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THE SITUATION ROOM

CIA Controversy: Fresh Fallout From Tenet Book; Washington Scandal: Alleged Madam Revealing Clients; Better Armor for Troops

Aired April 30, 2007 - 17:00   ET

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


JACK CAFFERTY, CNN CORRESPONDENT: Thomas in Surfside, Florida: "Jack, your propensity for outrage simply overwhelms me at times! Being a member of the Iraqi parliament happens to be one of the most dangerous jobs on the planet. Quite a few of them have paid for the privilege of serving it with their lives and the live of their families. Our own House and Senate do their best to avoid Washington in the summertime. Lighten up, Jack. You take more time off than the CNN anchor and staff combined.
It just seems that way, Thomas.

Larry in Texas: "If I were any Iraqi, I'd take a long vacation. We went in, destroyed their country for corporate profits and you wonder why they're not grateful. You can't be serious. The same buffoons that planned this abortionable war also helped get Maliki elected.

Why do you now expect him to be any less incompetent than the people that engineered his rise to power?

Dallas in North Carolina: "Jack, only if our troops take the rest of the civil war off."

And Bill in Washington, D.C.: "Who do they think they are? France? Get off your butts and create a country."

Wolf.

WOLF BLITZER, HOST: Thank you, Jack, for that.

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

Happening now, bloody April -- another staggering death toll for U.S. forces in Iraq. As the troops pay a terrible price, there are stunning new revelations about the Iraq rebuilding effort.

Are U.S. taxpayers throwing good money after bad?

Was 9/11 a convenient excuse for the Bush administration to invade Iraq?

There's new fallout today in the CIA controversy as the former director, George Tenet, finds himself at the center of a storm.

And will an alleged madam name more names from among Washington's rich and powerful? One official has already stepped down.

Who might be next?

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

Roadside bombings, ambushes, small arms fire -- a terrible toll among American troops as a bloody April finally draws to a close. Fourteen U.S. troops killed in a 72-hour period. One hundred four American troops killed overall this month, as April now becomes one of the deadliest of the war. The three worst months for U.S. troops -- December, 2006 -- 112 Americans were killed; April, 2004 -- 135 troops died; and the bloodiest of all, November, 2004, when 137 American troops were killed.

The dangers are always present, as CNN's Arwa Damon tells us from Baghdad -- Arwa.

ARWA DAMON, CNN INTERNATIONAL CORRESPONDENT: Wolf, it is nearly impossible to really describe what it's like for U.S. troops operating here. One thing for certain is that is is an incredibly frustrating, difficult, challenging and deadly atmosphere.

(BEGIN VIDEO TAPE)

DAMON (voice-over): There is no sugar coating the realities of war.

UNIDENTIFIED MALE: Left?

UNIDENTIFIED MALE: It's right!

DAMON: From snipers who lay in wait on rooftops...

UNIDENTIFIED MALE: We're talking about five people.

DAMON: To roadside bombs.

UNIDENTIFIED MALE: Jesus!

UNIDENTIFIED MALE: (UNINTELLIGIBLE).

UNIDENTIFIED MALE: All right, go right, go right, go right, go right!

UNIDENTIFIED MALE: To be honest with you, this tour is a lot worse than the last tour. (UNINTELLIGIBLE).

DAMON: As America increased its forces, drew up new strategies and dusted off old ones, the insurgency morphed itself, as well. In the chess game that is the war in Iraq, a strategic switch by the American side is countered by a deadly change in tactics by the other side. GENERAL DAVID PETRAEUS, COMMANDER, MULTI-NATIONAL FORCE-IRAQ: Our achievements have not come without sacrifice. Our increase in operational tempo, location of our forces in the populations they are securing and conduct of operations in areas where we previously had no presence, as well as the enemy's greater use of certain types of explosive devices, have led to an increase in our losses.

DAMON: This month among the deadliest for U.S. forces and the deadliest for British troops operating in the south. As the Baghdad security plan unfolded and caused a ripple effect throughout the country, senior commanders knew more of their men would pay with their lives. A risk it deemed worth taking to make sure this plan for Iraq succeeds, because, quite simply, there is no Plan B.

(END VIDEO TAPE)

DAMON: U.S. military commanders say that even for this plan to succeed, is it going to take a lot of time. But everyone right now acknowledges that the war in Iraq is not going to be won simply by American military might, but both American and Iraqi commanders say that if the U.S. withdraws prematurely, Iraq will not stand a chance -- Wolf.

BLITZER: Arwa Damon on the front lines for us in Baghdad.

The latest casualties, by the way, bring the overall U.S. military death toll since the start of the war in Iraq to 3,351.

As troops pay a heavy price, what about American taxpayers?

A disturbing new report of waste and corruption in the effort to try to rebuild Iraq.

let's go to our Pentagon correspondent, Barbara Starr.

She's following this story for us -- Barbara, what are we learning?

BARBARA STARR, PENTAGON CORRESPONDENT: Well, Wolf, the man in charge of keeping an eye on Iraq's reconstruction had a look around and he didn't like what he saw.

