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THE SITUATION ROOM

Path to Citizenship: Immigration Compromise; The Hidden Cost of Gas Prices; New York Police Spying Revealed

Aired May 17, 2007 - 17:00   ET

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


WOLF BLITZER, HOST: And to our viewers, you're in THE SITUATION ROOM.
Happening now, senators reach a deal that promises a path of citizenship for millions of illegal immigrants. That makes the president happy. But there's controversy in this compromise.

Can they actually turn it into law?

Did the U.S. Army fail to protect troops in the Triangle of Death in Iraq?

As the hunt goes on for missing American soldiers, there are new details emerging about deadly mistakes in an earlier incident.

And it's called an honor killing.

But where is the honor in stoning to death a young girl accused of shaming her family?

We have shocking video coming in from Iraq.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

New details are emerging in another attack in the Triangle of Death with an eerie resemblance to last weekend's bloody ambush that left American soldiers missing and killed.

Did the U.S. military fail to learn from earlier mistakes?

Let's go live to our Pentagon correspondent Barbara Starr.

She is standing by -- Barbara this is all pretty shocking stuff.

What are we learning?

BARBARA STARR, PENTAGON CORRESPONDENT: Wolf, it is the question of the hour -- did the Army fail to learn a lesson -- a tragic lesson -- from a year ago?

(BEGIN VIDEO TAPE)

STARR (voice-over): As U.S. troops continue their desperate search for three missing soldiers, the Army has finally made public a lengthy investigation into a disturbingly similar incident in almost the same location south of Baghdad nearly a year ago.

It was last June when three soldiers of the 101st Airborne Division were attacked and killed.

MAJ. GEN. JAMES THURMAN, U.S. ARMY: I'm investigating this to get to the facts and circumstances surrounding that. The investigation will give me some recommendations. And I'll look at every little fact associated with this.

STARR: Specialist David Babineau was killed outright. Private First Class Kristian Mechaca and Private First Class Thomas Tucker were kidnapped, their bodies found mutilated days later, despite a massive search.

The Army investigation said the mission that night was inadequately planned, supervised and executed.

This is just part of what the Army says went wrong last year. The three soldiers were left unprotected at the checkpoint for a 24 hour to 36 hour shift. They were too exhausted to be alert. There was no nearby fire support. Rescue forces were at least 15 minutes away. And the report found that the unit had suffered so many combat losses in the days before the attack, the troops were unprepared.

(END VIDEO TAPE)

STARR: Wolf, the platoon leader and the company commander from this previous incident were relieved of duty. But that is all that happened. No criminal charges were filed.

BLITZER: I assume, Barbara, a similar investigation will be undertaken in regards to this current incident.

STARR: Wolf, they have already begun that investigation even as they continue to look now for the three missing American soldiers.

BLITZER: They've got to learn the lessons from some of these horrible incidents.

Thanks very much, Barbara -- very much.

Barbara Starr at the Pentagon.

The U.S. military is still holding out hope that it can find the three missing soldiers. But searchers are up against enormous odds, including some very tough terrain.

CNN's Arwa Damon is with U.S. troops near the see scene of the ambush in so-called the Triangle of Death.

ARWA DAMON, CNN INTERNATIONAL CORRESPONDENT: Wolf, we're within a half mile radius of where Saturday's attack took place. And, as you can see, the vegetation here gets so thick in some places that you can barely see through it. And it provides the insurgents perfect cover to carry out their attacks, plant roadside bombs. And it makes it even harder for the Americans to try to find their missing men. Now, we've been speaking with soldiers who knew those that were killed and kidnapped in Saturday's incident. They are saying that the attack has only strengthened their resolve to try to defeat the insurgency here. Their number one, priority, of course to find those that were kidnapped.

One young soldier who I spoke to said that he was right now in "go mode," trying not to think about the consequences of Saturday's attack. But he did say that he was concerned that the demons would haunt him when he went back home -- Wolf.

BLITZER: Arwa Damon on the scene for us in the Triangle of Death.

Arwa, be careful over there.

Elsewhere in the Middle East, Israel says it won't be dragged into the bloody battle between Palestinian factions in Gaza. But today it hit back hard in response to rocket attacks coming from Gaza into Israel. And that's bringing Palestinians together once again, at least for now.

CNN's Atika Shubert is in Jerusalem -- Atika.

ATIKA SHUBERT, CNN CORRESPONDENT: Wolf, after days of fighting in the streets of Gaza between Fatah and Hamas, now Israel decided to step in the fray with a series of air strikes.

