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Torture Debate Twist; Man Texts Wife I Divorce You; White House Spokesman Grades the Press; First Lady Visits with Government Workers; Fakes Uncovered in $20M Bust; Congress Debates Cap & Trade; Iraq Suffers Deadliest 24 Hours of 2009; Inside Madoff's Scam

Aired April 24, 2009 - 17:00   ET

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


WOLF BLITZER, CNN ANCHOR: And to our viewers, you're in THE SITUATION ROOM. Happening now, a new twist in the torture debate. Did waterboarding the 9/11 mastermind uncover a plot to fly a hijacked jet into a Los Angeles skyscraper? A declassified memo now shedding some new light.

Also, secrets of the biggest scam in history revealed. Exclusive new details of Bernard Madoff's $65 billion Ponzi scheme come to light as a former partner now reportedly seeks a plea deal.

And a divorce by text message is upheld in Saudi Arabia, but only men can do it. A landmark case underscoring the plight of women in the ultraconservative kingdom.

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

They were two of the most powerful people in Washington. They remain two of the most polarizing. The former vice president, Al Gore, and the former House speaker, Newt Gingrich, today they returned to the scene of many of their old battles to fight a new one, this time over global warming. Our congressional correspondent Brianna Keilar is up on Capitol Hill. She covered it.

Brianna, how did it go?

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: Wolf, two political power players. In one corner, the Nobel Prize-winning global warming activist, in the other, a conservative icon and the architect of the Republican revolution, Gore and Gingrich weighed in as Congress took up one of the president's top priorities, combating global warming and overhauling the nation's energy policy.

(BEGIN VIDEOTAPE)

KEILAR (voice-over): Al Gore told Congress the fate of the planet is in their hands.

AL GORE, FORMER VICE PRESIDENT: ...off the Wilkins Ice Shelf, which is roughly the size of Northern Ireland, is now beginning to disintegrate right before our very eyes. If it were collapse and slide into the sea, we would experience global sea level rise of another 20 feet.

KEILAR: But some Republicans question whether man-made global warming is real.

GORE: There is a consensus on the science.

STEVE SCALISE (R), LOUISIANA: You must have been listening to our testimony that we have had for the last few days with dozens of experts that have come in who have given completely different views. So I would encourage you to go back and look at to the testimony that this committee has heard.

GORE: There are people who still believe that the moon landing was staged on a movie lot in Arizona.

KEILAR: Gore's appearance was meant to bolster Democratic plans to cut carbon emissions by setting up a complex system where industries would buy and sell pollution credits. Republicans had their own heavyweight, Newt Gingrich, who said the Democrats' proposal would levy a huge tax on all Americans.

NEWT GINGRICH (R), FORMER HOUSE SPEAKER: This bill will increase your cost of living and may kill your job.

KEILAR: Gingrich said tax breaks, not penalties, will get polluters to clean up their act, Democrats pounced.

REP. HENRY WAXMAN (D), CALIFORNIA: Mr. Gingrich, I'm sure glad you're not in charge of foreign policy. Do you think the only way to incentivize a country is by offering them more and more carrots?

GINGRICH: Mr. Chairman, I don't think of American citizens the way I think of foreign dictators. And I don't think this Congress should punish the American people.

(END VIDEOTAPE)

BLITZER: Brianna, the Democrats have a specific problem of their own in terms of not all the Democrats necessarily agree with the president and a lot of the liberal Democrats, especially those Democrats from some of the coal states, the manufacturing states, they're worried about some of these ideas that Al Gore is promoting.

KEILAR: They are, Wolf, mostly they're Midwestern Democrats afraid that their states might suffer economically because their states pollute more than other states. For instance, Michigan Democrat John Dingell, he voiced this concern, and minutes later, House Republicans sent out this e-mail, Wolf.

It's a video link to Dingell's comments, obviously they're trying to drive a wedge there between Democrats on the issue. And there certainly is some daylight -- Wolf.

BLITZER: Brianna, thanks very much. Gore versus Gingrich, we'll continue to watch this story.

Iraq engulfed by a deadly new wave of violence. Even as the dead from yesterday's attacks were being buried, suicide bombers struck again today, including two women who targeted a holy shrine on Islam's holy day. CNN's Cal Perry is in Baghdad. He has the latest -- Cal.

CAL PERRY, CNN CORRESPONDENT: Wolf, those deadly attacks that we saw yesterday continuing today, especially in the Iraqi capital of Baghdad where two female suicide bombers exploded their vests near to one of Shia Islam's holiest sites.

(BEGIN VIDEOTAPE)

PERRY (voice-over): She's only 4 years old and barely survived near-simultaneous suicide bombings on a holy shrine Friday in Baghdad. At first, no one knew who she was until her grandmother arrived at the hospital overcome with grief.