(BEGIN VIDEO TAPE)

STARR (voice-over): At the Irbil Maternity and Pediatric Hospital in northern Iraq, the sewer system doesn't work. Medical waste and contaminated water backs up into patients' rooms. Just last year, the U.S. said the hospital was providing first rate care.

Today, it's a $7 million example of a U.S. financed reconstruction effort gone wrong.

In the latest report from the special inspector-general for Iraq reconstruction, inspectors also found continuing problems providing Iraqis with electricity, clean water and sewage treatment. FREDERICK BARTON, CENTER FOR STRATEGIC & INTERNATIONAL STUDIES: We've made bad choices in terms of the large projects and then we put it all on a very fast timetable, thinking that we could get this stuff done and get out of town.

STARR: Congress budgeted some $20 billion to rebuild Iraq. More than 80 percent of it has been spent and most Iraqis don't feel it's brought them a better life.

The latest report looked at $150 million worth of projects. It's just a snapshot, but most of the projects are no longer in working order. At Baghdad International Airport, 17 power generators were delivered some 16 months ago. Today, 10 are no longer working. It was a $12 million effort.

(END VIDEO TAPE)

STARR: Wolf, Stuart Bowen, the special inspector-general for Iraq, still has 79 ongoing investigations of potential wrongdoing and a number of those cases already referred to the Justice Department -- Wolf.

BLITZER: All right, we'll watch this story with you, Barbara.

Thank you.

Meanwhile, are the United States and Iran headed for some accidental diplomacy?

Their top diplomats may -- just may be -- meeting this week in Egypt.

(BEGIN VIDEO CLIP)

GEORGE BUSH, PRESIDENT OF THE UNITED STATES: Should the foreign minister of Iran bump into Condi Rice, Condi won't be rude. She's not a rude person. I'm sure she'll be polite. But she'll also be firm in reminding this representative of the Iranian government that there's a better way forward for the Iranian people than isolation.

(END VIDEO CLIP)

BLITZER: Let's go to our White House correspondent, Ed Henry.

The secretary and the jiff -- how likely are they to actually meet while they're all at Sharm-El-Sheikh in Egypt?

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: It's clear, U.S. officials are noting that it's a real possibility. That's part of the reason why the president said that so directly, although it was noteworthy in that sound bite, you saw the president really tried to downplay it and almost make it like they might run into Starbucks or something like that, like it was no big deal, ah, they'll just bump into each other.

That's, in part, because the White House doesn't want to draw more attention to the fact that this is a bit of a reversal. They had shut the door on any kind of direct talks. Now they're opening it.

Also, U.S. officials very carefully want to lower expectations. They're saying they're not expecting some sort of a major breakthrough, and that's why they really want to downplay this. The only thing they might get out of it, they say, is that since this is a regional conference on Iraqi security and stability, they want to send a message to Iran to stop meddling in Iraq -- Wolf.

BLITZER: We'll be following her trip over there every step of the way.

Ed, thank you very much.

let's go to Jack Cafferty in New York for The Cafferty File -- Jack.

JACK CAFFERTY, CNN CORRESPONDENT: Wolf, six former CIA officers who used to work for him at the CIA are now calling George Tenet "the Alberto Gonzales of the intelligence community -- a grotesque mixture of incompetence and sycophancy shielded by a genial personality."

That's a quote.

The six say that Tenet was a willing participant in selling the war in Iraq based on phony intelligence. The agents write: "The CIA had solid intelligence in 2002 that there were no weapons of mass destruction in Iraq, no link between Iraq and al Qaeda and that Saddam Hussein considered Osama bin Laden an enemy."

And yet they say that Tenet went before Congress anyway, the following year, February of 2003, and testified that Iraq did, indeed, have links to al Qaeda.

They say George Tenet should have resigned instead of taking part in the administration's buildup to the war in Iraq.

In his book, Tenet complains at great length that he's a victim in all of this. His former employees beg to differ. They write this: "Your lament that you're a victim in a process you helped direct is a self-serving, misleading and admission of failed leadership. You weren't a victim, you were a willing participant in a poorly considered policy to start an unnecessary war and you share culpability with Dick Cheney and George Bush for the debacle in Iraq."

So here's the question -- some former CIA officers want George Tenet to return his Medal of Freedom and give part of his book royalties to soldiers and their families, people that were wounded in Iraq.

Is he right?

E-mail caffertyfile@cnn.com or go to cnn.com/caffertyfile -- Wolf.

BLITZER: George Tenet will be Larry King's guest, Jack, tonight, at 9:00 p.m. Eastern have he'll be here in THE SITUATION ROOM on Wednesday.

Still to come, open revolt against the World Bank President Paul Wolfowitz. Fighting to save his job and lashing out at what he calls the bogus charge against him.

Also, a tank proven to save American lives. Find out why more of them aren't getting to U.S. troops in Iraq.

An accused madam naming names from her little black book.

Will more of Washington's elite get caught up in a growing scandal?

