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THE SITUATION ROOM

Bloody April in Iraq; Wolfowitz Makes Last-Ditch Attempt to Remain World Bank President

Aired April 30, 2007 - 19:00   ET

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


WOLF BLITZER, CNN ANCHOR: Thanks, Lou.
Happening now, a bloody April in Iraq, one of the deadliest months yet for American troops -- is the war spending standoff in Washington holding up a key piece of equipment that potentially could save American lives?

One official has already resigned. Will an alleged madam name more names from among the rich and powerful of Washington?

And the World Bank chief, Paul Wolfowitz, making a last ditch effort to try to save his job. Critics say he should step down for promoting his girlfriend. He's calling it a smear campaign.

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

A terrible toll among U.S. troops as a bloody April comes to a close -- ambushes, small arms fire and roadside bombings. Fourteen Americans killed in a three-day period alone. Hundred and four U.S. troops killed overall as this month becomes one of the deadliest of this war.

The three worst months for U.S. Troops, December 2006, 112 Americans were killed. April 2004, 135 troops died, and the bloodiest of all, November 2004, 137 U.S. troops were killed that month. The dangers are always there, as CNN's Arwa Damon tells us from Baghdad -- Arwa.

ARWA DAMON, CNN CORRESPONDENT: Wolf, it is nearly impossible to really describe what it's like for U.S. troops operating here. One thing for certain is that it is an incredibly frustrating, difficult, challenging and deadly atmosphere.

(BEGIN VIDEOTAPE)

DAMON (voice-over): There is no sugar coating the realities of war.

UNIDENTIFIED MALE: This way.

DAMON: From snipers who lay in wait on rooftops to roadside bombs.

(SOUNDS)

UNIDENTIFIED MALE: Go right. Go right. Go right. Go right!

PFC. CARLOS LIVINGSTON, U.S. ARMY: To be honest with you, this tour is a lot worse than last tour (inaudible).

DAMON: As America increased its forces drew up new strategies and dusted off old ones. The insurgency morphed itself as well. In the chess game that is the war in Iraq, a strategic switch by the American side is countered by a deadly change in tactics by the other side.

GEN. DAVID PETRAEUS, CMDR., MULTI-NATIONAL FORCE-IRAQ: Our achievements have not come without sacrifice. Our increase in operational tempo, location of our forces in the populations they are securing and conduct of operations in areas where we previously had no presence, as well as the enemy's greater use of certain types of explosive devices, have led to an increase in our losses.

DAMON: This month, among the deadliest for U.S. forces and the deadliest for British troops operating in the south. As the Baghdad security plan unfolded and caused a ripple effect throughout the country, senior commanders knew more of their men would pay with their lives.

(SOUNDS)

DAMON: A risk deemed worth taking to make sure this plan for Iraq succeeds, because quite simply, there is no plan "B."

(END VIDEOTAPE)

DAMON: U.S. military commanders say that even for this plan to succeed, it is going to take a lot of time. But everyone right now acknowledges that the war in Iraq is not going to be won simply by American military might but both American and Iraqi commanders say that if the U.S. withdraws prematurely, Iraq will not stand a chance -- Wolf.

BLITZER: Arwa Damon in Baghdad for us. The latest casualties, by the way, bringing the overall U.S. military death toll since the start of the war some four years ago to 3,351.

Back here, the Iraq spending bill with its withdrawal timetable about to reach a dead end -- the president's desk.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MAJORITY LEADER: We ask that he finally summon what I believe is the courage to admit he makes mistakes, has made mistake here and take the steps we propose to begin to heal the grave wounds that have been caused by this war. This bill gives him a path forward. We ask him to follow it.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I have made my position very clear. The Congress chose to ignore it. So I will veto the bill.

(END VIDEO CLIP)

BLITZER: But the standoff over war funding has led to a consequence neither side wanted, a potential delay in purchasing life saving armored vehicles for the U.S. troops in Iraq.

Let's go to our senior Pentagon correspondent Jamie McIntyre. Jamie, explain what's going on.

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT: Well you know, Wolf, 70 percent of those casualties you're talking about come from IEDs, roadside bombs, 70 percent. The U.S. military finally has a piece of equipment they say provides some measure of protection, but it's caught in the crossfire of a Washington budget battle.

(BEGIN VIDEOTAPE)

MCINTYRE (voice-over): It's not impenetrable, but the U.S. military's newest armored vehicle design has turned out to be a life saver in Iraq.

STAFF SGT. TIM KESSLER, U.S. MARINE CORPS: We took a small hit last week, it was a low (ph) round. It blew a tire, basically the extent of the damage. Anytime we do take a blast, the vehicle, the way the vehicle is built, just -- it prevents casualties.

MCINTYRE: In military jargon, the vehicle is an MRAP, short for mine resistant ambush protected. The various models all feature a raised V-shape undercarriage that deflects the force of roadside bombs, providing four to five times the protection of an armored Humvee and cutting casualty rates by IEDs by some two-thirds -- price tag -- $1 million each. Senate support to rush thousands more to the front lines is unanimous and bipartisan.