(BEGIN VIDEO TAPE)

SHUBERT (voice-over): A precise and devastating strike in the heart of Gaza City. Israel used air power to destroy the headquarters of Hamas' executive force, its elite military wing.

Hours later, Israel carried out two more attacks, on a Hamas post and a vehicle carrying members of Hamas' Izzaddin al-Kassam Brigades, an armed unit that claimed responsibility for launching a barrage of rocket attacks into Israel.

Israel says the air strikes were an unavoidable response to terror attacks on Israel.

MIRI EISEN, ISRAELI GOVERNMENT SPOKESWOMAN: Today in Israel, we have had enough. Israel will take every defensive measure to stop these rocket attacks. We will defend our citizens against the rockets, against the weapons, against the Iranian-backed Hamas who are attacking Israel.

SHUBERT: Earlier in the week, it was Palestinian against Palestinian -- Hamas versus rival faction Fatah battling in out on the streets for control of Gaza. In the last three days, dozens have been killed in the violence.

In the midst of the fighting, Hamas dramatically increased the number of rocket attacks into Israel -- more than 80 rocket attacks in the last three days, most of them falling in the town of Sderot, hitting homes and a school.

The Israeli response was swift and harsh.

Palestinians immediately rallied together, condemning Israel's action, pushing aside their differences to focus on an old common enemy.

(END VIDEO TAPE)

SHUBERT: And things may only get worse. Hamas says it will respond to these air strikes with more violence more attacks, including possible suicide attacks -- Wolf.

BLITZER: Atika Shubert on the scene for us in Jerusalem.

Let's take a closer look at the areas of conflict.

Gaza lies on the Mediterranean coast, where Egypt and Israel meet. It covers just 146 square miles, about twice the size of Washington, D.C.

Since Israel removed its settlements from Gaza in 2005, the population now almost entirely Muslim, numbering just under 1.5 million.

The West Bank lies between Israel and Jordan. At 2,270 square miles, it's smaller than the state of Delaware. It's about 75 percent Muslim, 17 percent Jewish, with Christians and others making up about 8 percent. The population is just more than 2.5 million on the West Bank.

Let's check in with Jack Cafferty.

He's in New York with The Cafferty File -- Jack.

JACK CAFFERTY, CNN CORRESPONDENT: Well, apparently, Wolf, there is a deal.

Key Democratic and Republican Senators announced this afternoon an agreement with the White House on immigration overhaul.

It would grant quick legal status to millions of illegal aliens already in the United States. That's amnesty. You see, if you're here illegally and suddenly they give you legal status, that's amnesty.

We did this already. 1986 -- the United States granted amnesty to three million illegal aliens who were in the country then.

It didn't work. Now, there are between 12 and 20 million illegal aliens in the country. It doesn't work.

This plan would also tighten border security, create a temporary worker program to bring new workers into the U.S. It includes a so- called point system that, for the first time, would place a priority on immigrants' education and skill level over their family connections when it comes to giving out green cards. President Bush hailed this as a historic moment. He said he looks forward to signing it into law.

Republican Senator Arlen Specter in what seems like anticipation of conservative critics, said, "It's not amnesty. This will restore the rule of law."

Note to Senator -- we have laws on the books now, have for years, Senator, that are supposed to protect this country from the invasion of illegal aliens. The laws are not enforced. On the contrary, they're simply ignored.

So here's our question -- is there any reason to believe that this latest immigration law will be any more effective than the laws that have been ignored by the government for years?

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

BLITZER: Jack, thanks for that.

Jack Cafferty with The Cafferty File.

Up ahead, we're going to talk about this possible deal for immigration reform with two key administration officials who helped hammer it out -- Homeland Security Secretary Michael Chertoff and Commerce Secretary Carlos Gutierrez.

They're standing by live.

Also, a gruesome so-called honor killing in Iraq -- a teenage girl stoned to death because of whom she fell in love with. Details of this very disturbing story. That's coming up.

Plus, they spearheaded the war in Iraq. Now President Bush and British Prime Minister Tony Blair speak candidly as the clock ticks down on their administrations.

Stay with us.

You're in THE SITUATION ROOM.

COMMERCIAL

BLITZER: They're so-called honor killings. But there's nothing honorable at all about members of a family or a clan killing a young woman accused of bringing shame to them. It still happens all too often, unfortunately, in the Middle East.

We're go -- going to show you one such incident.

We want to warn you, though, some of you may find these images very, very disturbing. I know I did when I saw them.

Let's turn to CNN's Brian Todd.