The hospital reports that at least eight members of her family are believed to have been killed. Others lie in critical condition. At least 80 of the wounded and 25 of the dead were from Iran, many wail in Farsi, not in Arabic on this day in Iraq.

Witnesses describe the scene at the hospital to CNN as a, quote, "massacre." This has been the deadliest 24-hour period in Iraq since the beginning of 2009, the numbers staggering. At least 145 dead, over 200 wounded, the death toll likely to rise.

People are burying the dead from Thursday's attacks as well. More than 80 others killed the same day and attacked across Iraq. It's these kind of spectacular attacks that disturb the top U.S. commander in Iraq.

GEN. RAYMOND ODIERNO, CMDR., MULTI-NATIONAL FORCE-IRAQ: This spike in suicide attacks that we have seen over the last couple of days, frankly, is another tragic event caused by al Qaeda and their links, they're killing many innocent people, they're killing pilgrims going to pray, they're killing women and children, they're killing homeless. It again shows the type of individuals al Qaeda has and how much they care about the Iraqi people.

PERRY: But they're also targeting the Iraqi security forces. The Thursday attack in Baghdad targeted Iraqi police as they handed out aid to displaced families. "Eight killed there and security forces, three killed up there," this man says. "We were devastated, devastated. It was a female suicide bomber."

A clear message from the insurgency, they can still attack at the times and places of their choosing.

(END VIDEOTAPE)

PERRY: Now all eyes on June 30th, the date in which U.S. combat troops are supposed to be out of the urban areas here in Iraq. If the violence continues, the question is, will they be able to stay out of the cities, or will they be drawn back into a fight that they do not want to be a part of? Wolf.

BLITZER: All right. Tense situation in Iraq right now. Seems to be getting worse. We'll watch it. Cal Perry is in Baghdad. So why the sudden surge in violence in Iraq right now? The head of the U.S. military's Central Command blames a new influx of foreign fighters, listen to what General David Petraeus told lawmakers on Capitol Hill.

(BEGIN VIDEO CLIP)

GEN. DAVID PETRAEUS, CMDR., U.S. CENTCOM: We have seen -- in this case, we do know that -- for example, that a network that provides foreign fighters from Tunisia through Syria to Iraq was reactivated or re-established, after the foreign fighter network inside Iraq was damaged very significantly over the course of the last six months or so.

And we know that, for example, four of the suicide bombers in the past couple of weeks were Tunisians and we captured one of the facilitators.

(END VIDEO CLIP)

BLITZER: General Petraeus also says intelligence now working to determine exact which militant network is behind these latest attacks and how to best take them out.

Bringing troops home from Iraq is one promise President Obama will be graded on. Next Wednesday we mark his 100th day in office with the CNN "NATIONAL REPORT CARD: The First 100 Days." I'll be joined by Anderson Cooper, John King, Soledad O'Brien, and the best political team on television. And you can take part in live voting online at cnn.com. Wednesday night it all starts at 7:00 p.m. Eastern only here on CNN.

Let's go right back to Jack Cafferty in New York for "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Wolf, it seems like some Republicans still have not figured out that they lost big-time last November in part because the American people are sick and tired of their style of politics. Exhibit A, a conservative faction of the Republican National Committee wants the party to brand Democrats has socialists.

Politico reports RNC James Bopp Jr. of Indiana is accusing President Obama of wanting to restructure American society along socialist ideas. Quoting now: "just as President Reagan's identification of the Soviet Union as an evil empire galvanized opposition to communism, we hope that accurate depiction of the Democrats as a socialist party will galvanize opposition to their march towards socialism."

Sixteen RNC members agreed to the resolution and are petitioning the chairman, Michael Steele, to set a special meeting to consider it. An RNC spokesman wouldn't say what Steele thinks about all this, but a member -- a memo, rather, earlier this month suggests that while he agrees with hard-liners who say the president is leading the country towards socialism, he's probably not going to make it official party policy. Good thinking on his part. It's not just Democrats who they're after either, Bopp also wanted to criticize those three Republican senators who supported the stimulus package: Arlen Specter, Olympia Snowe, and Susan Collins. But that effort was apparently watered down. The resolution instead praises those in Republican Party who have opposed bailouts and Democratic spending plans.

Several Republicans threw around the socialist label during last year's campaign, you'll recall. And more recently, Congressman Spencer Bachus of Alabama claimed that there are is 17 socialists in Congress.

None of this seems like a real good way for the Republican Party to attract voters. But I guess we'll find out. The question is this, is it a mistake for some Republicans to try to brand Democrats as socialists? Go to cnn.com/caffertyfile, post a comment on my blog. Here's a hint, yes -- Wolf.

BLITZER: Thank you, Jack.

Stand by, it could have been L.A.'s version of 9/11, a hijacked jet flown into the city's tallest tower. Now a newly revealed secret memo indicates waterboarding may have prevented it, but did it?

