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THE SITUATION ROOM

Iraq's Insurgents Use Children as Bait; White House Strikes Deal with Congress Over Rove's Testimony

Aired March 20, 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: To our viewers, you're in THE SITUATION ROOM.
Happening now, car bomb killers using kids as bait and then blowing them up when they reach their target.

Have Iraq's insurgents developed a terrible new tactic?

He can talk but he can't testify. The White House tries to make a deal with Congress over top aide Karl Rove.

And that shrinking circle of Texans in the Bush administration -- will Alberto Gonzales be the next to go?

We'll hear from President Bush directly this hour.

And he's still not politically correct -- "Real Time's" Bill Maher tells us what he really thinks about the Bush administration and those dueling demographs.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

We're waiting to hear from President Bush this hour on the latest scandal swirling about his administration -- the firings of those federal attorneys. This as members of Congress call for the firing of the attorney general, Alberto Gonzales.

The showdown has the White House offering its top adviser, Karl Rove, and former White House Counsel Harriet Miers to talk to Congressional committees, but not under oath.

When the president comes out to talk, we're going to go there live to the White House.

We'll bring you his remarks.

Let's turn to Iraq now, where a roadside bomb killed two American soldiers today in southern Baghdad. The U.S. military says they died during a combat patrol, part of the current security crackdown in the capital. All this comes as there's word of a terrible new tactic by Iraq's insurgents.

Let's go live to our Pentagon correspondent, Barbara Starr -- Barbara.

BARBARA STARR, PENTAGON CORRESPONDENT: Well, Wolf, today when the Pentagon described this new insurgent tactic, the only word to describe it was, indeed, horrifying.

(BEGIN VIDEO TAPE)

STARR (voice-over): On the already violent streets of Iraq, the U.S. military was horrified by what happened at a busy eastern Baghdad marketplace on Sunday.

MAJ. GEN. MICHAEL BARBERO, U.S. ARMY: We saw a vehicle with two children in the back seat come up to one of our checkpoints, get stopped by our folks. The children in the back seat lowered suspicion and we let it move through. They parked the vehicle, the adults run out and detonate it with the children in the back.

STARR: And in Al-Anbar Province in the west...

BARBERO: Over the weekend, we had three suicide bombers detonate trucks loaded with chlorine in Al-Anbar Province.

STARR: That makes six chlorine attacks since January, and a very mixed picture, whether the security crackdown around Baghdad is working.

Sectarian killings are down. But suicide and car bomb attacks are not.

BARBERO: So, the brutality and ruthless nature of this enemy hasn't changed. I mean they're just -- they are just interested in slaughtering Iraqi civilians to meet their ends.

STARR: There are signs of progress. Iraqi security forces are stepping up. For the first time, units now arriving in Baghdad are fully ready to fight.

(END VIDEO TAPE)

STARR: Now, Wolf, General Barbero went on to say that they are noticing hundreds of Iraqi families are beginning to return to the country, especially to the streets of Baghdad. And now that U.S. troops are on patrol on the streets, one other positive sign -- they are getting a record number of tips about insurgent activity from Iraqi civilians.

So there is, in all of this, some good news -- Wolf.

BLITZER: All right, Barbara, thanks.

Let's get to a CNN exclusive right now.

Our own John King on a nighttime convoy run with U.S. troops who face death every day in some of Iraq's most dangerous territory.

The center of Iraq is the heartland of all of this activity. The country's Sunni Muslims forming what's called a triangle. It's called the Sunni Triangle, from Baghdad in the east and then it moves to Ramadi in the west, Tikrit in the north. That's the so-called Sunni Triangle, right in the center of the country.

It was home to Saddam Hussein and became a bedrock of support for his regime. This Sunni Triangle is now at the heart of the insurgency.

Let's go to our chief national correspondent, John King -- John.

JOHN KING, CHIEF NATIONAL CORRESPONDENT: Wolf, it all begins in this nondescript shack with the pre-convoy briefing. The mission leader tells the troops about the route, the destination, the latest intelligence on IED attacks in the region and then, just before the convoy hits the road, he leads them in a moment of silent prayer.

(BEGIN VIDEO TAPE)

KING (voice-over): Every pothole, trash pile and lump of grass a potentially deadly enemy.

UNIDENTIFIED MALE: Go ahead, Tech 3 (UNINTELLIGIBLE) 4.

KING: Specialist Terrence Dixon searches the roadside with a spotlight. His position is the most vulnerable -- exposed some even with the upgraded armor. But if he has to be out here, in the gunner's turret is where Dixon wants to be.

SPEC. TERRENCE DIXON, U.S. ARMY: It feels like you can defend yourself if you're the actual person bringing the hammer down.

KING: Mine clearing trucks check the roads regularly, as do unmanned surveillance drones. The driver is the last line of defense against an enemy that could be anywhere.

UNIDENTIFIED MALE: The way it is now in Iraq, though, everything is really out of the ordinary because, I mean, there's trash all over the place and there's holes all over the place.

UNIDENTIFIED MALE: I'm going to pull over and let him go around.

KING: Forward Operating Base Gabe is tonight's destination and the halfway point of another night on the edge.

(on camera): This base, just on the edge of Baquba, is populated mostly by Georgian troops, but also a small contingent of U.S. Marines. Because of its very limited facilities, it's taking nearly three hours to unload the water trucks, but we're almost ready now to head back.

(voice-over): Quick swerves on the way home are shaped by Heywood's (ph) memory of the trip out.

