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THE SITUATION ROOM

Interview With Alaska Governor Sarah Palin; Iran Holds Presidential Election

Aired June 12, 2009 - 18:00   ET

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


WOLF BLITZER, CNN ANCHOR: And Sarah Palin, she is here in THE SITUATION ROOM. The entire interview is coming up. She has words for President Obama, is even talking about women standing up against David Letterman.

We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

We are following breaking news. There are conflicting claims on who won Iran's presidential election, state media declaring President Mahmoud Ahmadinejad the winner, but the reformist challenger says he won. Early vote counts are coming in, but not yet the final outcome.

President Obama is expressing his preferences.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: After the speech that I made in Cairo, we tried to send a clear message that we think there is the possibility of change. And, ultimately, the election is for the Iranians to decide. But, just as has been true in Lebanon, what can be true in Iran as well is that you are seeing people looking at new possibilities.

And whoever ends up winning the election in Iran, the fact that there's been a robust debate hopefully will help advance our ability to engage them in new ways.

(END VIDEO CLIP)

BLITZER: What happens in this Iranian election could certainly have a major impact on U.S. policy toward Iran.

Let's go to our foreign affairs correspondent, Jill Dougherty. She is working her sources over at the State Department.

What are they saying, Jill?

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: Well, Wolf, they are going to -- and you heard it from the president. They are going to be very, very careful about getting into any type of statement that they support one candidate or the other.

It's a hands-off policy. But, that said, they know that the relationship with the United States and Iran really has been exacerbated by the comments by Mahmoud Ahmadinejad. If he were not leading -- actually in the position of president, it would make it certainly easier for the relationship.

But I can tell you, Wolf, we are getting more indications of how they are watching this. It's very interesting. They are talking to experts on Iran. They also have what is called the rapid response unit. They monitor media coverage around the world. And then they also have what are called watch offices.

And those are located in U.S. embassies around the globe in countries with large Iranian expat populations. And they are also monitoring there. So, it's -- they are watching this extremely closely and with a lot of interest.

BLITZER: Jill Dougherty is monitoring the situation at the State Department.

Jill, thanks very much.

And this just coming in to CNN right now -- A U.S. military official says a Chinese submarine hit an underwater sonar piece of equipment being towed by the USS John McCain yesterday off the Philippines. The listening device was damaged. But the officials says the sub and the ship did not actually collide. The official calls it -- and I'm quoting now -- "an inadvertent encounter."

But officials acknowledge it could have been disastrous. The ship could have been badly damaged in a collision and the sub could have been dragged to the bottom if its propeller snagged the tow line. The Navy does not believe this was a deliberate incident of Chinese harassment.

Polls show a majority of Americans think the Republican Party doesn't have a clear leader right now. That could create an opportunity for Sarah Palin. The Alaska governor is keeping a rather high profile right now. She is covering all the issues a national leader would, including economic and national security under President Obama, the Middle East peace process, even her own political future.

She is talking about David Letterman, the feud. She is also especially vocal about the deal toward more energy independence in her own state that some are criticizing.

(BEGIN VIDEOTAPE)

BLITZER: And joining us now, the governor of Alaska, Sarah Palin.

Governor, thanks very much for coming in.

GOV. SARAH PALIN (R), ALASKA: Thank you so much, Wolf.

BLITZER: You have a big energy deal that's in the works right now. And you announced it with a lot of fanfare, a $26 billion natural gas pipeline, which would bring natural gas from Alaska through Canada down to the lower 48.

Not everyone is enthused, including "The Wall Street Journal." They say this: "Among the most serious questions it faces is whether the Alaskan gas is even needed. North America is in the midst of a natural gas glut, driving down prices. And observers believe liquefied natural gas imports are set to grow, as overseas producers seek to unload their gas in the United States."

Why do you disagree with "The Wall Street Journal"?

PALIN: Well, I think very shortsighted of whomever wrote that for "The Wall Street Journal," assuming that market conditions are going to stay as they are today. Demand for natural gas has increased. And, in fact, by probably 2030, we will see about a 40 percent increase in demand for natural gas.

Domestically, we have the supply. The resources are up there in Alaska. And it's time that we build this infrastructure and flow that very valuable resource into hungry markets throughout the U.S. This is going to be the largest energy project in the world by the private sector.

It's a great venue that we have, a vehicle called AGIA, the Alaska Gasline Inducement Act. And, believe me, Exxon, the largest company in the world, and TransCanada, the best pipeline-building company in the world, I'm sure they would not have aligned and committed to building this project had they not crunched the numbers and figured out that for their bottom line, and for our nation's security, and for our environment, for our economy, this project is right.

It is time. Shortsighted to assume that there won't be growing demand for energy sources.

BLITZER: It's -- it's more energy independence, as well. Instead of importing this kind of energy, it's -- it's here. It's homegrown in the United States. That's a significant development, potentially.

