months before the war obtained by the National Security Archive revealed that General Franks presented a best-case scenario to his civilian bosses.

THOMAS BLANTON, NATIONAL SECURITY ARCHIVE: In part, the optimism came from not knowing diddley squat about the actual situation in Iraq -- the ethnic tensions, the dividing lines, the tattered infrastructure, the devastation that Saddam's dictatorship had actually wreaked. MCINTYRE: Among the rosy and ultimately flawed key assumption, that Iraqi units would be co-opted, stay in their garrisons and not fight, that the State Department would help form a credible provisional government even before the invasion, and that the regime had weapons of mass destruction. One slide projected that within four years, the number of U.S. troops in Iraq would dwindle to just 5,000.

BLANTON: What resonates about these PowerPoint slides is these are what President Bush saw as he was making the go decision. These are the PowerPoint war plans that convinced the White House and the secretary of defense, we have got a winnable plan here.

MCINTYRE: Blanton calls that delusional, considering today there are more than 141,000 U.S. troops still tied down in Iraq, with more than 10,000 more reinforcements on the way.

(END VIDEOTAPE)

MCINTYRE: Wolf, what the briefing slides seem to show is that far from planning for the worst, while hoping for the best, planners planned for the best and completely failed to anticipate the worst -- Wolf.

BLITZER: And anyone paying the price for that huge miscalculation based on everything you have seen over there, Jamie?

MCINTYRE: Well, there's a huge price being paid in lives and money and prestige of the United States for the way the war has gone over the last four years, but if you're asking if anyone particularly has been held accountable, no. In fact, General Franks, as you recall, received a medal for his service after he retired.

BLITZER: All right. Jamie, thanks very much.

Jamie watching this story for us.

Our Internet reporter, Jacki Schechner, is standing by with a closer look at some of the predictions made by the military more than four years ago -- Jacki.

JACKI SCHECHNER, CNN INTERNET REPORTER: Well, Wolf, you can take a closer look at those briefing slides for yourself. They are all online.

They were made public because of a Freedom of Information Act request by the National Security Archive, and they put the slides online, they say, as they receive them from CENTCOM.

If you take a closer look at this side, for example, it's a timeline before and after the invasion of Iraq, which is noted as "D- Day". And you can see over on the right-hand side here that Phase 4, the post-combat phase, is referred to as "Post Hostilities". Maybe some indication here that there was no anticipation of the severe violence that was going to ensue.

You can also see here the details of Phase 4 where stabilization would take about two to three months, and then the following stages would be all recovery and security corroboration -- Wolf.

BLITZER: All right. Thank you, Jacki, for that.

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

Lou, what are you working on?

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

Tonight, how can the National Guard defend our border if the rules say they can't even defend themselves? One state is fed up with this administration's policy and fed up with waiting for the federal government to fix it. It's going to change the rules itself.

We'll have a report.

And Washington says free trade with China will help the communist nation change its ways, but China has a very different idea. And guess who is the loser?

We'll have that special report tonight.

And a winter storm stranding passengers for hours on aircraft. In one case, 10 hours. What are your rights as a passenger in that situation? Do you even have any?

We'll have that report and the answers as well at the top of the hour.

We hope you'll join us for all of that and all the day's news.

Wolf, back to you.

BLITZER: Lou, you know, so much of this deal with North Korea involves China and China getting tough with North Korea. They have a lot more influence in North Korea than we do.

Do you think the Chinese are really going to live up to their end of the bargain?

DOBBS: The Chinese right now are not living up to anything in the way of abiding by the interests or the goals of the United States. Human rights violations, they're running extraordinary deficits. They're manipulating their currency.

And frankly, with the satellite killer missile they launched a few weeks ago, they're making a very clear statement to this administration and all who will pay attention that China will go its own way and not act in the interest and certainly not at the direction of the United States.

BLITZER: Lou, thanks very much.

Lou is getting ready for his show. He'll be coming up at the top of the hour. DOBBS: Thank you, Wolf.

BLITZER: Still ahead here in THE SITUATION ROOM, Senator Joe Biden fires back at claims that Democrats are gunning for a cutoff of Iraq war funding. My interview with the White House contender, that's coming up in our 7:00 p.m. Eastern hour right here in THE SITUATION ROOM.

And could that jar of peanut butter in your pantry be tainted? There are new details of a recall that's now under way.