HEYWOOD: Damn, what the hell is that?

It looks like a stack of grass or something. When the road is clear like this and then all of a sudden you see something that wasn't there when you came through. Not all the time is it an IED, but it keep you alert, though.

KING: A narrow bridge then lights on the horizon mean camp is close. Up to 100 major supply convoys a week in Iraq. Five or six have IED incidents on a slow week. Fifteen or more a week is more the norm. So everyone counts their blessings and everyone counts their days.

UNIDENTIFIED MALE: If they say go to Iraq then I ain't got no choice but to go and just do my time over here and then hopefully make it back. Six months to go. Six months to go!

(END VIDEO TAPE)

KING: Another way to understand the threat of these roadside attacks is to visit what they call the bone yard here at Balad. The military won't let us take pictures there because most of the vehicles are classified as battlefield damaged. But there is line after line, row after row of Humvees, fuel tankers, trucks and other vehicles destroyed in roadside attacks. And to see the scorched and the twisted steel, the shattered glass and other damage is sobering, to say the least -- Wolf.

BLITZER: John King risking his own life to bring you that report.

John is going to be reporting from Iraq all week.

New tensions in Tehran today. There are reports Iran is threatening to kidnap Western officials in retaliation for the alleged abductions of senior officers in its Revolutionary Guard. And there's a new twist to the nuclear showdown, with Russia reportedly pulling out its experts from a nuclear site they were helping to build in Iran and warning that it will not fuel Iran's first nuclear plant.

CNN's Aneesh Raman is joining us in Tehran -- Aneesh.

ANEESH RAMAN, CNN CORRESPONDENT: Wolf, it is a madhouse in Tehran today. At squares like this across the capital, traffic is backed up more than usual and huge crowds are out.

Why?

Because tomorrow is the Iranian new year. Everyone is out buying gifts, as well as symbols of the new year that they put on the dinner table. This is just one market.

Now, all of this comes -- the celebrations for Iran's new year -- as Iran deals with continued nuclear tensions and continued tensions with the West. Iran is now saying that if it is true that a number of high officials, including a former deputy defense official, have been kidnapped, as family members have alleged, Iran is in a position to do the same to Western officials, to essentially kidnap in a like-minded fashion. At the same time, Iran's president, Mahmoud Ahmadinejad, set to speak to the U.N. Security Council this week. That as the Security Council doubts and round of sanctions on Iran. More pressure is being felt here as Russia now, reportedly, is telling Iran -- Russia, which was a close ally of Iran -- to suspend its nuclear program or it will stop support of the Bushehr nuclear plant that Russia has been helping Iran with.

So if people here try and celebrate a new year -- and they're telling me they have new hopes for peace in the new year, perhaps for dialogue between Iran and the U.S. -- the reality is that the tensions simply continue to rise -- Wolf.

BLITZER: Aneesh Raman reporting for us from Iran.

Let's go to Jack Cafferty in New York for The Cafferty File.

We've got Aneesh in Tehran.

We've got John King in Balad in the Sunni Triangle.

We've got reporters all over the place.

I tip my hat to those reporters, as I know you do, Jack, as well, for doing the excellent job that they're doing.

JACK CAFFERTY, CNN CORRESPONDENT: Absolutely.

And I'm here in New York, and that isn't the safest place in the world, either, you know?

BLITZER: It's a lot safer than it is in Balad.

CAFFERTY: I'm taking big risks here everyday.

Attorney General Alberto Gonzales twisting in the wind -- and I absolutely love it. Another Republican congressman today, Tom Tancredo of Colorado, calling for Gonzales' resignation. The Justice Department has now released 3,000 pages of documents about the firings of those eight U.S. attorneys. And some of those documents show fears within the administration that the dismissals might not stand up to scrutiny.

One of the U.S. attorneys who got the attention of the Justice Department -- get this -- the special prosecutor in the "Scooter" Libby trial, Patrick Fitzgerald. Administration officials say Fitzgerald was ranked as one of the prosecutors who had "not distinguished themselves" on a Justice Department chart that was sent on to the White House. This was in 2005, when Fitzgerald was in the middle of the CIA leak investigation that led eventually to the trial of the chief of staff of Vice President Dick Cheney, "Scooter" Libby -- and his conviction.

Some think Fitzgerald is maybe the best prosecutor in the country. Meanwhile, the White House is denying reports that President Bush is looking for Gonzales' replacement. In fact, the president called the attorney general this morning to reaffirm his support. Not a good sign.

It's hard to forget the other times that Mr. Bush threw his support behind people who are no longer with us, like FEMA's Michael Brown or former Defense Secretary Donald Rumsfeld.

So here's the question -- do you think Alberto Gonzales will survive as attorney general?

Aren't we supposed to have the question on the screen?

I believe we are. We didn't get it up there.

You can send your thoughts to caffertyfile@cnn.com -- there it is -- or go to cnn.com/caffertyfile -- Wolf.

BLITZER: As we say, better late than never, Jack.

Thanks very much.

Jack will be back soon.

This note, we're standing by for the president's live comments on the Alberto Gonzales controversy. We're going to go to the White House once the president starts speaking.

Also coming up here in THE SITUATION ROOM, have the Democrats found the spine to stand up to the president?

I'll ask Bill Maher, the host of "Real Time," an outspoken critic of both Democrats and Republicans.

Also, Arnold Schwarzenegger -- is he a closet liberal?

A new war of words heating up between the governor and the conservative radio talk show powerhouse, Rush Limbaugh.