He's here with this very grim material -- Brian.

BRIAN TODD, CNN CORRESPONDENT:

It is grim, Wolf.

And we have new details on the investigation into this killing, which an official in that Iraqi province told me has shocked everyone there.

(BEGIN VIDEO TAPE)

TODD (voice-over): You're about to witness an honor killing -- a 17-year-old girl dragged into a crowd in a headlock.

(CELL PHONE VIDEO OF HONOR KILLING)

TODD: Uniformed men -- apparently security forces -- look on and do nothing. Plenty of other men around to stop it. Instead, many capture it on cell phone video.

Partially clothed, Do'a Khalil is kicked and stoned to death. A top official in northern Iraq's Nineveh Province, where this occurred last month, tells CNN Do'a had been seen with a Sunni Muslim man. She had not married him or converted, this official said. But her attackers believed she had.

Do'a's family belongs to the Yezidi sect. It draws on the beliefs of religions like Christianity, Islam and Judaism, and does not approve of mixing with people outside the faith.

HOUZAN MAHMOUD, ORGANIZATION OF WOMEN'S FREEDOM IN IRAQ: The climate -- the political and social climate is such that people can do that in daylight and that the authorities do not intervene.

TODD: the province official tells CNN four people have been arrested, including two members of Do'a Khalil's family. They're looking for four other men, including a cousin.

The U.N. and human rights groups say there are thousands of honor killings worldwide each year. Dozens have been committed in Iraq this year. And Amnesty International say there are frequent reports of them in the northern Kurdish region.

Do'a Khalil was Kurdish. But the killing occurred outside Kurdistan. Still, Kurdish officials condemn the attack and tell us what they're doing to prevent more of them.

QUBAD TALABANI, KURDISTAN REGIONAL GOVERNMENT: One of the things we're doing is trying to bring more female officers into the police and security organizations. This would give -- anyone that is a victim of these crimes or feels threatened by these kinds of crimes can feel more comfortable in speaking to a lady officer.

(END VIDEO TAPE)

TODD: as for those police officers in the video, the province official says he doesn't believe they could have done much to stop Do'a's killing. Still, at least three officers are being investigated, he says. He says they could be fired. And the top police official in that town, Bashika, is being replaced -- Wolf.

BLITZER: As many times as I see these stories about these so- called honor killings, it's very, very disturbing.

Brian, what about retaliation for Do'a's murder?

TODD: There apparently has been retaliation, Wolf.

The official we spoke to in the province says about two weeks later in Mosul, attackers that he says were affiliated with Al Qaeda -- which is a Sunni group -- pulled 24 Yezidi men out of a bus and slaughtered them.

BLITZER: Have authorities spoken with her parents?

TODD: This official me they've interviewed both parents. He says they were against her killing. He says some of her other members of her family turned on her, along with other locals. He says the broader Yezidi community there has condemned the killing.

But you have to remember, this is a sect that forbids mixing with others.

BLITZER: And, as we said at the top, unfortunately this happens thousands of times throughout the Middle East. What a horrible, horrible situation.

Brian, thanks very much.

They stood together as the world grew weary of the war in Iraq. And they stood together once again today, as the outgoing British prime minister, Tony Blair, made a last visit to the White House, his electorate grown weary of his ties to President Bush.

Let's go live to our White House correspondent, Ed Henry -- Ed, I guess you could say it's an end of a certain era.

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: That's right, Wolf.

They will get together at the G-8 in Germany next month. But, as you noted, this is Mr. Blair's last visit to 1600 Pennsylvania Avenue as prime minister and nostalgia was in the air.

(BEGIN VIDEO TAPE)

HENRY (voice-over): And now, the end is here.

TONY BLAIR, BRITISH PRIME MINISTER: Since it will be the last chance I get to do this type of press conference in the Rose Garden standing next to President Bush. And I've admired him as a president. And I regard him as a friend.

HENRY: two stalwart allies growing wistful as they face the final curtain.

GEORGE BUSH, PRESIDENT OF THE UNITED STATES: And it's -- you know, will I miss the -- working with Tony Blair?

You bet I will. Absolutely.

HENRY: but they're still stating their case, of which they're certain.

BLAIR: It is about us remaining steadfast, because what we are fighting, the enemy we are fighting is an enemy that is aiming its destruction at our way of life and anybody who wants that way of life.

BUSH: No matter how calm it may seem here in America, an enemy lurks. And they would like to strike.

HENRY: Regrets -- they've had a few. But then again, too few to mention.

BUSH: And, you know, I don't regret things about what may or may not have happened over the past five years.

