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THE SITUATION ROOM

Military Death Toll in Iraq; Pakistan Unrest Continues; Superchurches and Tax Status

Aired November 7, 2007 - 17:00   ET

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


CAFFERTY: S. Writes: "No. This is designed as cover for the corporations. The corporations will say it's the FDA's job to recall products and the FDA won't do its job."
And Bill in New Jersey writes: "Should they have the power? Of course. But so what? Even if they had it, would they use it? Doubtful in this administration, owned as it is by big business" -- Wolf.

BLITZER: Thank you, Jack.

And to our viewers, you're in THE SITUATION ROOM.

Happening now, clubs and tear gas as police clash with protesters in Pakistan -- a key U.S. ally clearly in the state of emergency.

But is the U.S. backing the right side?

I'll speak with an opposition leader who's on the run and in hiding.

Million dollar homes and marble toilets -- some TV Evangelists are living in luxury.

Are they preying on the poor?

And just add water. But if you follow the instructions for this Chinese toy, your child could end up ingesting the same dangerous chemical known as the date rate drug.

We'll explain.

Stay with us.

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

Clouds of tear gas fill the air as protesters confront club- swinging police in Pakistan. The country already facing a rising tide of Islamic militants and now this U.S. ally is caught up in a political power play and a massive crackdown. Some opposition figures are now on the run and President Bush is calling for restraint.

Let's begin our coverage this hour with CNN's Zain Verjee.

She's joining us live from Islamabad -- Zain, what is the latest?

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Wolf, the protests are growing and the crackdown continues.

(BEGIN VIDEO TAPE)

VERJEE (voice-over): A showdown between riot police and several hundred supporters of Benazir Bhutto in Pakistan's capital. They broke through barricades outside parliament, then were blinded by tear gas and dragged away.

Inside, a vote to rubber stamp General Musharraf's emergency rule.

Bhutto says her campaign of street protests will continue and grow -- unless Musharraf takes off his general's uniform, ends emergency rule and calls elections by next week.

BENAZIR BHUTTO, FORMER PAKISTANI PRIME MINISTER: If this is not done, then from November 13th, we will start a long march from Lahore through to Islamabad.

VERJEE: But Bhutto has also not ruled out negotiations with Musharraf. Their advisers are still talking about a possible deal. Supporters of another opposition leader, Nawaz Sharif, were beaten up and arrested in Lahore, while from exile, he warned Bhutto against playing both sides.

NAWAZ SHARIF, FORMER PAKISTANI PRIME MINISTER: So I think it is -- she -- she has to join the democratic forces and not go along with the dictator.

VERJEE: The calls for resistance to President Musharraf are growing louder in Islamabad, Karachi and Lahore -- with students joining some protests. This demonstration at Lahore University was captured by a CNN I-Reporter. The local media is banned from covering protests in Pakistan.

Bhutto is planning a rally for Friday and police have promised to crush it. Another opposition leader, Imran Khan -- in hiding from security forces -- is supporting plans for mass protests against Musharraf, whom he says is destroying the country.

IMRAN KHAN, PAKISTANI OPPOSITION LEADER (THROUGH TRANSLATOR): I will effectively gather Pakistani youths, student communities, civil society and all political parties and convince them to struggle against this move.

VERJEE: For the United States, an awkward choice -- rally to the cause of democracy or put security needs first.

UNIDENTIFIED MALE: Pakistan is a country vital to our interests. Its cooperation is critical to our and NATO's cause in Afghanistan and it is contributing heavily to our efforts in the war on terror.

(END VIDEO TAPE)

VERJEE: And, Wolf, we're just learning tonight that a massive crackdown has started on Benazir Bhutto's party members. Hundreds have been arrested and it's still going on -- Wolf.

BLITZER: What are people on the streets, though, saying to you Zain about President Musharraf?

VERJEE: Well, we were at a spice market in the capital city here in Islamabad. And we also talked to a lot of different people. And what they said, Wolf, is that they were really angry at what General Musharraf has done. They said that he's targeted the two pillars of this society -- the judiciary and the media. And they said that they want the law and order to be reinstalled. They also said that it was really ironic that he's going after the intellectuals, the progressives, the middle class liberals and, in fact, diverting his resources and his attention from fighting the war on terror to containing the very people that backed him in fighting that war -- Wolf.

BLITZER: Zain.

All right, Zain's in Islamabad.

We're going to check back with you.

Zain, be careful over there.

Meanwhile, President Bush was asked today why he's taken what some are considering to be a relatively soft line on the crisis in Pakistan.

He responded with some tough comments aimed at the Pakistani leader.

(BEGIN VIDEO CLIP)

GEORGE BUSH, PRESIDENT OF THE UNITED STATES: I spoke to President Musharraf right before I came over here to visit with President Sarkozy. And my message was that we believe strongly in elections and that you ought to have elections soon and you need to take off your uniform. You can't be the president and the head of the military at the same time. So I had a very frank discussion with him.