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

(COMMERCIAL BREAK)

BLITZER: Paul Wolfowitz now fighting back.

Under fire for promoting his girlfriend, the World Bank president says he's a victim of a "smear campaign."

Our State Department correspondent, Zain Verjee, has the story -- Zain.

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Wolf, that's an open revolt at the World Bank -- calls for Paul Wolfowitz to resign.

Today, he made his case to stay on as president.

(BEGIN VIDEO TAPE)

VERJEE (voice-over): Crunch time for Paul Wolfowitz. He took his case directly to a special World Bank panel to fight for his job.

At the center of the storm, how he handled the promotion and pay raise of his girlfriend, Shaha Riza. She was moved from the World Bank to the State Department when he took over.

In a statement defending himself, Wolfowitz says: "I will not resign in the face of a plainly bogus charge of conflict of interest. Only when the cloud of these unfair and untrue charges is removed would it truly be possible to determine objectively whether I can be an effective leader of the World Bank."

He submitted documents he says show he did nothing wrong and acted in good faith, that he tried again and again to sideline himself to avoid a conflict of interest. He says: "The World Bank ethics committee directed him to handle Riza's promotion and pay."

President Bush has supported the man he put in the top job.

BUSH: My position is, is that he ought to stay. He ought to be given a fair hearing.

VERJEE: But Wolfowitz has lost support of much of his staff, who say that a champion of anti-corruption policies is now tainted and can't lead.

From the outset, Wolfowitz had many opponents at the World Bank because he was an architect of the Iraq War. Many European countries want him out, including Germany, whose chancellor met with the president.

His lawyer, Robert Bennett, wants the bank to lower the temperature and deescalate the unnecessary dispute.

(END VIDEO TAPE)

VERJEE: The question now is, is there any room for compromise between Paul Wolfowitz and the World Bank board?

Wolf.

BLITZER: Zain Verjee reporting tonight.

Thank you, Zain.

A panel, by the way, reviewing the Wolfowitz situation is to report to the World Bank's 24-member board, which could make a decision in the case this week. We'll stay on top of the story.

The controversial bill calling for U.S. troops to start withdrawing from Iraq beginning in October is expected to land on President Bush's desk tomorrow, and he's making it clear once again today he will veto it.

But with the American public increasingly opposing the war, will the president's stance hurt his fellow Republicans?

And joining us now, Senator Mel Martinez. He's the chairman of the Republican Party.

Senator, thanks very much for coming in.

SEN. MEL MARTINEZ (R), FLORIDA, REPUBLICAN PARTY CHAIRMAN: It's always good to be with you.

BLITZER: You've got a tough job ahead of you. This showdown unfolding right now and you're deeply involved, as both the party chairman and a senator, the showdown between the president and Democrats in Congress.

The American public seems to be supporting the Democrats, as far as putting a time line on -- on U.S. troops withdrawing from Iraq. A recent poll had this question asked: "Who are you more likely to side with in the Iraq dispute between Bush and Congress?"

Sixty percent said Democrats in Congress, 37 percent said President Bush.

You've got an uphill struggle politically, senator.

MARTINEZ: Well, it is a political issue, and that's why the Democrats are focusing on the political side of this debate. I, frankly, have to tell you that I think when you look at it as a senator, you have to recognize that we cannot just leave Iraq as a failed state. A precipitous departure would be a wrong thing to do. And putting a date by which we would depart would really be telling our enemies the time when they could surely have a victory.

So I think you can look for the president to put a veto on this bill and I hope then we'll pull together as Americans -- not as Democrats and Republicans -- pull together as Americans to see if we can find a solution to -- to the baffling problem of Iraq.

It is a difficult problem. But just withdrawing, Wolf, is just not going to fix it.

BLITZER: Republican Senator Chuck Hagel of Nebraska tells Robert Novak in a column that's published in today's "Washington Post" that the U.S. has to start thinking about pulling out its troops, especially from Baghdad. He says it's a civil war right now. He says if the Bush administration doesn't do that, he says this. He says: "Then the prospects of the Republican Party are very dim next year."

How worried are you, Senator Martinez, that if the situation in Iraq stays next year as it is right now, you're going to suffer further loses in the Senate, in the House and in the presidential campaign?

MARTINEZ: You know, I love Senator Hagel and I have a lot of respect for him. But on -- in terms of what to do in Iraq, I'm going to take my advice from General Petraeus, who was here in the capital last week. And he -- he doesn't think this is the time to withdraw. In fact, he seems some signs that could be hopeful.

The Iraqis have to make some tough decisions politically. They have to come together in some regards. And that will open the way for a much better outcome in Iraq. It's too soon to begin to asses the impact of Iraq on elections that would be more than a year-and-a-half away. We would not have thought that the Senate would be in Democrat hands today if we had looked back a year-and-a-half back.

And, so the fact is, it's still a lifetime in politics. Plenty of time for a lot of things to happen and a lot of things to change.

BLITZER: In terms of politics, it looks like the top three Democratic presidential candidates, the three Democratic front runners, raised a lot more money than the top three Republican presidential candidates.

