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President Obama Hammered by Dems on Terror; President Obama vs. Dick Cheney; Iran: 'Ticking Clock Must be Stopped'; Republicans Still Not Appearing to Get Along Well Together

Aired May 20, 2009 - 15:59   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now, President Obama is taking hits from all sides for his terror-fighting strategy. He's just gotten hammered by some fellow Democrats, and now he's bracing for a showdown with Dick Cheney.

We're standing by to hear from the president live this hour.

Also, a new warning that Iran may be launching an arms race in the Middle East. We're tracking a missile test and the long-range danger to the world.

And a 13-year-old-cancer-patient-turned-fugitive from chemotherapy. He's on the run with his mom and authorities say time is running out to try to save his life.

I'm Wolf Blitzer in CNN's command center for breaking news, politics and extraordinary reports from around the world.

You're in THE SITUATION ROOM.

Right now, President Obama is trying to move forward with his message of change at a time when even some members of his own party are standing in his way. Just a short time from now, he'll be signing a bill designed to help families save their homes and another bill to give prosecutors more tools to fight financial fraud.

We'll have live coverage of that coming up.

Tomorrow, the president will try to take control of the red-hot debate over his anti-terror policies, scheduled to give a major address outlining his plan for closing the Guantanamo Bay prison camp, a plan derailed by the U.S. Senate today.

Let's go to Capitol Hill for more on that Senate vote and why Democrats delivered an overwhelming slap at their own president.

Let's go to our Senior Congressional Correspondent Dana Bash.

Wow, Dana. What's going on?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, what's going on is that the president's fellow Democrats and the FBI director are making his promise to close Guantanamo Bay much more difficult.

(BEGIN VIDEOTAPE) BASH (voice-over): No terror suspects at Guantanamo Bay may be released, transferred or imprisoned anywhere in the U.S. That directive passed the Senate by a stunningly lopsided margin, 90-6. A rebuke to the president and a stark indication of how uneasy this explosive issue makes lawmakers, even Democratic leaders like Byron Dorgan.

SEN. BYRON DORGAN (D), NORTH DAKOTA: Because I'm not very interested in transferring detainees from Gitmo to North Dakota. I'm sure many of my colleagues feel the same way. But first, let's see what kind of a plan this president proposes, and then we'll move forward.

BASH: FBI Director Robert Mueller appeared to affirm senators' concerns, telling Congress bringing detainees to the U.S. does pose risks, even if they're behind bars.

ROBERT MUELLER, FBI DIRECTOR: The concerns we have about individuals who may support terrorism being in the United States run from concerns about providing financing to terrorists, radicalizing others.

BASH: Still, in the raging battle over what to do with Guantanamo prisoners, some lawmakers say they have no problem putting them in federal prisons.

SEN. CLAIRE MCCASKILL (D), MISSOURI: As a former prosecutor, I am aware of the kind of people that we put behind bars in this country. They'd give terrorists a run for their money in terms of being bad, bad, dangerous people.

UNIDENTIFIED MALE: Good morning. Senator Nelson's office.

BASH: But in Nebraska Democrat Ben Nelson's office, most callers say...

SEN. BEN NELSON (D), NEBRASKA: Not to bring them to Nebraska. And so I think that may be true almost everywhere.

BASH: Nelson admits there is a "not in my back yard" fear factor at play, but says it's just inappropriate to imprison and try Guantanamo suspects in the federal system.

NELSON: I don't think the American people will stand for bringing a bunch of detainees for prosecution over here. And it's, in many ways, that simple.

(END VIDEOTAPE)

BASH: So, at this point, lawmakers have denied the president the $80 million he wants to begin closing Guantanamo Bay, and they have also effectively blocked the transfer of those prisoners to U.S. soil. But there is one more move that Republicans have that they're pushing on the Senate floor, and that is to require the president to come up with a threat assessment for every one of the 240 detainees currently at Guantanamo Bay. That could be something that could tie the president's hands on this even further -- Wolf.

BLITZER: And we'll see what the president says about all this in this big speech he's going to be giving tomorrow, Dana. Thanks very much.

There are numerous notorious criminals and convicted terrorists already serving jail in the United States in some of those Supermax facilities.

Abbi Tatton is here to outline what is going on, because there are some bad guys already serving time in a lot of these jails.

ABBI TATTON, CNN INTERNET REPORTER: And we're looking specifically at the Supermax facility, which is 45 mile as away from Colorado Springs in Colorado.

Currently, 465 inmates are housed, and they contain some of the most notorious household names: the al Qaeda terrorist Zacarias Moussaoui is there. Richard Reid, the shoe bomber. Ted Kaczynski, the Unibomber. The list goes on -- Terry Nichols, Oklahoma City conspirator.

Those are the people, the names that are most recognizable. Ninety-five percent of the inmates here have been transferred here from elsewhere around the country because they are the most violent, they are the most escape-prone prisoners, and this is the place that they are being housed to keep them in.

