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Slave Labor in Iraq; Perjury Probe of Gonzales? Stocks Plummet

Aired July 26, 2007 - 1900   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 shocking story that is just developing -- allegations of slave labor being used to build the U.S. embassy in Iraq; stand by for details.

Also, your investments at risk -- will stock prices keep plunging after today's dramatic sell-off? Tonight, sell-off anxiety.

Also this hour, fighting words between Hillary Rodham Clinton and Barack Obama. He suggests she's Bush-Cheney-lite. She suggests he's being silly.

And drunk in space -- startling claims about astronauts even as NASA confronts a case of alleged sabotage.

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

All those stories coming up, but there's another developing story we're getting right now in from California. Two people have died in a rocket explosion at a remote section of the Mojave Air and Space Port. That's a small facility in the desert. The Kern County Fire Department says four other people were seriously injured and have been transported from the scene by air ambulance. The airfield hosts 40 companies engaged in aerospace design as well as flight testing. We're going to have more details on this developing story. That's coming up here in THE SITUATION ROOM.

Also tonight, some startling and disturbing allegations are surfacing right now about laborers being used to build a multi-million dollar U.S. diplomatic complex in Baghdad and the conditions under which they work.

Our State Department correspondent Zain Verjee is joining us. She's watching this store. Zain, this is all pretty shocking stuff. What's going on?

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Wolf, the Bush administration has made fighting slave labor a real priority, but it seems as though its own tax dollars may be funding it.

(BEGIN VIDEOTAPE)

VERJEE (voice-over): Behind the walls of green zone in Baghdad, charges of slave labor. Allegations the new U.S. embassy compound is being built by trafficked workers from Asia and Africa who were beaten and subjected to squalid living conditions. Former employees of First Kuwaiti General Trading and Contracting Company, the contractor building the $600 million embassy are making some of the charges. John Owens, who is now suing the company, says he resigned in protest.

JOHN OWENS, FORMER EMPLOYEE FIRST KUWAITI: The conditions were deplorable, beyond even what a working man should tolerate. Foreign workers were packed into trailers very tight. There was insufficient equipment and basic needs like shoes and gloves.

VERJEE: Rory Mayberry says he was fired from the company for complaining about the conditions. He says the workers were told they were going to Dubai but ended up in Baghdad.

RORY MAYBERRY, FORMER SUBCONTRACTOR EMPLOYEE, FIRST KUWAITI: I believe these men were kidnapped by First Kuwaiti to work in the U.S. embassy. They had no passports because they were confiscated at the Kuwait airport. When the airplane touched down in Baghdad, they were loaded onto buses and taken away.

VERJEE: In a statement First Kuwaiti designed the allegations, calling them absolutely ludicrous and accusing both men of having a personal interest in making false charges. The State Department's inspector general traveled to Baghdad last year and after what he called an extensive investigation reported nothing came to my attention evidencing any trafficking in persons or human rights abuses.

HOWARD J. KRONGARD, INSPECTOR GENERAL, STATE DEPT.: I see some of the allegations that were made, they were contrary to what I saw and experienced.

VERJEE: A separate investigation by the U.S.-led coalition in Iraq cleared First Kuwaiti of wrongdoing. First Kuwaiti is still a U.S. contractor and working on embassy projects in Asia and Africa.

(END VIDEOTAPE)

VERJEE: Wolf, this is, by no means, over. Members of Congress really outraged that U.S. tax dollars could be funding these alleged abuses. The State Department inspector general faced though some really tough questions on the Hill about the recruitment practices of these contractors and whether they should be reexamined to make sure that this doesn't happen again. Wolf?

BLITZER: This could be hugely, hugely embarrassing. What are officials at the State Department saying to you, Zain?

VERJEE: We spoke to some today. And what they're saying is, is that they're really worried that First Kuwaiti, the company, could be treating its employees like trafficked workers. The Justice Department, too, Wolf has also launched a preliminary inquiry into these allegations, just to see if they warrant any further investigation.

BLITZER: All right, Zain, stay on top of this story. We'll update our viewers. Thank you very much. U.S. stock markets took a very big tumble day. Stock prices had recently they climbed to dizzying heights, but today investors got a mass case of vertigo when Wall Street went into a selling frenzy.

Let's go to New York. Mary Snow is standing by. Mary, what do we believe was behind this huge drop?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, the sell off on Wall Street was really triggered by renewed angst over what's happening on Main Street, particularly the decline in home sales. The Dow dropped 311 points for the day, and that was an improvement over what happened earlier.

(BEGIN VIDEOTAPE)

(SOUNDS)

SNOW (voice-over): It was jitters about the housing market and people borrowing money that sent stocks tumbling; a rollercoaster ride with the Dow at one point dropping more than 400 points. Investors are wary.

ROCHELLE BALLARD, UBS MORTGAGE SALES: Yes, I'm concerned because I work on Wall Street, so obviously it's kind of scary because it just kind of -- you know one minute everything -- you know the market is rallying and then all of a sudden you turn around and everything is down.

JAMES AWAD, AWAD ASSET MANAGEMENT: The market today is worried about debt. It's worried about consumers who have borrowed, about the people who lent them that money, and whether they'll ever get repaid.

SNOW: The housing market is at the center of those worries. For months, there have been ongoing concerns about loans made to people with bad credit. But now even those with good credit are having trouble paying their bills. On top of that, sales of homes in the U.S. continue to drop.