Look, our objective is the same in Burma as it is in Pakistan -- and that is to promote democracy. There is a difference, however. Pakistan has been on the path to democracy.

(END VIDEO CLIP)

BLITZER: And as we noted, the crackdown in Pakistan has some opposition figures in Pakistan clearly on the run. One of them, Imran Khan. He's a Pakistani sports hero, a world class cricket player turned politician. He's very well known. He's the leader of an opposition party.

To avoid house arrest, he's gone into deep hiding. Well, we managed to speak with him on the phone just a short while ago.

(BEGIN VIDEO TAPE) BLITZER: The White House says it's still premature at this point to call General Musharraf a dictator.

Do you believe he's a dictator?

KHAN: How can a Democrat stack the judges of the supreme court?

How he could put them under house arrest?

How can that happen in a democracy?

BLITZER: So your answer is he is a dictator, is that what you're saying?

KHAN: He is an absolute dictator and he wants absolute power. He has had absolute power for eight years. He's had a facade of democracy. He's distorted the constitution. He's had an amendment passed just to -- tailor-made for one man. He has ensured that it's an impotent parliament. The prime minister is his personal secretary in a parliamentary democracy, the prime minister is supposed to be the chief executor.

So he has absolute power. And what he has done is, he got scared that the supreme court would not allow the commander-in-chief to fight the presidential election. That's why he's stayed this emergency, to clean up the judiciary, which he thought was too independent for him. And instead, he's (INAUDIBLE) judges.

Well, what we wanted, we want a reinstatement of the chief justice and the judges that have been sacked.

BLITZER: What is your message to the White House then?

What would you like to see the U.S.

do?

KHAN: Well, what I want the U.S. to do is to learn from the experience with the Shah of Iran. They kept backing a dictator right to the end and the pro-democratic movement, in the end, not only turned anti-American, but because the democratic forces were crushed by the dictator, in the end, the militants took over.

Now, this is exactly where Pakistan is heading, because we, the democratic forces, today are facing the brunt of General Musharraf's police and his army. It's exactly what happened in Burma. They have squashed all opposition and there's no movement on the streets. It's exactly what Musharraf was trying to do in Pakistan.

But once the democratic opposition is crushed, what's going to be left in Pakistan are the militants. The militants will be the only ones who will be able to follow the military regime.

(END VIDEO TAPE)

BLITZER: Imran Khan, an opposition figure in Pakistan, speaking with me just a little while ago.

Let's check in with Jack Cafferty.

He's in New York. He's got The Cafferty File -- there are a lot of courageous people out there right now. That's a very dangerous situation -- Jack.

CAFFERTY: Yes. I, you know, I wonder if there's anything that we plan on doing to help those folks. I mean there are a bunch of nuclear weapons floating around that country and those pictures that we were watching, that's scary stuff.

Back here at home, when it comes to the Christian Coalition, the televangelist Pat Robertson has morphed into the crazy uncle who lives in the attic now. But he loves Rudy Giuliani. In fact, Robertson endorsed Giuliani for president today.

Let's see -- Evangelical Christians are opposed to abortion and Rudy Giuliani is pro-choice. Evangelicals are opposed to gay marriage and Rudy Giuliani supports gay rights. Evangelical Christians are opposed to multiple marriages. Rudy's had three.

But none of that stuff may be as problematic as the fact that Pat Robertson has become a certifiable loony tune in recent years. Robertson has developed a trademark on saying really crazy stuff. Some of his craziest hits include these -- suggesting that former Israeli Prime Minister Ariel Sharon had a stroke because God was punishing him for dividing Israel; calling for the assassination of Hugo Chavez; saying the threat to the United States from activist judges is "probably more serious than a few bearded terrorists who fly into buildings;" and saying that hurricanes would sweep down on Orlando, Florida because gays and lesbians attended special gay days at Disney World.

Here's the question -- how will Pat Robertson's endorsement affect Rudy Giuliani's campaign?

E-mail us at caffertyfile@CNN.com or go to CNN.com/caffertyfile. We've been getting all kinds of mail on this since 2:00 this afternoon, when we posted the questions online. And we haven't even done the on-air part yet.

Pat Robertson is a -- he's an unmade bed these days.

BLITZER: And you and I and our panel are -- at 6:30, later in this next hour -- at 6:30 Eastern, we're going to have a lot more on this specific subject coming up. And you're going to have a chance to really tell our viewers how you feel about it, Jack.

CAFFERTY: Fine.

BLITZER: Good.

Our panel, coming up in the next hour.

Big money televangelists under investigation by Congress right now.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: God is the gateway to the world of wealth.

(END VIDEO CLIP)

BLITZER: We'll take a closer look at the prosperity preachers, as they're called, and the senator who wants them to open their books.