BLAIR: I have taken the view that Britain should stand shoulder to shoulder with America after September the 11th. I have never deviated from that view. I do not regret that view.

HENRY: Yes, there were times, I'm sure you knew, where maybe they bit off more than they could chew.

(VIDEOTAPE OF ANTI-WAR PROTEST)

HENRY: and the record shows they took the blows.

BLAIR: You know, a politician in, you know, any part of Europe today, if you want to get the easiest round of applause, get up and attack America. You can get a round of applause. You attack the president. You get a...

BUSH: A standing ovation.

BLAIR: Yes.

HENRY: but the president and prime minister made clear they did it their way.

BUSH: I do congratulate the prime minister for being a -- when he gets on the subject -- is dogged.

BLAIR: You've been unyielding and unflinching and determined in the fight that we have faced together and I thank you for that.

(END VIDEO TAPE)

HENRY: the question hanging over all of this, of course, was Mr. Bush to blame for Mr. Blair's downfall?

When Mr. Bush was asked today, he said could be and then he said, well, I'm not sure.

But then Mr. Blair jumped in and said it really doesn't matter to them. They both feel they did what was right and they're going to live with the consequences -- Wolf

BLITZER: Ed Henry at the White House.

Other news we're following, it was a 17-mile trip that took more than half a century. A pair of passenger trains today crossed the heavily armed border between North and South Korea. The trains moved in opposite directions, each carrying 150 people on a short but symbolic journey of reconciliation, as it's being called. After a brief visit, the two trains returned home.

The last time a train tried to make a crossing was back in 1950, when Koreans fleeing the Chinese advance in the North were halted by American troops.

Coming up, new Republican pressure for the attorney general, Alberto Gonzales, to resign.

Can he survive the growing tide against him?

Plus, New York city police spying on leading hip hop artists. We're going to show you what happened.

Stay with us.

You're in THE SITUATION ROOM.

COMMERCIAL

BLITZER: Carol Costello is off today.

Fredericka Whitfield monitoring stories incoming to THE SITUATION ROOM right now -- Fred, what's going on?

FREDRICKA WHITFIELD, CNN ANCHOR: Hello again, Wolf.

The board of the World Bank meeting again today to discuss the fate of its embattled president, Paul Wolfowitz. There's growing speculation that he will be forced out by the scandal over a pay raise and a promotion he helped arrange for his girlfriend.

President Bush had been expressing support for Wolfowitz, but today said: "I regret that it has come to this."

A lawyer for Vice President Cheney is slamming Valerie Plame's lawsuit over her outing as a CIA operative. In a hearing today, he said the case is a "fishing expedition" and he called Plame's allegations "fanciful."

Plame is suing Mr. Cheney, his former aide, Louis "Scooter" Libby, and Karl Rove, saying the leaking of her identity to the news media violated her constitutional rights. And here's the bottom line on a massive meat recall -- 129,000 pounds of beef products are being recalled because of possible E. coli contamination. The products were made for Gordon Food Service Stores and include tenderized steaks and ground beef sold in 15 states. All of the items are in boxes marked EST1947A.

And the bottom line on Wall Street -- losses for all the major indices. The Dow, Nasdaq and the S&P were down slightly, as investors grappled with concerns about the economy and interest rates -- Wolf.

BLITZER: It reaffirms what we always say, Fred, what goes up...

WHITFIELD: I knew you were going to say it -- must come down. And it did.

BLITZER: You know, we predicted that, didn't we?

WHITFIELD: You did.

BLITZER: It doesn't take a genius to know that.

WHITFIELD: You know -- you know how to call it.

BLITZER: Thanks, Fred, very much.

Coming up, the homeland security secretary, Michael Chertoff, and the commerce secretary, Carlos Gutierrez, they'll join us live. We're going to talk about the new immigration bill they helped craft.

Plus, the cost of gas soaring with no end in sight, at least for now. We're going to show you why the pump won't be the only place you'll be feeling the pinch.

Stay with us.

You're in THE SITUATION ROOM.

COMMERCIAL

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

Happening now, they're watching the weather in north Florida, fearful that strong winds and possible lightning could spread the massive wildfire, now up to 120,000 acres. Hundreds of homes have been evacuated. Other residents are on notice. They may have to flee, as well.

Also, a day after getting a new president France now also has a new prime minister. Francois Fillon named to that post by Nicolas Sarkozy. He's the new president. The reform-minded conservative, Fillon, has previously served as education minister and social affairs minister.