UNIDENTIFIED MALE: It all emanates from the housing market because the one place you have to say there was the most excess as a result of the abundance of cheap money was in housing.

SNOW: The money was cheap because it was easy to borrow. Interest rates were low. Housing prices increased and consumers refinanced their homes to access cash. With the housing price slowdown, homeowners are running out of money.

(END VIDEOTAPE)

SNOW: Consumers who run out of money stop spending and that's the big concern for the economy. Wolf?

BLITZER: All right, a bad day on Wall Street. We'll see what happens tomorrow, Mary. Thanks very much.

Tonight -- new and potentially damaging questions about whether the attorney general, Alberto Gonzales, has been telling the truth to Congress. The FBI director, Robert Mueller, is publicly contradicting Gonzales. Gonzales has testified in a 2004 meeting in a hospital room with then Attorney General John Ashcroft was not about the administration's domestic surveillance program. Today Mueller told Congress it was.

(BEGIN VIDEO CLIP)

ROBERT MUELLER, FBI DIRECTOR: The discussion was on a national -- a NSA program that has been much discussed, yes.

(END VIDEO CLIP)

BLITZER: Even before Mueller's testimony, top Democrats called today for a perjury investigation of Gonzales. Let's go to our White House correspondent Suzanne Malveaux.

Suzanne, how is the White House firing back to these very serious allegations?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well they certainly are, Wolf, because Republican strategists, friends of this White House say that this was a bad day for Attorney General Alberto Gonzales. They say his future is bleaker today than it was yesterday. That he didn't start off with a lot of friends, including people in this building, but they say he has the support of the most important friend and that's the president.

(BEGIN VIDEOTAPE)

MALVEAUX (voice-over): President Bush and Pennsylvania Republican Congressman Arlen Specter, friends on the ground in Philadelphia. But aboard Air Force One, and respected member of his own party goes to the back of the president's plane to talk to the press and slam his attorney general, Alberto Gonzales, tells reporters the hearings focusing on Gonzales have been devastating and that Mr. Bush's basis for keeping him is out of loyalty. Back in Washington, Senate Democrats formally call for an investigation into whether Gonzales committed perjury.

SEN CHUCK SCHUMER (D), NEW YORK: He tells the half-truth, the partial truth, and everything but the truth.

SEN. DIANNE FEINSTEIN (D), CALIFORNIA: Obfuscation, prevarication and untruths.

MALVEAUX: Despite Specter's complaints about Gonzales aboard Air Force One, later back in Washington, he threw him a lifeline.

SEN. ARLEN SPECTER (R-PA), JUDICIARY COMMITTEE: I think that Senator Schumer has obeyed a practice of politicizing this matter.

MALVEAUX: On the same day the president's top political strategist Karl Rove was subpoenaed by the Senate Judiciary Committee to provide testimony about his role in the controversial firings of nine U.S. attorneys. President Bush is standing by his men. Press Secretary Tony Snow...

TONY SNOW, WHITE HOUSE PRESS SECRETARY: Members of the Senate, at each and every stage, seem to have been inclined toward confrontation.

MALVEAUX: With 18 months left in office and his approval ratings hovering in the low 30's, some political analysts believe the president needs to compromise.

DAVID GERGEN, FORMER PRESIDENTIAL ADVISER: I understand why the White House may feel if we give in a little bit they'll open the flood gates, but you know the flood gates are already open.

(END VIDEOTAPE)

MALVEAUX: And Wolf, the Republican strategists say look to September for everything to come to a head. That is when Congress returns from its August recess. They're going to focus on the upcoming Iraq progress report as well as the attorney general. Wolf?

BLITZER: All right, Suzanne, thanks very much. And there may be more than meets the eye to that subpoena for the presidential adviser Karl Rove. Is this political payback time for Democrats? Earlier I spoke with the White House press secretary, Tony Snow.

(BEGIN VIDEO CLIP)

BLITZER: Here's what a lot of Democrats are saying on the Hill. They're the majority right now. They remember when they were in the minority when there was a Democrat in the building where you work. That would be Bill Clinton. Listen to one of Bill Clinton's former aides, Paul Begala, what he said the other day.

T. SNOW: Oh, come on...

BLITZER: I want you to listen...

(CROSSTALK)

BLITZER: Listen to this.

T. SNOW: Paul Begala?

BLITZER: Paul Begala, listen to this.

T. SNOW: Oh, my goodness.

PAUL BEGALA, CNN POLITICAL STRATEGIST: When I was working in the Clinton White House, one committee alone, the House Government Reform Committee, issued 1,000 subpoenas to Clinton administration officials, 141 different people were subpoenaed.

BLITZER: So if it was OK for Republicans to do it to a Democratic White House, then why isn't it OK for Democrats to do it to a Republican White House now? T. SNOW: Look, people get issued subpoenas. We've never argued against that. There are some cases where executive privilege applies, and I believe the very first executive privilege case this administration supported was for, oh that's right, the Clinton administration, trying to preserve the ability for people to have conversations, confidential conversations, with the president.

Those government reform and oversight subpoenas I think had to do with things other than confidential conversations with the president. I'm not going to say that members of Congress don't have oversight obligations and responsibilities. Of course they do.

(END VIDEO CLIP)

BLITZER: The White House says Democrats are out to make headlines and the subpoena and the Alberto Gonzales perjury probe all that simply designed to score political points.