But it's not cheap. Who's going to pay for all of this?

PALIN: The private sector, thank goodness. I mean, this isn't a government program. It's not a government service. And heaven forbid anybody think that this infrastructure project needs to be nationalized. We have to keep our eyes and ears open to make sure that nobody thinks that the federal government should ever come in and take control over an energy project like this.

There is a need for it. The economy is asking for such a stimulus package as this to create the jobs. Thousands and thousands of jobs will be created with the construction and the operation, then, of this pipeline. It's time. It's ready to do it, and it's a private-sector project, as well it should be.

BLITZER: How long is it going to take to build it?

PALIN: It should be about a decade before that energy flows. These are long lead time-type projects. I mean, we've been talking about it and planning for it in Alaska for decades. But it took this alignment that was announced yesterday to really see the path forward made much clearer. The project will come to fruition.

BLITZER: And the grumbling you're hearing from some politicians in Alaska in your home state, how do you react to those complaints that they're saying, you know what, this is not necessarily such a great idea?

PALIN: Well, a couple of the politicians who are up for re- election and they're trying to position themselves, you know, they have to kind of distance themselves from some of the positions that the administration has taken, for political reasons, I believe. But the numbers speak for themselves.

Largest companies in the world aligning to get the project built for national security reasons and for our environment and for our economy. Even those politicians up in Alaska. And really, Wolf, I think they do support it. They voted for it. I think there's just some political wrangling going on right now to position themselves.

BLITZER: On the economic stimulus package, and I want to just clarify this, originally, you were supposed to get Alaska $288 million in stimulus money that you didn't want. You said the state didn't need it, didn't want it, didn't like the strings that were attached to it. In the end, you're going to get everything but about $28 million and maybe even that you'll have to take as well.

What happened here? The original reluctance on your part to accept the money from the federal government, but now you're going to accept it.

PALIN: You know, legislators across the country, including in Alaska, many resolved to take the money anyway, to go around governors and via resolution said, well, we're going to apply for the money anyway. Look at what happened in South Carolina, where the governor said, no, I'm not going to take the money. And they ended up in court. And the judiciary told the administrative branch, which is an odd mingling there of branches of government, the judiciary told that governor, you're going to take the money anyway.

There are fat strings attached to these federal dollars, not the least of which is an attachment to contributing to the dizzying debt of our nation and borrowed money to supply the funds to grow this government that the stimulus package is all about. I have had great hesitancy in embracing such a thing, and I did veto some of the money. Our lawmakers are discussing now whether they'll override that veto.

More power to them in that debate whether they should override or not. That's the beauty of our democracy, the checks and balances that are in place. That protects the people whom we're serving.

So, discussion on whether they'll override my action against hesitance to accept some of these energy funds because they're tied to energy building codes, universal building codes that for the most part, communities in Alaska have opted out of.

We don't want the federal government mandating to a local community or a business or a family how they can build and develop opportunities for more progress in an individual's life. We don't necessarily think that it's the right way to go is to allow the federal government to mandate more universal codes on how we'll develop.

BLITZER: How do you think President Obama's doing now in these early months as president?

PALIN: I think he's growing government way too quickly, and he's digging that hole of debt for our country that we're going to pass on to our children and our grandchildren, expecting them to pay off debt for us. It's a selfish thing that we're doing right now if we think that is OK.

So, I do like some of the talk that he's giving Americans right now, though, about eventually here getting to the point of reining in spending and finding efficiencies within government. I encourage him to follow through on that. We have to follow through on that, because it is unfair to our kids and grandkids that we expect that we grow government...

BLITZER: You think they'll be able to do it?

PALIN: Yes. He's got to be able to do it. He's promised that he would do it, that he would consider some of these actions and take action to slow down the growth of government. Now, having said that, we have to recognize what's already happened. Trillions of dollars more in spending.

Trillion dollars stimulus package -- we don't have that money. We're borrowing it from China, so, you know, we become indebted to another country that can essentially control some of the things that go in our country, because of that debt. That's a very scary place for America to be, for our economy and for our national security.

BLITZER: You recently said that -- I want you to clarify what you meant -- you said that the Obama administration is trying to bail out some of the debt-ridden states so they can -- quote -- "control the people."

Explain what you meant by that.

PALIN: Here's -- here's -- sure. Here's what I said. These stimulus package dollars, they're very enticing.

And some states were made to look unethical or incompetent for not accepting all this debt-ridden, largess package of federal funds. And my belief has been, look what's happened in the private sector with these bailout funds. Government was able to get in there and control some of those businesses then that had accepted those stimulus bailout dollars. What's to say same thing won't happen with the state?

This state has not made wise decisions, gotten itself in a heck of a lot of debt, and then they be enticed by federal dollars to come in and bail them out. Who's to say that the same principle wouldn't apply to there, then? That government would be able to get in there and control some of the decisions that a state government is making? That -- that's not a safe place to be.