What does that say to you?

Put on your political hat for us.

MARTINEZ: Right. Well, here's what I'll tell you, is the Republican Party raised more money than the Democratic Party. So I think that there's still -- we have more candidates on the field and we have a little bit of a process of winning -- winnowing out. I think that there's been a lot of excitement about someone like Barack Obama. I know him in the Senate. I served with him. And I think that that all has generated an awful lot of excitement.

But I will tell you that I think we have an embarrassment of riches when it comes to candidates with experience, with the kind of seasoning that it takes to be president. I think we'll be fine in that regard. I really, frankly, like our field. I think we're going to be fine and I think the support will be there.

I was with the president on Saturday. We did a lot of money raising in addition to speaking to a bunch of people who had just gotten a college degree. And some of that seems to be going rather well, frankly, and I appreciate the fact that the president continues to help the party by raising money.

BLITZER: Because a lot of Republicans are still saying right now they're not totally satisfied with the field of Republican presidential candidates. They would like a Fred Thompson, perhaps, to jump in; a Newt Gingrich; maybe some other Republicans.

Are you among those Republicans who would like to see other candidates jump into this contest?

MARTINEZ: No. Being the chairman, I have to be agnostic about all of that. I'm excited about those that are in and I also think there's some good people in the wings. So, frankly, I think, not only do we have good candidates, but I think someone like a Fred Thompson could be very exciting to have if he chose to join the race.

We've -- like I said, we have an embarrassment of riches. We have a lot of good people running, people with a lot of depth of experience, Wolf. And I think that's going to be the defining difference. I think Americans are going to need a leader for the -- for the next president -- who has the depth of experience to deal with these very difficult issues that the world is facing.

I like our chances when we compare experience.

BLITZER: Mel Martinez is the senator, the Republican senator from Florida.

He's also the chairman of the Republican Party.

Senator, thanks for coming in.

MARTINEZ: Thank you, Wolf.

BLITZER: Coming up, did 9/11 provide the Bush administration with an excuse to attack Iraq?

There are new claims by the former CIA director, George Tenet, and they're sparking a new storm of controversy. I spoke with a CIA insider.

And weeks after an almost fatal car accident, New Jersey's governor is speaking out, asking for forgiveness. We'll tell you why.

Stick around. You're in THE SITUATION ROOM. (COMMERCIAL BREAK)

BLITZER: Carol Costello is monitoring some other stories incoming into THE SITUATION ROOM right now.

She's standing by to tell us what she has -- hi, Carol.

CAROL COSTELLO, CNN CORRESPONDENT: Yes, here's what's happening now, Wolf.

This police dash cam video at the center of a Supreme Court decision. The justices ruled today that the Georgia officer behind the wheel used reasonable force when he rammed a fleeing car, ending a high speed chase. But the resulting accident left the teenaged driver paralyzed. He later tried to sue the officer, but the court effectively dismissed that case.

New Jersey Governor Jon Corzine is out of the hospital, almost three weeks after he was almost killed in a car accident. As he was leaving, he made a brief but emotional remark, thanking his family and the medical staff and expressing regret that he wasn't wearing a seatbelt when the accident happened.

(BEGIN VIDEO CLIP)

GOV. JON CORZINE (D), NEW JERSEY: I also understand that I set a very poor example for a lot of young people, a lot of people in general. And I certainly hope the state will forgive me. And I'll work very hard to try to set the right kind of example to make a difference in people's lives as we go forward.

(END VIDEO CLIP)

COSTELLO: Corzine was a passenger in the SUV that crashed. A state trooper was driving that SUV and he was speeding. He was going 91 miles per hour.

Prince Harry will be seeing combat in Iraq. That is the final word from the head of the British Army, who says he personally made the decision to deploy the third in line to the throne. Military commanders reportedly have been reconsidering Harry's deployment for fear he would be a prime target for insurgents. The prince's regiment will likely start its six month tour in Iraq within weeks.

And the bottom line on Wall Street, the down and Nasdaq and the S&P all lost ground today. The tech heavy Nasdaq led the way, and the Dow followed, but not before setting a record intra-day high of 13,162. back to you -- Wolf.

BLITZER: Thanks, Carol, for that.

Coming up, George Tenet is definitely at the center of a storm, a storm of controversy surrounding his new book. Coming up, our Brian Todd takes a closer look at the fallout. Also, the so-called D.C. madam criticizes one of her former clients for not coming forward sooner. The Bush administration official says he did not have sex with one of Deborah Palfrey's clients, but he's also suddenly resigned his high level position. Carol Costello will sort things out for us.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

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

Happening now, a harsh rebuke for the Israeli prime minister, Ehud Olmert. A government commission calling his leadership of last summer's war with Hezbollah, and I'm quoting now, "a severe failure." It also says Olmert showed -- and, once again, we're quoting -- "a lack of judgment, responsibility and caution."