Let's go to Jack Cafferty. He's watching all of this unfold. It is fun times here in Washington, Jack.

JACK CAFFERTY, CNN ANCHOR: Yes and it's interesting. With everything that's going on, the Congress wants to take a month off in August. That's great. Maybe they could you know go somewhere and get a discount on a resort rate with the Iraqi parliament. You know if they rent enough rooms, they can get them cheap.

U.S. Special Forces would enter Pakistan if they had specific intelligence about a terrorist strike against the U.S. Top officials, the Pentagon and State Department said a unilateral strike would be a last resort as the U.S. prefers to work with Pakistani forces, but that quote, "of course the United States would always have the option of taking action on its own", unquote.

The Pakistani government has warned in recent days a U.S. military strike in their country would be irresponsible and dangerous not to mention unpopular. This all follows last week's intelligence estimate that showed al Qaeda is using a tribal area in northwestern Pakistan to plan attacks against the U.S. It is worth noting here that Osama bin Laden and al Qaeda have been thought to be in that same general area for the last five years.

Remember Tora Bora? And they've probably spent at least some of that time planning attacks against the United States. But the Bush administration decided it was more important to invade Iraq than track down and kill the terrorists who knocked down the World Trade Center, hit the Pentagon, and killed 3,000 of our people. No big surprise here -- most Americans don't have much confidence in the Bush administration's handling of the terror threat from al Qaeda.

A new "Washington Post"/ABC poll shows 71 percent of those surveyed think that al Qaeda is stronger or as strong as it was before 9/11. And among that group, 55 percent say a great deal or a good amount of blame lies with President Bush. So here's the question.

Under what condition should the U.S. military enter Pakistan? E- mail your thoughts on that to CaffertyFile@CNN.com or go to CNN.com/CaffertyFile. Wolf?

BLITZER: Thank you, Jack, for that.

Coming up tonight -- Hillary Clinton says Barack Obama's new attack on her is downright silly.

(BEGIN VIDEO CLIP)

HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: I've been called a lot of things in my life, but I've never been called George Bush or Dick Cheney, certainly.

(END VIDEO CLIP)

BLITZER: Senator Clinton firing back as her war of words with her primary rival Barack Obama gets even uglier.

Also -- a new report claims there have been cases of astronauts -- get this -- being drunk in space. NASA is under fire tonight.

And it's been a year since President Fidel Castro was seen in public. We're going to go live to Cuba to find out if life there has changed.

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

(COMMERCIAL BREAK)

BLITZER: Tonight presidential candidate Hillary Clinton is dismissing the latest attack from her rival, Barack Obama as, quote "silly". Obama today likened Clinton to a certain degree to the Bush- Cheney White House that they're both campaigning against. Let's go to our chief national correspondent John King. He's here.

You met with Senator Clinton today. Give our viewers a sense of what this feud is all about.

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: This is getting raw, Wolf, and it is getting personal and pointed between the two top candidates in the Democratic field, Clinton and Obama. The war of words escalated to a new level this morning. Senator Obama was campaigning up in New Hampshire and he decided to pin what most Democrats would consider a most unfriendly label on the Democratic front-runner.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: I don't want a continuation of Bush-Cheney. I don't want Bush-Cheney lite. I want a fundamental change. It's time to turn the page on how we do business and say to the world, we are ready to lead. We are ready to lead by deed and example.

(END VIDEO CLIP)

KING: Now, it is more than safe to assume that being compared to the current Republican president and vice president didn't go down too well with Senator Clinton. In an exclusive interview with CNN, she suggested her rival was abandoning his promise of running an uplifting smear-free campaign.

(BEGIN VIDEO CLIP)

HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: This is getting kind of silly. You know I've been called a lot of things in my life but I've never been called George Bush or Dick Cheney certainly. You have to ask what's ever happened to the politics of hope.

(END VIDEO CLIP)

KING: Amid all this sniping, both are holding firm on the question that started this dust-up. That was back Monday night in our CNN-YouTube debate when Senator Obama said he would be willing as president to meet quickly with leaders of rogue nations that President Bush has refused to deal with like Iran, Venezuela, Cuba. Mrs. Clinton said it's irresponsible to make such a promise up front without first doing some delicate diplomacy.

(BEGIN VIDEO CLIP)

OBAMA: If we want fundamental change, then we can't be afraid to talk to our enemies. We can't be afraid to -- I'm not afraid of losing the P.R. war to dictators. I'm happy to look them in the eye and say what needs to be said. I'm happy to tell them what I think. I'm not going to avoid them. I'm not going to be -- hide behind a bunch of rhetoric.

H. CLINTON: I have been saying consistently for a number of years now, we have to end the Bush era of ignoring problems, ignoring enemies and adversaries. And I have been absolutely clear that we've got to return to robust and effective diplomacy. But I don't want to see the power and prestige of the United States president put at risk by rushing in to meetings with the likes of Chavez and Castro and Ahmadinejad.

(END VIDEO CLIP)

KING: Now it is -- on the one hand, Wolf, a debate about how to conduct foreign policy. On the other hand, it is the big dynamic in the Democratic campaign. Hillary Clinton says I have the experience. I'm sophisticated. I know the nuances of the presidency. Barack Obama says that might be fine, but everyday Americans, they want to rewrite the way Washington does business -- pointed and personal, very, very early. No one's talking about that Clinton/Obama or Obama/Clinton ticket these days.