Plus, the Texas connection in the White House -- it's a shrinking circle of Lone Star loyalists.

Who has the most power right now?

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

(COMMERCIAL BREAK)

BLITZER: We're standing by to hear live from the president on the Alberto Gonzales controversy. Once he starts speaking, we'll go to the White House.

As we await the president, this word -- the White House has now agreed to give Congress access to top adviser Karl Rove and to former White House Counsel Harriet Miers. But they won't go under oath about the firing of those eight federal attorneys.

Some members of Congress want to fire the attorney general, but right now they may be distracted by a massive document dump, as it's called.

CNN's Brian Todd is standing by.

But let's go to our justice correspondent, Kelli Arena, with more on what's going on -- Kelli.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Wolf, there's a lot to be distracted by. Justice officials sent over thousands of pages of documents but very little in the way of answers, which didn't go over very well on Capitol Hill.

(BEGIN VIDEO TAPE)

SEN. CHARLES SCHUMER (D), NEW YORK: The documents we've gotten last night and our staffs are still going through give no clear reason why these U.S. attorneys were fired.

ARENA (voice-over): The documents do not present a clear explanation for the U.S. attorney dismissals, nor do they shed light on the White House role.

SEN. DIANNE FEINSTEIN (D-CA), JUDICIARY COMMITTEE: There is a conversation about involving the president in the process and asking who decides what his level of involvement should be. But there are no subsequent documents showing the answers.

ARENA: But there is a lot of back and forth about job performance in the documents. Some e-mails are snarky, like an exchange about U.S. attorney Carol Lam and her alleged inability to meet deadlines.

Others are tense, like when U.S. Attorney Margaret Chiara pleads to know why she was let go, insisting it wasn't for performance reasons.

All in all, it was not enough to appease lawmakers.

SEN. PATRICK LEAHY (D), VERMONT: It was an abuse of power committed in secret to steer certain outcomes in our justice system and then to try to cover up the tracks.

ARENA: There's one exchange about whether former U.S. attorney Bud Cummins should testify before Congress and how he might respond to some sticky questions like, "Did you resign voluntarily?"

Cummins was fired to make room for an associate of Karl Rove. We know that because Deputy Attorney General Paul McNulty admitted it to Congress. But apparently that disclosure did not please the attorney general, described in one e-mail as "extremely upset."

(END VIDEO TAPE) ARENA: Justice officials say that's because Gonzales thought that Cummins was fired for performance reasons. And just like Justice officials said, Gonzales does seem to have been out of the loop.

But last we checked, Wolf, he still runs the Justice Department and Congress wants to have a come to Jesus talk with him.

BLITZER: Kelli, thanks for that.

President Bush once surrounded himself with home state partisans, a group of Texans who formed a very tight ring around the White House. But their ranks are thinning.

Let's go back to Brian Todd.

He's got this part of the story -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Wolf, inside this tight circle, known widely in Austin as "the Texas Mafia," loyalty is prized. Now, I may never have been tested like it is now, but as one observer says, this president is known for hanging onto his close friends and it looks like the Gonzales case may follow that pattern.

(BEGIN VIDEO TAPE)

TODD (voice-over): The president shows his attorney general and all those who would bring him down, loyalty still counts most. Alberto Gonzales has never been more vulnerable. But those who have chronicled the Bush ascendancy say Gonzales has one vital trump card -- he's one of few remaining confidantes who prepared George W. Bush for the presidency from the early days, the so-called "Texas Mafia."

MIKE ALLEN, POLITICO.COM: This tight Texas circle was one of the reasons this White House became so known for message discipline.

TODD: But the circle has shrunk. Former FEMA Director Joe Albaugh, who managed the Texas campaigns, gone; along with former White House Counsel Harriet Miers and former Press Secretary Scott McClellan. Close adviser Karen Hughes has moved to the State Department.

The trusted Texans left?

A shaky Gonzales; Communications Director Dan Bartlett; Education Secretary Margaret Spellings and the man who observers say knew as early as 1990 what George W. Bush could become.

WAYNE SLATER, AUTHOR, "THE ARCHITECT": That relationship, Rove and Bush, began before George Bush even knew his entire political career was about to take off like a rocket.

TODD: With other loyalists now gone, observers believe Karl Rove has even more influence over the president, valuable from a tactical standpoint, they say, but also politically risky. This group was never great at telling Mr. Bush what he needed to hear, according to two authors who have written about the Texas connection, and one critical counter-balance to Rove is no longer at the president's side.

RON SUSKIND, AUTHOR, "THE PRICE OF LOYALTY": Karl would walk into each meeting with a sharp sort of partisanship and tactics. Karen would often beat it into a plowshare. She was pragmatic in a way that almost no one has been since on behalf of George Bush.

(END VIDEO TAPE)

TODD: As a result, observers say this president has become more isolated, looks around the Oval Office and sees fewer people who will tell him the hard truth, fewer people whose loyalty he doesn't question -- Wolf.

BLITZER: Thank you, Brian.

Coming up, we're standing by for President Bush to comment on this major new development in the controversy over the firings of those federal prosecutors. We're standing by for that.

Also, the mystery behind a hugely popular Internet attack ad against Hillary Rodham Clinton.

Her leading rival says he's not behind it, so who is?

And the search for that Boy Scout missing in North Carolina -- that search is over. We're just getting some new comments from the Scout's father. We're going to have the latest for you on that.

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

(COMMERCIAL BREAK)

BLITZER: Let's check back with Carol for some other important stories -- Carol.