Local control is the best form of government. The most responsive, responsible level of government is local government, not big, centralized federal government.

(END VIDEOTAPE)

BLITZER: David Letterman explains his joke about Sarah Palin's daughter.

(BEGIN VIDEO CLIP)

PALIN: Yes, it is a weak, convenient excuse, now, and, you know what, regardless of which daughter it was, inappropriate.

(END VIDEO CLIP)

BLITZER: You heard part one of the interview I had with Sarah Palin -- part two coming up. Sarah Palin says women should share her outrage at David Letterman. The one-on-one interview with the Alaska governor will continue.

Plus, President Obama ready to sign what's called the strongest action Congress has ever taken to reduce tobacco use.

And al Qaeda extremists moving to a new haven, and officials say at least one American is fighting alongside them.

(COMMERCIAL BREAK)

BLITZER: You just heard the Alaska governor, Sarah Palin, blast President Obama for government spending.

Now part two of the interview. She criticizes his foreign policy and national security agendas, then turns her fire to a late-night comedian.

(BEGIN VIDEOTAPE)

BLITZER: Let's move on to some other issues that are out there, including the president's speech in Cairo to the Muslim world.

What did you think of it?

PALIN: Well, I would certainly like our president to stand very, very strong and bold in his statements about our protection of Israel that so many of us believe in, and our strongest ally in the Middle East being Israel, deserve our protections. I would have liked to see a little bit more passion in that arena.

BLITZER: Are you suggesting he's not pro-Israel enough? Is that what I'm hearing?

PALIN: I'm sure he is pro-Israel. I would have liked to see more passion in the talk that he gave regarding our friends in Israel, our strongest ally, making sure that they know that we are here for them. We're going to stand by their side; we're going to help them.

BLITZER: You recently criticized him for showing weakness by having some Pentagon cuts in terms of missile defense that clearly affects Alaska.

Is the country safer now that Barack Obama is president of the United States?

PALIN: I think it's a sign of weakness to cut defense spending right now, especially when particular projects and services like missile defense systems. There in Alaska, we're strategically located where we could intercept a missile coming from North Korea. You see what Kim Jong Il is up to right now, having launched the six small missiles, and now deciding by about June 16, he saying, to launch a large missile.

Alaska has the position and the equipment, it it's funded correctly, to intercept a missile, and to see, then, that there is talk of cutting that system. I think it's nonsense. I think it's a sign of weakness.

We need to be showing signs of strength with our national defense, especially when you consider, Wolf, our young men and women abroad fight for us and our safety, our security. We need to do all that we can with our military to show that we are strong on offense, not just defense.

BLITZER: In recent days, there's been a huge brouhaha over David Letterman's jokes involving your family and your daughter. He says he made a mistake. He says, yes, it was probably in bad taste, he shouldn't have done it.

Are you willing to forgive and forget?

PALIN: I will always forgive whomever is asking for forgiveness. It goes beyond, though, David Letterman's crude, sexist, perverted joke about a 14-year-old girl being "knocked up" by Alex Rodriguez. I think he's like 30-some years old. I think that that's, you know, pretty perverted.

But it goes beyond that. Not just that joke, but this insinuation that it's OK, it's acceptable to talk like that, and then that it's acceptable for the media to not provide the American public, the listeners, the readers, the full context of that joke.

Letterman says, now, hey, I wasn't talking about her 14-year old.

David, my 14-year-old was there with me at the game. She was the only one there with me. It wasn't my older daughter, who's in college and taking care of her young family. It was my 14-year-old.

So, for the American public to not be given the full context of what that joke was all about, I think that's quite unfortunate. And also, it is that sad commentary on what Americans are fed in terms of full news.

BLITZER: Because he says -- he now says he was talking about your 18- year-old daughter, not the 14-year old daughter.

PALIN: Yes, it's a weak, convenient excuse. No. And you know what? Regardless of which daughter it was, inappropriate.

I think it contributes to some low-self esteem of many of the young girls in the country. Very unfortunate.

I'm so glad to see women standing up and saying, enough is enough. Talk about a 14-year-old being -- statutory rape is what this is, because a 14-year-old would not consent to being "knocked up -- quote, unquote -- (AUDIO GAP) gentleman (AUDIO GAP) A-Rod.

I think (AUDIO GAP) degrading. I think it contributes to so many problems. It's not unacceptable. And I'm very, very glad to hear you say that even David Letterman has recognized that it was inappropriate.

BLITZER: Yes. All right. Let's move on and talk a little bit about politics, a subject close to your heart, 2012. Before there's 2012 there 2010. Are you definitely going to seek reelection?

PALIN: I'm not definitely going to do anything yet. What I'm trying to get done for Alaska right now is to get that Alaska gas line built.