SEN. JOSEPH BIDEN (D-DE), FOREIGN RELATIONS COMMITTEE: This is a matter of life and death. Two thousand, five hundred more vehicles means literally that 10,000 to 30,000 more Americans will have a three to four times greater chance of surviving a hit with an IED while on patrol than exists today if we don't act.

MCINTYRE: But plans to kick the deployment of the better armored vehicles to Iraq into high gear has hit a political roadblock -- the standoff between Congress and the White House over Iraq funding. While each side blames the other, $3 billion for more life-saving vehicles is held hostage to the political debate. As the outgoing Army chief told Congress last month, the only hold-up is funding.

GEN. PETE SCHOOMAKER, U.S. ARMY CHIEF OF STAFF: We can build what we can get the funds to build. It's strictly an issue of money.

(END VIDEOTAPE)

MCINTYRE: Wolf, there's already over 1,000 of these MRAP vehicles in Iraq used by the Army and the Marines, but they'd like to have 7,000 total. But they're going to need that money to be freed up. And right now it looks like there may not be any kind of a compromise on this until June 1 -- Wolf.

BLITZER: Jamie McIntyre reporting from the Pentagon -- thanks, Jamie.

Tonight, President Bush is leaving the door open for a high-level encounter between the United States and Iran, even though he calls the Tehran government a significant threat to peace, to world peace, that is. During a news conference with European leaders over at the White House, Mr. Bush was asked about an upcoming regional conference this week in Egypt, the subject security in Iraq. Both Secretary of State Condoleezza Rice and Iran's foreign minister will be there.

(BEGIN VIDEO CLIP)

BUSH: Should the foreign minister of Iran bump into Condi Rice, Condi won't be rude. She's not a rude person. I'm sure she'll be polite. But she'll also be firm and reminding the representative of the Iranian government that there's a better way forward for the Iranian people than isolation.

(END VIDEO CLIP)

BLITZER: Let's bring in our White House correspondent Ed Henry. This would be a pretty significant develop in U.S./Iranian relations if the secretary of state and the foreign minister actually had a meeting.

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: That's right, Wolf. I mean U.S. officials are trying to downplay this is by saying they don't really have high expectations that there will be a major breakthrough. But you're right. These kinds of meetings, direct talks between the U.S. and Iran, are so rare that almost anything can happen and just the fact that they might be meeting does open the door to potential breakthroughs either on the nuclear issue, but also what U.S. officials say they want to focus on if these talks go forward is the fact this is a conference on stability in Iraq.

So Secretary Rice would send the message in the short term that she wants Iran to stop meddling, stop sending weapons into Iraq. Those roadside bombs we've heard so much about. And finally, if the nuclear issue does come up, the U.S. says what Secretary Rice would try to do would push it over to the U.N. and others. That she doesn't want to really negotiate into great detail because what they really want Iran to do is to step its uranium enrichment program before there's major negotiations. But the bottom line is you are absolutely right. Since these talks are so rare, this could be a big deal -- Wolf.

BLITZER: We'll watch every step of the way -- Ed Henry reporting for us.

Let's go to New York and Jack Cafferty for "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: State Department report, Wolf, shows that terror attacks worldwide up 25 percent last year. And the number of fatalities from those attacks up 40 percent -- some of the numbers a bit staggering.

Fourteen thousand terror attacks in 2006, killed more than 20,000 people. That compares to about 11,000 attacks in 2005. Forty- five percent of those attacks happened in Iraq. Kidnappings by terrorists in Iraq increased 300 percent last year from 2005.

In Afghanistan, terror attacks up 50 percent; in Africa, 65 percent. No one was spared. Attacks on kids increased 80 percent from a year ago; educators, the number up more than 45 percent. The report also says that Iran is the biggest supporter of terrorism in the world. There were some successes. No major terror attacks reported in Europe last year. There was a decline in terrorism in India, Pakistan and Indonesia.

The report comes out right as Congress and the White House are fighting over this war funding bill. So you can expect these numbers to be grabbed and used as ammunition by everybody who is involved in that debate. Here's the question.

What does it mean if terror attacks worldwide are up 25 percent last year? E-mail CaffertyFile@CNN.com or go to CNN.com/CaffertyFile -- Wolf.

BLITZER: Thanks, Jack, for that.

Coming up, the woman accused of being the D.C. madam names, names.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I would ask the press and the media to put aside the titillation of the who's who list, at least in part.

(END VIDEO CLIP)

BLITZER: Young women and the rich and the powerful -- big questions though. Who used this service? Was it all legal? The story that has some men in Washington bracing for public disclosure.

Plus -- he's head of the World Bank and an architect of the war in Iraq -- Paul Wolfowitz right now fighting for his job over payments to his girlfriend. Will he resign?

And millions of dollars down the drain in Iraq -- reconstruction projects that fell apart after being declared a success.

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

(COMMERCIAL BREAK)

BLITZER: As U.S. troops pay a heavy price in Iraq, what about American taxpayers -- very disturbing new report of waste and corruption in the effort to try to rebuild Iraq.