CAROL COSTELLO, CNN CORRESPONDENT: Happy news to tell you about, Wolf.

Thanks to a search dog's sharp nose, that missing Boy Scout is missing no more. Twelve-year-old Michael Auberry had been wandering around the North Carolina wilderness since Saturday, but he survived three full nights in near freezing temperatures. His dad spoke just a short time ago.

(BEGIN VIDEO CLIP)

KENT AUBERRY, SCOUT'S FATHER: I think anybody who is a parent probably knows how Debbie and I feel right -- just to have our son back. It's just a tremendous blessing.

(END VIDEO CLIP)

COSTELLO: You can tell he's happy.

Michael is a little disoriented and tired, but otherwise he is A- OK. Louisiana Governor Kathleen Blanco will not run for reelection this year. Sources tell us local TV outlets in Louisiana are reporting the first-term Democratic governor will make the announcement at 7:00 p.m. Eastern. Blanco has received criticism for her role during Hurricane Katrina. She currently trails Republican Congressman Bobby Jindal by double digits in recent polling. Blanco narrowly edged out Jindal to win the governorship back in 2003. Former Democratic Senator John Breaux has reportedly been thinking about running for Louisiana governor if Blanco decided to step aside.

Open for business -- that massive glass bottom sky walk hanging more than 4,000 feet above the Grand Canyon. Leaders of the Native American tribe that owns the land led the inaugural walk just over an hour ago, with former astronaut Buzz Aldrin taking part in the ceremony.

You, too, can stroll the $30 million skywalk -- $25 plus other fees. That's what it'll cost you -- Wolf.

BLITZER: Carol, thanks very much for that.

We're just getting a statement in from the chairman of the Senate Judiciary Committee, Senator Patrick Leahy, saying thanks but no thanks to the White House offer to allow top officials, including Karl Rove and the former White House counsel, Harriet Miers, to have a discussion with members of his panel, but not under oath. No sworn testimony, no transcripts: "I don't accept his offer," Leahy says. "It is not constructive and it is not helpful to be telling the Senate how to do our investigation or to prejudge its outcome. Instead of freely and fully providing relevant documents to the investigating committees," Leahy goes on to say, "they have only selectively sent documents after erasing large portions that they do not want to see the light of day."

And as far as any testimony, any statements from Karl Rove, Harriet Miers, other White House aides, testimony, he says, should be, "on the record and under oath. That's the formula for true accountability. I hope the president will agree to be forthcoming."

We're expecting to hear shortly from the president in the White House on this uproar and the future of the attorney general, Alberto Gonzales.

Once the president starts speaking, we'll go to the White House live.

Coming up, California's Republican governor calling Rush Limbaugh "irrelevant." It's the latest volley in a heated war of words. We're going to show you how Rush Limbaugh is responding.

Plus, the outspoken host of "Real Time" -- that would be Bill Maher -- right here in THE SITUATION ROOM to talk about the war in Iraq, the race for the White House, lots more.

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

(COMMERCIAL BREAK)

BLITZER: To our viewers, you're in THE SITUATION ROOM.

Happening now, President Bush about to speak out on the controversy over the firing of those U.S. attorneys and the White House offers to have Karl Rove and Harriet Miers talk, but not testify to Congress, an offer just rejected by the chairman of the Senate Judiciary Committee, Patrick Leahy, who says it's not good enough.

We're standing by for the president's remarks. We'll go to the White House live once he starts speaking.

Also, Vice President Dick Cheney taken to the hospital today. The White House initially said it was a routine follow-up on the blood clot found in his left leg earlier in the month. But later, officials said Mr. Cheney was suffering new discomfort in that leg. Doctors found no complications and the vice president has returned to work.

And Israel conducting a massive drill to prepare for a chemical or possible Iranian missile attack. The two day exercise is the largest in the country's history, with thousands of security forces and rescue crews taking part in simulated assaults in seven locations throughout the country.

I'm Wolf Blitzer and you're in THE SITUATION ROOM.

Now to the keen eye of a comedian and social critic on everything from President Bush's Texas two-step with Alberto Gonzales to the delicate dance of Democrats elbowing one another out on the campaign trail -- joining us, Bill Maher. He's the host of HBO's "Real Time With Bill Maher."

Thanks for coming in, Bill.

BILL MAHER, HOST, "REAL TIME WITH BILL MAHER": Great alliteration, Wolf.

BLITZER: I have excellent writers who -- who know how to do that. I assume you have...

(CROSSTALK)

MAHER: Is William Safire writing for you now?

(LAUGHTER)

BLITZER: Somebody is. I don't know who it is.

Bill, let's talk a little bit about the president standing by his man, the loyalty, as far Alberto Gonzales is concerned. What do you make of this?

MAHER: Well, first of all, I'm very flattered, because he's going to be on in a few minutes. So, I guess I'm opening for him.

BLITZER: You are. You're the -- you're the -- in the lounge. He's in the main -- he's in the main ballroom.

MAHER: Well, there are so many things about this that amaze me.

First of all, I was saying on my show the other night that we have been on the air for this season five weeks. In three of those weeks, there's been a major Bush scandal, Scooter Libby, Walter Reed, and, of course, now this U.S. attorneys thing.

What amazed me about it, Wolf, is that this was something that was written into the Patriot Act, that they could replace these attorneys and -- and not have to consult with the Senate.

BLITZER: It was sort of slipped in.

MAHER: And how long has...

BLITZER: It was sort of slipped in.

MAHER: Right.