They spend almost 23 hours a day in their own cell, 86 square feet, a window just four inches wide that overlooks another part of the facility, not the outside world. And to keep people out, strong measures in control there as well, like cables, large cables that are strung over outside areas. That to specifically prevent attacks from the outside, specifically a helicopter deterrent there at Supermax.

BLITZER: Yes, it's a tough place in Florence, Colorado.

All right. Thanks very much, Abbi, for that.

Look for President Obama to be called on the carpet once again tomorrow by one of his toughest Republican critics, the former vice president, Dick Cheney. He's scheduled to give a speech on "Keeping America Safe" -- that's the title -- on the same day the president of the United States gives his major address about the war on terror.

Our Senior Political Analyst Gloria Borger is here, along with our Chief National Correspondent John King, the anchor of CNN's "STATE OF THE UNION," which airs every Sunday morning.

Why has the president of the United States decided to give this big speech tomorrow?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well, we just heard what Dana Bash said -- he's got problems on Capitol Hill with its plan for dispersing these detainees. He's got problems on the left, in his party. And at the White House today, they were briefing human rights groups about just what this president plans to do about Guantanamo because he is a bit on the defensive right now.

BLITZER: This White House is a pretty savvy, politically-charged White House. Rahm Emanuel, the White House chief of staff, spent a lot of time up on Capitol Hill. Were they blindsided by this opposition, not from the Republicans so much, but by fellow Democrats?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: That's what makes it so stunning, because even the Democrats, the very senior Democrats who are now trying to help the White House figure this out, say, what happened? Some of those Democrats on Capitol Hill blame themselves. They say they got caught up in the early days.

Remember, they all wanted, Wolf, the president to sign that executive order announcing the shutdown of Gitmo. They wanted that. They never thought through what would come next, and they put the cart before the horse.

So, now the Democrats out there have told the White House you left us in an untenable position, we cannot go home and do this. And it comes on the heels of more Democrats, 51 in the House, saying no to the money in Iraq and Afghanistan. So they say they don't think this president has a plan for Afghanistan, they don't know he doesn't have a plan for what to do with the detainees, so they're essentially stepping back and giving the president a chance to reset things.

BORGER: And that's where Dick Cheney comes in, because he has really focused this debate for the Republican Party. You know, Dick Cheney's not very popular, but that doesn't mean that he can't leave this debate. And what he's done is he's giving the Republicans their talking points on all of this. And they've taken it.

BLITZER: It's going to be fascinating. The president, I think, speaks at 10:00 a.m. Eastern tomorrow morning. The former vice president speaks at, what, 11:00 or 11:30 a.m. Eastern, right here in Washington?

BORGER: What a coincidence.

KING: And coincidence, what the Cheney people are saying is that they scheduled their event before the president scheduled his. So they say they're not reacting to the president.

And Wolf, you mentioned, you know, what is the vice president going to say? I just spoke to someone very close to him who said he will stick to the message that he has said that reversing these policies is a mistake. Here's one line just from the announcement of this speech, one of the questions Mr. Cheney is due to address. "Will inhibiting these procedures" -- the interrogation procedures" -- cost more American lives?"

So, he will continue to stir the pot, saying that this president's decisions are, in his view...

(CROSSTALK)

BLITZER: But in our brand new CNN/Opinion Research Corporation poll, we asked this question: "How is President Obama handling terrorism?" Sixty-one percent approve, 35 percent disapprove. This was actually from March, this poll, but I suspect the numbers aren't all that different right now.

BORGER: You know, but this is personally for President Obama, which is why he's going out there again tomorrow. The Democratic Party itself, you know, may have more of a problem than President Obama right now. He's personally popular, but the Democrats have really got some issues right now on this. And so, you know, they're trying to backtrack and distance themselves from him, particularly on Guantanamo.

KING: And Democrats in Congress would tell you they see some slippage in those numbers, specifically -- not on the on the big picture question, but specifically on the Gitmo question, that when they are going home, they being told by their constituents, you go back to Washington and make sure none of those people come here.

BORGER: And I'm told by a source close to the former vice president that what really set him off on all of this -- first, he spoke with John King and said we're less safe -- but what really set him off on all of this was the notion that Obama kind of flip-flopped on the question of whether to prosecute those attorneys in the Justice Department. He feels very strongly you shouldn't criminalize their decisions.

BLITZER: Right. Well, we'll have coverage of both of those big speeches tomorrow.

We're going to be speaking later here in THE SITUATION ROOM today with the Republican leader in the House, John Boehner. He's got some strong thoughts on all of this as well.

Guys, thanks very much.

Let's check in with Jack Cafferty right now for "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: California has got serious money problems. Boy do they.

Voters rejected five out of six propositions that were meant to pull the state out of a deepening budget crisis. The measures were a combination of spending cuts, higher taxes, and changes in borrowing and funding. The only proposal that passed would prohibit pay raises for lawmakers during deficit years.