Also, the White House press secretary, Tony Snow, back on the job five weeks after treatment for a recurrence of cancer. He grew emotional as he thanked members of the news media for their support. He said he's optimistic about his health and he stated simply, "It's great to be back."

And the Virginia governor, Tim Kaine, closing the legal loophole that allowed the Virginia Tech gunman to buy his weapons, even after he had been deemed mentally ill. Kaine's executive order creates a database of such people and prohibits them from buying guns.

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

BLITZER: The former CIA director George Tenet certainly picked the right title for his new book. It's called "At the Center of the Storm". His assertions about the decision to invade Iraq have placed him right in the center of new controversy.

Let's turn to our Brian Todd for the latest fallout -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Wolf, Tenet's being rebutted by the Bush administration for his take on the pre-war intelligence debate, but he's also being skewered by some former CIA officers. And one account of an encounter he had just after September 11th at the White House is raising a few eyebrows here in Washington.

(BEGIN VIDEOTAPE)

TODD (voice over): The day after 9/11, were President Bush and his conservative allies making connections to Saddam Hussein? Former CIA director George Tenet describes an encounter that stunned him, he says, on September 12, 2001.

Tenet claims as he was going in to the White House early that morning, Richard Perle was leaving. In his new book, Tenet writes that Perle, a so-called neoconservative who headed a Pentagon advisory board at the time, "... turned to me and said, 'Iraq has to pay a price for what happened yesterday. They bear responsibility.'" GEORGE TENET, FMR. CIA DIRECTOR: And I remember thinking to myself as I'm about to go in and brief the president, "What the hell is he talking about?"

TODD: Perle tells "The Weekly Standard" he was in France that day, denies ever saying that to Tenet. Tenet now says his dates may have been off, but insists the exchange happened. Here's what Perle did tell CNN five days after 9/11.

RICHARD PERLE, DEFENSE ADVISORY BOARD: Even if we cannot prove to the standards that we enjoy in our own civil society that they were involved, we do know, for example, that Saddam Hussein has ties to Osama bin Laden.

TODD: Tenet has testified to a Senate committee will were no operational ties between Saddam and bin Laden. And before 9/11, Tenet claims, he didn't have the right opportunity to go after the al Qaeda leader. Tenet writes of a 1998 plan to capture bin Laden, backed by now former CIA officer Michael Scheuer, "Every one of the senior operations officers above Mike recommended against undertaking the operation. They believed the chances of success were too low."

MICHAEL SCHEUER, FMR. CIA OFFICER: That's a lie. The entire program was approved by everyone above me. It was canceled at the last moment for reasons unknown.

(END VIDEOTAPE)

TODD: Michael Scheuer says the U.S. military had no fewer than eight chances to kill Osama bin Laden between the springs of 1999 and 1999 -- Wolf.

BLITZER: Brian, thank you.

Former CIA insiders have been caught up in the storm over George Tenet's book and its controversial view of the decision-making that led to the war in Iraq.

(BEGIN VIDEOTAPE)

BLITZER: And joining us now is Robert Grenier. He's the former director at the CIA Counterterrorism Center.

Mr. Grenier, thanks very much for coming in.

ROBERT GRENIER, FMR. CIA COUNTERTERROR CHIEF: Very good to be here.

BLITZER: There's been criticism immediately leveled by some former CIA officers. Among others, Vincent Catastraro, Larry Johnson, saying this -- they're very angry. "We believe you have a moral obligation to return the Medal of Freedom you received from President George Bush. You were a willing participant in a poorly considered policy to start an unnecessary war and you share culpability with Dick Cheney and George Bush for the debacle in Iraq." This in an open letter they've written to George Tenet. They also want him to give up a large amount of proceeds he's making from this book.

Is that criticism of Tenet fair?

GRENIER: Well, no, I don't think that it is. And in fact, George himself has said that the only reason that he accepted that Medal of Freedom was for the performance of himself, and particularly of the organization in Afghanistan, not Iraq.

BLITZER: Because they're angry at him for allowing this war to go forward when he now says he didn't -- he never believed there was any imminent threat to the United States. And they say if you didn't believe that then, and you met with the president virtually every single day, why didn't you resign?

GRENIER: Well, the reason for the war, in my opinion, at least, is it had to do with the long-term threat that was posed by Saddam Hussein and his regime in Iraq. The reason for all of the focus on a short-term, imminent threat is because that was what was thought to be far more sailable in public relations terms.

So, to turn around afterwards and say, well, you know, it's your fault that you were a participant in what turned out in the end to be a misconstrued argument having to do with imminent threat, I think simply misses the point. The whole point for the war, irrespective of what was said frequently at the time, had to do with the long-term threat that was posed by that regime.

BLITZER: Listen to Michael Scheuer, a former CIA analyst on the Osama bin Laden case. Listen to what he said here on CNN earlier this morning.

(BEGIN VIDEO CLIP)

SCHEUER: If he had that information and it wasn't being listened to, it would seem to me his duty was to resign and tell the American people.