BLITZER: No, it is getting raw and really raw. And our viewers are going to see a little bit more of that when we speak with two surrogates, two top advisers to the Obama and the Clinton campaigns. That's coming up. They're going to want to stick around for that. John thanks very much. Cuba celebrated the anniversary of its revolution today without its long-time leader. In charge, the brother of the ailing Fidel Castro and he's offering a deal to the United States with one condition.

Our Morgan Neill is joining us now live from Havana. Morgan, what is Raul Castro actually offering?

MORGAN NEILL, CNN CORRESPONDENT: Well, this is a position, Wolf that we've heard from Raul before. What he said today was that if in next year's presidential elections there emerges a government that is willing to deal with the United States in a civilized way early -- we've heard him say as equals -- then he would welcome that move.

He would welcome those sorts of talks. We also heard a couple of signs of what could be reforms in the works, but we'll have to wait and see how they play it out. He talked about wanting to see more foreign investment in the country and he mentioned the fact that the minimum salary here in Cuba just wasn't enough, something that we haven't heard in public before -- Wolf.

BLITZER: Even on this historic day, this revelation day as it's called down there, once again, a no-show for Fidel Castro.

NEILL: That's right, Wolf. Although I'm not sure it is even fair to call it a no-show because we saw in the state-run newspapers yesterday, headline across the front page, that it would be Raul speaking here today. Now, Fidel, as you said in the intro there, it's been a year since his last public appearance and he seems in no hurry to return.

He's believed to suffer from diverticulitis. That's the infection of a pouch in the intestine wall. But in recent months he's been writing these columns that have reestablished his presence in the country, talking about a wide range of politics -- policies, something he very clearly enjoys doing, so in no apparent hurry to get back -- Wolf.

BLITZER: Our man in Cuba. Morgan Neil joining us; Morgan, thanks very much.

Just ahead -- problems, serious problems, at NASA; we're learning about them right now. Someone allegedly sabotaging a computer headed for space. And get this, reports of drunken astronauts actually blasting into flight and authorities knowing about it.

And bad blood over a steroid report after Bob Costas interviewed a man linking Barry Bonds to steroids use. Bonds calls the veteran sportscaster -- and I'm quoting now -- "a midget man who knows absolutely jack about baseball." It's getting ugly.

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

(COMMERCIAL BREAK)

BLITZER: Getting word of some really shocking allegations -- a report about drunk astronauts taking off in flight and mysterious sabotage to a computer headed for space. We're following these two bizarre stories out of NASA.

CNN's John Zarrella is joining us on the phone from Florida. John, what is going on? What is NASA saying about all of this?

JOHN ZARRELLA, CNN CORRESPONDENT (via phone): Well, Wolf, NASA is not saying a word right now, not about the report of astronauts being inebriated. What's happened is that the following Lisa Nowak incident back in February, NASA empowered a panel to look into the screening process, both medical and psychological, for astronauts.

And coming out of this, according to "Aviation Week" today, in this report, apparently, it details at least two accounts where astronauts were allowed to fly after the flight surgeons and other astronauts warned that these astronauts were so intoxicated that they were a flight safety risk. Now, the panel, according to "Aviation Week", is also reporting quote, "heavy use of alcohol by astronauts within 12 hours of a launch." Now, NASA again not saying anything about this right now, Wolf, but they are promising a press conference -- news conference tomorrow afternoon out of Washington, D.C., where more will be revealed on what the panel has discovered -- Wolf.

BLITZER: I don't know what's worse, astronauts taking off and going into space drunk or authorities or the experts there allowing them to do so even knowing they were drunk. The other allegation involves sabotage of a computer headed for space. What do we know about that?

ZARRELLA: Wolf, before I get to that, following your question, two former astronauts I had an opportunity to talk with today both told me that it was outrageous and nothing like that ever took place on any of their flights. And if it had, they would have ensured that that astronaut would not have flown and the launch would have been scrubbed.

Regarding this issue with the damaged computer, apparently it was intentionally damaged, according to NASA officials who made that announcement today following the flight readiness review for endeavor's launch on the 7th of August. They said that this computer was to be used aboard the international space station. It would have been used in the U.S. laboratory up there.

The problems with this apparently intentional damage were discovered on the ground. The computer was changed out. It was not a computer that would have been used on the space shuttle or for any kind of serious navigational issues involving using the space station or the space shuttle. But apparently they are saying they are investigating, that it may have been intentionally damaged. They would not reveal who the contractor was or subcontractors involved in making this computer. Wolf?

BLITZER: All right. We'll stay on top of this tomorrow, John. Thanks very much.

A verbal brawl between the Clinton and Obama camps and the gloves are off.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: And I just want to know and Senator Clinton asked today, what happened to the politics of hope, David? I mean is Senator Clinton really like George Bush?

(END VIDEO CLIP)

BLITZER: Hillary Clinton says she's been called a lot of things in her life, but never Bush-Cheney lite, which is what Senator Barack Obama is suggesting. I'm going to speak with both camps. There's a debate that's coming up here.

And a pet that smells death -- our Jeanne Moos tells us about a cat many people say can predict when someone's about to die.

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

(COMMERCIAL BREAK)

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

Happening now, get this -- an electronic game creates 90 minutes of havoc for passengers at the Long Beach airport in California. The game registers as a suspicious item on an X-ray machine. Hundreds of people are evacuated.

It's been copied around the world, but a federal judge has now struck down Hazelton, Pennsylvania's tough anti-immigration law. Hazleton's mayor says he'll appeal.