And a former top deputy to Bernard Madoff reportedly seeking a reduced sentence right now, revealing secrets of the massive Ponzi in exchange.

And the news media grading President Obama as he nears the 100- day mark. Now his White House press secretary, guess what? He's grading us. We have the marks for the White House press corps coming up.

(COMMERCIAL BREAK)

BLITZER: It's believed to be the biggest scam in history, but how exactly did Bernard Madoff swindle some $65 billion from some of the world's most successful people?

Our sister publication Fortune magazine reveals secrets of the massive Ponzi scheme and reports exclusively that a former Madoff deputy is now trying to reach a plea deal. Fortune magazine's writer Nicholas Varchaver is joining us now. He shares the byline on this article.

It's a very long article, an excellent piece of journalism, Nick. Thanks very much for coming in.

NICHOLAS VARCHAVER, FORTUNE: My pleasure.

BLITZER: All right. Tell us about this key deputy to Bernard Madoff and what you have learned about a possible plea deal which would allow him to go and say -- tell us -- tell the prosecutors whatever he knows in exchange, presumably, for some reduced sentence.

VARCHAVER: Right. Well, his name is Frank DiPascali. He was the number two to Bernie. He was basically the person in charge of the investment business which we now know was a fraud, essentially. He has gone in and he's trying to cut a deal for himself and he has got essentially two things that he can offer prosecutors to try to get a reduced sentence.

And let's remember, this is not a person who has a chance, really, we don't think, of getting off with no sentence, we're talking about a reduced sentence. So there is basically two things he can offer. One is that despite his heavy involvement in this, he has nothing to offer about the Madoff family.

You know, people's...

BLITZER: About Madoff's wife Ruth and the two sons, or some of the other relatives who worked in the company, what you're saying, this guy just doesn't know anything that they may have done illegally, is that right?

VARCHAVER: Exactly correct, yes. There were a number of Madoffs who worked in the business and one would assume that they were -- if they were involved in the fraud, he would know about it. So I think this is one where the absence of evidence is pretty telling.

Now that doesn't mean they didn't know anything about it, but it's very strong evidence that they may not have had involvement.

BLITZER: But this guy, Frank DiPascali, as you point out, he's acknowledging that he knew about all of this criminal activity.

VARCHAVER: He's acknowledging that he was involved in the fraud. I think he is trying to set out some parameters as to things he didn't know. You know, this is a fluid situation, he's negotiating. But he clearly knew that things were going on that were not correct, let's put it that way.

BLITZER: Because, you know, the general consensus out there is that the wife and the two sons, they must have known what was going on. A lot of people, as you well know, simply believe that

VARCHAVER: Absolutely, that is very much the contention. Now remember, he can only testify as to whether they were involved. He's certainly not in a position to know what Bernie Madoff may have said to his wife, may have said to his brother Peter who was an official in the firm.

But still I think it's pretty significant. The second thing that he's able to potentially testify to are special deals that special investors got from Madoff. So Madoff was famous for giving everyone 10 to 15 percent annual returns, but certain favored investors were getting 20 and 30 percent more, or if imagine they had a great year with some other investments and they needed -- you know, their taxes were going to be very high and it would help their situation with the taxes if they could have on paper a loss.

DiPascali would work with them and would give them on paper and say, OK, you lost 20 percent on your Madoff investment this year to help them with their taxes.

BLITZER: Well, that potentially opens the door to a lot of people going down if in fact this is true, the allegations that he's suggesting.

VARCHAVER: Yes. And I would emphasize that he's not saying this was widespread among all investors, this would be a -- sort of a tier of very big, long-term investors, sort of, you know, Bernie's favored investors.

BLITZER: Nicholas Varchaver is the senior writer for Fortune magazine. Nick, thanks very much.

VARCHAVER: Thank you very much.

BLITZER: I recommend viewers go to that fortune Web site and read the article. It is pretty amazing.

The architect of the 9/11 attacks waterboarded, now a once top secret memo suggests that may have prevented a similar attack on the West Coast, but did it?

And one top congressional Republican says the GOP needs to, quote, "go to war" if Congress seeks torture prosecutions against Bush administration officials. Paul Begala and Ed Rollins, they're here in THE SITUATION ROOM, we'll talk about that and a lot more.

(COMMERCIAL BREAK)

BLITZER: All right. There's growing concern, we're hearing right now, that the U.S. actually may be pushing out some Taliban fighters from Afghanistan and pushing them into Pakistan. Let's go to our Pentagon correspondent Chris Lawrence, he has been investigating what's going on.

What are you learning, Chris?

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Well, Wolf, there are some new concerns that what's good for security in Afghanistan may be bad for its nuclear-armed neighbor.

(BEGIN VIDEOTAPE)

LAWRENCE (voice-over): One of the president's biggest decisions in his first 100 days, sending 17,000 more troops to Afghanistan to take on the Taliban. But what if they do their job too well?