With the failure of the rest of this stuff, though, it's now estimated that California's budget deficit could balloon from about $15 billion to $21 billion or more. Governor Schwarzenegger had said that if these measures failed, he would have to make drastic cuts.

This could include shortening the school year by a week and a half; cutting tens of thousands of education jobs; eliminating health insurance for 250,000 kids; laying off 1,700 firefighters; withholding $2 billion from local governments -- that could mean cuts in local police forces and other services -- and freeing almost 40,000 inmates from San Quentin prison. The results of yesterday's special election mark a new low for the Republican governor, Schwarzenegger, who had promised to restore fiscal stability to California.

Meanwhile, the three major credit rating companies have reduced the grade on around $60 billion of California bonds to the lowest level, lowest rating of any U.S. state. There's no question the recession and record deficits are causing critical damage to California's economy. And think about this: If California was a standalone country, it would be the eighth largest economy in the world.

So the question is this: What would it mean if California goes bankrupt?

Go to cnn.com/caffertyfile and you can post a comment on my blog -- Wolf.

BLITZER: It's amazing what's going on around the country, especially in California, Jack. Thanks very much.

Iran test-fires a missile, and simmering fears about its nuclear threat explode. Just ahead, the U.S., Israeli and European targets that Tehran may have its sights on.

And in our "Strategy Session," Colin Powell is now firing directly back at Dick Cheney in the battle for the heart and soul of the Republican Party.

And a 13-year-old cancer patient on the run with his mom and refusing chemotherapy. Now the boy's father is speaking out about where they may be.

(COMMERCIAL BREAK)

BLITZER: Israel's deputy foreign minister says Iran is "playing with fire." Another Israeli expert simply calls Iran troublemakers.

There's widespread reaction and concern after Iran announced it has test-fired a new missile. Among the biggest concerns, the missile could strike Israel, parts of Europe, even U.S. military bases in the Middle East.

Tom Foreman is getting ready to map out the range. He's standing by.

But first, let's go to our Pentagon correspondent, Barbara Starr. She's got the news.

We woke up to the news this morning. It wasn't pretty, Barbara.

Well, it wasn't Wolf.

U.S. officials say the initial indications are that the test was successful. But the question is, what are Iran's intentions now?

(BEGIN VIDEOTAPE)

STARR (voice-over): With Iran's test of this medium-range missile, the Sagil (ph), Tehran moves closer to its goal of fielding (ph) an arsenal of hundreds of ballistic missiles. Iranian President Mahmoud Ahmadinejad, who is running for reelection next month, told a campaign crowd the missile has advanced technology. The Obama administration doesn't argue the point.

GARY SAMORE, PRESIDENT, ADVISER ON ARMS CONTROL: I see it as a significant step forward in terms of Iran's, you know, capability to deliver weapons.

STARR: The big concern? The missile could have a 1,200-mile range. That means it could reach Israel and parts of southern Europe.

But according to the top White House adviser on arms control, all of that could backfire on Iran.

SAMORE: I think it actually helps us in terms of making the case to countries like Russia, which had been skeptical in the past about whether Iran really poses a threat.

STARR: The missile uses solid fuel. That means once on the launcher, it's 100 percent ready to fire. There's little warning time and it's easier to move around.

But where is Iran, which is operating under heavy sanctions to keep it out of the weapons business, getting all the help?

DAVID ALBRIGHT, INSTITUTE FOR SCIENCE & INTERNATIONAL SECURITY: I would assume they're getting help from North Korea. I know North Korea is in Syria to help them, so I assume they also have been helping Iran develop solid fuel technology.

(END VIDEOTAPE)

STARR: Now the question is really, Wolf, what is Iran really up to? The Obama administration is still committed to trying to open that dialogue with Iran, but these kinds of tests may push that whole idea further down the road -- Wolf.

BLITZER: Barbara Starr at the Pentagon.

Thanks very much.

Tom Foreman is here with me over at our Magic Map.

Let's take a closer look, Tom, at where this missile, and potentially missiles, where they could potentially strike.

TOM FOREMAN, CNN CORRESPONDENT: That's a good thing to look at, Wolf.

This is the facility itself as we're talking about it. You saw Tehran off over there...

(CROSSTALK)

BLITZER: This is in Iran, right?

FOREMAN: Yes, this is the main facility in Iran that we're talking about.

If you move in, this is sort of the command center right up in here. There's a more recent photograph that indicates there may now be a mosque right over here, which, is as you know, politically complicates things.

Down here is one of the launching pads they've used in the past. And then over this way, there's some other launching pass that have gone in over here that we don't yet have satellite images of yet, but this is a fairly large facility that they put in out in this area.

But more importantly, Wolf, is what you just raised a minute ago, and that's when you widen out to the bigger picture, 1,200 miles, pretty far. And you have a sense of that. That's, what, Dallas to Washington, something like that? It's a pretty big range.