We need those energy sources flowing through North America. That's what my focus is. That and raising my family, doing those good things that we need done up there in Alaska. That's my focus.

BLITZER: So, no decision yet on either 2010 or, let alone, 2012. Is that right?

PALIN: No decision that I would want to announce today.

BLITZER: All right. Well, you'll let us know when you're ready to make that announcement. Is that right?

PALIN: I will let you know, Wolf.

BLITZER: Hey, Governor, thanks very much for joining us. Good luck out there.

PALIN: Thank you so much. I appreciate you.

(END VIDEOTAPE)

BLITZER: We want to apologize for that technical snafu with the satellite breaking up a little bit.

Also, we tried to get in touch with David Letterman and CBS to get his reaction. We invited David Letterman to come on as well. So far, no response from CBS or David Letterman.

Moving from Afghanistan to Africa: Al Qaeda find a new haven and some help from an American extremist.

Plus, back in rehab -- the youngest son of Senator Ted Kennedy once again seeking treatment for substance abuse.

And cash for your clunker -- the government may soon begin a program to put you in the driver's seat of a brand-new car.

(COMMERCIAL BREAK)

(NEWS BREAK)

BLITZER: We're following the breaking news in Iran here in THE SITUATION ROOM: conflicting claims right now of victory in the country's presidential election, with major ramifications for the United States.

Our own Christiane Amanpour, she is standing by live in Tehran. We're going to go there.

Disturbing new signs extremists are finding safe haven in Somalia, including al Qaeda.

And Congress clears the way for unprecedented tough new rules on tobacco, overcoming decades of resistance.

(COMMERCIAL BREAK)

BLITZER: You're in THE SITUATION ROOM.

Happening now: a U.S. antagonist vs. a change candidate, as he's been dubbed -- both sides claiming victory right now in Iran's presidential election. We are following the breaking news out of Tehran.

Signs that Somalia is becoming a new haven for extremists, including al Qaeda, a report you won't want to miss, that's coming up.

And cash for clunkers -- the government's new plan to try to get consumers to turn in their gas guzzlers. But will it help the auto industry?

All of this coming, plus the best political team on television.

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

Will -- will there be a change in leadership in Iran? We are following the breaking news. President Mahmoud Ahmadinejad's campaign claims victory in the presidential election, but so does the challenger, a man running as a change agent who some compare to President Obama.

Let's go straight to CNN's chief international correspondent, Christiane Amanpour. She's joining us live from Tehran.

What's the latest right now, Christiane?

CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: Well, the latest is that the official interior ministry elections commission has held a series of press conference at various intervals since midnight. It is about 3:00 a.m. here.

And the latest word is that, with the number of votes, they are saying now 15 million votes counted, they say that President Ahmadinejad has some 10 million, just about, and also four million or so for his main rival, Mir Hossein Mousavi.

Now, this is something that has caught a lot of people greatly by surprise, because this huge unprecedented turnout that happened today, according to the election officials and according to everything we saw, unusually heavy turnout, many analysts said that this would favor the challenger, Mir Hossein Mousavi.

And, certainly, all the people who came out came out because they said that they were having a protest vote. So, they were voting against the four years of President Ahmadinejad.

Now, it's clear that he still had strong support in many of the villages and the outlying provinces with the more religious, the traditional, the less affluent, the poor. He's been traveling and courting them all through his presidency.

But this result is coming as a surprise to many, many analysts who've been watching this and people here most certainly have been on the street.

But the Moussavi camp held their own press conference just before the election commission and said that they had won. And all the officials around the country at various polling stations had reported that they had won a significant portion of the vote. So they're not accepting these figures at the moment -- Wolf.

BLITZER: All right, Christiane.

We're going to stay in close touch with you and wait for the official results to come in.

Christiane Amanpour has been on the scene for us all week in Iran.

Al Qaeda, meanwhile, is on the move, from Afghanistan to Africa. And the presence of an American fighting alongside the enemy may be a rather ominous development.

Our Pentagon correspondent, Barbara Starr, has been working the story for us.

We're talking about Somalia in Africa becoming, what, a New Haven for Al Qaeda?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Exactly, Wolf.

There is new classified intelligence. CNN has learned that Al Qaeda is on the move.

(BEGIN VIDEOTAPE) STARR (voice-over): As fighting rages in Somalia, CNN has learned the U.S. intelligence community believes the Al Qaeda presence in the war torn East African country is growing. U.S. officials say this American is in Somalia fighting for Al Qaeda.

UNIDENTIFIED MALE: The only reason we're staying here, away from our families, away from the cities, away from, you know, ice, candy bars, all these other things, is because we're waiting to meet with the enemy.

STARR: U.S. officials who say the young man, who goes by the battlefield name, Abu Mansour al-Amriki, recently made this video in Southern Somalia. U.S. officials with access to the latest intelligence tell CNN Al Qaeda operatives have set up new training areas there and are teaming up Somali fighters, known as the al Shabab, already designated by the U.S. as a terrorist group.