And wildlife experts are using recorded whale sounds -- get this -- to try to lure two wayward whales out of California's Sacramento River and back to the Pacific Ocean. That's 90 miles away. The mother and calf both have injuries that may be propeller wounds, but they don't appear to be life threatening.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

Democrats are going all out to oust the attorney general, Alberto Gonzales.

But can they do more than wish for him to leave office?

Let's go to our justice correspondent, Kelli Arena -- Kelli, what are the Democrats up to now?

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Well, Wolf, Democratic lawmakers have had enough. They say the only person in Washington who has confidence in the attorney general is the president. And they're going to make it official.

(END VIDEO TAPE)

ARENA (voice-over): If you thought it couldn't get any worse for Alberto Gonzales, it just did. Senate Democrats say they will schedule a no confidence vote on the attorney general.

SEN. CHARLES SCHUMER (D), NEW YORK: His credibility is shot. Any faith that he can manage or run the department is gone.

ARENA: The latest problem?

It seems the Justice Department considered more prosecutors for dismissal than they ever let on. As first reported in "The Washington Post," records shows there were first 26 prosecutors named as possible candidates for dismissal, many of them well respected.

In the end, only a handful were let go. But lawmakers say it's still not clear how those decisions were made.

SCHUMER: It just shows a department that has run amok, where virtually no one is in charge. It's sort of like one of the bumper cars, just going from wall to wall without direction.

ARENA: and Senators are still reeling from shocking testimony this week from former Deputy Attorney General James Comey. He described how Gonzales, as White House counsel, tried to bully his predecessor, John Ashcroft, into approving the controversial NSA surveillance program while Ashcroft lay sick in a hospital bed.

Two more Republicans called for Gonzales to resign. And the tone on Capitol Hill changed dramatically.

SEN. ARLEN SPECTER (R-PA), JUDICIARY COMMITTEE: I have a sense that when we finish our investigation, we may have a conclusion of the tenure of the attorney general.

(END VIDEO TAPE) ARENA: until the president says that Gonzales is out of a job, he'll stay right where he is. But a no confidence vote can certainly put pressure on President Bush to reassess whether his support is worth all the trouble -- Wolf.

BLITZER: Kelli, what does the Justice Department have to say about all of this?

ARENA: Well, they wouldn't specifically comment about the no- confidence vote, but they instead touted recent achievements and said that the attorney general remains focused on doing the job that the American people expect.

BLITZER: Kelli Arena, our justice correspondent.

Thank you very much.

Let's get back to our top story. A path to citizenship for millions of illegal immigrants, that's at the core of a compromise immigration bill hashed out by a bipartisan group of senators. If it makes it through Congress, it could mean a major victory for the president, as well. He strongly supports this proposed legislation. Critics say, though, it rewards illegal behavior.

Joining us now from the White House, two guests, the homeland security secretary, Michael Chertoff, and the commerce secretary, Carlos Gutierrez.

Gentlemen, thanks very much for coming in.

Secretary Chertoff, let me start with you. What do you say to those people -- a lot of critics, especially Republicans, a lot of conservatives, say you may deny this is amnesty, but in effect you are granting amnesty to millions of people who snuck into the United States.

MICHAEL CHERTOFF, HOMELAND SECURITY SECRETARY: You know, Wolf, first, I understand there's some people who expect anything other than capital punishment is an amnesty. The reality is the proposal here requires people who came in illegally who want to stay to pay a penalty. Like a fine. That's a punishment. That's not an amnesty.

It requires them to register. It gives us background checks. It requires them to work. It requires them to pay taxes.

There's a punishment. There's an acknowledgment of wrongdoing. And then there's a probationary period under which they have to continue to do the right thing.

Now, some people may want a harsher punishment. But the reality is, right now, we have 12 million people who aren't going to be deported. They aren't going anywhere.

And it's whistling in the dark to say that there's some other solution than one which acknowledges wrongdoing and tightens up the system and corrects it for good, which is what this bill would do. BLITZER: Secretary Gutierrez, what do you say to those other critics who say you're rewarding illegal activity?

CARLOS GUTIERREZ, COMMERCE SECRETARY: Well, what we're doing is putting an order to a very dysfunctional system. We have a system in place that is just -- it's broken. It's not working. It's not working for anyone. And what we're doing is putting some order to it.

What we need is an orderly legal immigration system. We need an employ verification system. We need security borders.

That's what we need for our national security. And that's what we need for our economy. And this goes a long way towards doing that.