Our Pentagon correspondent Barbara Starr is following this story -- Barbara. BARBARA STARR, CNN PENTAGON CORRESPONDENT: Wolf, a grim assessment of the reconstruction efforts in Iraq.

(BEGIN VIDEOTAPE)

STARR (voice-over): At the Irbil maternity and pediatric hospital in northern Iraq, the sewer system doesn't work. Medical waste and contaminated water back up into patients' rooms. Just last year, the U.S. said the hospital was providing first-rate care.

Today, it's a $7 million example of a U.S. financed reconstruction effort gone wrong. In the latest report from the special inspector general for Iraq reconstruction, inspectors also found continuing problems providing Iraqis with electricity, clean water and sewage treatment.

FREDERICK BARTON, CTR. FOR STRATEGIC & INTL STUDIES: We made bad choices in terms of the large projects and then we put it all on a very fast timetable thinking that we could get this stuff done and get out of town.

STARR: Congress budgeted some $20 billion to rebuild Iraq. More than 80 percent of it has been spent, and most Iraqis don't feel it's brought them a better life. The latest report looked at $150 million worth of projects. It is just a snapshot, but most of the projects are no longer in working order.

At Baghdad International Airport, 17 power generators were delivered some 16 months ago. Today, 10 are no longer working. It was a $12 million effort. At a $5 million barracks at the airport for Iraqi Special Forces, there isn't enough water to flush the toilets.

Barton calculates Iraqis see less than 30 cents on the dollar of reconstruction money turned into real improvements in their daily lives. The insurgency and government corruption in Iraq are partly to blame, but Barton says, so is poor U.S. management.

(END VIDEOTAPE)

The inspector general's work has already resulted in nearly half a dozen convictions. There are another 79 cases of alleged wrongdoing currently under investigation by the office and 28 of those cases are waiting Justice Department prosecution -- Wolf.

BLITZER: Thank you, Barbara, for that.

Add at least one more name to the list. The number of people critical of President Bush may be many, but those actually talking about removing him from office, relatively few and yet their number appears to be growing.

Our congressional correspondent Andrea Koppel has more -- Andrea.

ANDREA KOPPEL, CNN CONGRESSIONAL CORRESPONDENT: Wolf, Pennsylvania Democrat John Murtha sure knows how to grab the headlines. And he did just that over the weekend. But they weren't the kind of headlines that Democratic leaders want.

(BEGIN VIDEOTAPE)

KOPPEL (voice-over): For the second time in a week, Democrats were using the "I" word.

UNIDENTIFIED MALE: Are you seriously talking about contemplating an impeachment of this president?

REP. JOHN MURTHA (D), PENNSYLVANIA: Bob, what I am saying, there's four ways to influence a president...

UNIDENTIFIED MALE: And that's one of them.

MURTHA: One of them is impeachment.

KOPPEL: Only days earlier, Ohio Democrat Dennis Kucinich, who is also running for president, held a news conference and called for the impeachment of the vice president.

DENNIS KUCINICH (D), OHIO: Because if we were to start with the president and pursue articles of impeachment, Mr. Cheney would then become president.

KOPPEL: Other Democrats were quick to dismiss such a move out of hand.

REP. JANE HARMAN (D-CA), INTELLIGENCE COMMITTEE: I think very few people in Congress are talking about impeachment.

KOPPEL: But the timing of any talk of impeachment muddies the message for Democratic leaders eager to keep the focus on their veto showdown with President Bush over the Iraq funding bill, which calls for troops to be out of Iraq by this time next year. Just listen to the third ranking House Republican.

REP. ADAM PUTNAM (R), FLORIDA: I am shocked that John Murtha would put himself as an ally of Kucinich on this impeachment idea. It's time that we stop playing to the far left base of the Democratic majority is speaking to.

KOPPEL: For Murtha, a top lieutenant of Speaker Nancy Pelosi, this isn't the first time he's drawn attention to himself at a politically sensitive moment. In February, on the eve of the House vote opposing the president's plan to send more troops to Iraq, Murtha gave an interview to an antiwar group threatening to place conditions on war funding.

(END VIDEOTAPE)

KOPPEL: That interview gave Republicans fresh ammunition to attack Democrats for their alleged, quote, "slow bleed strategy", denying funds for U.S. troops. Democratic leaders later privately admitted that Murtha's comments had cost them more than just a few Republican votes -- Wolf.

BLITZER: Andrea Koppel on the Hill for us.

And still ahead tonight here in THE SITUATION ROOM, George Tenet's attacks on the Bush administration over Iraq and 9/11. Is the former CIA chief trying to help the nation or himself? J.C. Watts and James Carville -- they are here for our "Strategy Session".

Also, the chase, the crash, and now the United States Supreme Court ruling -- did police cross the line?

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

(COMMERCIAL BREAK)

BLITZER: Our Carol Costello is monitoring stories incoming into THE SITUATION ROOM right now. Carol, what do you have?