And, you know, I understand that the Patriot Act, and then the "Patriot Act II: The Search for Curly's Gold," were not read. You know, that's the joke in Washington, that nobody read them. I understand, OK, nobody read them right after they were written, because, oh, it was after 9/11, and we didn't have time. We just had to rush through this legislation.

How come, at this late date, no one still has read them?

BLITZER: They're very, very long documents.

(LAUGHTER)

MAHER: I know, but you would think a lawmaker, Wolf, that's their job, to maybe go through -- you know, just when they are getting on a long plane ride, like a screenplay: Hey, take this and read it on your way to Japan.

BLITZER: Do -- have you...

MAHER: No, none of that.

BLITZER: ... seen a change on the part of the Democrats? They won back in November. They are the majority in the House and the Senate. They -- they now have subpoena power, oversight power. They can do things now they couldn't do during the first six years of the Bush presidency.

MAHER: Well, when are they going to start doing them?

BLITZER: Are you suggesting they haven't shown the spine yet, the guts that you would like to see?

MAHER: Right. They don't raise the bet, you know?

Cut off the funding. That's what -- that's what -- or at least vote for that. That's what the Congress is supposed to do, control the purse strings.

When the Republicans cut off funding, like, their famous starve- the-beast theory with government, no one complains about that. Cut off the funding, and allow the -- the -- Bush -- put the onus on Bush, so that, if the troops don't get what they need, that's because that money is there to bring them home.

BLITZER: Well, they don't have the votes yet in either the -- certainly not in the Senate, given the arcane rules of the Senate. They need 60 votes to get anything substantive done. They don't have the votes in the Senate. And they may not even have the votes in the House.

MAHER: Yes.

And I think part of that is because there's not enough pressure out there in the country. There was a march against the war the other day, and 20,000 people showed up. Obviously, if the pressure isn't there in the streets, it's not going to be felt in the halls of Congress.

BLITZER: So, what are -- what are you recommending, if anything?

MAHER: Well, you know, I would say, people in this country have to get more upset about this situation. It's a "Where's the outrage?" kind of situation.

We have lost this war. I think most people agree with that. This -- this situation in Iraq is not going to turn around, no matter how much President Bush surges. And -- and, therefore, every -- every life that we lose at this point is, in the words of several candidates, even though they retracted that word, wasted. And that's -- that's just unacceptable.

BLITZER: Bush, as recently as yesterday, said the U.S. can still win.

MAHER: Who said that?

BLITZER: Bush.

MAHER: Bush. Oh, sure, Bush.

(LAUGHTER)

MAHER: Right.

Well -- but his -- his own commander, General Petraeus, said, there is no military solution to this situation, which, my question to General Petraeus would be, then -- then, what are you doing there?

BLITZER: Well, he wants a combination of a military and a political solution, bringing in the neighbors, if you will, which I suspect they are trying to do a little bit more, if -- we saw that meeting that recently took place in Baghdad with Iranian representatives, Syrian representatives, Saudis, and -- and some of the others.

Let me switch gears, because we have a limited amount of time. Hillary Clinton and Barack Obama, what do you make of this duel among the Democrats?

MAHER: Well, I think it's good for the viewer.

(LAUGHTER)

MAHER: It's interesting. It will put the presidential race perhaps on the cover of "People" magazine, and then people would follow it.

I think Hillary Clinton should run in 2008 on a platform of restoring honor and integrity to the White House.

BLITZER: It reminds a lot of our viewers of what Bush ran on in 2000; is that what you are suggesting?

MAHER: That -- that is exactly what I'm saying, Wolf.

BLITZER: Because I remember that phrase.

You think Al Gore is going to jump in?

MAHER: I think Al Gore will jump in if he smells blood in the water.

I don't think he's going to do it any time soon. I think, if he sees a situation sort of similar to what's going on in the Republican Party, where folks are dissatisfied with the choices, I think, then, he will. I think he still wants to be president. I don't think you ever lose that yen. And I think he still could be a good president.

But it's a crowded field. And I think, if Hillary or Obama falters, I think you have other candidates, even before Al Gore, who would rise to the top. I think John Edwards is probably the dark horse in this race. I think he could win this thing by being everybody's second favorite choice.

BLITZER: You have had a lot of these candidates, "Real Time With Bill Maher," your show that airs Friday night. I watch it all the time.

Are you -- are you inviting all these candidates to sort of come on over the next several weeks and months and make an appearance?

MAHER: Oh, yes. We invite everybody. And the -- the ones who don't show up are the chickens.

BLITZER: And the ones that don't show up, you go after; is that right?

MAHER: Well, we try, but, so far, we don't have a lot of luck with -- well, we haven't had Hillary. We haven't had Barack Obama. We haven't had McCain. We haven't had Giuliani. BLITZER: All right. Well, I assume -- I assume...

MAHER: We are getting Kucinich next week.

BLITZER: Dennis Kucinich. Maybe you will get Tom Tancredo on the Republican side as well. He's a -- he's a candidate, as you know.

Let me pick your brain. You are out in California. Arnold Schwarzenegger, he seems to be -- he won decisively his reelection. He was here in THE SITUATION ROOM last week. He's pretty popular out there.

How do you explain this?

MAHER: Well, I think he's a pretty good politician, for one.

He understands that you can reverse yourself and avoid the -- the term flip-flopper, which is applied to people who sometimes reverse themselves in politics. I think he looks at President Bush and, says: Oh, well, Mr. Resolute, look where that got him. He's -- he's really just seen as stubborn and willful and arrogant.