Look at this. If we turn it on over here, we see that is how much we're talking about in terms of how far it would reach. You can see this is Pakistan over here, into India, all of Afghanistan, Iraq, Saudi Arabia, Syria, Turkey, Jordan. Wolf, you noted not all of these are big military gatherings of people.

BLITZER: But these are -- with the American flag over here, these are where U.S. troops, basically, whether in Iraq or Afghanistan, are stationed right now.

FOREMAN: Right, some sort of stationing. And as you pointed out a little while ago, some of these may be small, like Marine guards. Not a lot of people.

But we do know this -- look at Iraq over here. We have about 140,000 troops in this area right now, all deep within the range.

Over here in Afghanistan, we have 30,000 now, going to build up to at least 60,000 over there, as we pull some people out over here. In any event, you've got a 250,000 or so troops, something like that, or at least 200,000, all well within the range of this new rocket, Wolf. That's why Washington is paying so much attention, and the Pentagon, too.

BLITZER: For a good reason. All right, Tom. Thanks very much.

A vexing question: Why did the U.S. government burn bibles in Afghanistan?

And the fate of a presidential suit maker hangs in the balance. The company that's dressed President Obama could be suited for financial ruin. What's going on?

We'll tell you right here in THE SITUATION ROOM.

(NEWSBREAK)

(COMMERCIAL BREAK)

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

Happening now, lost. Missing right now is some private information including Social Security numbers of former White House staff and protected Secret Service information. It's a critical breach from Bill Clinton's administration.

How could this happen from the agency that's supposed to protect national treasures? Stand by.

Republicans continue their assault on the House speaker, Nancy Pelosi. The new punishment Newt Gingrich is urging for her has rarely ever happened.

And a first lady versus the pope. Wait until you hear what France's Carla Bruni said about Pope Benedict that some are calling a scathing attack.

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

All right. You're looking at live pictures coming in right now from the East Room of the White House. The president of the United States getting ready to walk in there. The guests have already been assembled.

He will sign legislation into law designed to help American homeowners deal with the possibility of foreclosure. Once the president gets there, we're going to have to hear what he has to say. This is legislation potentially that could affect millions and millions of people.

In the meantime, a bill that will affect virtually every single American is ready for President Obama's signature as well. The House of Representatives overwhelmingly passed sweeping new rules regarding credit cards. The vote, 361-64.

They're designed to protect people from what some would consider abuse from the credit card companies, but there might be a twist. Could it penalize many of you who pay your credit card bills on time?

We asked our Congressional Correspondent Brianna Keilar to take a closer look at this part of the story.

What are you finding out, Brianna?

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: Well, Wolf, as you know, some opponents say good customers could see some of the perks they enjoy from their credit cards disappear. For instance, low interest rates, free balance transfers, and frequent flyer mile programs.

(BEGIN VIDEOTAPE)

KEILAR (voice-over): Supporters of the Credit Cardholders' Bill of Rights say plastic just became a little less perilous.

REP. CAROLYN MALONEY (D), CHAIRWOMAN, JOINT ECONOMIC COMMITTEE: Today is a victory for every American who holds a credit card.

KEILAR: But credit card companies and some Republicans insist if risky customers can't be penalized, others will pay more, including those who pay in full, on time, every month.

REP. JEB HENSARLING (R), TEXAS: They will be forced to bail out those who don't. They will end up paying annual fees. They will end up paying higher interest rates. They will see such things as member rewards programs contract.

KEILAR: Opponents of the credit card changes say qualifying for a credit card will be more difficult, taking away a financial lifeline during a bad economy. But money expert Clark Howard disagrees, calling the bill a grand slam for consumers.

CLARK HOWARD, HLN MONEY EXPERT: Historically, when financial products are easier to understand, they actually become cheaper, not more expensive. So it's way too early to make an assumption that because we're going to pinch credit cards' abilities to rip people off, that they're going to turn around and rip everybody else off more than they were already.

(END VIDEOTAPE)

KEILAR: But keep this in mind. This bill won't go into effect until nine months after President Obama signs it.

And, facing record losses, credit card companies have been hiking interest rates lately. And they have now until February until those new rules would kick in, Wolf, to continue to do that, if they choose.

BLITZER: All right. We will watch very closely, by the way. Thanks, Brianna -- Brianna Keilar reporting.

As for when these new credit card rules might be actually signed into law, the White House says President Obama will do that on Friday at a ceremony over at the White House, this coming Friday. And, as Brianna just mentioned, the credit card rules would take effect in February of next year.

Another story we're following right now affecting your finances, some of you say those 1-800 bank numbers that are supposed to help homeowners resolve problems are actually causing problems.

CNN's Thelma Gutierrez is joining us. She has more on this story for us.

(BEGIN VIDEOTAPE)

COMPUTER VOICE: For operator assistance, press zero.

COMPUTER VOICE: Please remain on the line.

THELMA GUTIERREZ, CNN CORRESPONDENT (voice-over): Megan Cavallari knows the words by heart.