CAROL COSTELLO, CNN ANCHOR: Well let's start with the Supreme Court, Wolf. This police dash cam video was at the center of a Supreme Court decision. The justices ruling today that the Georgia officer behind the wheel used reasonable force when he rammed a fleeing car ending a high-speed chase, but the resulting accident left the teenage driver paralyzed. He later tried to sue the officer, but the court effectively dismissed that case.

Take a look at this. CNN I-Reporter Laura Kennedy sent this in to us, a freight train slamming into a tractor-trailer. It happened in Richmond, Texas, near Houston. You can see this train just demolish the moving van and whatever was inside it. The good news here, no person was hurt, but everything in that moving van destroyed.

Virginia Governor Tim Kaine closes the legal loophole that allowed the Virginia Tech gunman to buy his weapons, even after he had been deemed mentally ill. Kaine's executive order creates a database of people, like Cho, who was found by a judge to be a danger to himself and ordered to undergo psychiatric treatment. Under the new law, such people are prohibited from buying guns.

A former presidential candidate attacked. Today former Illinois Senator Carol Moseley Braun talked about being mugged right outside of her own home. It happened this past Friday. She praised two University of Chicago students who helped fend off a knife-wielding attacker. Listen.

(BEGIN VIDEO CLIP)

CAROL MOSELEY BRAUN (D), FORMER PRES. CANDIDATE: It really got scary, yes. It really got scary and frankly, I didn't realize until Rachel and Zach said after the fact how close he was with the knife on me physically. He had me down on the ground and was coming at me with the knife.

(END VIDEO CLIP)

COSTELLO: He was slashing at her with the knife. Moseley Braun calls the students heroes. And an emotional Tony Snow says it's great to be back. The White House press secretary was back at his lectern today, five weeks after he left it to undergo treatment for cancer. Snow says he'll begin chemotherapy this week for what he calls some small cancers. Good for him -- back to you, Wolf.

BLITZER: We wish him only, only the best. We're glad he's back on the job -- Carol, thanks for that.

Just ahead, it's creating a firestorm here in Washington. So why isn't the White House saying much about the explosive new book by former CIA Director George Tenet? James Carville and J.C. Watts, they're here in THE SITUATION ROOM.

Plus, the little black book threatening to derail some high- profile careers in Washington, maybe beyond.

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

(COMMERCIAL BREAK)

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

Happening now, after being found guilty on terror charges five Britons have been sentenced to life in prison. They are accused of plotting al Qaeda inspired bomb attacks across Britain.

According to a scathing new report, hasty decisions and inexperience played a role in Israel's war with Hezbollah last summer. An independent commission says the Prime Minister Ehud Olmert was too hasty to go to war and that Israel's defense minister was inexperienced. Today, the prime minister vowed to fix any failures.

And he's going. Prince Harry will head to Iraq. That's what the British Army chief says who adds he personally made that decision.

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

Former CIA Chief George Tenet certainly picked the right title for his new book. It's called "At the Center of the Storm." His assertions about the decision to invade Iraq have placed him right at the center of a new controversy.

Let's go to CNN's Brian Todd. He's watching the latest fallout -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Wolf, Tenet is being rebutted by the Bush administration for his take on the prewar intelligence debate, but he's also being skewered by some former CIA officers and one account of an encounter that Tenet says he had just after September 11 at the White House is raising a few eyebrows here in Washington.

(BEGIN VIDEOTAPE)

TODD (voice-over): The day after 9/11, were President Bush and his conservative allies making connections to Saddam Hussein? Former CIA Director George Tenet describes an encounter that stunned him he says on September 12, 2001.

Tenet claims as he was going into the White House early that morning, Richard Perle was leaving. In his new book, Tenet writes that Perle, a so-called neo-conservative who headed a Pentagon advisory board at the time quote, "turned to me and said Iraq has to pay a price for what happened yesterday. They bear responsibility."

GEORGE TENET, FORMER CIA DIRECTOR: And I remember thinking to myself as I'm about to go and brief the president, what the hell is he talking about?

TODD: Perle tells the "Weekly Standard" he was in France that day, denies ever saying that to Tenet. Tenet now says his dates may have been off, but insists the exchange happened. Here's what Perle did tell CNN five days after 9/11.

RICHARD PERLE, DEFENSE ADVISORY BOARD: Even if we cannot prove to the standards that we enjoy in our own civil society that they were involved, we do know, for example, that Saddam Hussein has ties to Osama bin Laden.

TODD: Tenet has testified to a Senate committee there were no operational ties between Saddam and bin Laden. And before 9/11, Tenet claim he's didn't have the right opportunity to go after the al Qaeda leader. Tenet writes of a 1998 plan to capture bin Laden, backed by now former CIA officer Michael Scheuer.

Quote, "Every one of the senior operations officers above Mike recommended against undertaking the operation. They believed the chances of success were too low.

MICHAEL SCHEUER, FORMER CIA OFFICIAL: That's a lie. The entire program was approved by everyone above me. It was canceled at the last moment for reasons unknown.