So, Schwarzenegger has not been afraid to switch gears. And the other thing he does, I think, is that he's out front of where the federal government is -- is on many issues, like the environment, like stem cell research.

He's saying: California is a giant state. It's almost its own country. If it was a country, I think it would have the seventh largest economy in the world. And he puts the federal government to shame by doing things that they should be doing.

BLITZER: Is he your favorite Republican?

MAHER: He's one of them, yes.

BLITZER: Who -- who else do you -- who else do you like?

(CROSSTALK)

MAHER: Well, I used to like John McCain a lot more. But I think what we have to look for, most importantly, in the next president is smart.

I think, if you polled the people in this country, they would say, well, we had a big experiment here the last eight years, the last six years, with George Bush. We -- we thought, well, maybe we can get away with a president who wasn't that bright. Well, look how that turned experiment turned out.

I want a very bright man in the White House next time. John McCain supports the idea that more troops is the answer in Iraq. To me, that's just dumb. It's just not bright. So, he's out -- not my favorite anymore.

(CROSSTALK) BLITZER: A final thought on Rudy Giuliani?

MAHER: Rudy Giuliani, you know, his reputation rests largely on the fact that he was so great on 9/11. And he was very inspiring on 9/11.

But I think what folks forget is that the reason why there were so many great pictures of him running around town that day is because the command-and-control center was put, by him, in the World Trade Center, which was attacked in 1993. He put the command-and-control center in the one place he shouldn't have.

So, his big decision on terrorism turned out to be quite a bust. So, him, smart? Sorry. Can't give him that either.

BLITZER: "Real Time With Bill Maher" airs on our sister network HBO Friday nights, 11:00 p.m. Eastern.

Bill, thanks for coming in.

MAHER: Wolf, always a pleasure.

BLITZER: And we have a lot more coming up, including this: some men who know how to grab the spotlight -- the new war of words between Arnold Schwarzenegger and Rush Limbaugh. We will update you on that.

And Al Gore returns to Washington: Could he be warming up for a return to presidential politics?

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: We're standing by to hear from the president of the United States. He's about to make remarks at the White House on his embattled attorney general, Alberto Gonzales. Once he speaks, we will go there live.

Meanwhile, there's a growing war of words between Arnold Schwarzenegger and Rush Limbaugh. The radio talk show host has long been questioning Schwarzenegger's Republican credentials.

And, today, the California governor is firing right back.

Let's go back to CNN's Carol Costello. She has the latest for us -- Carol.

CAROL COSTELLO, CNN CORRESPONDENT: You know, Wolf, Rush Limbaugh is a master at coining a loaded term: Breck Girl for Democrat John Edwards, feminazi for feminists, and Queen Bee Nancy for Democratic Speaker Nancy Pelosi.

But why pick on Republican Governor Arnold Schwarzenegger?

(BEGIN VIDEOTAPE)

(BEGIN AUDIO CLIP, "THE RUSH LIMBAUGH SHOW")

RUSH LIMBAUGH, RADIO TALK SHOW HOST: The Democrats in this country still...

(END AUDIO CLIP)

COSTELLO (voice-over): Rush Limbaugh calls himself the most dangerous man in America, because critics have longed worried his powerful radio show shaped the political landscape.

And then came Arnold, who told "The Today Show":

(BEGIN VIDEO CLIP, "THE TODAY SHOW")

UNIDENTIFIED FEMALE: Why?

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: Rush Limbaugh is irrelevant. I'm not his servant. I'm the people's servant of California. What they call me, if it's a Democrat, or a Republican, or in the center, or I changed, or this or that, that's not my bottom line. This is for them to talk about.

(END VIDEO CLIP)

COSTELLO: It was a shot aimed at Limbaugh's loaded term for Schwarzenegger: closet liberal.

(BEGIN AUDIO CLIP, "THE RUSH LIMBAUGH SHOW")

LIMBAUGH: I don't know what happened to Arnold. He obviously didn't have the leadership skills to articulate conservative principles and win over the public, as Reagan did.

(END AUDIO CLIP)

COSTELLO: Some say Schwarzenegger's smackdown is a sign Limbaugh's not the dominant force he once was. Back in the day, his was the only conservative voice on the airways. Now he's one of many.

But others say Limbaugh's power has always been a myth.

MICHAEL HARRISON, EDITOR AND PUBLISHER, "TALKERS": For all of his power and for all of his fame, Rush Limbaugh, during his ascent in the '90s, bashing Bill Clinton on a daily basis, hours every day on the radio coast to coast, was not able to un-elect Bill Clinton.

COSTELLO: Some political analysts say Limbaugh's power now has diminished because there's no true neoconservative Republican running for president.

Listen.

(BEGIN AUDIO CLIP, "THE RUSH LIMBAUGH SHOW")

LIMBAUGH: They're good guys. They're Republicans, but they're not conservative. I happen to be a conservative, and I happen to be oriented toward conservative triumph. And conservatism won't triumph if we water it down and dilute it, and say that people are 60 percent conservative or whatever happened to be the definition of new conservative.

(END AUDIO CLIP)

COSTELLO: Still, none of this means you will hear any Republican running for president disrespecting Limbaugh. They're still in the business of not offending anyone.

Schwarzenegger, who can't run for president, is free to shoot from the hip.

(END VIDEOTAPE)

COSTELLO: And does he ever. As for how Limbaugh responds to being irrelevant, well, on his radio show today, he said, "I don't know how it is I can be irrelevant, when, every time Schwarzenegger shows up on 'The Today Show,' they ask him about me" -- Wolf.