And it's been almost 14 years since Manuel Noreiga has appeared in public. The former Panamanian dictator was in court in Miami today. He is fighting extradition to France, where he's facing money laundering charges.

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

Right now, two powerful U.S. senators, both top Democrats running for president, are hurling names at each other in a verbal slugfest. More on one of our top stories. Today, Barack Obama accused Hillary Clinton of being Bush-Cheney lite. She shot right back, suggesting to CNN that Obama is being silly. It's the ongoing spat that started just days ago.

(BEGIN VIDEOTAPE)

BLITZER: Joining us now, two guests. Howard Wolfson is the communications director for the Clinton campaign. From Chicago, David Axelrod. He's chief strategist for the Obama campaign.

Guys, thanks very much for coming in.

And let me remind you and all of our viewers the source of this latest exchange between both of your camps, these comments made at the CNN/YouTube debate Monday night, when they were asked whether they would meet with a whole bunch of dictators during the first year of their presidency.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: I would. And the reason is this, that the notion that somehow not talking to countries is punishment to them -- which has been the guiding diplomatic principle of this administration -- is ridiculous.

(APPLAUSE)

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: Well, I will not promise to meet with the leaders of these countries during my first year. I will promise a very vigorous diplomatic effort, because I think it is not that you promise a meeting at that high a level before you know what the intentions are.

(END VIDEO CLIP)

BLITZER: And those numbers, the squiggly lines that you saw in the middle, were undecided Democrats deciding whether they liked or didn't like the respective answers. And, in New Hampshire, they sort of liked what Senator Obama said, didn't like what Senator Clinton said.

First question to you, Howard.

Any regrets on your campaign's part on how this exchange has developed?

HOWARD WOLFSON, CLINTON CAMPAIGN COMMUNICATIONS DIRECTOR: Absolutely not.

You know, Wolf, today, Senator Obama referred to Senator Clinton as Bush-lite. Six months ago, he entered the race promising to elevate our politics. And I just want to know and Senator Clinton asked today, what happened to the politics of hope, David? Is Senator Clinton really like George Bush?

I mean, are any of the Democrats running comparable to George Bush?

BLITZER: I believe the exact quote was Bush/Cheney-lite.

David, what do you say?

DAVID AXELROD, CHIEF OBAMA CAMPAIGN STRATEGIST: I say to Howard that the politics of hope is ending a foreign policy that has been predicated on the notion that somehow we make advances as a country by not engaging our adversaries.

That's what this is all about. This is not about little tactical squabbles. This is about a fundamental principle. Are we going to engage our enemies and have a dialogue and try and push forward the cause of peace and make us our country stronger and more secure, or are we not?

And that's really what this is about.

WOLFSON: Wolf, Wolf...

(CROSSTALK)

AXELROD: We say ending the Bush/Cheney -- ending the Bush/Cheney policy of nonengagement is part of the politics of hope, part of the politics of change. And, if you don't subscribe to it...

(CROSSTALK)

BLITZER: Hold on. One at a time.

Go ahead, David. Finish your thought.

AXELROD: No, and that's what this is fundamentally about. That's what Senator Obama stands for, ending that disastrous foreign policy, and turning the page on -- on the disastrous failure that we have seen.

BLITZER: He's not backing away. I didn't hear him backing away from the Bush/Cheney-lite comment, Howard.

WOLFSON: Well, I think that's unfortunate. It certainly doesn't represent the politics of hope. I don't what kind of politics it represents, but I don't think it's what Democratic primary voters are looking for.

And I don't think anyone is going to find it particularly credible that Hillary Clinton, who has spent the entirety of the Bush/Cheney presidency fighting George Bush's disastrous policies, is somehow similar to George Bush.

But, you know, David is avoiding the question that was asked by the questioner at the debate. The question wasn't whether or not we want to turn the page on George Bush's diplomatic cowboy style. Of course, Senator Clinton and Senator Obama agree on that.

The question was very specifically asked, would you commit to meet with the dictators of these countries, without conditions, in the first year of the presidency? Senator Clinton said, no, we have to engage in diplomacy. But we don't pre-commit. We don't give away our leverage. We don't give the -- these dictators a public relations coup. Senator Obama said, yes.

There's a difference there.

BLITZER: All right.

WOLFSON: It's not about whether we change the Bush diplomacy. But it's about whether or not we conduct smart diplomacy that's good for our nation.

BLITZER: David?

AXELROD: I think you better go back and look at the transcript, Howard. It didn't say, will you commit? It said, would be willing? And the fact is, any president of the United States should be willing to sit down with any foreign leader if it might advance the causes of the United States -- the cause of the United States of America. And that is what the point is here.

WOLFSON: David, I'm confused about Senator Obama's position.

(CROSSTALK)

WOLFSON: Is really willing? Will he consider? Is he going to do it?

(CROSSTALK)

BLITZER: Howard, hold on.

(CROSSTALK)

BLITZER: Let him finish.

AXELROD: Wolf, are we going to continue down this road, the Bush/Cheney policy, the evil axis policy of nonengagement, or are we going to vigorously engage leaders in this world to push our security interests forward, to push the cause of conflict resolution...

(CROSSTALK)

AXELROD: That's what this is all about.

BLITZER: Let me try to move this forward.

WOLFSON: Yes, let's move it forward, Wolf, because I don't understand what Senator Obama's position is.