(END VIDEOTAPE)

TODD (on camera): Michael Scheuer says the U.S. military had no fewer than eight chances to kill bin laden between the springs of 1998 and 1999. Wolf?

BLITZER: There's other fallout coming in from former intelligence officers in the CIA.

TODD: Absolutely. In addition to Michael Scheuer, six other CIA officers have written a letter to tenet calling him the Alberto Gonzales of the intelligence community, telling him he should give some of his royalties to the families of U.S. soldiers killed and wounded in Iraq.

BLITZER: Brian Todd,. Thanks for that.

At the same time, the controversy has many in Washington pondering what if. (BEGIN VIDEOTAPE)

BLITZER: Joining us, our CNN political analysts -- James Carville is a Democratic strategist. J.C. Watts is a former Republican congressman from Oklahoma.

Listen to this little clip from George Tenet, who is out now promoting his new book. Listen to this.

(BEGIN VIDEO CLIP)

GEORGE TENET, FORMER CIA DIRECTOR: People were inundated with data and operations, and they missed it. We're not trying to control information. We're not trying to intentionally withhold. Human beings made mistakes.

(END VIDEO CLIP)

BLITZER: He was on "60 Minutes." And he was talking about the failures to anticipate Osama bin Laden and al Qaeda leading up to 9/11.

What do you think about this whole uproar over George Tenet's allegations, charges that he's leveling?

JAMES CARVILLE, CNN POLITICAL ANALYST: Well, I mean, first of all, is, he's just put another guy from Tony Blair, to Colin Powell, to Dick Cheney, to Don Rumsfeld, to Condoleezza Rice, everybody that has touched this administration one way or another has been diminished, some a lot more than others.

And I think part of the thing -- at least give Tenet credit. He feels terrible about what he did. He feels terrible about what happened. Most of these people don't even express any remorse for it. So, I give him some credit for being out there, saying, I feel bad.

The CIA told the president on August 6 that bin Laden was determined to strike the United States. He went to Condoleezza Rice's office to say, please, we have got to do something. They said the entire system was blinking red the entire summer of 2001, and they couldn't get anybody's attention.

So, I mean, you are right. Tenet has been really hurt by this. He's been diminished. But at least he feels bad about it, which is better than other people.

BLITZER: J.C., what do you think?

J.C. WATTS, CNN POLITICAL ANALYST: Well, I think the operative words that George mentioned was: "We made mistakes."

And I think members of the administration, they have said they made mistakes. But, based on the data they had to make the decisions that they had to make, they made the decision to pull the trigger. I don't think George Tenet -- I don't think he questions that. I don't think anybody questions that in the administration. He said there was not enough discussion about whether or not to go to war. I think there was plenty of discussion whether or not to go to war. I think it was a lack of discussion -- discussion on post- toppling of Saddam Hussein. Should we have more troops?

BLITZER: He says -- he says that -- that was the case also.

But he -- but he also insists that there was not enough discussion. In fact, he says he didn't know of any meetings about the imminent threat from Saddam Hussein, that he represented what he calls an imminent threat.

WATTS: Well, but, you know, I also heard over the last couple of days that he and Condi Rice, that they were not communicating. Maybe there were meetings.

You know, Wolf, it's going to be a lot of he said/she said. I understand, you know, George Tenet is a decent guy. And I am not questioning that. But, when things -- when books like this come out under these type of circumstances, when a Republican or a Democrat leave an administration, these books look self-serving.

BLITZER: He's got -- the criticism he's facing is that he is someone who had the ear of the president...

CARVILLE: Right.

BLITZER: ... almost every single day.

CARVILLE: Right.

BLITZER: He briefed the president of the United States in the morning on overnight developments almost every day. So, you can talk to the president. You have spoken to presidents. You know, you have the ear of the president.

CARVILLE: Right. Right.

BLITZER: You can say whatever you want.

CARVILLE: That's a valid criticism.

I mean, he says -- if you told -- I mean, but they told the president. They went and they gave him the memo on August 6. And he says, well, you have covered your rear end. Now leave me alone. I'm on vacation.

I mean, they went by to see the national security adviser to the president. I think, and probably in Tenet's mind, they said every system was blinking red. The guy was in Texas the entire month of August, when they were telling him that this was coming. I mean, people had -- almost knew this, said almost to a certainty, we're getting ready to get hit.

Had people been on alert, had things -- had people been placed on alert, maybe they could have done something. And, by the way, Tenet's book is just a validation of the hundreds of books that came out. This administration wanted to invade Iraq before anything had to do with 9/11, or Saddam Hussein or weapons of mass destruction, any of that.

Every book that has come out, from Paul O'Neill, all the way through George Tenet, of people who were there, who served in the administration, all have the same story.

Maybe, if 30 people say you have something stuck between your teeth, you probably got something stuck between your teeth.

WATTS: There were -- you know, there were mistakes made. And I think it's even fair to say they missed it on August 6.

But, James, we can also say, we missed it in 1993. We missed it in 1995, 1998, 2000. I mean, there's many instances that we can say we missed it, that we missed it. Republicans and Democrats both can say they missed it.