BLITZER: Duncan Hunter, the Republican congressman, Secretary Chertoff, the other night in that Republican presidential debate, he had some strong words, because he's very concerned about what this could result in terms of homeland security.

Listen to what he said.

(BEGIN VIDEO CLIP)

REP. DUNCAN HUNTER (R), PRESIDENTIAL CANDIDATE: As long as you've got a revolving door, and you have no border -- and this 2,000- mile porous border, incidentally, is our biggest homeland security problem.

(END VIDEO CLIP)

BLITZER: All right. And what do you say to Congressman Hunter?

CHERTOFF: Here's what I say. Right now, I've got my Border Patrol agents and my immigration agents chasing maids and landscapers. I want them to focus on drug dealers and terrorists. It seems to me if I can get the maids and the landscapers into a regulated system, and focus my law enforcement on the terrorists and the drug dealers, that's how I get a safe border.

BLITZER: Secretary Gutierrez, let's talk a little bit about what these illegal immigrants have to do now to get on a path towards a legal residence status here in the United States and eventually citizenship. If they're honest, they're hard-working, they pay the fines, they do what you want them to do, how long will it take for them to become legal, A, residents of the United States, B, to get a green card, and C, eventually become citizens?

GUTIERREZ: Well, first of all, the important thing is that there is no automatic path to citizenship. What we are offering them is a legal status, an ability to stay and work, if, as you say, they meet certain requirements and pay a fine.

BLITZER: And they get a Z -- it's a new Z visa that they would get almost right away, is that right?

GUTIERREZ: Well, we're calling it a Z visa, and will take some time to put it in place. In fact, part of the bill, part of the compromise is that we first have to have some border security triggers before we actually put this Z...

BLITZER: How long will that take?

GUTIERREZ: Well, it depends. And Secretary Chertoff will be able to add to that. We're assuming around 18 months. But we've got to get it done.

BLITZER: So what happens -- let me interrupt for a second.

Secretary Chertoff, maybe you want to weigh in, as well. What happens between now and that 18 months to these 12 million or so illegal immigrants?

CHERTOFF: Well, here's what happens. Assuming Congress passes the bill and it becomes law, we will begin the process of enrolling these people as we are moving toward the triggers. And when we enroll them, we're going to do a background check.

If people turn out to be criminals, they're going to be ejected from the country. If they turn out to be gang bangers, they're going to be ejected from the country.

Once we have them in a probationary status, we complete the background check, then once the triggers are met, they will transform themselves into a Z visa, which is a four-year visa, renewable if they -- they have to pay the fine, they have to play by the rules, they have to pay their taxes. So, we're going to bring them into the system slowly, get them visible, get them regulated. And then if they play by the rules, they can stay.

BLITZER: One final question, Secretary Gutierrez, for you.

The criticism from the right we're familiar with. But what about the criticism from the left, that this is simply too harsh and you're going to be breaking up families here in the United States because you're going to be giving priority status to education and other aspects, as opposed to those who have blood relatives here in the United States?

GUTIERREZ: Well, Wolf, that's the thing about a compromise, is that everyone gets something, but no one will get everything. And we believe that the shift toward a merit system, a shirt toward national needs, is important.

We need to ensure that we're bringing in the job skills that our economy needs to be able to grow in the future. We're not discarding family, but what we are saying is that we need to look primarily at those job skills in addition to family.

But what you have here is the classic -- it's a compromise. And in order to get a bipartisan bill, which is what we're going to do in the Senate, we need to have a compromise.

And we need to just know that no one will get everything. But the way to move forward as a country and make progress is to have a compromise, to have a bipartisan solution, and to put the country first.

BLITZER: Secretary Gutierrez, Secretary Chertoff, thanks to both of you for coming in.

GUTIERREZ: Thank you, Wolf.

CHERTOFF: Good to be here.

BLITZER: And still ahead here in THE SITUATION ROOM, what if the price of gas were to hit, get this, $5 a gallon or even more? Our Frank Sesno takes a closer look at some chilling scenarios.

Also, some famous hip-hoppers were spied on by New York City police in the days leading up to the 2004 Republican convention. Why?

Tom Foreman unseals the secret files.

All that coming up right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: The price of gas climbing and climbing, with no end in sight. What happens when it hits $5 a gallon and beyond?

(BEGIN VIDEOTAPE)

BLITZER: And joining us in THE SITUATION ROOM four our "What If?" segment, our special correspondent, Frank Sesno.

Frank, what's on tap this week?

FRANK SESNO, CNN SPECIAL CORRESPONDENT: What if we take on this week, Wolf, what everybody's talking about and experiencing, high gas prices? A few questions for you?