Peter Bergen is a CNN contributor on terrorism issues.

PETER BERGEN, CNN NATIONAL SECURITY ANALYST: Al Qaeda was running training camps in Somalia in the early and mid-'90s and was training with Somalis in this group. So if this is now coming back, this is something that Al Qaeda has already done and it's worrisome for the future.

STARR: U.S. officials say Al Qaeda operatives recently have moved the Afghan-Pakistan border into Somalia, some 2,000 miles away. Experts believe after dozens of attacks from U.S. drones along that border, Al Qaeda may see the Horn of Africa as its new headquarters.

BERGEN: The fact that we're seeing some evidence of this already happening in both Yemen and Somalia suggests that, A, the drone program in the tribal areas of Pakistan has been effective; and, but, B, you know, it's pushing Al Qaeda into areas where it will build up longer operations.

STARR: Two prime U.S. targets in Somalia -- Fazul Abdullah Mohammed and Sali Ali-Sali Nabad (ph), hard core Al Qaeda wanted for previous bombings on Western targets in Africa, they are believed to be planning new attacks.

(END VIDEOTAPE)

STARR: And if Americans think that Somalia and nearby Yemen in the Horn of Africa are so far away they don't need to worry about it, Wolf, of course, what government officials say their bottom line worry is that Al Qaeda is moving in here and has a new safe haven to possibly plan new attacks against the West -- Wolf.

BLITZER: Another source of worry.

All right, Barbara.

Thank you.

Big tobacco may never be the same again here in the United States. President Obama is praising Congress for putting tobacco marketing under FDA oversight. He says he's looking forward to signing the just passed bill.

Let's go straight to our Brian Todd.

He's here in THE SITUATION ROOM -- Brian, what does this mean for the tobacco industry and for a lot of -- millions of Americans who still smoke?

BRIAN TODD, CNN CORRESPONDENT: Well, one in five Americans still smoke, Wolf, so it affects them to a great degree. And at least one watchdog group, the Center for Responsive Politics, says this is a big reversal of fortune for the tobacco companies.

For decades, that powerful tobacco industry successfully imposed the heavy hand of government regulation. But now, it will have to submit to new rules on what's in the cigarettes and how they're advertised -- especially toward children.

(BEGIN VIDEOTAPE)

TODD (voice-over): No ads within 1,000 feet of schools or playgrounds; black and white ads only; bigger warning labels, no more candy or fruit flavored cigarettes -- just some of the tough new regulations in a bill that will give the government unprecedented power to regulate the tobacco industry. Supporters say a top goal is to prevent the marketing of cigarettes to children.

REP. GENE GREEN (D), TEXAS: How many loved once and constituents do you know have died from lung cancer caused by smoking?

This bill can help those 13, 14 and 15-year-olds who are growing up now not to become addicted to tobacco.

TODD: The government projects the bill would reduce underage smoking by 11 percent over the next decade and cut down smoking by adults 2 percent.

Opponents say it also cuts free speech rights and represents bureaucratic meddling.

REP. RON PAUL (R), TEXAS: Freedom and self-reliance and individualism can solve these problems a lot better than a bunch of politician and bureaucrats and tobacco police here from Washington, D.C..

TODD: President Obama, who struggled to quick his own habit, will sign the bill, which finally pushed through after decades of resistance by the tobacco industry.

OBAMA: This bill has been a long time coming. We've known for years -- even decades -- about the harmful, addictive and often deadly effects of tobacco products.

TODD: Altria Group, owner of the largest American cigarette maker, Philip Morris, is the only major manufacturer to support the bill. A libertarian critic of the legislation says the restrictions will actually benefit the biggest cigarette makers, whose brands are already well-known.

MIKE CANNON, CATO: Big tobacco is a perennial villain. Congress loves to tax them, love to run against them, loves to say that they're going to regulate big tobacco out of existence or keep cigarettes out of the hands of kids. But usually it's big tobacco that has their way with Congress rather than the other way around.

(END VIDEOTAPE)

TODD: Now, as for one of the most critical issues here, that's the use of the addictive substance, nicotine, the bill empowers the FDA to require manufacturers to reduce the levels of nicotine in cigarettes, but does not ban nicotine outright and does not ban smoking -- Wolf, a lot of people have looked for that. They just couldn't go that far.

BLITZER: All right, Brian.

Thanks very much.

Brian Todd reporting.

Sarah Palin's very public battle with David Letterman over what she called a perverted joke about her daughter.

Did the war of words pay off for her politically?

And how is she handling it?

Stand by.

Plus, Iran's presidential election still up in the air right now -- conflicting claims of victory.

What does it mean for President Obama?