SEN. RUSS FEINGOLD (D), WISCONSIN: What about the possibility that an escalation in Afghanistan could actually be more destabilizing to Pakistan?

LAWRENCE: Senator Russ Feingold worries that routing the Taliban in Afghanistan could push them into Pakistan.

FEINGOLD: In other words, in terms of militants spilling back over into that border. LAWRENCE: Instability in nuclear-armed Pakistan presents an even greater threat to the U.S.

SEN. JOHN KERRY (D), MASSACHUSETTS: Well, there are people worried about that. In fact, the Pakistanis have expressed that concern.

LAWRENCE: Military analysis say the U.S. and Pakistan must trap militants between a hammer and anvil. If the U.S. succeeds in Afghanistan, but there's no progress in Pakistan...

MICHAEL O'HANLON, BROOKINGS INSTITUTION: That you couldn't imagine a situation where some of the insurgents would go into Pakistan and start trying to destabilize that country even more.

LAWRENCE: The Taliban control entire sections of Pakistan's northwest frontier, and recently pushed within 60 miles of Islamabad.

COL. ANDREW BACEVICH (RET.), BOSTON UNIVERSITY: And therefore, why invest such a large effort in the stabilization of Afghanistan if that effort doesn't fix the larger problem?

LAWRENCE: But General David Petraeus was on Capitol Hill Friday asking Congress for more money to better fund Pakistan's own counterinsurgency force.

PETRAEUS: The military by itself can't do it. And they are actually studying our counterinsurgency manual.

(END VIDEOTAPE)

LAWRENCE: In fact, General Petraeus believes -- or claims that it was Pakistan's paramilitary force, the frontier corps that moved into Buner and pushed the Taliban out of that area. But some senior U.S. officials believe that may only be a tactical retreat as the Taliban prepare for a bigger battle down the line -- Wolf.

BLITZER: Chris Lawrence, thanks very much. Chris is at the Pentagon.

The war on terror is just one of the challenges President Obama is facing. Next Wednesday we mark his 100th day in office with the CNN "NATIONAL REPORT CARD: The First 100 Days." I'll be joined by Anderson Cooper, John King, Soledad O'Brien, and the best political team on television. And you'll be able to take part in live voting online at cnn.com. That's Wednesday night, 7:00 p.m. Eastern only here on CNN.

A revealing admission from the man who tried to steer Senator John McCain into the White House. His campaign strategist now says he knew the senator didn't stand a chance. Two veteran political insiders take on this story.

Plus, the president's face on a pair of Nikes. Not so fast. The multimillion dollar bust that turned up a showroom full of counterfeits. And a text from a man to his wife ended their marriage. The court that granted a text message divorce, still ahead.

(COMMERCIAL BREAK)

BLITZER: To our viewers, you're in THE SITUATION ROOM. Happening now, a dangerous virus skips borders. Health officials link a swine flu bug that has infected eight people in the United States to the same virus that has killed dozens in Mexico. Can this outbreak be contained?

Federal aviation officials open the book on in-flight bird strikes on commercial airlines -- airplanes, some with disastrous outcomes. Could the new information ultimately make flying safer?

And a lighter mood on Wall Street, where the feds unveil their economic stress tests for banks. Ford performs better than expected and investors relax a little bit. The Dow Jones average ended the day up 115 points.

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

Campaign managers, strategists for both the Obama and McCain campaigns are now revealing some of the inside details of their race for the White House last year. We asked Brian Todd to take a closer look.

Pretty fascinating stuff for those of us who covered the campaign for all the millions of folks who watched the campaign.

BRIAN TODD, CNN CORRESPONDENT: This is the stuff that's great to see, behind the scenes, from even months later. The men who fought each other tooth and nail had a much more friendly encounter yesterday.

In their first joint appearance since the election, both men lifted the veil of what was going on behind the scenes in both campaigns. John McCain's senior adviser Steve Schmidt had a surprising comment of what his campaign was like at the very end. He likened it to throwing a football through a tire at 50 yards.

That wasn't exactly the message we got last year. Schmidt told the audience yesterday, quote: "We had a very challenging time in what was probably the worst year ever for Republicans."

Now when he was asked about the choice of Sarah Palin for the ticket, Schmidt acknowledged the campaign had considered Senator Joe Lieberman, John McCain's friend, the independent from Connecticut, but they were warned not to go there.

When his name was leaked to the press, the word came to us right from the party leaders that his name "would not be acceptable." That a quote from Steve Schmidt.

Now Obama campaign minister David Plouffe told the audience at the University of Delaware Palin was the Democrats' best fundraiser and motivator, saying: "When people were mad at her, they took it out on McCain."

Wolf, it's great to hear that stuff from behind the scenes, what they were thinking as they were going along here, and some of the key moments.