Plus, a record number of American troops killed in Iraq. I'll be speaking with the U.S. military's number two man in charge.

Are insurgents running out of people to kill, as one powerful Congressman says?

I'll ask General Raymond Odierno.

And the CEO of Yahoo! is called a moral pygmy on Capitol Hill for turning over dissidents to the Chinese government. We'll tell you what's going on on that front, as well.

Stay with us.

Lots more news right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Is Iran mending its ways in Iraq?

The U.S. military will soon release nine Iranians it's been holding on suspicion of arming Iraqi insurgents. That word coming to THE SITUATION ROOM from the number two U.S. military commander in Iraq, Lieutenant General Raymond Odierno. He says 11 other Iranians will remain in custody, but he also tells us it's unclear whether Iran is still shipping deadly explosive devices to Iraq or if it's still training and funding militant groups there.

I spoke with General Odierno in Baghdad just a short while ago.

(BEGIN VIDEO TAPE)

BLITZER: Let's talk a little bit about this year, 2007. Even though there's been a reduction -- a dramatic reduction in U.S. military casualties the past few months, it's still turning out to be the worst year so far for the U.S. military, going back to the start of the war in March of 2003. Four hundred and eighty-six killed in that first year. But now, in 2007, so far -- there's still two months to go, almost -- 853 American troops dead.

What do you -- what should we interpret -- how should we interpret these U.S. military deaths in Iraq?

LT. GEN. RAY ODIERNO, COMMANDER, MULTINATIONAL FORCES-IRAQ, U.S. ARMY: Well, first off, every -- every life of our soldiers, marines, airmen and sailors is valuable to us and all of us. They're courageous young men who have been incredibly dedicated to their country. And we have thousands more here that are dedicated every single day. So every single loss is bothersome.

But, Wolf, what's happened here is when we came in last December, we started to see a significant rise in sectarian violence here in Iraq. We are starting to see a rise in overall violence. We surged forces in here. We went on the offensive. We eliminated safe havens and sanctuaries in February, March, April, May, June. We went on major offensive operations. We tried to eliminate these places where Al Qaeda was operating, where Shia extremists were operating. And we think we've done that.

And now, for the last five months now -- going on five months -- we've started to have a steady decline in casualties. And it's been the -- it's the most steady decline we've had since we've been here. So we think we have had some success. The trends are in the right direction. We still have to wait and see because, as you know, two days ago, we lost five soldiers. So it's still very dangerous out here and we're very cognizant of that. But we are seeing progress.

BLITZER: One influential Democratic congressman, Congressman David Obey of Wisconsin, who is the chairman of the Appropriations Committee, he offered this explanation why there's been a reduction in the deaths -- sectarian violence -- over the past few months.

I'm going to play this clip, because I want -- I want your expert analysis on what's really going on.

Listen to this.

(BEGIN VIDEO CLIP)

REP. DAVID OBEY (D-WI), APPROPRIATIONS COMMITTEE CHAIRMAN: I would say one of the reasons that you've had incidents of violence -- of sectarian violence go down is because you're running out of people to kill. I mean they've killed so many in so many areas that there are fewer opportunity targets, if you want to put it that way, for each side.

(END VIDEO CLIP)

BLITZER: All right.

Do you want to react to that?

ODIERNO: Well, first off, civilian casualties have decreased significantly. And, as far as I know, there are still over 25 million people in Iraq today. And the bottom line is they are starting to work together. They are starting to work together -- Sunni and Shia. We are starting to see reconciliation. There is more that has to be done. There's more that has to be done by the government. But at the local grassroots level, we're seeing, every single day, these people want to get together. They are coming forward to us. Sunnis are coming to us. Shia are coming to us. They want to solve these problems. They want to start moving forward. And that's very encouraging.

And so what we're concentrating on is those extremist fringes of these elements. And we will continue to go to after them.

BLITZER: I guess, though, one of the points he's trying to make is that the Shia neighborhoods have ethically been cleansed. Very few Sunnis are living there. The Sunni neighborhoods have ethnically been cleansed. Very few Shia living there. As a result, fewer targets of opportunity, if you will, for the Shia and the Sunnis to kill each other.

Is there a point there?

ODIERNO: No. In fact, has there been some movement in the population in Baghdad?

Yes. But there are still almost -- every neighborhood is mixed. The mixed might have adjusted a little bit, but there's still a mix in almost every single neighborhood within Baghdad -- of Sunni and Shia. And so I feel confident that that is starting to reduce. Again, there's a change in attitude here in Iraq. And you can feel it as you walk down the street. And I'm here every day. And I was here 10 months ago. I was here 11 months ago -- at the height of the violence.

And today, Baghdad -- and the rest of Iraq -- is a different place. We are not where we need to be. There is still some violence and we still have to work on that. But we clearly are -- have seen a difference.