We're going to be talk about all of this and more.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: One of the more intriguing politicians out there right now, the governor of Alaska, Sarah Palin. You just saw the full interview I conducted with her earlier today.

Joining us right now to discuss this, Kathleen Parker of "The Washington Post;" Lynn Sweet, the Washington bureau chief for the "Chicago Sun-Times;" a columnist for PoliticsDaily.com; and our own Joe Johns.

How do you think she's handling this whole David Letterman uproar, Kathleen?

KATHLEEN PARKER, "WASHINGTON POST" COLUMNIST: Well, I think she's making political capital of it, for one thing. I mean just -- the cynical part of me wants to recognize that she's making her case for pointing out that, you know, look, this is more proof that those New York-Hollywood folks don't get the rest of us -- the rest of us in real America.

But as a parent, I'm completely on board with her. I was offended. I mean I think Letterman went way too far by attacking -- making jokes about children. That's really off base.

I also think that if the -- just the slutty flight attendant joke had been the only one, you know, Sarah Palin probably would have laughed that off. She showed she's a good sport when she went on "Saturday Night Live."

BLITZER: It's showing she's a smart politician.

PARKER: Yes. Yes.

BLITZER: Because Letterman himself has acknowledged, you know, he went way too far.

LYNN SWEET, "CHICAGO SUN-TIMES": He did. And one of the things that I think even comics know by now is that the kids are off limits, especially in the way -- when he was putting this in a sexual context. My goodness, he had to know that he was handing the moral high ground to Governor Palin.

BLITZER: Does it look like she's setting the stage for a run for the White House -- Joe, you've covered politics for a long time.

JOE JOHNS, CNN CORRESPONDENT: Well, sure. I've also covered her for a long time. And, certainly, it's possible. It seems like she's leaving her options open. And this could really only play into it for her.

You know, when you think about it anything she does or says, given the jokes that were thrown at her, makes her look like, oh, you know, I'm a real person and I'm under attack and how would you -- how would you respond to this?

So -- So it's probably good for her, at the end of the day.

BLITZER: You know, and she's one of those politicians, as you know, that's also a celebrity. I remember I interviewed her right after the election, after she and McCain lost, down in Miami at the Republican governor's meeting. She was followed by 20 or 30 camera crews wherever she went. Haley Barbour, nobody...

(LAUGHTER)

BLITZER: ...the governor of Mississippi. Mark Sanford of South Carolina or Tim Pawlenty, very few, if any, reporters chasing them through the lobbies. Wherever she went -- it almost reminds me of other celebrity politicians like Arnold Schwarzenegger or Ronald Reagan, for that matter; Bill Clinton, a celebrity politician; and Barack Obama, for that matter.

UNIDENTIFIED FEMALE: Yes.

BLITZER: It's a unique -- it's a unique source of strength and potential pitfall.

PARKER: Yes. Well, she is one of those people that has it. You know, she's an it girl. She has that thing that we can't quite identify that -- it's charisma. She's great looking. She's got, you know, she connects with people.

And so when she walks into a room, you feel that air shift. And there are only a certain number of people in the world that actually have that. And Sarah Palin is absolutely one of them.

BLITZER: So is that going to be a help for her if she wants to run for the White House or could it be a disaster?

SWEET: Well, it's only a disaster if she doesn't use the opportunity she has in talking to you and others -- she has a bully pulpit whenever she wants it, Wolf. What is she going to make of it?

OK, and this -- and right now, the episode about talking about her daughter and David Letterman can only go so far. She wanted to talk about the Alaska gas line, which is now a controversial thing. Fine. So she could set a stage now. She knows -- or we know -- we think we -- she could have the stage whenever she wants it. It's up to her to find what is she about if she wants to be a candidate.

JOHNS: And the celebrity thing, also, is really good with her base. You know, conservative Republicans, a lot of them, really like Sarah Palin for a variety of reasons.

BLITZER: Is she a real threat, Joe, to, let's say, someone like Newt Gingrich, who might be thinking for running -- running for -- or Mike Huckabee or Mitt Romney?

How much of a threat, potentially, is she?

JOHNS: It remains to be seen. But, on the one hand, she does have that knack of putting conservative language out there in a way where it doesn't offend people. It has sort of a soft side to it -- a soft ring to it. She can make it funny. All of these things help her.

On the other hand, she has a lot of Republicans and people on the left who just despise her and despise everything she stands for.

So she is a polarizing figure.

BLITZER: And we know, Lynn...

(CROSSTALK) BLITZER: ...and, you know, this as well, that there are plenty of McCain types who worked in the McCain campaign who didn't emerge from that experience with, let's -- shall we say, a great fan of Sarah Palin.

SWEET: Well, yes. But she could -- she could blow through the, you know, Washington Republican establishment and the campaign professionals. That, I think, if she wants to do this, that's the easiest group to turn around.