BLITZER: Well, and they also sort of revealed -- we also learned that the Obama team had some self-doubts early on as well.

TODD: That's right. Plouffe talked about his team understood what it was like for the campaign to see only a slim chance of eking out a victory having gone through that during the primary campaign.

Here is a quote: "We thought that nine times out of 10, Hillary Clinton would probably win the primary. If we made one big mistake, we would be out of the race."

Again, you know, fascinating insight, the Obama team, as flawless as that campaign seemed to be throughout, how close it was with Hillary Clinton and how close she was to winning that nomination throughout those early primary races.

And if they had one slip-up in their minds, they would have been gone.

BLITZER: It's interesting, both Steve Schmidt and David Plouffe, they went to the University of Delaware. They're graduates, so they went there together at the University of Delaware. And I see in that picture behind you our old friend Ralph Begleiter, who used to work here at CNN, he's one of the professors over there right now. He put it all together. All right. Thanks very much for that.

Let's talk about this and more with Democratic strategist and CNN political contributor Paul Begala, and Republican strategist and CNN contributor Ed Rollins.

What do you think about that revelation that -- I mean, a lot of us speculated that Joe Lieberman was really on the short list, but would it have erupted with a floor fight if Sarah Palin would not have been tapped by McCain, instead McCain going with his instinct and his old pal the Democrat, now independent, Joe Lieberman?

ED ROLLINS, CNN CONTRIBUTOR: Absolutely. There's no question that there would have been 300 or 400 delegates, the candidate I worked for, Mike Huckabee, who came in second in the primaries, would have walked off the floor and his delegates would have gone with him.

They basically thought they needed someone who supported the party and supported the foreign policy platform. Joe Lieberman obviously did on foreign policy, but it would have been a very significant blow to the Republican Party and the McCain candidacy.

BLITZER: If you listen to Steve Schmidt, who's being very, very blunt right now in the aftermath of all of this, Paul, it's pretty amazing to those of us who watched as closely as we did, what was the thinking really on the inside of the inside of that McCain campaign. PAUL BEGALA, CNN CONTRIBUTOR: Well, it's fascinating and I give Mr. Schmidt enormous credit, as well as Mr. Plouffe for coming forward and having these kinds of discussions.

You know, it's a fool who doesn't learn from his own defeats. And, you know, I've said this on the air before, Ed whipped my butt 15 years ago in a campaign we did in New Jersey. And then I had to go -- Ed came too, we went to Princeton, I think it was then and did a recapitulation of what had happened. I was struck when I think Ed's right, he knows his party, that the party would have exploded. But what I have always wondered, why not say Tom Ridge, a real Republican, a war hero like JohnMcCain, he's reasonably close to McCain personally former governor, very popular up there, I think when you go from Lieberman to George Parrish to Sarah Palin, you get the bends, it's just too big a swing.

WOLF BLITZER, CNN ANCHOR: I'll let Ed Rollins respond to that, but you forgot to mention that Tom Ridge supports abortion rights which also could have divided the Republican convention.

BEGALA: Not to be too cynical, but he could have switched. George Bush senior switched the day Reagan approached him about the vice presidency. I said gee, that was cynical. And he said, that's the power of prayer, son, the power of prayer.

ED ROLLINS, REPUBLICAN STRATEGIST: Ridge won a very key state. There's a lot of discussion about that, but the problem that would have happened is people saw Ridge as the future of the party. And he was not pro-life so there was great, great opposition to him. Part of John's problem was John did not have that conservative base, he was also suspect among that base. So by picking, whoever they picked they assumed was going to be the heir apparent, win, lose or draw to the nomination in the future. Ridge had a lot of objections.

BLITZER: Republican Congressman Peter King of New York, he's a ranking member, Paul of the house homeland security committee told Politico that republicans will go to war if the Obama administration actually starts prosecuting Bush administration officials who wrote those legal memos on enhanced interrogation techniques. "We would need to have a scorched earth policy and use procedural means to bring the place to a halt. Go to war." That's Peter King who's thinking about running in New York State for higher office.

BEGALA: Well, I like Peter King, I respect Peter King, I don't mean to hurt his chances if he runs, because he's a good man. But he sounds like a guy who thinks? There might be criminal prosecutions and that there might therefore have been criminal conduct. I disagree with the president about this, no one wants to look backward, but every investigation has looked backward. The last president came in, he did a nine-month investigation as to whether the offices were careered out. We had house hearings and all those all cleared him as well. But we do have some precedent of going back, and that was a pretty minor thing pardoning Mark Ridge, and this could be torture, this could be war crimes and if you swore an oath to uphold the constitution, I think that's a pretty important oath. BLITZER: Here's how Paul Krugman, the columnist for the "New York Times," the Nobel prize winning economist put it in his column today, he said, "What question really should do for the sake of the country is have investigations both of torture and of the march to war. These investigations should where appropriate be followed by prosecution, not out of vindictiveness, but because this is a nation of laws. We need to do this for the sake of our future."