BLITZER: Carol, thanks.

Let's check in with Lou 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, a lot of relevancies today.

We will be reporting tonight on the huge scale of adult illiteracy in this country, another result of our failing public education system. As many as one in five of us can't do simple tasks such as reading maps.

(CROSSTALK)

BLITZER: Lou, I have to interrupt, because the president is about to make his statement on the attorney general.

Want to go right to the White House.

(JOINED IN PROGRESS)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: And, in this case, I appointed these U.S. attorneys. And they serve four-year terms.

The Justice Department, with the approval of the White House, believed new leadership in these positions would better serve our country. The announcement of this decision and the subsequent explanation of these changes has been confusing and, in some cases, incomplete.

Neither the attorney general, nor I approve of how these explanations were handled. We're determined to correct the problem.

Today, I am also announcing the following steps my administration is taking to correct the record and demonstrate our willingness to work with the Congress. First, the attorney general and his key staff will testify before the relevant congressional committees to explain how the decision was made, and for what reasons. Second, we're giving Congress access to an unprecedented variety of information about the process used to make the decision about replacing eight of the 93 U.S. attorneys.

In the last 24 hours, the Justice Department has provided the Congress more than 3,000 pages of internal Justice Department documents, including those reflecting direct communications with White House staff. This, in itself, is an extraordinary level of disclosure of an internal agency and White House communications.

Third, I recognize there is significant interest in the role the White House played in the resignations of these U.S. attorneys. Access to White House staff is always a sensitive issue. The president relies upon his staff to provide him candid advice. The framers of the Constitution understood this vital role when developing the separate branches of government.

And, if the staff of a president operated in constant fear of being hauled before various committees to discuss internal deliberations, the president would not receive candid advice, and the American people would be ill-served.

Yet, in this case, I recognize the importance of members of Congress having -- the importance Congress have placed on understanding how and why this decision was made. So, I will allow relevant committee members, on a bipartisan basis, to interview key members of my staff to ascertain relevant facts.

In addition to this offer, we will also release all White House documents and e-mails involving direct communications with the Justice Department or any other outside person, including members of Congress and their staff, related to this issue.

These extraordinary steps offered today to the majority in Congress demonstrate a reasonable solution to the issue. However, we will not go along with a partisan fishing expedition aimed at honorable public servants. The initial response by Democrats, unfortunately, shows some appear more interested in scoring political points than in learning the facts.

It will be regrettable if they choose to head down the partisan road of issuing subpoenas and demanding show trials, when I have agreed to make key White House officials and documents available. I have proposed a reasonable way to avoid an impasse. I hope they don't choose confrontation. I will oppose any attempts to subpoena White House officials.

As we cut through all the partisan rhetoric, it's important to maintain perspective on a couple of important points. First, it was natural and appropriate for members of the White House staff to consider and to discuss with the Justice Department whether to replace all 93 U.S. attorneys at the beginning of my second term.

The start of a second term is a natural time to discuss the status of political appointees within the White House and with relevant agencies, including the Justice Department. In this case, the idea was rejected, and it was not pursued.

Second, it is common for me, members of my staff, and the Justice Department to receive complaints from members of Congress in both parties and from other citizens.

And we did hear complaints and concerns about U.S. attorneys. Some complained about the lack of vigorous prosecution of election- fraud cases, while others had concerns about immigration cases not being prosecuted. These concerns are often shared between the White House and the Justice Department, and that is completely appropriate.

I also want to say something to the U.S. attorneys who have resigned. I appreciate your service to the country. And, while I strongly support the attorney general's decision, and am confident he acted appropriately, I regret that these resignations turned in -- into such a public spectacle.

It's now my hope that the United States Congress will act appropriately. My administration has made a very reasonable proposal. It's not too late for Democrats to drop the partisanship and work together.

Democrats now have to choose whether they will waste time and provoke an unnecessary confrontation or whether they will join us in working to do the people's business. There are too many important issues, from funding our troops, to comprehensive immigration reform, to balancing the budget, for us to accomplish on behalf of the American people.

Thank you for you time. Now I will answer a couple of questions.

Deb (ph).

QUESTION: Mr. President, are you still completely convinced that the administration did not exert any political pressure in the firings of these attorneys?

BUSH: Deb (ph), there is no indication that anybody did anything improper.

And I'm sure Congress has that question. That's why I have -- I have put forth a reasonable proposal for people to be comfortable with the decisions and how they were made. Al Gonzales and his team will be testifying. We have made available people on my staff to be interviewed. And we have made an unprecedented number of documents available.

QUESTION: Sir, are you convinced personally?

BUSH: There's no indication whatsoever, after reviews by the White House staff, that anybody did anything improper. Michael (ph).

QUESTION: Is today's offer from Mr. Fielding your best and final offer on this? Are you going to go to the mat in protecting the principle that you talked about? And why not -- you know, since you say nothing wrong was done by your staff, why not just clear the air and let Karl Rove and other senior aides testify in public, under oath?

BUSH: Well...

QUESTION: There's been a precedent for -- for previous administrations doing that.

BUSH: Well, some -- some have. Some haven't. My choice is to make sure that I safeguard the ability for presidents to get good decisions.

Michael (ph), I'm -- I'm worried about precedents that would make it difficult for somebody to walk into the Oval Office and say, "Mr. President, here's what's on my mind."