CARVILLE: But J.C., nobody sent 150,000 people into a war, and we're still stuck there going into the fifth year.

WATTS: But why do we keep ...

CARVILLE: I mean, this is not -- it's one thing to say -- it's one thing to say somebody made a mistake.

This is not just a mistake. This is the most colossal disaster maybe, some people think, in U.S. history.

But, certainly, it's one of the most colossal disasters we have ever had. This is not a mistake. This is a disaster. Some things are a mistake. Some things are disasters. This war is a disaster.

BLITZER: Go ahead.

WATTS: But, James, maybe we wouldn't have had to send 150,000 people into war had we dealt with it in 1992 ...

CARVILLE: We didn't. We didn't have to.

WATTS: .... had we dealt with it in 1995, had we dealt with it in 199...

CARVILLE: J.C ...

WATTS: We have had many instances to raise our conscience level that, hey, something is wrong out there. And we kept kicking that can down the street, kicking it down the street, and not dealing with it.

CARVILLE: We never had to invade Iraq. It's not a mistake. It's a disaster. There's a difference between the two.

BLITZER: All right, guys, thanks very much, James Carville and J.C. Watts. (END VIDEOTAPE)

BLITZER: And you can hear from George Tenet himself tonight. He will be a guest on LARRY KING LIVE. That airs at 9:00 p.m. Eastern, 6:00 Pacific. And George Tenet will join us right here in THE SITUATION ROOM on Wednesday.

Still ahead tonight, the woman who has Washington on edge. The alleged DC madam appears in court today and warns that more of her clients' names may soon become public.

The World Bank chief Paul Wolfowitz fighting back against what he calls a sphere campaign with help from President Bush.

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

(COMMERCIAL BREAK)

BLITZER: An alleged madam and a roster of influential clients. The main elements of a growing scandal that has Washington buzzing and has already cost one top official his job. CNN's Carol Costello once again joining us from New York. Are we expecting to hear more names, Carol?

CAROL COSTELLO, CNN CORRESPONDENT: I'm sure we will in the days to come, Wolf. This alleged madam, Deborah Palfrey held a bizarre news conference today. She appeared in court to request another lawyer. She left the courtroom with an apology, more threats and a thirst for revenge.

(BEGIN VIDEOTAPE)

COSTELLO (voice over): The alleged DC madam, Deborah Palfrey, played sweet at first, reaching out to Randall Tobias, the first prominent Washington politician to admit he used her self-professed legal erotic fantasy service.

DEBORAH PALFREY, ALLEGED DC MADAM: Allow me to say how genuinely sorry I am for Mr. Tobias, his family, and his friends.

COSTELLO: Sources say Tobias, a top State Department official appointed by President Bush, directed programs to fight AIDS overseas. Important methods? Abstinence was one. Combating worldwide prostitution or human trafficking was another.

Tobias, who's married with children, told ABC NEWS he'd "... have gals come over to the condo to give me a massage." No sex, but massages.

His confession played into Palfrey's hands. She berated Tobias for not stepping forward sooner to describe the legal services he obtained from her.

PALFREY: Had he done so earlier, I most likely would not be in my current predicament.

COSTELLO: Palfrey wants to force others on her client list to reveal themselves. And she's hoping to use ABC News to do that.

She's given the network selected telephone numbers taken from 46 pounds of telephone invoices, telling reporters she wants ABC's help in identifying potential defense witnesses like Tobias. And while ABC doesn't characterize its mission that way, it has the goods.

BRIAN ROSS, ABC NEWS: There are several thousand names, tens of thousands of phone numbers, and they range from administration officials, to lobbyists, to advisers who are well known, people who appear on television, lawyers, and then just lots of sort of ordinary businessmen and CEOs.

COSTELLO: It leaves those who have used Palfrey's services with a painful weight, which is exactly what Palfrey seems to want.

ANNE SCHROEDER, POLITICO.COM: She wants to go down in flames. She's going to bring some people with her. She's definitely made that very definitely clear.

(END VIDEOTAPE)

COSTELLO (on camera): Yes, she has. But it's not clear if Palfrey turned over the biggest names on her list to ABC News or even if there is a big name. She does have a Web site and there is a sample page from her phone records with the phone numbers on it. Jeanne Moos will have more on that, though. No names. Just the phone numbers.

BLITZER: We're watching the story. Thanks, Carol, for that.

Another scandal brewing here in Washington as well. And Paul Wolfowitz is fighting back, under fire for promoting his girlfriend. The World Bank president says he's the victim of a smear campaign. Let's turn to our State Department correspondent, Zain Verjee. Zain?

ZAIN VERJEE, CNN CORRESPONDENT: Wolf, there's an open revolt at the World Bank. Calls for Paul Wolfowitz to resign. Today, he made his case to stay on as president.

(BEGIN VIDEO TAPE)

VERJEE (voice-over): Crunch time for Paul Wolfowitz. He took his case directly to a special World Bank panel to fight for his job.

At the center of the storm, how he handled the promotion and pay raise of his girlfriend, Shaha Riza. She was moved from the World Bank to the State Department when he took over.