(END VIDEO CLIP)

BLITZER: You know, that's a strong criticism of George Tenet, that he allowed this -- this facade, if you will, to go forward, that there was, in fact, an imminent threat to the United States.

GRENIER: Well, I think that he feared that there was an imminent threat to the United States. You mean by bin Laden and al Qaeda?

BLITZER: No. By Saddam Hussein.

GRENIER: Oh, by Saddam Hussein. Well, again, we did have a pattern of intelligence, a pattern of evidence which indicated that there may very well be an imminent threat, at least in the region. It was thought by nearly all analysts that Saddam did have a chemical weapons capability. It was feared that he probably had a biological weapons capability.

BLITZER: But because...

GRENIER: People realized that he was still some time away.

BLITZER: What he's suggesting, George Tenet...

GRENIER: I'm sorry?

BLITZER: What George Tenet is suggesting in the book is that -- that the whole war, the notion of a war against Saddam Hussein, analysts at the CIA were telling him that this is going to be a disaster. This is not going to be a cakewalk. This is not going to be easy. This is going to be a protracted ordeal for the United States, a very painful ordeal, and the notions that he, in turn, was not conveying that sense directly to the president.

GRENIER: Well, I'm not sure just how compelling an argument was being made at the time. I think it was recognized that the war itself, the act of hostilities, would probably go forward fairly quickly and would be successful.

The concern had to do with the aftermath of the war, and there were a great many unknowns. And the greatest unknown was the policy that was going to be pursued by the United States of America. We were one ever of the great agents of the future in Iraq, and George was not going to be responsible at the end of the day for U.S. policy in Iraq.

BLITZER: Because you were the mission manager for Iraq during the buildup to the war. In the book Tenet writes, "There was never a serious debate that I know of within the administration about the imminence of the Iraqi threat."

Do you remember any debates, any discussion that you had personally about the imminence of the Iraqi threat?

GRENIER: No. There were no such discussions that I ever participated in. And again, I think it gets to the overall point that the focus, irrespective of the public relations case, the focus was on the long-term threat, not the imminent near-term threat.

BLITZER: Robert Grenier, thanks for coming in.

GRENIER: Thank you.

(END VIDEOTAPE)

BLITZER: And you're going to be able to hear from George Tenet himself tonight. He'll be Larry King's guest live, 9:00 p.m. Eastern, 6:00 Pacific. He'll also be here in THE SITUATION ROOM on Wednesday.

Up ahead, a tank that could save American lives in Iraq. Find out why more of them aren't getting to the frontlines.

Also, the so-called D.C. madam names at least one name. Carol Costello will tell us about the high-level administration official who suddenly resigns.

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

(COMMERCIAL BREAK)

BLITZER: An alleged madam and a roster of influential clients. The main elements of a growing scandal that has Washington buzzing has already cost one top official his job.

CNN's Carol Costello is watching this story for us.

Are we expected to learn more names, Carol?

CAROL COSTELLO, CNN CORRESPONDENT: It could happen pretty soon, Wolf. You know, this alleged madam, Deborah Palfrey, held a bizarre news conference today. She appeared in court to request another lawyer. She left the courtroom with an apology, more threats, and a thirst for revenge.

(BEGIN VIDEOTAPE)

COSTELLO (voice over): The alleged D.C. madam, Deborah Palfrey, played sweet at first, reaching out to Randall Tobias, the first prominent Washington politician to admit he used her self-professed legal erotic fantasy service.

DEBORAH PALFREY, ALLEGED D.C. MADAM: Allow me to say how genuinely sorry I am for Mr. Tobias, his family, and his friends.

COSTELLO: Sources say Tobias, a top State Department official appointed by President Bush, directed programs to fight AIDS overseas. Important methods? Abstinence was one. Combating worldwide prostitution or human trafficking was another.

Tobias, who's married with children, told ABC NEWS he'd "... have gals come over to the condo to give me a massage." No sex, but massages.

His confession played into Palfrey's hands. She berated Tobias for not stepping forward sooner to describe the legal services he obtained from her.

PALFREY: Had he done so earlier, I most likely would not be in my current predicament.

COSTELLO: Palfrey wants to force others on her client list to reveal themselves. And she's hoping to use ABC News to do that.

She's given the network selected telephone numbers taken from 46 pounds of telephone invoices, telling reporters she wants ABC's help in identifying potential defense witnesses like Tobias. And while ABC doesn't characterize its mission that way, it has the goods.

BRIAN ROSS, ABC NEWS: There are several thousand names, tens of thousands of phone numbers, and they range from administration officials, to lobbyists, to advisers who are well known, people who appear on television, lawyers, and then just lots of sort of ordinary businessmen and CEOs.

COSTELLO: It leaves those who have used Palfrey's services with a painful weight, which is exactly what Palfrey seems to want.

ANNE SCHROEDER, POLITICO.COM: She wants to go down in flames. She's going to bring some people with her. She's definitely made that very definitely clear.

(END VIDEOTAPE)

COSTELLO: Oh, yes, she has. But look, it's not clear if Palfrey turned over the biggest names on her list to ABC News.