ROLLINS: You can't blame lawyers who advised the president or the vice president who ultimately made the decision. If you're going to go after anybody, you're going to go after George Bush. I think the public voted and as much as Barack Obama won, George Bush and his side lost. I think there's a big agenda for the democrats. I think Peter King is right in that there will be a lot of animosity and sometimes these things don't repair. What I would say to you, Paul, you had a hard time and you guys handled it very, very well, a lot of distractions that kept you off your mine messages. At the end of the day, these things become a story and you've got so much to try and move forward in a very critical time that I would discourage anybody from wanting to do that.

BEGALA: Let me say in defense of Peter King, he did not like those investigations of Bill Clinton either. He's showing some consistency.

BLITZER: On Wednesday night, when we have our special, the national report card, the viewers are going to be able to rate the president and the congress. I'll start with you right now. Is the country safer right now as far as national security is concerned? What grade would you give the president of the United States, a, b, c, d or f?

ROLLINS: I think President Obama's put a very strong national security team around him, and I think he's made some correct decisions early on here that are keeping us safe.

BLITZER: I want you to give a grade to congress, specifically, the republicans in congress on national security, Paul, forget about the economic issues, the domestic issues, when it comes to national security, the republican leadership in congress, what grade would you give them?

BEGALA: I guess I would give them an incomplete. I would be very interested to see how they respond. This won't be partisan, I predict to Robert Gates the new pentagon budget. Where Secretary Gates is really trying to transform the military away from what he believes are cold war expensive weapons systems and into special operations, unmanned aerial vehicle, Navy S.E.A.L.s like who took out those pirates. Let's see both how democrats and republicans look at this need to recon form our military.

ROLLINS: The chairman for the subcommittee on appropriations for defense Mr. Murtha, than any republicans.

BLITZER: Thanks very much. And remember, terrorism, the economy, two of the important charges facing President Obama. Next Wednesday night we'll be marking his 100th day in office with a CNN national report card, the first 100 days, I'll be joined by the best political team on television and you'll be able to grade the president and the congress online at CNN.com, Wednesday night 7:00 p.m. eastern only here on CNN.

A special message reverberating around the world, we have new details of the Saudi woman whose husband divorced her by text.

Press Secretary Robert Gibbs is grading us, the white house press corps, what grade does he give them during this first 100 days? Stand by.

(COMMERCIAL BREAK)

BLITZER: A plot to launch an attack on one of the most recognizable buildings in Los Angeles. The attack never happened and some point to the harsh techniques of the 9/11 mastermind as the reason why but the timing revealed in a newly declassified memo isn't exactly matching up. We asked CNN's Ted Rowlands in Los Angeles to take a closer look.

Ted, what'd you find out?

TED ROWLANDS, CNN CORRESPONDENT: Well Wolf, Khalid Sheikh Mohammad wasn't even in custody when the plan to attack Los Angeles was this thwarted. Still his interrogation using waterboarding, et cetera, did provide information in a detail from the justice department to the CIA which a lot of people are pointing at as an example of waterboarding success.

(BEGIN VIDEOTAPE)

ROWLANDS: A 2005 justice department memo indicates that the waterboarding of Khalid Sheikh Mohammed, the alleged mastermind of 9/11, provided new details of a similar attack on Los Angeles. The memo says conventional interrogation methods had little effect on Mohammed, but advanced techniques led to the discovery of a Khalid Sheikh Mohammad plot to use Asian operatives to crash a hijacked airliner into a building in Los Angeles. That building turned out to be the library tower now called the U.S. bank tower, L.A.'s tallest and most recognizable downtown building. The alleged plan was that an al Qaeda cell would carry out the attack using money provided by Mohammad. President Bush detailed the plan in a 2006 speech saying a team of terrorists was going to use shoe bombs to get into the cockpit and was ready to strike.

FMR. PRES. GEORGE BUSH (R), UNITED STATES: Once the operatives were recruited, they met with Osama Bin Laden. And then began preparations for the west coast attack. Their plot was derailed in early 2002 when a Southeast Asian nation arrested a key al Qaeda operative.

ROWLANDS: For some, this seems to be evidence that waterboarding worked, possibly saving many American lives. Former Vice President Dick Cheney says there are other examples as well that are still classified.

(END VIDEOTAPE)

ROWLANDS: The reality here, Wolf, is the fact that Mohammad wasn't even in custody when this arrest was made and this plan was effectively dismantled, the investigation didn't save any lives at all. Still people are pointing at it as a possible success because they didn't learn a lot about the alleged plot.

BLITZER: Thank you for that, clarifying it well.