In a statement defending himself, Wolfowitz says: "I will not resign in the face of a plainly bogus charge of conflict of interest. Only when the cloud of these unfair and untrue charges is removed would it truly be possible to determine objectively whether I can be an effective leader of the World Bank."

He submitted documents he says show he did nothing wrong and acted in good faith, that he tried again and again to sideline himself to avoid a conflict of interest. He says, "The World Bank ethics committee directed him to handle Riza's promotion and pay."

President Bush has supported the man he put in the top job.

BUSH: My position is, is that he ought to stay. He ought to be given a fair hearing.

VERJEE: But Wolfowitz has lost support of much of his staff, who say that a champion of anti-corruption policies is now tainted and can't lead.

From the outset, Wolfowitz had many opponents at the World Bank because he was an architect of the Iraq War. Many European countries want him out, including Germany, whose chancellor met with the president.

His lawyer, Robert Bennett, wants the bank to lower the temperature and deescalate the unnecessary dispute.

(END VIDEO TAPE)

VERJEE (on camera): The question now is, is there any room for compromise between Paul Wolfowitz and the World Bank board? Wolf?

BLITZER: Thank you, Zain, for that.

We're watching the story. Still ahead here in THE SITUATION ROOM, New Jersey's governor, he leaves the hospital after almost three weeks after the accident that almost killed him. And he has a very emotional message to send.

Also, the fiery collapse of a California freeway. How hot was it? Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Jon Corzine leaves the hospital with mending bones and a heavy heart. The New Jersey governor was released from the hospital today, three weeks after a car crash. Corzine says he feels blessed, and he made this admission, apparently, for not wearing a seat belt.

(BEGIN VIDEO CLIP)

GOV. JON CORZINE, (D) NEW JERSEY: I also understand that I set a very poor example for a lot of young people. A lot of people in general. And I certainly hope the state will forgive me. And I'll work very hard to try to set the right kind of example to make a difference in people's lives as we go forward.

(END VIDEO CLIP)

BLITZER: At the same time, the "New York Times" trailed Corzine after he left the hospital. The paper reports the governor's six-car caravan was doing about 70 miles an hour in one zone that allows only 55 miles per hour. CNN called the governor's office about this report in "The New York Times" but the governor's office declined to comment. The evening rush hour commute is getting under way in San Francisco Bay area right now. And it's going to be a very rough one for tens of thousands of drivers. Part of a major freeway interchange is closed after it collapsed in a fiery accident. A gasoline tanker truck crashed on the connector road yesterday morning and the resulting fire was so hot it melted the metal support structures on the highway above.

Several witnesses caught the fire and the collapse on video as it happened. Let's bring in our Internet reporter Abbi Tatton. Abbi, what are we seeing?

ABBI TATTON, CNN CORRESPONDENT: Wolf, we've seen multiple angles of this crash. The collapse online. And people sending them in to CNN. The first one here is an I-Report sent in just within an hour of this happening by Paul Kochli. He said he saw the flames as he was coming off the Bay Bridge and stopped to record these images. These are flames that were shooting several hundred feet into the air. On more videos on YouTube, some shot with cell phones and this one with a camcorder. This is from independent filmmaker Esa Gasiovich (ph).

He says he saw the crash happen, got into a position on a higher bridge above the flames where he recorded these scenes. And you can see the camera pan around to the motorists who were stunned as this interchange was collapsing.

Esa says the vehicle was engulfed but through the fireball he could just about make it out that it was a tanker. And we've heard the driver of the tanker did survive, amazingly. He suffered second- degree burns, Wolf.

BLITZER: Abbi, thanks for bringing us those pictures.

The part of this story many people find amazing is just how hot the fire was. Steel like the kind supporting that roadway, loses half its rigidity at 1,000 degrees and completely melts at 2750 degrees. Engineers estimate the fire reached temperatures close to 3,000 degrees. And that was the result of the collapse.

Let's turn to Jack Cafferty. He's in New York with the "Cafferty File."

CAFFERTY: Maybe they rethink letting those full tanker trucks on those bridges and overpasses. I guess out there, though, because of the way San Francisco is configured, it would be about impossible for them to get into the city without passing over one of those.

The question this hour, Wolf, what does it mean if terror attacks, this is the new State Department report, terror attacks worldwide up 25 percent last year.

Roxie in Minnesota writes, "Jack, the war on terror is beginning to look a lot like the war on drugs to me. A never-ending war that spawns continued excuses for failure and lacks any realistic plan to achieve victory." Darryl in Oregon writes, "It means we're wasting our time in Iraq. It also means I'm still not going to worry much about terrorists because bathtubs and ladders kill more Americans than Islamic radicals. Don't get me wrong they need to be found and eliminated but their numbers really haven't gotten me that worried yet."

Paul in New York writes, "Terrorists attacks are up worldwide because terrorists believe it works. Our divided country and softening response caused by the Democrats' blind ambition to bring down President Bush gives terrorists a reason to believe. Getting the job done in Iraq, no matter what it takes is what we need to fight back."