And you know, Wolf, there are two ways to think about this. One, you'd think if she did have a big name, he or she would have already resigned. Or two, the alleged big fish is calling her bluff, because if you can't prove he or she paid for sex, will ABC publicize the name?

BLITZER: We'll watch the story unfold. Thank you. Good questions to ask.

Carol Costello watching the story for us.

Still ahead here in THE SITUATION ROOM, a freeway collapse threatening to cause traffic nightmares tonight, and for tens of thousands of drivers.

Plus, the tank that can save American lives caught in the battle between Congress and the White House. We'll explain.

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

(COMMERCIAL BREAK)

BLITZER: Lou Dobbs getting ready for his show that begins right at the top of the hour.

Lou, what are you working on?

LOU DOBBS, HOST, "LOU DOBBS TONIGHT": Wolf, thank you.

Tonight we're reporting on the rapidly increasing number of American casualties in Iraq. This month now one of the deadliest months in this entire war.

What can be done to protect our troops? We'll have that special report from Baghdad tonight.

Also, the Supreme Court has made a ruling on high-speed police chases that will affect communities across the entire nation. How much can force can police reasonably use in car chases? We'll have that story.

And the illegal alien open borders lobby will hold nationwide protests and demonstrations tomorrow, pushing amnesty and open borders. The superintendent of California schools telling his students, well, go make a protest for their own safety. We'll have that special report.

And among my guests here tonight, the author of an important new book on our illegal immigration crisis, Vanderbilt University professor Carol Swain.

Please join us for all of that, a great deal more, all the day's news at the top of the hour right here on CNN.

Wolf, back to you.

BLITZER: Over the weekend, Lou, the president, at a commencement address down in Miami, made a major push for what he calls comprehensive immigration reform, reaching out not only to Democrats, but to Republicans who are concerned as well.

You think they're going to get this legislation passed any time soon?

DOBBS: Well, you know, I hope they certainly don't, because the president, the Democratic leadership of the Senate, are lying through their teeth on the issue of illegal immigration and border security, and are not serving the interests of the American people. You know, it's really remarkable what is being permitted in Washington, D.C., and mainstream media, Wolf, in the obfuscation rather than the illumination of facts and the welfare of the nation.

BLITZER: Lou's got a lot more coming up on this subject at the top of the hour.

DOBBS: You bet.

BLITZER: He'll be here in THE SITUATION ROOM with us tomorrow as well.

Thank you, Lou, for that.

DOBBS: Thank you.

BLITZER: The standoff between the president and Congress over funding the war in Iraq has led to an unintended consequence -- a potential delay in purchasing life-saving armored vehicles for American forces.

Let's go to our senior Pentagon correspondent, Jamie McIntyre.

Jamie, what is this all about?

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT: Well, Wolf, whatever their differences, both Democrats and Republicans agree that U.S. troops in the field should get what they need. So why is some proven life-saving technology caught in the middle of a budget battle?

(BEGIN VIDEOTAPE) MCINTYRE (voice over): It's not impenetrable, but the U.S. military's newest armored vehicle design has turned out to be a lifesaver in Iraq.

STAFF SGT. TIM KESSLER, U.S. MARINE CORPS.: We took a small hit last week. It was a round that blew a tire. Basically, the extent of the damage. Any time we take a blast, the old way the vehicle is built, it just prevents casualties.

MCINTYRE: In military jargon, the vehicle is an MRAP, short for Mine Resistant, Ambush Protected. The various models all feature a raised V-shaped undercarriage that deflects the force of roadside bombs, providing four to five times the protection of an armored Humvee and cutting casualty rates by IEDs by some two-thirds. Price tag, $1 million each.

Senate support to rush thousands more to the frontlines is unanimous and bipartisan.

SEN. JOSEPH BIDEN (D-DE), PRESIDENTIAL CANDIDATE: This is a matter of life and death -- 2,500 more vehicles means literally that 10,000 to 30,000 more Americans will have a three to four times greater chance of surviving a hit with an IED while on patrol than exists today if we don't act.

MCINTYRE: But plans to kick the deployment of the better armored vehicles to Iraq into high gear has hit a political roadblock -- the standoff between Congress and the White House over Iraq funding. While each side blames the other, $3 billion for more life-saving vehicles is held hostage to the political debate. As the outgoing Army chief told Congress last month, the only holdup is funding.

GEN. PETE SCHOOMAKER, U.S. ARMY CHIEF OF STAFF: We can build if we could get the funds to build. It's strictly an issue of money.

(END VIDEOTAPE)

MCINTYRE: And so while the Democrats send the president a bill he can't sign, and the president holds out for one with no timelines, the Army and the Marines have to get by with the 1,000 vehicles they have now, not the 6,000 more they're still waiting for -- Wolf.

BLITZER: So there's a clear frustration level that you're sensing out there?

MCINTYRE: Well, that's right. I mean, obviously it doesn't become a critical problem right away. But with Congress looking like they may not come up with a compromise until June, that's really putting the squeezen on the Army to try to reprogram some funds to keep the flow of these vehicles going.