A text message is renewing a debate over women's rights in Saudi Arabia. A man texted his wife a few words and with that their marriage was over. A court there granted a text message divorce. CNN's Mohammed Jamjoom is following these developments. He's joining us now with the details.

People are going to be saying, wow, what's going on, Mohammad?

MOHAMMED JAMJOOM, CNN CORRESPONDENT: That's right, Wolf, even in a country where getting a divorce is an extremely easy thing for a husband to do, this case has made jaw's drop.

(BEGIN VIDEOTAPE)

JAMJOOM: Divorce by text message? It happened in Saudi Arabia. A husband sent his wife a message on his cell phone informing her the marriage was over, and a court then approved the divorce. According to local media, the wife, a Saudi woman in her 20s, got the text message from her husband who is in Iraq participating in what he described as jihad. Saudi English Language Daily Arab News reported that he sent the text message and then called two men who had witnessed his marriage and told them what he had done. The wife went to court and the judge finalized the divorce.

Saudi law permits husbands to divorce their wives just by saying the word I divorce you. But Saudi women cannot do the same. If they seek a divorce, they have the right to go to court and ask for one, but usually find it at best difficult. Amal Banten had been stuck in an abusive marriage, she went to divorce court with four witnesses who backed her story. She found little simply from the judge.

AMAL BANTEN, ABUSED WIFE: The man wants to divorce a woman, very easy, if the woman wants divorce, very difficult.

JAMJOOM: Women's rights activists say the system in Saudi Arabia is failing women, that they have rights according to Islamic law and no one tells them.

MAHA TAHER, WOMEN'S ISSUES CAMPAIGNER: These rights are not given to them by the judges or by the men, these are their rights by Islam.

JAMJOOM: Saudi King Abdullah is considered a reformer, but still in this conservative society, change is coming slowly. Especially in the realm of family law. (END VIDEOTAPE)

JAMJOOM: Now ever since I first heard of this case, I have been speaking to many women's rights active at this times. And they can't believe it's now become even simpler for a husband to divorce his wife. Wolf?

BLITZER: Just by sending a text message, wow. All right. Mohammed, thanks very much for that report.

They look like brand name items and that's the point, a multimillion dollar ripoff ring, why investigators say some of you are part of the problem. And what the first lady says the president can't -- the president can't leave the nation without, we'll tell you what it is right here THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Here's a look at some of the hot shots coming in from our friends at the Associated Press, pictures likely to be in your newspaper tomorrow.

In Russia, soldiers shout slogans as they practice for an upcoming military parade.

In Florida, state workers rally at the capital steps to protest proposed pay cuts.

In Britain, Prince William talks to children.

In Denmark, a baby albino kangaroo and his mother hop around the zoo.

Some of this hour's hot shots, pictures worth 1,000 words.

As President Obama nears his 100th day in office, many of the political analysts and correspondents who have been covering him are grading his performance. So I asked the White House Press Secretary Robert Gibbs to grade the white house press corps performance.

(BEGIN VIDEO CLIP)

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: I give them a strong a, Wolf, you guys watch every day, they're tough questions each and every day and they're looking at and trying to find the stories in this administration. I think the job that they have to do every day to get up and go to work, ask tough questions and cover for the American people the job that this administration is doing, I think they're obviously doing a tough job, particularly well.

(END VIDEO CLIP)

BLITZER: And you can hear interview with Robert Gibbs, his assessment of what's going on tomorrow when we count down to the CNN "National Report Card." We'll take a look at the first 100 days, accomplishments, failures, on issues that matter most to you, a SITUATION ROOM special tomorrow, 6:00 p.m. eastern, only here on CNN.

If you ever think about federal employees at all, it's unlikely the workers at the Office of Personnel Management would be at the top of the list. But that's one of the reasons why they were singled out by the first lady, Michelle Obama, who paid them a visit. Here's what she told them in her own words.

(BEGIN VIDEOTAPE)

MICHELLE OBAMA, FIRST LADY: Our nation is best served when the principles of excellence and diversity guide the government's hiring practices. It all starts there. When we uphold the merit system's principals that call for recruiting qualified individuals from all segments of society, when we demand that employees are treated fairly and equitably, when employees are paid equally for equal work; when we do all this, we make government stronger. It is the cornerstone of a strong and vibrant democracy.

Barack Obama cannot make the changes that we hope without strong employees who are motivated and excited and enthusiastic. The next several years are going to be hard work for all of us. We have to work together, we have to care about one another. That has to start here in this office, if it's going to emanate through the entire federal agency.

(END VIDEOTAPE)

BLITZER: The Office of Personal Management, the personnel management, the first lady's latest stop as she visits various government agencies in Washington to thank the workers for their contributions.

Let's go back to Jack Cafferty for the Cafferty file. Very nice of her to do that. I don't remember a time when a first lady has gone from agency to agency, day after day and thanks the government workers, they're doing a good job.