What she also has is another appeal. Frankly, it's a generational appeal. You know, Newt Gingrich is doing well and still making himself a political force right now partly by just being an againster -- whatever Obama is for, he's been against. And it's not so much the force of his ideas, It's combating the president, who's very popular.

She has a generational appeal. She has -- still has what she had going out -- the mother of children, now the -- the hurt -- you know, the hurt mother whose family...

BLITZER: Protecting her children.

SWEET: Sure. And that goes to her. The fact that there are professional Republicans that think she failed McCain, she could deal with that if she wants to.

PARKER: I -- you know, I agree with all you both have said to a point. But once -- once you sit down and actually deal with the issues, I'm not sure that a Sarah Palin can compete with a Mitt Romney.

Now, each of the Republican frontrunners, at this point, have strengths and weaknesses, clearly. And lots of them have baggage. So, you know, it just depends on where we are in this nation, how the first administration goes and what people are feeling and what they're most insecure about.

BLITZER: And where the state of the economy is in 2011 and 2012...

PARKER: Exactly.

BLITZER: ...will have a huge, huge impact on who the Republican nominee might be.

PARKER: Yes. I was going to throw in one more thing. Getting this pipeline going, though, has been a big plus. And it gives Sarah Palin some gravitas...

BLITZER: Yes. She was really anxious to talk about it.

Yes. This is her...

(CROSSTALK)

-- issue. She knows this one.

BLITZER: In the interview she did with us today.

All right, guys, thanks very much.

And now that it owns a large chunk of the auto industry, will the U.S. government start offering incentives to get you into a new car?

The idea is moving forward here in Washington, on Capitol Hill. Details of what's being called the Cash for Clunkers program -- your tax dollars at work.

(COMMERCIAL BREAK)

BLITZER: The Department of Justice here in Washington has just announced that three Saudi Nationals held at the U.S. prison camp at Guantanamo Bay in Cuba have now been returned to Saudi Arabia. They are already there.

This follows the release of others at Guantanamo Bay, including some Chinese Muslims called weegers.

CNN's Don Lemon is joining us now.

He's in Bermuda, where some of the detainees have been relocated -- and you had a chance exclusively today, Don, to actually speak with these former GITMO detainees.

How did that go?

DON LEMON, CNN CORRESPONDENT: Wolf, it was very interesting. Shortly after we got the news about those four former detainees or detainees, as they were then coming here, we tried to get interviews with them. We were able to secure an interview today with two of them -- two of them that speak English, very broken English. One of them is Abdul Nassar (ph). The other one is Abdul Semet (ph). That was their GITMO name. They're Khalid now and Ansallah Hudeen (ph). That's their names now.

But they spoke -- they spoke to the president of the United States. They said under George Bush that they were oppressed and they were left at Guantanamo Bay.

Under President Obama, they were freed. And they want the president, they say, to live up to his promise to close Guantanamo Bay within a year. They also wanted people to know, one of them said: "I am not a terrorist. I have never been a terrorist and I will never be a terrorist."

Full interviews coming up, Wolf, on CNN.

BLITZER: Excellent work.

Don Lemon on the scene for us in Bermuda, catching up with the former Guantanamo Bay detainees.

Stand by for more on that.

Meanwhile, Uncle Sam -- he's trying to get you in the driver's seat of a new car.

Let's go straight to our senior political analyst, Bill Schneider.

He's looking into the story.

What's behind this government program that's called Cash for Clunkers?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well, Wolf, the federal government is going into the car business. So it's coming up with -- what else -- dealer incentives.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): To sell cars, you need dealer incentives.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Better deals were never made. (INAUDIBLE).

(END VIDEO CLIP)

SCHNEIDER: Now that the federal government is in the car business, it's got to figure out how to get Americans to start buying new cars that get better gas mileage. And last fall, University of Maryland Professor Peter Morici came up with this idea.

(BEGIN VIDEO CLIP FROM NOVEMBER 18, 2008)

PETER MORICI, UNIVERSITY OF MARYLAND: We could have a clunker rebate program. Bring in a Tahoe, trade it in for a Volt and we'll give you a big rebate.

(END VIDEO CLIP)

SCHNEIDER: Cash for Clunkers -- you bring in your old car and replace it with a new, more fuel-efficient model and the government will give you a $3,500 to $4,500 rebate.

How's that for a dealer incentive?

MORICI: It would help the industry. It would help the environment. It would help the trade deficit. Everybody would win.

SCHNEIDER: A harebrained academic idea?

No. It passed the House this week with bipartisan support.

Some environmentalists are suspicious.

What's going to happen to all those old clunkers? MORICI: If the legislation is going to make any sense, they have to require that the car be permanently taken off the road.

SCHNEIDER: OK. But according to the editor-in-chief of the automotive Web site, Edmunds.com...