BLITZER: Sure.

SESNO: Up for it?

BLITZER: OK.

SESNO: All right.

Question No. 1: The highest price for regular in the country now? What do you think it is, $3.56, $4.09, $4.25?

BLITZER: I'm guessing, because it's pretty high around here, C, $4.25 a gallon.

SESNO: Bingo, $4.25 a gallon, the highest for regular.

Question No. 2 comes right out of that: Where -- where is that highest price found, do you think? BLITZER: Let me see -- Mendocino, California; Binghamton, New York, Honolulu? I've got to go with California. For some reason, I know they're pretty high out there.

SESNO: You're right, Mendocino, California, a small gas station. That premium, $4.40.

Question No. 3: According to the government, by what percentage have these prices gone up just since February?

BLITZER: Since February, through April of this year, I would say they've gone up B, 20 percent.

SESNO: Twenty percent. You're three for three, Wolf. And the average price right now, $3.11 a gallon.

(BEGIN VIDEOTAPE)

SESNO (voice over): Up, up, up. What if gas prices keep going up? A lot of people seem to think it's inevitable.

UNIDENTIFIED MALE: By the summertime, we'll at least get to $4.00 a gallon.

SESNO: In Europe, they've been there, and higher, for a while now, the equivalent of $7.00 a gallon or more in many places. It's why they drive those teeny, tiny cars. Or take the train.

In this country, we've enjoyed cheap gas since we started, but it's more expensive now than ever.

CRAIG SILVERTOOTH, DRIVER: It's an availability issue. Until we increase supply, these numbers are going to continue to remain high.

SESNO: Higher prices this year could translate into an extra $1,000 out of pocket. But what if gas hit $5 a gallon? It could happen more easily than you might think.

Another Hurricane Katrina, for example, hitting Houston, home to about 25 percent of America's refining capacity. It could happen if Mideast oil were disrupted. Twenty percent of the world's oil passed through the Strait of Hormuz, right by Iran.

In Saudi Arabia, the biggest processing facility in the world has been targeted by terrorists. So far, unsuccessfully.

But what if catastrophe were to occur and gas hit 5 bucks a gallon? A Chevy Suburban would cost about $150 to fill up. A family drive in it from Chicago to St. Louis would cost about $90. There would be huge ripple effects from the farm, to FedEx, and Wal-Mart, because higher fuel prices put a damper on everything.

It's happening already.

UNIDENTIFIED FEMALE: I don't even own a car anymore.

UNIDENTIFIED MALE: Maybe a little less eating out.

SESNO: Last month, consumers cut back on buying, at least party, because of rising gas prices.

(END VIDEOTAPE)

SESNO: Rising gas prices are not rising evenly across the country. Here's a map of the disparities.

Here you see it's about $3.01 a gallon. That's again for average regular gas. The cheapest in the Mid-Atlantic states, $2.95. Back out to the west coast, where we saw that most expensive gas, it's averaging around $3.29.

BLITZER: And what about the road ahead?

SESNO: The road ahead is a bumpy one, actually. Although AAA and others think that gas prices should stabilize over the summer.

But they have what they call the tipping point, Wolf. At $3.50 a gallon for regular, if it averages about $3.50, that's where people say -- and the Travel Association of America predicts people would start canceling vacation plans. That would hurt a lot. Four dollars a gallon, that's going to start affecting car purchases.

BLITZER: Frank Sesno, scary stuff. But important.

I know you have a documentary that's going to air on CNN June 2nd and 3rd entitled -- let me read it -- "We Were Warned: Out of Gas".

A very important documentary.

SESNO: We'll take a look at all of this and what it means, yes.

BLITZER: Thanks for coming on.

SESNO: You bet.

BLITZER: And you think $3 a gallon is bad? Take a look at what other people are paying around the world.

In Britain, a gallon was recently going for $7.19. In Germany, they're paying $5.81. A gallon of gas costs $5.77 in Italy.

In Saudi Arabia, on the other hand, they're practically giving gas away. A gallon there just costs 45 cents.

Take a look at Venezuela. A gallon of gas there costs, get this, 19 cents. Nineteen cents a gallon in Venezuela.

(NEWSBREAK)

(COMMERCIAL BREAK)

BLITZER: Secret files unsealed and showing who New York police were actually spying on in the days before the 2004 Republican convention. That list including some prominent hip-hop artists.

CNN's Tom Foreman's here in THE SITUATION ROOM.

These newly-released documents, what do they show, Tom?