It seems like he now has two positions. When -- after -- directly after the debate, David come out -- David Axelrod came out and said, no, Senator Obama wasn't saying we would actually have summitry. We were talking about a conversation with world leaders.

Senator Obama seems to be saying, no, I'm actually talking about sitting down with them. Now David Axelrod is back, saying, no, that's not what we mean.

AXELROD: No, I'm not saying that. I'm saying...

(CROSSTALK)

WOLFSON: Is Senator Obama committing to meet with these people or not?

(CROSSTALK)

BLITZER: All right.

AXELROD: The -- the question -- you have misstated the question that was asked. What Senator Obama said is, he is not afraid to...

WOLFSON: I'm asking Senator Obama's position. AXELROD: ... sit down with -- well, no, no, Howard...

(CROSSTALK)

BLITZER: Hold on. David, finish your thought. Go ahead.

(CROSSTALK)

AXELROD: Howard, Howard, Howard, Howard, Senator Obama has said that he's willing to sit down with any foreign leader.

Now, they may not like what he has to hear, but he believes that we don't resolve our conflicts, we don't push the ball forward, in terms of resolution of our differences, by not having a dialogue.

BLITZER: Here -- here's the...

AXELROD: And that is, I think, the way the -- that's what the -- most of the American people feel.

Now, you can engage in sort of tactical political maneuvering around that, but that's the fundamental principle...

(CROSSTALK)

BLITZER: Hold on, Howard.

(CROSSTALK)

AXELROD: This is about a fundamental change in our foreign policy.

WOLFSON: You're right.

(CROSSTALK)

WOLFSON: And, with all due respect, if you want to talk about tactical political maneuvering, it's about one Democrat comparing another Democrat to George Bush. That's the worst kind of tactical political maneuvering.

AXELROD: No, he was comparing a policy...

(CROSSTALK)

WOLFSON: From a senator who promised us the politics of hope, very disappointing.

(CROSSTALK)

AXELROD: When -- when you say that you will not meet with foreign leaders...

WOLFSON: Well, that's not what she said either.

AXELROD: ... that you will hold out as a reward -- you will hold out as a reward, and set of a series of preconditions, if you have a chance to move the ball forward, that is the policy of George Bush. It is a disastrous policy.

(CROSSTALK)

WOLFSON: So, now -- I'm sorry. Now -- now you are saying you will met with them.

BLITZER: Stand by one minute.

(CROSSTALK)

BLITZER: David, David, I want to give you a chance. Do you want to take back or leave on the table the reference to Bush/Cheney-lite and that Hillary Clinton's policy, in effect, could turn out to be that?

AXELROD: When you say that you will not sit down with foreign leaders who are hostile to us, when you will set a series of preconditions, when you -- that is exactly the policy that we have seen for the last six years.

And even George Bush has changed his mind. Now we are in dialogue with the Iranians, the Syrians, and the North Koreans, although five nuclear weapons...

(CROSSTALK)

BLITZER: Hold on.

(CROSSTALK)

BLITZER: Hold on, guys.

(CROSSTALK)

BLITZER: I'm taking that, David, as a no, you don't want to revise the -- the Senator Obama statement?

AXELROD: Unless the -- unless the senator -- and Senator Clinton's revising her policy. We need to push the diplomacy vigorously in this world. We need to sit down with our adversaries, as well as our allies.

(CROSSTALK)

WOLFSON: And we -- we agree with that. It's just a question of whether or not we commit to doing it.

(CROSSTALK)

AXELROD: That's the change -- that's the change -- that's the change we need.

BLITZER: Here's the point that Senator Obama and his -- Howard, here's the point that Senator Obama and his team have made against Senator Clinton.

She accuses him of perhaps being naive in willing to sit down with Kim Jong Il or Castro or Ahmadinejad or any of these guys. He says she was naive when she voted to support a resolution authorizing the president to go to war.

WOLFSON: Well, Wolf, I will address that.

But I'm more interested in the fact that, first, we were compared to George Bush. Now David just said we're worse than George Bush, if I understood him correctly.

AXELROD: No, you didn't understand me correctly, Howard.

(CROSSTALK)

WOLFSON: OK.

(CROSSTALK)

AXELROD: I'm not even comparing personality.

WOLFSON: No?

AXELROD: What I am saying is that, if you embrace a policy of nonengagement with our adversaries...

(CROSSTALK)

AXELROD: ... if you're afraid to sit down with them, if you -- if you think, somehow, that you are punishing them by not talking to them, you are embracing the politics of George Bush and Dick Cheney.

WOLFSON: Hillary Clinton has...

(CROSSTALK)

AXELROD: That's the point I'm making. And let me make it very clear, so you understand it.

(CROSSTALK)

WOLFSON: Well, then let me say precisely what Senator Clinton's position is, because Senator Obama's position isn't clear to me, listening to you articulate it.

Senator Clinton believes in vigorous diplomacy with our allies and with our enemies. She believes that we need to talk to folks. She does not believe that we ought to be committing, a year-and-a-half before somebody enters the White House, that you would sit down with the five dictators in one-on-one summitry without any preconditions, which is what Senator Obama apparently has agreed to, although I'm still not exactly clear what his position is.

(CROSSTALK)

AXELROD: Well, the -- first of all, the question was, would you be willing to meet with these leaders? And he said, yes, I would be willing to meet with these leaders. And his further point was that, if we continue to embrace this policy -- we should -- we should embrace the policy of Ronald Reagan...