Stay with us. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: The Israeli government is hoping new technology will help ease tensions over an ancient holy site in Jerusalem. Israeli construction near a place sacred to both Jews and Arabs triggered protests and violence by Palestinians last week.

Can the Internet help allay fears that the religious site is being damaged?

Let's go to our Internet reporter, Jacki Schechner. She's looking in to this story -- Jacki.

SCHECHNER: That's right, Wolf. There's now three Web cams that are trained on this controversial dig site in Jerusalem, and the Israeli Antiquities Authority is hoping that the constant public eye on the project will help to ease Muslim fears that the Israeli government is going to damage an adjacent mosque.

This dig is a precursor to a construction project to replace a damaged ramp that leads up to the mosque compound. Now, a spokesman for the Palestinian group Hamas told The Associated Press that the Web cams were not enough and that he doesn't trust the procedures being put into place.

Now, the images can be seen by anyone with a computer and an Internet connection. However, the Web site by the Israeli government is in Hebrew and in English. It is not in Arabic -- Wolf.

BLITZER: Thank you for that, Jacki.

(NEWSBREAK)

Up next, Jack Cafferty wants to know what impact will a House resolution opposing the president's strategy in Iraq have? Jack with "The Cafferty File" when we come back.

(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.

In India, an artist blows a ball of fire during a religious procession.

In Iraq, Iraqi soldiers guard a border crossing with Iran.

In Germany, men wearing masks parade through a town during a tradition that's supposed to drive away winter.

And in the Czech Republic, check it out. A baboon stares at onlookers at a zoo.

What a picture.

Some of this hour's "Hot Shots," pictures often worth a thousand words.

Did you see that picture, Jack? What a picture.

JACK CAFFERTY, CNN ANCHOR: I like those "Hot Shots." I enjoy those.

I heard you tell Carol you're going to be broadcasting from Las Vegas tomorrow. What up with that?

BLITZER: Well, you know what? Nevada is a very important state in the political process. It's right after Iowa, before New Hampshire. They're going to have a caucus in Nevada.

CAFFERTY: And why didn't you invite the rest of us to go with you?

BLITZER: Well, you know, it's still early in the campaign, but a lot of time, Jack. You'll be doing a lot of traveling.

CAFFERTY: Wrong.

The question this hour: What impact will a House resolution opposing the president's strategy in Iraq have?

Patrick in Manhattan Beach, California, writes, "The impact of the resolution will come in two parts. First, all Democrats and some Republicans will make their opposition to the troop surge public record. Second, if the surge succeeds, the impact will be a sudden lack of media coverage on the subject, and then all Democrats and some Republicans stating their resolution was non-binding and therefore didn't count."

Scott in Lincoln, Nebraska, "No effect. With more stem-cell research, perhaps Congress will grown a spine and impeach Bush. Until then, a wimpy Congress gets no respect from the populace and our brainless president's handlers know this. Look for our current state of affairs to continue until Bush is out of office."

Clifton in Front Royal, Virginia, "It will not help achieving President Bush's state of objectives in Iraq, nor will it help our war against global terrorism. It will support the Iranian president's desire to get our troops out of Iraq." Jacquelyn in Chicago, "As long as Congress is busy wrangling over non-binding resolutions, they aren't issuing non-non-binding subpoenas. Maybe that's why the president is so cheerful lately."

Mark in Norfolk, Virginia, "Congress passing this resolution is like a small dog nipping at Bush's heels. If you want to get his attention, be an 800-pound gorilla and impeach him."

Mark in Glen Burnie, Maryland, writes, "It won't do jack, Jack."

And Mike in Pennsylvania, "We've heard the word 'non-binding' so often, it's starting to sound like a laxative commercial. We voted Congress in to do something binding, and if they're not going to do it, they're going to be voted out, too."

If you didn't see your e-mail here, you can go to cnn.com/caffertyfile and read more of them online -- Wolf.

BLITZER: Looking forward to Las Vegas tomorrow. You've been to -- you've been to Nevada, haven't you?

CAFFERTY: I was raised in Reno. Reno, Nevada, is my home town. I've been to Las Vegas many, many times.

BLITZER: Reno, Nevada, now a city of more than 400,000 people, Jack. It was a lot smaller when you were there.

CAFFERTY: A lot better off, too, after I got out of there, probably.

BLITZER: All right, Jack. Thanks very much.

That's it for us. We'll be back here in one hour, 7:00 p.m. Eastern.

Until then, thanks very much for joining us.

Let's go to Lou Dobbs. He's in New York.

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