TOM FOREMAN, CNN CORRESPONDENT: Well, Wolf, what they show is that when the Republicans decided to hold their 2004 convention in New York, the city was very worried about protests that might get violent. The convention came off without a hitch. But now some people are raising questions about the tactics the NYPD used to make sure that the protesters were no threat to the GOP.

(BEGIN VIDEOTAPE)

FOREMAN (voice over): Attention protesters and peaceniks, anarchists and Alicia Keys, and all those other artists who came out in 2004 to protest the Grand Old Party's big national convention. These private eyes were watching you. That's right, the New York Police Department was secretly monitoring these artist-protesters, and not just at public events.

DONNA LIEBERMAN, EXECUTIVE DIRECTOR, ACLU: To participate in meetings, to monitor e-mails, and to act as not police officers, but undercover agents in dealing with organizations that are exercising their right to protest, raises serious concerns.

FOREMAN: Six hundred pages of secret police files were released to the public as the result of a lawsuit filed by the New York Civil Liberties Union. They reveal that New York's finest began spying on performers like Jay-Z, LL Cool J and others, months before they were to perform at a protest rally during the GOP convention.

They monitored Web sites and a guy known for throwing pies. They spied on meetings of billionaires for Bush who were not for Bush at all. New York police say the surveillance was justified.

COMMISSIONER RAY KELLY, NEW YORK POLICE: People wanted to come here to shut down the city, to replicate what happened in Seattle and Montreal and Genoa. We simply didn't let that happen.

FOREMAN: New York has refused to release the documents for three years. The New York Civil Liberties Union went to court to get access to them as part of a lawsuit on behalf of people who were arrested while protesting the GOP convention.

While some protesters were self-declared anarchists, most planned performances or marches or theater. One group planned to sing about the war.

UNIDENTIFIED MALE (SINGING): Stop the war, stop the war.

FOREMAN: Lawyers for the protesters said all the spying discourages regular people from exercising their right to free speech.

LIEBERMAN: If the government is monitoring lawful, political dissent, then people who -- people are intimidated. (END VIDEOTAPE)

FOREMAN: If you stop that kind of singing, of course, it might have been a good thing.

Anyway, the point is, they have had problems in the past. Their concern was that these groups that would say they're peaceful, in fact, were planning something bigger than that. But that doesn't sit well at all with the arts community, the peace protest community.

They feel like they're being sat a upon because they think LL Cool J has some LL cool secrets.

That's it, Wolf.

BLITZER: Tom, thank you.

(NEWSBREAK)

BLITZER: Up next, Jack Cafferty wants to know if the proposed immigration law would be more effective than laws ignored by the government for years.

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

(COMMERCIAL BREAK)

BLITZER: Let's check back with Jack Cafferty in New York -- Jack.

JACK CAFFERTY, CNN ANCHOR: The question is: Is there any reason to believe that this latest proposed immigration law will be any more effective than the laws that have been ignored by our government for years?

Rick in Norcross, Georgia, "The new immigration bill sounds like it was written by big business. Why not include a provision to make employers pay for health care for illegal aliens they use? Why isn't there a provision for fines for employers that have used illegal aliens, like the $5,000 fine they want the illegals to pay for working for big business? Why isn't there a provision to force employers to pay a prevailing wage to illegal aliens for work performed?"

"This should be called the new indentured slave act."

Paul in Jerseyville, Illinois, "This is an affront to the citizens of this country. Professional politicians think they can still treat us like mushrooms without a response."

We know what mushrooms are, right?

"My response to my senators and representatives or presidential candidates is this: if you vote for this amnesty, my vote will be for your opponent, no matter what their political affiliation."

B. writes, "You don't like what the Senate agreed on? What they had the guts do?"

"So, Jack, how would you solve the problem? You want to go out and round them all up? The solution they agreed on is the only logical one."

Michael in The Woodlands, Texas, "None of the what they're doing in Washington about the illegal alien situation makes any sense. This latest proves that neither party is interested in the American people, but instead favors whatever special interests will keep them in power."

Now you're getting it, Michael.

And Chip in Clarkston, Michigan, "I don't know what they call it in the East, Jack, but in the Midwest we call it getting porked. I would like to see a binding national referendum on amnesty for illegal aliens. Our representatives, both parties, don't get it. How many bone-headed George Bush types are there in Washington anyway?"

"Maybe we need a chain gang of politicians to build a southern border fence. I'll volunteer to stand guard" -- Wolf.

BLITZER: Thanks very much.

See you back here in THE SITUATION ROOM in one hour.

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

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