BLITZER: All right.

AXELROD: ... who spoke to the Soviets during the -- during the Cold War, of JFK...

WOLFSON: Yes.

AXELROD: ... who had a dialogue with...

(CROSSTALK)

BLITZER: All right, guys.

AXELROD: That's what a strong, confident country does.

WOLFSON: Just a history lesson.

BLITZER: We are out of time.

WOLFSON: Ronald Reagan met with Gorbachev in year six of his presidency. He didn't commit to meet with the five dictators in year one.

BLITZER: All right, guys, stand by. Thank you very much.

I want to leave both of you with this latest "Hotline" poll number, Democratic primary voters' choice for the nominee. It's getting close out there, nationwide, 39 percent in this poll for Senator Clinton, 30 percent for Senator Obama, 11 percent for Edwards.

This is a race. And I think the nature of the race was underscored by the two of you today.

Guys, thanks very much for coming in.

WOLFSON: Thank you.

AXELROD: Thank you.

(END VIDEOTAPE)

BLITZER: And still ahead tonight, a Giants slugger calls famous broadcaster Bob Costas a midget man. Now Costas is firing back.

Also, meet the cat who supposedly can predict death. The story that has stunned scientists. Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Let's get back to our top story right now. The breaking news out of California, a rocket explosion at a small airport in the Mojave Desert. There are a number of casualties. On the phone with us right now, the fire inspector, c, the Kern County fire department. Tony, tell us what happened? What do we know?

TONY DIFFENBAUGH, KERN COUNTY FIRE DEPT (on phone): Well, Wolf, at about 2:34 this afternoon, Kern County fire units responded to a report of an explosion at the Mojave Airport.

Units arrived on scene and found at a remote test site on the airport property that some sort of catastrophic event had occurred. They found six patients, and the fire department assisted by ambulance personnel and Kern County sheriff's department along with airport fire rescue crews.

What they did was they went in and they evacuated the patients from the scene and brought them to a secure site. They did a medical evaluation, and four of the patients were airlifted to Kern Medical Center in Bakersfield. Right now our hazmat crew along with the airport personnel are evaluating the scene and going in to secure the scene and to see if there's any more hazard.

BLITZER: Two people are dead. Is that right?

DIFFENBAUGH: That's unconfirmed. We have a report that there was possibly fatalities, but we won't know for sure until we go in and look at the scene, get the hazmat crew in there and secure the scene.

BLITZER: Tony Diffenbaugh, we'll stay in touch with you. Thank you very much for that.

DIFFENBAUGH: You're welcome.

BLITZER: Let's move on to some other news we're watching. Bob Costas is firing back at Barry Bonds. We've been telling you about an HBO sports report highlighting fresh allegations that Barry Bonds used steroids. Bonds responded, and the Giants slugger was not amused. Late today Bob Costas weighed in with a jab of his own. Carol Costello is following up on this story. It's getting pretty nasty out there.

CAROL COSTELLO, CNN CORRESPONDENT: Oh, it is getting pretty nasty. But you know, you know it's getting hot when the word "midget" is thrown out there. When confronted by reporters last night about Bob Costas' HBO report about Bonds and steroid allegations, take a look behind you, Wolf. This was Bonds' response.

He said, "You mean that little midget man who knows absolutely jack about baseball?"

For the record, Bonds is 6'1" and Costas is 5'6" and a half.

(BEGIN VIDEOTAPE)

COSTELLO (voice-over): It started on HBO Sports Tuesday when Patrick Arnold the man who reportedly created the steroid the Clear told Bob Costas he believed Bonds was a steroid user back in 2001 when he blasted a record 73 home runs.

PATRICK ARNOLD, CHEMIST: He was on the program and like everyone else the program consisted of the Clear.

COSTELLO: Bonds who sat out last night's game against the Braves, answered the charges by telling reporters, "I have never seen the man in my entire life."

But Arnold's comments echo the steroid allegations made in the best selling book "Game of Shadows" by two "San Francisco Chronicle" reporters and others piled on as Costas probed further like Red Sox pitcher Curt Schilling.

CURT SCHILLING, BOSTON RED SOX: If someone wrote that stuff about me and I didn't sue their ass off, am I not admitting there is legitimacy to it?

COSTELLO: Well, Bonds did sue the authors, but dropped the suit three months later. And more recently back in February, he brushed off news coverage that touched upon the steroid use allegations.

BARRY BONDS, SAN FRANCISCO GIANTS: Doesn't wear on me at all. At all.

QUESTION: Why not?

BONDS: Because just you guys talking, that's all it is. Just media conversation.

COSTELLO: But now Schilling's comments caused him to lash out, not at Schilling but Costas, calling him a "little midget man who absolutely knows jacks -- about baseball, who never played the game before." Bonds added, "You can tell Bob Costas what I called him."

(END VIDEOTAPE)

COSTELLO: Well, we did that, and Bob Costas, of course, heard the midget comment and said, "As anyone can plainly see, I'm 5'6" and a strapping 150 pounds. And unlike some people, I came by all of it naturally." Ouch!

BLITZER: Ouch from Bob Costas indeed from our sister network HBO. Thanks very much for that, Carol Costello.

Up ahead -- a cat creeps into the rooms of nursing home patients whenever one of them is about to die. What's behind this fatal attraction?

And Jack Cafferty wants to know, under what conditions should the U.S. military enter Pakistan to go after al Qaeda? We'll be right back.