BLITZER: Lieutenant General Raymond Odierno, U.S. Army in Baghdad.

General, good luck to you.

Good luck to all the men and women you command.

ODIERNO: Thank you so much, Wolf.

BLITZER: So it's been the deadliest year of the war for U.S. troops.

But what about injuries?

Here are the latest numbers. More than 28,000 American servicemen and women have been wounded in Iraq. But those numbers have been declining in recent months, down from the year's high of 754 in July to 608 in August, 297 in September, before climbing again last month, to 376.

The numbers are much more grim for Iraqi civilians, although still tending down. An estimated 1,900 were killed in July; 1,600 in August; and 1,100 in September.

Still ahead, they preach prosperity, but who's really prospering?

The lavish lifestyles of some television Evangelists are now in the spotlight. We'll go to that story.

And Iran announces a nuclear milestone. Are atomic weapons far behind?

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK

BLITZER: Carol Costello is monitoring some other important stories incoming into THE SITUATION ROOM right now -- Carol, what's going on?

CAROL COSTELLO, CNN CORRESPONDENT: Well, Wolf, there was a test over the Pacific Ocean just a short time ago. The U.S. Navy took an unprecedented step toward developing a ballistic missile defense system. For the first time, ever missiles launched from a Navy cruiser successfully intercepted two targets outside of the Earth's atmosphere almost simultaneously.

A pretty cool video, isn't it?

Officials say it demonstrates the ability to shoot down incoming missiles under realistic conditions.

General Motors is reporting one of the biggest quarterly losses ever for any company. According to data released just hours ago, the American automaker was $39 billion in the red from July to September. Much of the loss is due to massive -- to a massive charge involving unused tax credits. Company executives say G.M.'s auto sales are strong.

And at this hour, former Illinois Governor George Ryan is settling into his new home -- at a federal prison in Wisconsin. Before surrendering to authorities earlier today, the 73-year-old Ryan said he was embarking on what he called "a new journey in my life." He was convicted of corruption charges and sentenced to six-and-a-half years in prison last year. He says he's innocent, but he's appealing his verdict. We'll keep you posted.

Back to you -- Wolf.

BLITZER: Carol, thank you.

Televangelists under investigation -- are they bringing in big money from their followers to fund their lavish lifestyles?

A closer look at why one U.S. senator is now demanding they open up their books.

Plus, Pat Robertson once predicted that millions of people will be killed in the United States by the end of the year. Now, he's endorsing Rudy Giuliani for president in 2008.

And made in China -- a dangerous so-called date rape drug is found in the toy of the year -- the most stunning recall so far. We'll tell you what's going on -- information you need to know. Stick around.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

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

Happening now, a major sell-off on Wall Street. Credit market concerns and rising oil prices send the Dow plummeting more than 360 points, or about 2.5 percent. It's the second loss of more than 300 points in less than a week.

A political protest erupts in violence and chaos in Venezuela. The Associated Press now reporting that just a short time ago, gunmen wearing ski masks opened fire on thousands of students. The students demonstrating against constitutional reforms that expand the powers of the president, Hugo Chavez. At least one person is dead. Six are wounded.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

They used to use -- they still use the TV spotlight, but a Congressional spotlight may now be a little too hot for some of the country's top television Evangelists. A leading Republican senator is now investigating their finances.

CNN's Carol Costello she's here in THE SITUATION ROOM watching this.

These Evangelists preach what's known -- and I'm quoting a lot of people -- prosperity gospel.

What exactly is this?

COSTELLO: It's different from your normal gospel preaching.

Senator Charles Grassley suspects that it means ministers enriching themselves at their followers' expense. Today, one of those gospel preachers spoke out, suggesting the senator is poking his nose where it doesn't belong.

(BEGIN VIDEO TAPE)

COSTELLO (voice-over): They tout prosperity as a gift from God. Creflo Dollar, one of the Evangelicals now under scrutiny by the U.S. Senate, preaches poverty is a curse that can be cured -- if you believe.

CREFLO DOLLAR, CREFLO DOLLAR MINISTRIES: The word of God is the gateway to the world of wealth.

COSTELLO: Through his Creflo Dollar Ministries, he tells his 29,000 followers in Georgia Jesus wants them and him to prosper. DOLLAR: There's this Jesus who died for us so we can have a type of life that expenses peace and prosperity.

COSTELLO: But Senator Chuck Grassley says praying for prosperity for the poor is one thing -- getting rich off them is another.

SEN. CHARLES GRASSLEY (R-IA), FINANCE COMMITTEE: Bentleys, Rolls Royces, corporate jets, $23,000 commodes and a multi-million dollar home -- you know, just think of it, a $23,000 marble commode -- a lot of money going down the toilet.