BLITZER: Jamie, thank you for that. We'll stay on top of this story for our viewers.

Tens of thousands of drivers in the San Francisco Bay Area are only hours away from what threatens to be a nightmare commute. Part of a major freeway interchange is closed after the highway collapsed in a fiery accident.

A gasoline tanker truck crashed on the connector road early yesterday morning, and the resulting fire was so hot, it simply melted the metal support structures on the highway above. Several witnesses caught the freeway fire and the collapse on video as it happened.

Let's bring in our Internet reporter, Abbi Tatton.

Abbi, what are we seeing?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, multiple angles to this collapse early in the hours yesterday morning.

The first is an I-Report I'm going to show you right now. It came in to CNN very soon after this interchange collapse.

This is from Paul Kochlij, who was coming off the San Francisco Bay Bridge and recorded these images of the tanker in flames, stopped to do so. These are flames which shot several hundred feet into the air.

And other motorists were from different vantage points. Take a look at this one from independent filmmaker Iser Kasiavich (ph), who put this one on YouTube.

Iser (ph) saw the crash happen, drove up on to a highway, a bridge section that was a little bit higher so he could record these images. You can see other motorists who had stopped and watched the collapse as it happened. Iser (ph) said that in this fireball he could just about make out the shape of the tanker. And amazingly, the truck driver survived, suffering second-degree burns -- Wolf.

BLITZER: OK, Abbi. Thanks very much. Let's see what happens out in San Francisco.

Up next, Jack Cafferty wants to know this: should former CIA chief George Tenet give up his Medal of Freedom and his book royalties?

And Condi won't be rude. That pledge from President Bush, saying his secretary of state may meet up with an American foe. More of that coming up in our 7:00 p.m. Eastern hour.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Here's a look at some of the "Hot Shots" coming in from our friend over at The Associated Press. Pictures likely to be in your hometown newspapers tomorrow.

In Germany, special forces of the police hang on to a helicopter during a training session.

In Virginia, men dressed as 17th century settlers celebrate the 400th anniversary of Jamestown, the first permanent English settlement in the new world.

In Taiwan, dancers mark the birthday of a traditional deity.

And in India, zookeepers feed a newborn giraffe.

Some of this hour's "Hot Shots," pictures often worth a thousand words.

Let's go to Jack Cafferty in New York.

Jack, you love those pictures.

JACK CAFFERTY, CNN ANCHOR: I do. I like them a lot.

What do you feed a baby giraffe?

BLITZER: Milk?

CAFFERTY: I guess.

The question is, some former CIA officers want George Tenet to return his Medal of Freedom and give his book royalties to soldiers who were wounded in Iraq. Are they right?

Ed writes, "Jack, I've got a question for you. Why would a self- serving, book-hawking incompetent start behaving selflessly and honorably now?"

Willow in Portland, Oregon, "I saw him interviewed on '60 Minutes' last night, was completely unimpressed with his attempt at pimping his own get-out-of-jail free card in the form of his book. He ought to be ashamed of himself for not coming forward sooner, much sooner. He, just like the rest of the Bush administration, has blood on his hands."

Ryan in Arizona, "As far as I'm concerned, the jury is still out on Tenet. However, as far as those six CIA officials go, if their present status is 'former,' maybe they couldn't handle their jobs and were summarily bounced. It sounds like sour grapes to me."

Charles in New York writes, "Absolutely! That pathetic acting job on '60 Minutes' didn't fool me. It reminded me of when my daughter was in high school and I'd catch her in a lie. She'd give me that righteous indignation act. It didn't work then. It doesn't work now."

"If you believe Tenet, then his silence caused more lives than 9/11. He doesn't deserve any medals or any financial benefit, period."

Andy in New Jersey, "I think the CIA officers are being kind to Tenet. He ought to be serving 3,400 consecutive life sentences for each of the fine young men and women we have lost in this fraudulent war."

Holly writes, "A better question might be: Where were these six CIA agents when George Tenet was testifying to things that they knew were untrue?"

And Monica in Houston, "No, I want him to keep the medal. He received the medal for helping sell the war. He sold it well, and he deserves the Medal of Freedom from Bush."

"In fact, he should be required to wear it in public every day for the rest of his life. Keep the money, too. Spend it to fill the hole inside."

If you didn't see your e-mail here, you can go to cnn.com/caffertyfile. We post more of them online, along with video clips of "The Cafferty File".

Remember that dog and pony show at the U.N., Wolf, where Colin Powell was holding up those pictures of the mobile biological weapons labs?

BLITZER: You remember the two guys sitting behind him?

CAFFERTY: Well, that's where I was going with this. George Tenet was sitting right behind him giving additional credibility, the CIA director sitting there with Colin Powell. It was a disgrace.

BLITZER: John Negroponte was the other one, the U.N. ambassador.

Jack, see you in an hour.

We'll be back in one hour. Much more of THE SITUATION ROOM coming up.

In the meantime, let's go to Lou in New York.

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