Jonathan in Ohio. "It makes perfect sense. Terrorist attacks are up. Our mistakes in Iraq have turned it from being a minor nuisance into being the largest sponsor for terrorism in the world. We should be mad at ourselves, however, as much as the terrorists. If you poke a hornet's nest with a stick, is it the hornet's fault or yours when you get stung?"

Chris in Columbia, Missouri. "Jack, it just reinforces the fact that yee-haw is not a foreign policy."

And Rick in California, "They read my e-mail response to Jack's question over the air. I was wondering, do we get anything when that happens like a shirt or a hat? Anything at all? I was just wondering. Thank you."

Rick, no, you don't. Because any extra money on this program goes right into Wolf's pocket.

BLITZER: Rick -- Can't we send him a SITUATION ROOM hat or something?

CAFFERTY: I don't have any of that stuff.

BLITZER: You don't even have any of that?

CAFFERTY: If we start that, you'll -- no. The answer is no.

BLITZER: OK. All right. I got it. All right, Jack. I'm going to send you one, though, Jack. See you tomorrow.

Let's find out what's coming up at the top of the hour. Paula Zahn is standing by. Hi, Paula.

PAULA ZAHN, CNN HOST: Oh, Jack is going to be sorry he ever said any of that. He's going to have all these freebie caps from all of our shows. You might even get a sweatshirt from my show.

Thanks, Wolf.

"Out in the Open" tonight, some critics who were absolutely furious about former CIA Director George Tenet's new book. Do they really think he could have stopped the war if he had resigned? We're also going to give you an inside look at a place you're not going to believe. It has surfing, tennis, massages and one on one therapy for people trying to overcome addictions. It's the kind of rehab center the movie stars visit. We're going to take you exclusively behind its closed doors tonight at the top of the hour. And find out if it really can cure alcoholism. As the folks who run the place say they can.

All that and more coming at you, Wolf, top of the hour.

BLITZER: We'll be watching, thank you, Paula, for that.

Up ahead, an alleged madam's DC scandal sheet. Jeanne Moos looks at the people who are digging for dirt and practically begging for names to be named. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: The accused madam naming names here in Washington. Jeanne Moos on the press that's pressing for more.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): Flash bulbs are popping. We in the press are licking our lips over this woman's list.

UNIDENTIFIED FEMALE: The DC madam.

UNIDENTIFIED MALE: The alleged DC madam.

UNIDENTIFIED FEMALE: The notorious DC madam.

MOOS: There she is, posing in "The New York Post" in her court- ordered ankle bracelet. But it's her list, rather than her accessories that obsesses the press.

UNIDENTIFIED FEMALE: So who else is on this list?

UNIDENTIFIED MALE: Well, it's a long list.

MOOS: The alleged DC madam says she gave ABC four years worth of client phone numbers. She put a sample page on her Web site. Imagine having ABC's investigative reporter call you up, telling you where he got your number. That's what Brian Ross says happened to deputy secretary of state Randall Tobias.

BRIAN ROSS, ABC NEWS (on phone): After about a five-second silence, he confirmed -- he said he had gals come over to the condo to give him massages.

MOOS: These gals had to have a minimum of two years of college. The DC madam claim her girls fulfilled sexual fantasies, rather than having actually sex. The Smoking Gun Web site obtained prosecution documents showing the alleged the DC madam put out a newsletter for her escorts offering advice like, "Don't let customers record you because then you are in the video stores." Well, now it's all over the news.

DEBORAH JEANE PALFREY, ALLEGED DC MADAM: First, allow me to say how genuinely sorry I am for Mr. Tobias, his family and his friends.

MOOS: The alleged DC madam, real name Jeane Palfrey, says she wants to call former clients as witnesses, a concept that prompted skeptical questions to her attorney.

UNIDENTIFIED MALE: Did you really expect Mr. Tobias, or anybody else on that list, to be a witness for Ms. Palfrey?

How can this be described as anything else but blackmail.

UNIDENTIFIED FEMALE: And I would like to hear Jeane on that as well.

MONTGOMERY BLAIR SIBLEY, PALFREY'S CIVIL ATTORNEY: Everybody would like to hear Jeane and none of you will.

MOOS: We heard this.

PALFREY: I would ask the press and the media to put aside the titillation of a who's who list.

MOOS: Fat chance. On ABC's Web site e-mailers begged for the network to post the names, or are you protecting ABC News people on the list?

And the sample page of phone numbers that went up on Jeanne Palfrey's Web site had amateur sleuths hot on the trail, tracking numbers.

The San Diego number is to a JC Penney.

(on camera): This must be what ABC News is doing now. Dialing every number on the list.

UNIDENTIFIED FEMALE: Hi. This is JC Penney. Store 2069 in a Florida mall.

MOOS (voice-over): The JC Penney operator never heard of the DC madams. And those gals cost more than pennies. Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

BLITZER: And CNN has been trying to reach Tobias but so far he has been unavailable for comment. That is it for us. Let's go to Paula in New York. Paula?

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