COMPUTER VOICE: We're currently experiencing extremely high call volume.

GUTIERREZ: Her home is in foreclosure. For the past eight months, the single mother has called her bank repeatedly, trying to get help.

MEGAN CAVALLARI, HOMEOWNER FACING FORECLOSURE: Every report says the banks are helping and everything on the radio says they're helping. And you call and call and call and call, and no one -- you're not even getting a voice anymore. You're...

COMPUTER VOICE: Your estimated hold time is now 18 minutes.

YVONNE MARIAJIMENEZ, ATTORNEY: Is there a supervisor or somebody in a decision-making division?

UNIDENTIFIED FEMALE: There's really no way around those procedures.

UNIDENTIFIED FEMALE: These are all people losing their homes.

GUTIERREZ: Yvonne Mariajimenez is an attorney who works with One L.A., a nonprofit organization that helps families facing foreclosure and tracks how far they're getting with their banks. She says the calls are going into black holes.

MARIAJIMENEZ: Overwhelmingly across the country, what homeowners are faced with is a 1-800 number. And they don't talk -- they don't see anyone in person. There's no office to walk into. On the 1-800 number, you're not talking to loss-mitigation folks.

GUTIERREZ (on camera): Who are you talking to?

MARIAJIMENEZ: You're talking to intake people or people in community relations.

GUTIERREZ (voice-over): Not the people who have the power to change your loan.

UNIDENTIFIED FEMALE: No, the underwriters don't talk on the phone. We don't give their names out. And they don't speak on the phones at all.

GUTIERREZ (on camera): The banks say they're overwhelmed with all the calls. Some calls get sent to the homeowners HOPE NOW Web site that refers them to a hot line funded by the lending industry as a resource to provide free counseling and foreclosure-prevention help.

FAITH SCHWARTZ, EXECUTIVE DIRECTOR, HOPE NOW: Our goal is to have separate 800 numbers or 888-995-HOPE, separate 800-numbers for services that are on our Web site. And services are working hard to triage those calls and help borrowers.

GUTIERREZ (voice-over): But, in the end, the homeowner is sent right back to the bank, where Megan Cavallari says her frustrations began.

CAVALLARI: You call them. And after being on the phone with them, they send you to an automated lady. So, they send you to a Web site after you have been on the phone for an hour.

GUTIERREZ: Cavallari, a music composer, says the process of trying to save her house and her $92,000 down payment wore her out. She filed bankruptcy, and she and her daughter are moving out.

Thelma Gutierrez, CNN, Los Angeles.

(END VIDEOTAPE)

BLITZER: And a reminder: We're standing by to hear from the president of the United States. He's getting ready to walk into the East Room of the White House there. There, you see some live pictures. He's about to sign legislation into law to protect homeowners. We will hear what he has to say. That's coming up.

Some Christian groups are furious at the U.S. military over a stunning act in Afghanistan: Bibles burned. What happened?

Also, information from the Clinton era missing -- we're investigating the lost records. Who dropped the ball?

And a Cinderella story without a happy ending -- a young star of the hit movie "Slumdog Millionaire" is left homeless in India.

(COMMERCIAL BREAK)

BLITZER: Remember, we're waiting to hear from the president of the United States. He's going to be in the East Room momentarily. We will go there shortly.

The U.S. military, meanwhile, is caught in a raging controversy right now over Bibles that were burned. Some Christian groups are furious that Americans were involved in what they consider to be an unthinkable act in the midst of a war against religious extremism in Afghanistan.

What is going on? We asked our Brian Todd to dig into this story and take a closer look.

What is going on, Brian?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, this speaks to the very delicate and dangerous balance that U.S. commanders face in Afghanistan, books that are holy to the majority of U.S. servicemen burned in the name of protecting them.

(BEGIN VIDEOTAPE)

TODD (voice-over): Bibles written in Pashto and Dari, the two most common Afghan languages, Bibles sent by a church to a U.S. soldier in Afghanistan, Bibles that were later burned by the U.S. government. These holy books were confiscated about a year ago at Bagram Air Base in Afghanistan. An independent film aired by the Al-Jazeera network had shown evangelical soldiers worshipping at Bagram and talking about ways to share their faith.

(SINGING)

TODD: But military rules forbid troops of any religion from proselytizing while in Afghanistan. And U.S. officials were concerned that the Bibles would be used to try to convert Afghans to Christianity.

A U.S. military spokesman tells CNN that kind of religious outreach could have provoked a violent backlash against Americans in this devoutly Muslim nation.

But in trying not to offend the Muslim population there, the military seems to have offended some Christians, the president of a Christian group called Open Doors USA quoted as saying, "It really should shake the core of every Christian to realize that Bibles are being burned."

A military analyst who is also a Pentagon adviser agrees.

COLONEL ROBERT MAGINNIS (RET.), MILITARY ANALYST: There's no need to burn the Bibles. They could have been shipped back. Just imagine if we were to, you know, the same United States military were to take a bunch of Korans and burn them. I can imagine the -- the ramifications across the world.