COSTELLO: As for dollar, he lives in a multi-million dollar home in Fayetteville, Georgia, travels in expensive cars and private jets. Even has access to a $2.5 million Manhattan apartment. With no apologies.

PASTOR CREFLO DOLLAR, WORLD CHANGERS MINISTRIES: First of all, it's a miscalculated assumption that those things were purchased with the church's money. I've purchased over 100 cars for people in my congregation, homes for people in the congregation.

COSTELLO: But Senator Chuck Grassley wants proof of that miscalculated assumption. He sent letters to five other ministries as well. Kenneth Copeland Ministries, Benny Hinn's World Healing Center, Randy and Paula White's ministry, Bishop Eddie Long's New Birth Missionary Baptist Church and Joyce Meyers' ministries.

Grassley wants detailed explanations of how billions of dollars in donations are spent. These ministries are organized as churches and are exempt from paying taxes. That means normally they can't divert contributions for personal use. But Dollar who said he provided Grassley with some detailed records wonder if the senator is overstepping his authority.

DOLLAR: We comply with the IRS, we have board of directors and we have a compensation board, an audit board and an ethics board. So these are, these things that he's requested we've given these things to the IRS.

(END VIDEOTAPE)

COSTELLO (on camera): But if Senator Grassley isn't satisfied with whatever records Dollar and the others turn over it his committee he could subpoena them and they could be forced to testify publicly about how they fund their lavish lifestyles.

BLITZER: A lot of people would want to cover that hearing, I'm sure. Carol, thanks very much.

For more now on the probe of the so-called prosperity ministries we're joined by our CNN contributor Roland Martin, he has a new book coming out that's entitled "Listening to the Spirit Within." Roland, you've talked to a lot of these people over the years. Do their followers find their lifestyles to be extravagant, certainly as extravagant as Senator Grassley is now suggesting? ROLAND MARTIN, CNN CONTRIBUTOR: Wolf, most of their members are going to be fiercely protective of their pastors. There are very few people who are really going to go after them.

But this is a significant problem that has grown over the last several years. The "St. Louis Post-Dispatch" had a major series dealing with Joyce Meyers and her ministry and you also had the "Tampa Tribune" dealing with Pastor Paula and Randy White. Then "Dallas Morning News" had a story dealing with Benny Hinn.

I talked about all this stuff in my blog on essence.com because it is critical because it boils down to members' money. When you all of a sudden have the planes and the jets and the private travel and the exquisite vacations, people have a problem with individuals who say they believe in Jesus and helping the poor and the needy, but living an opulent lifestyle.

BLITZER: This investigation that Senator Grassley is now launching, I assume these preachers are really worried about where it could eventually lead.

MARTIN: Of course. And I talked to several pastors who are very concerned about. Look, my wife is an ordained minister. She doesn't have a church but she's involved in this and that is, what could happen. See, Wolf, let's expand this. Let's say there is a preacher who endorses another candidate. They say, wait a minute, some politician could potentially target me and my church because I personally endorse someone else. So, many politicians rely on the endorsements of pastors all across the country, so, yeah, forget just these six pastors. This could extend the across the country. That's why this is a very touchy issue that Grassley is walking into and, trust me, you're going to see Democrats and Republicans who are evangelicals say, hey, hold up. You're now getting into church business. You should stay focused on state business.

BLITZER: Roland Martin, thanks very much for that. Roland Martin is one of our CNN contributors.

MARTIN: The television evangelist Pat Robertson is endorsing Republican presidential candidate Rudy Giuliani, but there are questions out there about whether that could actually backfire on the former New York City mayor. Let's go back to Mary Snow. She is in New York. Mary, how could Pat Robertson's endorsement hurt Giuliani?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, you know, for one Robertson doesn't carry the clout he once did and carries fire for several controversial comments in recent years.

(BEGIN VIDEOTAPE)

SNOW (voice-over): Television evangelist Pat Robertson said with confidence the message came straight from God. Evil people will come after the U.S. in the second half of 2007.

PAT ROBERTSON, TELEVANGELIST: I'm not saying nuclear, the Lord didn't say nuclear, but I do believe it will be something like that that will be mass killing. Possibly millions of people.

SNOW: Robertson regularly shares his predictions on "The 700 Club." Last year he said God warned him there would be coastal storms and perhaps even a tsunami in the U.S.

In 2004 Robertson said God told him President Bush would be re- elected in a blowout. Actually Mr. Bush won 51 percent of the vote that year. But one religion writer says at the time Robertson is drawing attention, he's widening the distance between himself and evangelicals.

JEFFREY SHELLER, AUTHOR, "BELIEVERS": The eyes roll and people are really embarrassed by it. He's certainly not speaking for the evangelical main stream when he says things of this nature.

SNOW: Robertson often injects himself into controversial debates. In 2005 he chastised a Pennsylvania town for rejecting the teachings of intelligent design and choosing to only teach the theory of evolution.