JACK CAFFERTY, CNN CORRESPONDENT: Well, I don't know if they're doing a good job, but I bet they enjoy hearing a pat on the back from somebody who lives in the white house once in a while. And she is just so gracious and so appealing. Who knows, maybe she'll be president one day.

The question this hour, is it a mistake for some republicans to try to brand democrats as socialists?

Linda writes from Kentucky, "It's precisely why I have no faith at all in the Republican Party. They keep trying to appear to their knuckle dragging base. I notice Meghan McCain making the rounds trying to yank the party back to some semblance of reason. More power to her."

Bruce in St. Paul writes, "There are problems with this strategy. First, you don't associate socialism with any particular evil regime. Many don't even know what it means. Others think we could use a little socialism around here. Secondly, they're using it as a defense against health care reform and the more fair tax system without offering any intelligent alternatives."

Reed in Washington says, "Politically it will not pay off for the republicans. It will only serve to rally a portion of the base that doesn't require it, while alienating moderate republicans such as myself."

Kerry says, "It is much, much worse than the perceived socialism. My guess is they're headed, thanks to Obama, on a road to fascism and/or communism." Oh, Kerry, lighten up.

Charles in Oregon, "Jack, the republicans are using the label socialist, fascist, et cetera, to raise fear in the hearts of America. If it sticks, then it's done and ready to be used to fool the people of the U.S. Unfortunately, they're showing how trivial they are, because they have no new ideas of their own."

Scott writes, "The republicans are wrong. There are way more than 17 socialists in congress."

And Kim in Nebraska says, "Probably, but give them enough rope and they'll hang themselves. I believe they almost have enough already."

If you didn't see your e-mail here, you can go to my blog, CNN.com/Caffertyfile.com. Look for yours there among hundreds of others. You would vote for Michelle Obama if she ran.

BLITZER: She's still a very young woman.

By the way, we'll show some more behind the scenes photos, "Time" magazine had some exclusive access. The first lady, the little girls, the president, you'll want to see this.

CAFFERTY: I do want to see it.

BLITZER: Bogus Obama memorabilia, busted.

CHARLES HYNES, BROOKLYN DISTRICT ATTORNEY: Frankly, disrespectful to have the president of the United States depicted on this sneaker, just absolutely disgraceful.

BLITZER: And that's just part of a $20 million counterfeit operation. We have details of the sting and what else investigators found.

Plus, a deadly new strain of flu cropping up in at least two U.S. states, and that has health officials very concerned.

(COMMERCIAL BREAK)

BLITZER: Trendy hats, shoes, sporting the president's face. Millions of dollars in knockoffs that dealers were buying to -- trying to sell to customers. Investigators in New York City say they broke up a massive counterfeit ring. Let's go to CNN's Mary Snow. She's got the details.

Mary?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, six people were arrested, this after a year and for investigators in New York, cracking down on counterfeits, they uncovered a first.

(BEGIN VIDEOTAPE)

SNOW: It's labeled Nike and features the president's image, but it's counterfeit and part of an estimated $20 million of fake goods seized in a sting operation in New York.

HYNES: Frankly disrespectful, to have the president of the united states, depicted on this sneaker. Just absolutely disgraceful.

SNOW: Prosecutors say all these fake ripoffs of brands like Coach, Polo and Doony and Bourke are traced to China. They were unaware that an investigator was posing as a dealer, bringing in people from Nike to identify fakes. There may be up to 18 other facilities like this one just in this area and the Brooklyn DA says the counterfeiters aren't the only ones to blame.

HYNES: We're responsible and we the public are responsible for this stuff. Because if the public was careful about from whom they purchase, you wouldn't have this kind of industry.

SNOW: Counterfeits typically wind up selling on streets, but investigators say they are making their way into retailers as well. The U.S. chamber of commerce estimates that it costs the U.S. up to $250 billion in lost sales each year, and 750,000 jobs. Organizations trying to crack down on counterfeits say the problem is only growing.

BOB BARCHIESI, INTL. ANTI-COUNTERFEITING COALITION: This economic landscape where industries are hemorrhaging jobs, I mean, it's just so widespread, and it's more pronounced with industries having to spend money on combating this problem, as well as law enforcement, whose resources are stretched thin as it is.

(END VIDEOTAPE)

SNOW: And, Wolf, one other problem. Investigators we talked to today say the counterfeiters have become so sophisticated, it's getting more difficult to identify the fakes.

BLITZER: Thank you so much, Mary Snow.

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

Happening now, a declaration of political war, republicans accusing democrats of crossing a dangerous line to help the president promote health care reform.

Plus, slaughter in Baghdad, a sudden spike in violence renews fears about Iraq's future and whether U.S. troops will be able to withdraw as planned.

And a growing danger at some of America's busiest airports. Secret records finally are released on bird strikes, weeks after the emergency landing on the Hudson River.