(COMMERCIAL BREAK)

BLITZER: There's Jack Cafferty standing by with "The Cafferty File." Jack?

CAFFERTY: Question this hour, under what condition should the U.S. military enter Pakistan, which is where a lot of people think Osama bin Laden and his lads might be hanging out. Bill in Virginia Beach writes: "We need to be asked first by the Pakistani government. Once we are, we should go in fully loaded for terrorists, find them, fix them in position, fight them, finish them and leave as quickly as possible. We can give the Pakistanis the aid so they can do the hearts and mind thing. We should keep Halliburton and Cheney as far away as possible."

Tom in California writes: "The only possible excuse for a military intervention in Pakistan would be if our homeland was attacked, and Obama bin Laden claimed credit for the attack. Our success rate for invading countries hasn't been too good going back to Vietnam, and of course we can't forget our misadventures in Lebanon and Somalia."

James writes from Oregon: "Jack, our forces ought to go into Pakistan with no holds barred, get the job done, get out. If the Pakistani government doesn't like it, too bad. This isn't about making people happy. It's about chopping off the head of al Qaeda and the security of America and the world."

Theresa in New York: "Our military ought to enter Pakistan positioned in the far, far back of the line, with the rest of the world's military forces in front of it."

Glenn in Mississippi writes: "If U.S. armed forces enter Pakistan under any condition other than an open invitation for joint operations, we'll have just signed President Musharraf's death warrant and we will have created the first nuclear armed fundamentalist Islamic state."

Jake in Texas writes: "Pakistan? Since when have we concerned ourselves with pesky details like borders, reasons for war, obeying the law?"

And Dale in California: "The conditions have already been met. It's time to catch the real perpetrator, since the imaginary one has already been executed."

If you didn't see your e-mail here, you can go to CNN.com/CaffertyFile where we post more of them online along with video clips of "The Cafferty File." Wolf?

BLITZER: Thank you, Jack, for that.

Up next -- a cat said to predict death with surprising accuracy. There's a new scientific report that's just out. Jeanne Moos has the story.

(COMMERCIAL BREAK)

BLITZER: Here is a look at some of the hot shots coming in from our friends at "The Associated Press."

In San Diego, a baby California sea otter gets a bottle after being found stranded and comatose on the beach.

In Cuba, the sun silhouettes a crowd of Castro loyalists celebrating the 54th anniversary of the Cuban revolution.

In southern Israel, a soldier paints another one's face before a 24-mile march that marks the end of basic training.

And in Rio de Janeiro, U.S. synchronized swimmers prepare to dive into the pool at the Pan-American games.

Some of this hour's hot shots, pictures, often worth a thousand words.

A pet that curls up to someone but not just for comfort and companionship. Its owners claim the cat can smell death. Our Jeanne Moos has this most unusual story.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): Talk about a feline fatal attraction.

JOY BEHAR, THE VIEW: Every time this cat shows up, somebody dies!

MOOS: Don't die laughing, because this is no joke. Two-year-old Oscar lives on the advanced dementia floor here at the Steere House Nursing Center in Providence, Rhode Island. According to an essay in the respected "New England Journal of Medicine," Oscar has an uncanny ability to predict when a patient is about to die.

DAVID DOSA, ESSAY AUTHOR: He does a much better job than any of us.

MARY MIRANDA, NURSE: It's been about 25 times in the two years.

MOOS: About 25 times that Oscar has walked into a room, sniffed around, and settled in just two to four hours before the patient passed way.

STEVE FARROW, STEERE HOUSE: Oscar stays, curled up on the bed, and stays there until death.

MOOS: In the words of one Internet poster, isn't that Dr. Kevorkian's cat? We've covered plenty of weird cat stories from the cat with two tongues to the cat who dialed 911 by pressing speed dial.

UNIDENTIFIED FEMALE: 911?

MOOS: Dogs have likewise helped their owners.

DISPATCHER: 911? Hello?

MOOS: But getting help is one thing, predicting death another.

MIRANDA: It's one of these things where you just go, hmm.

MOOS: Animal behaviorist Dr. Nicholas Dodman has two theories. He notes that cats can read body language like we read books. So Oscar may be picking up cues from the staff. And cats can smell things we can't imagine.

As we die, there are biochemical changes that could change our scent. Maybe you've seen how dogs can be trained to sniff out cancer from breath samples.

UNIDENTIIFED FEMALE: Six time out of six attempts, Kobe gets it right.

MOOS: And there are anecdotal stories of cats repeatedly pawing at their owner and cancer being diagnosed at that exact spot, leading to jokes about mom's CAT scan.

Nurses say most relatives of dying patients seem comforted by Oscar, while the patients themselves are generally unaware. And if relatives object to his presence.

MIRANDA: We've told them, just close the door. Of he will pace outside that room.

MOOS: Oscar has even received an award from a hospice association. Move over, Morris.

UNIDENTIFIED FEMALE: Where were you? I was so worried.

UNIDENTIFIED MALE: Good. Always keep owners guessing.

MOOS: But there's no second-guessing at this nursing home when the grim kitty shows up. Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

BLITZER: What a cat.

That's it for us. Remember, we're in THE SITUATION ROOM, weekday afternoons from 4-to-6 p.m. Eastern, back for another hour at 7 p.m. Eastern. I'm Wolf Blitzer. "PAULA ZAHN NOW" starts right now. Paula?

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