ROBERTSON: I would like to say to the good citizens of Dover, if there is a disaster in your area, don't turn to God. You just rejected him from your city.

SNOW: Robertson's Christian Broadcasting Network claims it has an audience of 1 million viewers. Experts say he's targeting a small group of evangelicals who believe in prophecies. But some suggest he sparks controversy in an attempt to broaden his base.

January 2006, Robertson created a furor suggesting former Israeli Prime Minister Ariel Sharon suffered a stroke as punishment from God for removing Israeli settlers from Gaza. Robertson later apologized.

SHELLER: I think he's willing to take his licks. He certainly knows that he has a penchant for doing this. He has had to apologize in the past and yet he continues.

SNOW: Robertson also apologized after calling for the assassination of Hugo Chavez in 2005.

(END VIDEOTAPE)

SNOW (on camera): So, in the end, the question comes down to how much will Giuliani gain from the following Pat Robertson does have versus the controversy that hangs over him? Wolf?

BLITZER: Mary Snow, thank you very much. Mary reporting from New York.

A congressman gives top executives over at Yahoo! a piece of his mind.

(BEGIN VIDEO CLIP)

REP. TOM LANTOS, (D) CA: While, technologically and financially you're giants, morally you are pygmies. (END VIDEO CLIP)

BLITZER: Did Yahoo! betray Chinese dissidents? The story behind the outrage. That's coming up.

Also, freedom fries, remember those? Well, pretty soon they may be a distant, distant memory. The new French president pays a visit to the United States voicing his love for America. Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: They may be giants of the Internet, but one U.S. congressman calls Yahoo!'s top executives, and I am quoting now, "moral pygmies" to their faces. Others are simply outraged over what they see as the company's betrayal of Chinese dissidents. Let's go back to Brian Todd. He is watching this story for us. So Brian, what did Yahoo! allegedly do to these dissidents?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, the company was pressured by the Chinese government for the Web information of those dissidents, the company gave in and the Chinese government tracked those men down.

(BEGIN VIDEOTAPE)

TODD (voice-over): The families of Chinese dissidents, demanding money from an American Internet giant who gave up their loved ones to the communist regime.

GAO QINSHENG, MOTHER OF CHINESE DISSIDENT (through translator): Yahoo! should do the things they ought to do. They should follow up their apology by taking concrete action.

TODD: While Gao Qinsheng and others prepare to move a lawsuit forward next month, Yahoo! says it will consider settling. Yahoo!'s apologized for giving the Chinese government information that led to the jailing of journalists like Gao's son Shirtao (ph).

QINSHENG: He'll be in his 40s ten years later. His wife divorced him in order it protect her own job under pressure.

TODD: Shirtao got in trouble three years ago when the Chinese government told journalists not to report on the Tiananmen Square anniversary. He forwarded the notice to human rights groups and pressured Yahoo! to give up the account holder who did that. Yahoo! complied.

LANTOS: While technologically and financially you're giants, morally you're pygmies.

TODD: Yahoo!'s CEO, contrite before an outraged Congress.

JERRY YANG, CEO, YAHOO! INC: My heart goes out to the families.

TODD: And the company's lawyer talked about what Yahoo! might have faced if they had not given him up Shirtao?

MICHAEL CALLAHAN, ATTORNEY FOR YAHOO! INC.: I cannot ask our local employees to resist lawful demands and put their own freedom at risk, even if in my personal view, the local laws are overbroad.

TODD: But Yahoo! and other U.S. based companies like Google and MSN are also accused by rights groups of censoring their Internet search engines in China.

LUCIE MORILLON, REPORTERS WITHOUT BORDERS: Excluding words like human rights, Falun Gong, Dalai Lama, democracy. This is one thing. Others like Cisco have provided some material to the Chinese that allow them to ensure the surveillance and the monitoring of the Internet.

(END VIDEOTAPE)

TODD (on camera): Cisco has not yet responded to CNN or the charge that it sold the Chinese regime the equipment to monitor Internet users but it has denied censoring. Yahoo!, MSN and Google tell us they only censor when they are given an order by the Chinese. And they say they always let customers do that.

Google also told is it takes step to make sure that private users are not identified. Wolf?

BLITZER: How many dissidents Brian, has Yahoo! given up to the Chinese government?

TODD: That's in some dispute right now. Human rights activists say they know of four dissidents now in jail because Yahoo! gave their regime their information. Yahoo! executives say they're aware of only two.

BLITZER: Thanks very much, Brian Todd reporting.

Popular children stories now being pulled from the store shelves in Australia. It turns out if kids swallow some of the parts, it's as if they have taken the so-called date rape drug GHB, let's go to Brian - excuse my, Jason Carroll. He is in New York. He's watching this story for us. First of all, Jason, what is this toy?