(END VIDEOTAPE)

TODD: Why couldn't those Bibles have been shipped back? Well, a military spokesman tells us they worried that the church that had sent them would then turn around and send them to another organization in Afghanistan, giving the impressions that they had been distributed by the U.S. government.

So, the decision was made to throw the Bibles away. And, in war zones, U.S. troops are required to burn their trash. A U.S. military spokesman says they understand the sensitivities of Christians. They say this was not an easy decision, but they had to do this for force protection -- Wolf.

BLITZER: Is there any indication, Brian, these Bibles, or any of these Bibles, were actually circulated among the local population?

TODD: No. A Pentagon official tells us they have no evidence that these Bibles made it off the base. The soldier who had gotten them didn't know that he was not supposed to hand them out. He was quickly corrected by a chaplain there, who confiscated the Bibles. As far as they know, they never made it out of Bagram.

BLITZER: All right, Brian Todd, thanks very much.

All right, let's head over to the White House right now. In the East Room, the president of the United States is speaking. He's getting ready to sign into law legislation making it easier for people to get homes and deal with foreclosures.

Let's listen in to the president briefly.

(JOINED IN PROGRESS)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: And I want to thank him and Senator Richard Shelby...

(CHEERING AND APPLAUSE)

OBAMA: Now, Chris and Richard Shelby over on the Senate side and then, on the House side, Chairman Barney Frank and Representative Maxine Waters did a great job.

(CHEERING AND APPLAUSE)

OBAMA: And I want to thank Senators Patrick Leahy and Chuck Grassley, as well as Representatives Conyers and Bobby Scott for leading the way on the fraud enforcement bill.

Now, these two laws...

(CHEERING AND APPLAUSE)

OBAMA: These two laws, together with the comprehensive credit card reforms that I hope to sign later this week, represent fundamental change that will help ensure a fair shake for hard-working Americans.

And I think it's important for people to understand the significance of this week. This has been one of the most productive congressional work periods in some time. And I am grateful to have Harry Reid here, as well as Nancy Pelosi, who could not be here, and the other key members of Congress for assigning these measures the urgency that they deserve and that the times demand.

Now, let me talk a little bit about the housing bill. The Helping Families Save Their Homes Act advances the goals of our existing housing plan by providing assistance to responsible homeowners and preventing avoidable foreclosures.

You know, last summer, Congress passed the Hope for Homeowners Act to help families who found themselves underwater as a result of declining home values, families who owed more on their mortgages than their homes are worth.

But too many administrative and technical hurdles made it very difficult to navigate, and most borrowers didn't even bother to try. And this bill removes those hurdles, getting folks into sustainable and affordable mortgages, and, more importantly, keeping them in their homes.

And it expands the reach of our existing housing plan for homeowners with FHA or USDA rural housing loans, providing them with new opportunities to modify or refinance their mortgages to more affordable levels.

And because many responsible renters are being unfairly evicted from homes that go through foreclosure because the owners haven't been paying their mortgages, it requires banks to honor existing leases or provide at least 90-days notice for renters on month-to-month leases.

And because far too many Americans go homeless on any given night, this bill provides comprehensive new resources for homeless Americans, focusing specifically on families with children, the fastest-growing segment of the homeless population.

So all together, it's a bill that builds on the housing plan we already put into action to stabilize the housing market and stem foreclosures. And because of that plan, all of you should know that interest rates are down, refinancings are up, and Americans who participate can save up to $2,000 a year, in effect, a $2,000 pay cut per family -- tax cut. Excuse me.

They don't need pay cuts.

(LAUGHTER)

BLITZER: All right, the president of the United States explaining the legislation he is now signing into law, making it easier for folks to get mortgages, to deal with foreclosure problems. We're going to continue to monitor the president's remarks and go back there when appropriate.

In the meantime, there's other important news we're following right now, including a former speaker vs. a current speaker. We're talking about Newt Gingrich and Nancy Pelosi. He says she should pay, the former House speaker saying the current speaker must be punished, after he claims against the CIA. But Pelosi's backers are circling the wagons around her.

And a mother takes her son -- her sick son on the run. She does not want the son to undergo a common and effective cancer treatment. Now a massive search is under way.

(COMMERCIAL BREAK)

BLITZER: Former Secretary of State Colin Powell has now responded to his former boss, the former Vice President Dick Cheney.

Let's talk about this and more in our "Strategy Session."

Joining us, the Democratic strategist Jamal Simmons, and the Republican strategist Karen Hanretty.

Guys, thanks to both of you for coming in.

Colin Powell saying this, and I will read it to you: "Rush Limbaugh says, get out of the Republican Party. Dick Cheney says he's already out. I may be out of their version of the Republican Party, but there's another version of the Republican Party waiting to emerge once again." Karen, explain what's going on...