KARL BRAUER, EDMUNDS.COM: When you have a fully functioning vehicle that runs fine and you crush it to replace it with a new vehicle that runs fine, you've actually wasted a lot of energy.

SCHNEIDER: The rebates will cost the government about $4 billion. Nearly two-thirds of House Republicans voted against the plan. But auto manufacturers are for anything that will sell cars. And the government's now a major investor in that business.

Hey, President Obama's a great salesman. Maybe he can make commercials.

(BEGIN VIDEO CLIP FROM WORTHINGTON FORD AD)

UNIDENTIFIED MALE: Baloney. Baloney.

Hey, what's all this baloney about foreign cars having better quality than American cars?

(END VIDEO CLIP)

(END VIDEOTAPE)

SCHNEIDER: Here's another incentive to get people to buy more fuel-efficient cars -- raise the price of gas. Oh, wait. That's already happening -- Wolf.

BLITZER: Bill Schneider with the Cash for Clunkers program.

Thanks very much.

He made his first parachute jump when he was in a Navy plane and it was shot down during World War II. He jumped again on his 75th and 80th birthdays. And today, the former president of the United States, George H.W. Bush, celebrated his 85th birthday by jumping with a member of the U.S. Army parachute team.

He told CNN the jump shows that, "old guys can still have fun."

Afterward, the former president met with reporters, joined by his sons.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Did you feel any nervousness or

or what was it like right before you jumped out of the plane?

GEORGE H.W. BUSH, FORMER PRESIDENT OF THE UNITED STATES

Not

, because I've done it before. But you have a certain -- a certain nervousness when you start out.

UNIDENTIFIED MALE: Well, done.

GEORGE H.W. BUSH: Yes, sir.

It was awesome.

UNIDENTIFIED MALE: Well done.

UNIDENTIFIED MALE: How are you doing (INAUDIBLE)?

GEORGE H.W. BUSH: Doing good. I'm here with two of my boys on my birthday.

UNIDENTIFIED FEMALE: So are you guys planning to skydive with him any time soon?

GEORGE W. BUSH, FORMER PRESIDENT OF THE UNITED STATES: No.

UNIDENTIFIED MALE: Mr. President, do you want to go again?

GEORGE H.W. BUSH: Sure. My 90th birthday, I've already announced it right here.

UNIDENTIFIED MALE: Which is harder, doing this or, say, getting a bill passed through Congress?

GEORGE H.W. BUSH: Well, that...

(LAUGHTER)

GEORGE H.W. BUSH: Getting a bill from me. I don't know how this president feels. Getting a bill passed through Congress is much harder. This isn't hard. You've got professionals who know what they're doing and you just relax and enjoy it.

(END VIDEO CLIP)

BLITZER: Good work for him. Congratulations to the former president.

President Obama's Supreme Court justice nominee, Sonia Sotomayor, makes the rounds on Capitol Hill on crutches. But her injury definitely isn't tripping up the late night comics. Stand by.

(COMMERCIAL BREAK)

BLITZER: Late night comedians certainly had their fun with the news this week.

Listen to this from Conan O'Brien on North Korea.

(BEGIN VIDEO CLIP FROM "THE TONIGHT SHOW WITH CONAN O'BRIEN," COURTESY NBC)

CONAN O'BRIEN, HOST: As you all know, two U.S. reporters have been imprisoned in North Korea. And now President Obama is considering sending Al Gore to negotiate their release. Yes.

Yes. And after hearing the Al Gore threat, North Korea gave up the reporters and their nuclear program.

(LAUGHTER)

(END VIDEO CLIP)

BLITZER: And here's Jimmy Fallon on health care.

(BEGIN VIDEO CLIP FROM "LATE NIGHT WITH JIMMY FALLON," COURTESY NBC)

JIMMY FALLON, HOST: President Obama is proposing a new national health care plan that's both inexpensive and accessible. He's calling it have your surgery in Mexico.

(END VIDEO CLIP)

BLITZER: And Conan O'Brien, once again, on the U.S. Supreme Court.

(BEGIN VIDEO CLIP FROM "THE TONIGHT SHOW WITH CONAN O'BRIEN," COURTESY NBC)

O'BRIEN: Supreme Court nominee, Sonia Sotomayor, fell and broke her ankle and she's expected to be on crutches for several weeks. She's going to be on crutches -- no, it's -- yes. In a related story, Republicans have announced that Sotomayor's confirmation hearing will consist of three questions and a timed obstacle course.

(END VIDEO CLIP)

BLITZER: Don't forget to see THE SITUATION ROOM tomorrow, Saturday, 6:00 p.m. Eastern. We'll have the entire interview with the Alaska governor, Sarah Palin. Also, a major discussion on health care reform.

I'm Wolf Blitzer in THE SITUATION ROOM.

Up next, "LOU DOBBS TONIGHT."

Kitty Pilgrim sitting in for Lou -- Kitty.