JASON CARROLL, CNN CORRESPONDENT: Well, first of all, Wolf, let me tell you about developing news. The original toy that was in question here is a toy called Bindeez Beads but we got off the phone with a representative from the Consumer Product Safety Commission. Here is what they said, they said a similar toy that is made here in the United States called Aquadots, this is the toy made here in the United States, Bindeez Beads are made in Australia.

The CPSC, the Consumer Product Safety commission is now announcing the recall of 4 million of those Aquadots sold from April 2007 to November 2007. This announcement, Wolf, coming later this evening, but we just got off the phone just a few moments ago with the representative. They say they've announced this recall after two reports of children having to be hospitalized after ingesting these Aquadots and had some same very strange adverse effects. Both of these children slipped into non-responsive comas, they have since been deemed to be okay. Wolf, this is all based on a toy, initially, as I said, a toy that was named in 2007 as one of Australia's toys of the year. That toy, Bindeez Beads was linked to a dangerous drug, a drug we're going to tell you a little bit more about. Once again this was a toy made by a Chinese manufacturer.

(BEIGN VIDEOTAPE)

CARROLL (voice-over): Just add water and create a fantasy world.

UNIDENTIFIED FEMALE: Bindeez.

CARROLL: That's how Bindeez toys were marketed to children looking to create play things out of the colorful beads. It turns out, at least in some cases, if Bindeez Beads are swallowed a chemical used to make the adhesive metabolizes into a dangerous drug known as Fantasy, also called GHB and in other circumstances it's referred to the date rape drug because of its hazardous effects.

DR. NAREN GUNJA, POISONS INFORMATION CENTER: This toxin can cause you to become comatose from when you may either stop breathing or obstruct your airway and potentially cause death.

CARROLL: Doctors discovered the problem after three children were hospitalized in Australia. The mother of a 10-year-old victim says her daughter became very ill after swallowing the beads.

HEATHER LAHANE, CHARLOTTE LAHANE'S MOTHER: I was just beside myself. I was just so frightened because I literally thought that she wasn't going to make it.

CARROLL: The toy beads are imported from a manufacturer in China. The company that says Bindeez toys, Moose Enterprise released a statement on its Web site announcing an immediate and voluntary recall. Over the past year at least 20 million toys made in China have been recalled worldwide.

Now another toy this time connected to GHB. Gamma Hydroxy Butyrate used to be sold in health food stores in the United States as a performance enhancer for body builders until it was banned in 1990.

Now, it's more common use is by club goers who risk using it illegally for its euphoric and hallucinogenic effects.

(END VIDEOTAPE)

CARROLL (on camera): And once again, the company that makes Bindeez Beads obviously also distributes a similar product here in the United States called Aquabeads. Again, we're just hearing from the representative of the Consumer Product Safety Commission that Aquadots are also going to be recalled. That announcement expected later this evening.

BLITZER: A lot of worried parents watching obviously. Millions of those toys that are out there right now here in the United States? CARROLL: That is absolutely correct, Wolf. According to the representatives, some 4 million of these Aquadots are distributed at toy stores throughout the United States. They're telling parents if you have one of these products at home, if it was made between the period of April 2007 to November of 2007, you should simply throw out those toys. Again, the announcement expected a little later on this evening.

BLITZER: Jason Carroll, breaking some news for us in THE SITUATION ROOM. Jason, thank you very much.

There has been a mass shooting at a high school in Finland. Never happened over there. Eight students are dead, plus the shooter who killed himself. The 18-year-old student apparently posted a trail of warning signs online. Let's go to our Internet reporter Abbi Tatton. Abbi, what did he post? What did he say?

ABBI TATTON, CNN CORRESPONDENT: Wolf, these are videos that were posted to YouTube and we counted more than 80 of them, videos ranging from footage of columbine to video of the young man practicing shooting in the woods. But the most disturbing of these has to be this one. This was posted just hours before today's rampage. It was posted with the user with the same name as the shooter, Pekka-Erik Auvinen and it shows an image of the school there which then disintegrates to show an image of a figure of Auvinen and the title was Jokela High School massacre, the name of the school, with today's date. There were other warnings out there.

"Just testing my gun." This was posted with the same user name just a couple days ago shows the young man firing at fruit in the woods. All of these have been removed now. This profile has been removed by YouTube, but all of this image, all of them popping up online, including archives that you can find of text of a manifesto that Auvinen wrote online. One thing he said, I will eliminate all who I see fit. Wolf?

BLITZER: What a story, all right, Abbi, thank you for that.

Still ahead, Democrats targeting former President Bill Clinton for criticism. We're going to show you why. Stick around. Lot's more coming up right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: The federal employee who wore a racially offensive costume to an Immigrations and Customs Agency Halloween party has been placed on administrative leave and now the acting director of the agency, Julie Myers, could lose her job over the scandal. Let's go to our homeland security correspondent Jeanne Meserve. She's watching the story. Jeanne?