(LAUGHTER)

BLITZER: ... amidst your fellow Republicans. And I include Colin Powell as a fellow Republican, because he says he's still a Republican.

KAREN HANRETTY, REPUBLICAN STRATEGIST: Yes.

Well, and, actually, I think it's really interesting what Colin Powell is doing. This is not a man who has really identified himself necessarily with Republican politics. It looks like he wants to expand the discussion of what it means to be a Republican. That's what's happening in this party right now.

I think you have got a real struggle for identity going on. And he's almost this new generation of country club Republicans, right, who are -- you know, look, they're socially a little bit more liberal. And I think they're really trying to expand the conversation.

BLITZER: Anything wrong with trying to expand the Republican Party like that?

HANRETTY: I actually don't think there's anything wrong with trying to expand the discussion.

And, look, we have only been out of the White House for, what, a little over 100 days, right? So, these discussions are going to take some time. I think it's healthy. There's plenty of time for us to work this out.

BLITZER: And it's fascinating to me as someone who covered Colin Powell when he was chairman of the Joint Chiefs of Staff during the first Gulf War, back in 1991. His boss was the then Defense Secretary Dick Cheney.

(LAUGHTER)

BLITZER: And then flash forward to -- to the Bush administration, the vice president, the secretary of state, and now they're in the midst of this very, very public feud.

JAMAL SIMMONS, DEMOCRATIC STRATEGIST: Well, there are some stories that say they weren't really so tight when they worked together a few years ago in the Bush administration -- the first Bush administration.

But you know what is interesting? It's almost like they're forcing Colin Powell to become, whether he wants to be or not, sort of become the Al From or Bruce Reed of the Republican Party, and maybe the -- who is head of the Democratic Leadership Conference.

(CROSSTALK)

BLITZER: Which is -- which are the centrist Democrats... (CROSSTALK)

BLITZER: ... who are often at odds with the more liberal Democrats.

SIMMONS: Absolutely.

And, in the 1980s, they are the ones who really -- in the early '90s, they are the ones who sort of brought the Democratic Party a little further closer to the center and helped Bill Clinton and Al Gore get elected.

And I think the Republicans may be in the mood to get something like a Republican leadership conference to try to bring them back from the brink of right-wing extinction.

BLITZER: And -- and Rush -- Rush Limbaugh has now weighed in as well.

HANRETTY: Right.

BLITZER: He's part of this feud that's going on amidst -- among the Republicans, Rush Limbaugh saying: "Does Powell have the pulse of the Republican Party, folks? He's for more spending. He's for higher taxes. He's against raising the social issues. He's for affirmative action. He's for amnesty for illegals. He endorsed Obama. Colin Powell presents the stale, the old, the worn-out GOP that never won anything."

(LAUGHTER)

BLITZER: I guess, Rush Limbaugh, he's not mincing any words.

HANRETTY: Well, I don't know how many elections Rush Limbaugh has actually helped for -- win for the Republican Party either. And I think, you know, that's worth pointing out.

But I do think that there are areas that Colin Powell discusses about maybe, you know, childhood education and poverty, which are issues that Republicans are going to have to address, I think, if they're going to reach out to independent voters and a lot of those moderate and conservative Democrats that we lost in 2006 and 2008 who, you know, they might be Democrat in name. They traditionally vote Republican. We have got to bring them back in the fold.

BLITZER: Yes, a lot of Republicans, including Lindsay Graham -- I spoke with him last week, the Republican senator from South Carolina -- they want Colin Powell in that Republican Party.

HANRETTY: Absolutely.

BLITZER: He's still a very, very popular guy.

(CROSSTALK)

SIMMONS: And if he's not happy there, we will take him in the Democratic Party.

BLITZER: I'm sure you would.

(LAUGHTER)

BLITZER: All right. Let's talk a little bit about the Democrats right now, the fellow Democrats of the president of the United States. Did the president and the White House take the Democrats in the House and Senate simply for granted, that they would roll over and do whatever the united -- the -- the Obama administration wanted on this issue of moving terror suspects from Guantanamo Bay to prisons here in the United States?

SIMMONS: That is one take on it.

It is clear, though, that the Democrats on -- on the other side of Pennsylvania Avenue -- you know, Democrats have politics, too, and they all have to go home and run. And the Republicans have been very focused on this in have they have -- in have they have talked about this.

So, I think there are Democrats, including, you know, some people who are in the leadership, who have really politics, that are coming up for reelection soon. And they don't want to have to run on this. So, the -- the Obama administration is going to have to figure out where these prisoners out at Guantanamo are going to go in order to sell this...

(CROSSTALK)

BLITZER: Easier -- easier said than done.

SIMMONS: And that's a complicated -- that's a complicated question.

BLITZER: Yes. You see this fighting amongst the Democrats between the White House, a Democratic White House, and fellow Democrats in the House and the Senate, it's pretty amazing this early on in the new administration.

HANRETTY: It is.