And, if you haul somebody up in front of Congress, and put him in oath, and, you know, all the klieg lights and all the questioning, it -- it -- to me, it makes it very difficult for a president to get good advice.

On the other hand, I understand there is a need for information- sharing on this. And I put forth what I thought was a rational proposal, and the proposal I put forward is the proposal.

QUESTION: And you will go to the mat? You will take this to court...

(CROSSTALK)

BUSH: Absolutely. I hope the Democrats choose not to do that.

If they truly are interested in information -- in other words, if they want to find out what went on between the White House and the Justice Department, they need to read all the e-mails we released. If they're truly interested in finding out what took place, I have proposed a way for them to find out what took place. My concern is, they would rather be involved with, you know, partisanship; they view this as an opportunity to score political points.

And, anyway, the proposal we put forward is a good one. And if -- I mean, it really is a way for people to get information. We will just find out what's on their mind.

Kelly O.

QUESTION: Sir, in at least a few instances, the attorneys that were dismissed were actively investigating Republicans in San Diego, in Arizona, in Nevada. By removing them, wouldn't that have possibly impeded or stopped those investigations? And, sir, if I may also ask about the attorney general. He does not have support among many Republicans and Democrats. Can he still be effective?

BUSH: Yes, he's got support with me. I support the attorney general. I told you in Mexico I have got confidence in him. And I still do. He's going to go up to Capitol Hill, and he's going to explain the very thing -- questions you asked.

You know, I have heard all these allegations and rumors. And when -- people just need to hear the truth. And they're going to go up and explain the truth.

QUESTION: San Diego, Nevada, Arizona -- Republicans were the targets of investigations and those U.S. attorneys were removed. Does that not give the appearance...

BUSH: Why don't -- why don't -- it may give the appearance of something, but I think what you need to do is listen to the facts and let them explain to you. That's precisely why they're going up to -- to testify, so that the American people can hear the truth about why the decision was made.

Listen, first of all, these U.S. attorneys serve at the pleasure of the president. I named them all. And the Justice Department made recommendations, which the White House accepted, that eight of the 93 would no longer serve. And they will go up and make the explanations as to why.

I'm sorry this, frankly, has bubbled to the surface the way it has for the -- for the U.S. attorneys involved. I really am. These are -- I put them in the -- I put them in there in the first place. They're decent people. They -- you know, they serve at our pleasure.

And -- and, yet, now, they're being held up, and there's to the -- the scrutiny of all this. And it's just -- it's -- it's -- I -- what I said in comments, I meant about them. I appreciated their service, and I'm sorry that the situation has gotten to where it's got.

But that's Washington, D.C., for you. You know, there's lot of politics in this town. And I repeat, we would like people to hear the truth. And, Kelly, your question is one I'm confident will be asked of people up there. And the Justice Department will answer that question in an open forum for everybody to see.

If the Democrats truly do want to move forward and find the right information, they ought to accept what I proposed. And the idea of dragging White House members up there to score political points, or to, you know, put the klieg lights out there, which will harm the president's ability to get good information, Michael (ph), is -- is -- is -- I really do believe will show their -- the true nature of the -- of this debate.

And, if information is the desire, here's a great way forward. If scoring political points is the desire, then the rejection of this reasonable proposal will really be -- will really be evident for the American people to see.

Listen, thank you all for your interest.

BLITZER: And there he is, the president of the United States, with a very, very strong statement, a tough statement from the president, saying the Democrats can have this deal or reject this deal, but this is where he says he's going, Jack Cafferty, and he's not going to move beyond this offer to allow an interview, as he says, of these top officials, but no sworn testimony.

JACK CAFFERTY, CNN ANCHOR: The question this hour is: Do you think Alberto Gonzales will survive as attorney general?

Paulet writes from Connecticut: "I would like to see Gonzales go, as well as Cheney and Bush. I think, at some point, they will have to throw him under a bus to save their own hides. And that is what they do best. Bush can't do a thing to save his legacy at this point."

Virl in Hertford, North Carolina: "Forget whether he survives or not. He is but a symptom of a malignancy on the body politic. All the disease must be excised, but not before they have been brought before the Judiciary Committee under oath and on the record."

Blanche in Los Angeles: "Yes, the attorney general will survive, but I think he's going to take a whooping in the woodshed from the Democrats for a few days."

David writes: "I don't trust the president will just do the right thing. Attorney General Gonzales has a job until you see the president gather the media and announce, 'You're doing a great job, Gonzo.' Then, I will know for sure we have recovered from Hurricane Albert."

Joe in Orlando: "Gonzales must go. He is incapable of understanding the difference between being the president's legal adviser and the attorney general of the United States. He simply doesn't know who he is working for."

And John in California: "Bush just called 'Al' to give him his support. That means there will soon be a horse's head on Al's pillow, and he will be checking into rehab."

If you didn't see your e-mail here, you can go to CNN.com/CaffertyFile, where you can read more of these online -- Wolf.

BLITZER: He says, the president -- we just heard it, Jack -- the Democrats are demanding show trials.

That's a strong word.

CAFFERTY: Well, you know, it's partisan politics to a point, but there's reason to -- to suspect that something untoward may have gone on with the firings of these attorneys. What is wrong with putting people under oath and getting them to tell the truth?

Hey, there's a -- there's a strange idea: the truth.

BLITZER: We're going to have a lot more on this coming up at 7:00 p.m. Eastern.

In the meantime, let's go to Lou in New York -- Lou.

DOBBS: Wolf, thank you very much.

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