JEANNE MESERVE, CNN CORRESPONDENT: Wolf, Myers is the acting director of ICE, she still needs Senate confirmation. Today one Democrat says she's putting a temporary hold on Myers' nomination because of concerns about her judgment.

(BEGIN VIDEO CLIP)

SEN. CLAIRE MCCASKILL, (D) MO: Well, there's obviously a lack of judgment here. We can try to like parse it and slice it and slice it and dice it, but bottom line is someone showed up in dreadlocks and a prison outfit and this isn't a matter of how dark their skin was colored, it is a matter of it being inappropriate. As the leader of that organization, she should have immediately recognized the problem.

(END VIDEO CLIP)

MESERVE: Some Hill staffers say the key to Myers' future is whether the story picks up steam. Wolf?

BLITZER: And there is another scandal in the Department of Homeland Security involving that staged press conference over at FEMA. You're getting some new exclusive information. What are you learning?

MESERVE: Well, Wolf, Russ Canocki (ph), the DHS spokesman who did the review said no preconceived effort to deceive the media or the public. The former head of external affairs for FEMA, Pat Philbin has thus far gotten most of the blame, but the review found a senior member of Philbin's staff encouraged and even instructed other FEMA staffers to ask questions and no one including senior staff tried to stop the session, although some employees did have misgivings. Won't say if anyone has been disciplined in the matter, but some new rules that FEMA press conferences have been scheduled two hours ahead of time and reporters who call in have to be able ask questions and no government employee may ask a question at any press event. Wolf?

BLITZER: Seems like basic, basic rules of the game. All right, thanks very much, Jeanne, for that.

Let's go to Jack Cafferty. He's got "The Cafferty File." Jack?

CAFFERTY: What do they mean they won't say whether anybody has been disciplined? Aren't we entitled to know that stuff? Those people work for us.

BLITZER: That's absolutely correct.

CAFFERTY: They're on the public pay roll. What do you mean you won't tell us whether anyone's been disciplined? They all ought to be disciplined. The question is this for this hour, how will Pat Robertson's endorsement affect Rudy Giuliani's campaign? Here's some of the mail that we can read on a family-oriented program.

Jabriel in Washington. "Jack, if you're correct and you are that Mr. Robertson has truly said some truly strange things, then what does it say about a man who would accept such an endorsement? Either Mr. Giuliani agrees with Mr. Robertson's statements or pandering for the votes he believes Mr. Robertson will bring. Whichever answer is correct, what does it all say about Giuliani as potential president of the United States? Hopefully Pat Robertson's words will do the same for Rudy as they have Mr. Robertson, render him obsolete."

William in North Carolina, "In the United States money is king and it won't make any difference, even if Rudy Giuliani gets endorsements from pope. On Election Day, people vote their pocketbook and forget about God."

Graham writes, "Christianity and in its your face proprietors have sealed the deal on my ever voting for a Republican, never again."

Ed in Virginia City, Nevada, that would be the Ponderosa. "With the millions of lock-step followers of Robertson, the endorsement will bring a big help to Giuliani. So the ultimate hypocrite who blames America's problems on abortions and gays stands behind the mayor who supports both. What could be in it for Robertson? Maybe a new Cabinet position, say secretary of morals."

Mike in West Virginia, "Thank you for being the first reporter today that cause capable of remembering that for being a Christian, Pat Robertson sure seems infatuated with killing people. Goes to show how desperate Rudy and the Republicans are for getting votes. When you take endorsements from demented and judgmental TV evangelists, what is next?"

And Lisa, in Alabama, "Pat Robertson, televangelist, is endorsing Rudy Giuliani a pro-choice, pro-gay rights Catholic. The world is ending, prepare for the rapture immediately."

Wolf?

BLITZER: Thank you, Jack. We'll take a little bit more about this in our roundtable in the next hour right here in THE SITUATION ROOM.

Still ahead, though, this hour, Lou Dobbs, he is joining some members of Congress blasting Yahoo! for ousting Chinese dissidents. Lou is standing by to join us right here in THE SITUATION ROOM.

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BLITZER: To our viewers you're in THE SITUATION ROOM. Happening now, the United States and France standing together on the crisis in Pakistan. Presidents Bush and Sarkozy sealing their new cozy relationship with talk of war and peace.

Also this hour Bill Clinton opening his wife up to attack with a remark Hillary Clinton's rivals are simply calling stunning. Is Senator Clinton's campaigner in chief the help Democrats thought he'd be?

And preaching for Giuliani. Some Christian conservative jaws are dropping over Pat Robertson's endorsement. Jack Cafferty and our panelists take on the question, does Robertson's backing of Giuliani really matter? I'm Wolf Blitzer, you're in THE SITUATION ROOM.

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