And, really, politically, this one should have been a cinch, right? I mean, look, Barack Obama made very clear this was his intention throughout the campaign. And the fact that there are Democrats like Harry Reid who are concerned, if they support releasing these Gitmo detainees into U.S. prisons, that they might not get reelected shows you how unpopular politically this proposal is from this president.

And, look, this is just the beginning. It's not just Gitmo. It's going to be health care. It's going to cap and trade. It's going to be these big-ticket items. This one should have been easy, and it wasn't.

(CROSSTALK) BLITZER: Can't take -- can't take the Democrats in the House and Senate for granted.

SIMMONS: They can't. But I think, on things like health care, they're in a much stronger position. When it comes to these prisoners coming on U.S. soil, it's a easy thing to demagogue.

And some people have mentioned talking about putting them on a -- you know, on an aircraft carrier and having them float around the Caribbean or someplace, just to keep them off of American soil, because that makes things...

(CROSSTALK)

BLITZER: I'm not so sure it's going to be all that much easier on issue like...

(CROSSTALK)

BLITZER: ... like health care or energy, because there are so many of these Democrats now who are not liberal Democrats. They're much more centrist or even conservative Democrats. And they're deeply -- not all that far away on some of these issues from Republicans.

SIMMONS: Well, the difference...

(CROSSTALK)

HANRETTY: And these issues are not well-thought-out either.

Look, health care is no more thought-out than Gitmo was. Where are you going to put these prisoners? What are you going to do with them? How are you going to pay for health care? These things have not been thought out.

So, they sound grand on a campaign trail, but once you go, and you try to govern, and you try to pass these things, and people who actually have to get reelected two years from now...

SIMMONS: The one thing that is different -- the one thing that is different, though, is we now have this position where you have people who are pro-life and pro-single-payer health care. We have got a big-tent coalition that exists in the Democratic Party.

BLITZER: All right.

We have got to leave it there, guys. Jamal, Karen, thanks for coming in.

HANRETTY: Thank you.

SIMMONS: Thank you.

BLITZER: It's a mind-boggling concept. The state of California bankrupt? Jack Cafferty is standing by with your e-mail. And later: They used their fists, their feet and billy clubs -- police officers caught on tape beating a suspect unconscious -- the video and the punishment.

And the first lady of France is known for speaking her mind, but jaws are dropping over here rather blunt comments about the pope.

(COMMERCIAL BREAK)

BLITZER: On our "Political Ticker": a family tragedy affecting diplomatic relations.

The White House says the Egyptian president, Hosni Mubarak, has canceled his visit to the United States next week because his 12-year- old grandson has died. The cause of his death has not been made public. The White House is offering condolences and says the president will meet with Mr. Mubarak when he visits Egypt next month.

CNN has learned another possible Supreme Court candidate has met privately with President Obama. That would be Diane Wood, a federal appeals court judge from Chicago. A source close to the selection process says Wood is in town today for a conference and met with the president.

Mr. Obama is expected to name a nominee to replace retiring Justice David Souter by the end of the month.

Remember, for the latest political news any time, check out CNNPolitics.com.

Let's check out Jack Cafferty right now for "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Isn't President Obama from Chicago?

BLITZER: Yes, he is. Used to be the United States senator from Illinois.

CAFFERTY: So, interviewing a judge from Chicago? Maybe.

Question: What would it mean if California went bankrupt? And the state is very close.

David in California: "It would mean that taxpayers, state elected officials finally have to face reality. For 30 years, Californians have refused to increase taxes, while, at the same time, demanding more and more government services. You don't need a degree in accounting to figure out that isn't going to work forever."

P. in Arizona writes: "Once again, California leads the way as we slip into Third World country status. If this isn't a look at what's to come in this country, I don't know what is."

Brian writes: "Why would Californians vote for higher taxes? Of course, if the state does go bankrupt, the federal government will step in and bail them out. After all, they are a part of the United States. And if the government can bail out the auto industry, the banks and whomever else they deem necessary, I am sure that they will be willing to bail out California."

Remo writes from Texas: "It's up to the voters of California to solve their own problems. If they've voted no so many times, I guess a reality check is in order. If you don't have the funds, cut back on the fun."

Simon in Orlando says: "I don't think it's a matter of if, rather, when. It's a prequel of what the rest of this country is eventually in -- a cut in services, increase in taxes to cover all of the debt we are now incurring."

Stef in Minneapolis says, "Maybe I can finally afford to move there."

David in Missouri says: "It would mean nothing to me since they did it to themselves. Free everything for everybody with no rainy day money. I don't feel a bit sorry for them."

And Tutu, Lagos, Nigeria: "That's what happens when you let a Terminator in."

If you didn't see your e-mail here, you can go to my blog at CNN.com/caffertyfile. Look for yours there, among hundreds of others.

The failure of those tax initiatives in that special election means now, Wolf, that the budget could hit north of $21 billion in California.

BLITZER: Yes, it's a real mess out there. We're going to watch that story closely, Jack. Thank you.

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