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THE SITUATION ROOM

Missing Soldier Search; UNICEF: Iraq Conditions Critical; Expletive Deleted: Boehner Slams Immigration Bill

Aired May 23, 2007 - 17:00   ET

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


CAFFERTY: And, finally, Philip in Denver: "ABC's revealing of the covert CIA operation is unpatriotic and detrimental to our national security. They should be ashamed of themselves" -- Wolf.
WOLF BLITZER, HOST: And the White House has been saying, Jack, that it will not comment. It will neither confirm nor deny the ABC report, saying they never discuss covert activities, or allegations of covert activities to be precise.

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

Happening now, a CNN exclusive. Horrifying images of torture uncovered in Iraq -- a gruesome how-to manual underscoring the insurgents' brutality.

Also, the long-awaited testimony to Congress from a key former Justice Department insider.

Will Monica Goodling reveal a smoking gun in the firing of those eight federal prosecutors?

And the heated debate over immigration reform overheating, with a House Republican leader using a graphic expletive to describe the controversial bill.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

We begin with an exclusive report on torture training in Iraq. Horrific pictures discovered showing gruesome methods of torture. We have to warn you, these images you're about to see are extremely disturbing.

Let's go to CNN's Brian Todd.

He's joining us now -- Brian, where were these pictures found?

BRIAN TODD, CNN CORRESPONDENT: Wolf, they were found in an Al Qaeda safe House during recent raids in and around Baghdad. U.S. military officials say these images they just declassified show the true nature of what the Iraqi people are facing and they reinforce in the minds of military commanders why U.S. forces are there.

(BEGIN VIDEO TAPE) TODD (voice-over): torture at the hands of Al Qaeda -- victims suspended upside down and whipped, drilled through the hands, suspended from a ceiling and electrocuted.

U.S. military officials say these cartoons are part of an Al Qaeda training manual, complete with how to use a blowtorch on a victim's body.

These drawings, given to CNN by the U.S. military in Iraq, were found on a computer captured during recent raids of Al Qaeda safe houses.

MAJ. GEN. WILLIAM CALDWELL, MULTI-NATIONAL FORCE, IRAQ: They made it in a cartoon manner so that no matter what your literacy rate or what nationality you are, all you've got to do is look at this picture to understand how to conduct tortures of innocent people.

TODD: Methods like taking a hot iron to the skin and others too grotesque to show.

CALDWELL: This is the nature of the enemy that the Iraqi people are facing here in Iraq.

TODD: U.S. military officials say information from this raid led them to other safe houses, where they freed dozens of Iraqi kidnap victims.

CALDWELL: Which included a 13-year-old boy that literally had been tortured, electrocuted, whipped, beat by these Al Qaeda terrorists.

TODD: Pictures of scars on those victims tell only part of the story.

General William Caldwell says the boy suffered more gruesome injuries.

We asked General Caldwell, is this being done by Sunni Al Qaeda fighters against local Shias?

CALDWELL: This was Sunnis conducting it on Sunnis themselves, where they had brought in some of the population from that area.

TODD: Why?

Kelly McCann of Kroll Security Group, a former U.S. Special Forces officer, says it's mostly a matter of intimidation.

KELLY MCCANN, KROLL SECURITY GROUP: I think that people are afraid of physical pain to that degree. They're afraid of this being done to their husband, their uncle, their grandfather, their child. So, yes, not only to extract information but also to compel a local population to at least not help U.S. forces.

(END VIDEO TAPE) TODD: General Caldwell says Al Qaeda typically sends that message with the kidnap victims back to their families. He says some of the people that they freed told them they expected to be ransomed off back to their families -- Wolf.

BLITZER: You've been speaking, Brian, with U.S. officials and other experts.

What do they say to this question -- are these torture methods unique to Al Qaeda?

TODD: U.S. officials are being very cautious about that, saying only that they got them from an Al Qaeda safe house. They're going to try to give us more information on that in the coming days.

Kelly McCann says, however, that he recognizes some of those techniques from Saddam Hussein's Baathist regime; other techniques from as far back as the Vietnam era. So there could be maybe some borrowing going on.

BLITZER: Brian Todd with some exclusive reporting for us.

Brian, a horrific story, but important.

Thank you.

Meanwhile, the U.S. military is reporting new casualties in Iraq. Nine troops killed yesterday and today. There were also raids on suspected militants, with six reported killed and 23 detained. But there were also new insurgent attacks that killed at least 30 people across the country.

Amid all of this, U.S. officials are telling CNN a major overhaul of U.S. strategy in Iraq is underway, with a new plan for the four- year-old war expected by the end of the month.

Let's go straight to our senior Pentagon correspondent, Jamie McIntyre -- Jamie, what's in this new plan, based on all the information you're gathering?

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: Wolf, one thing that this new strategy acknowledges is something that the Pentagon has denied for years, and that is that the heart of the problem in Iraq is the civil war.

(BEGIN VIDEO TAPE)

MCINTYRE (voice-over): What military and civilian planners hammering out a new strategy for Iraq have come up with is a shift from fighting a classic counter-insurgency, which supports one against the other, to a new strategy designed to end sectarian violence by brokering a series of power sharing agreements and local ceasefires, to create pockets of stability that hopefully would slowly spread across Iraq.

The overhaul is a tacit admission the current strategy of unconditionally backing the government of Nuri Al-Maliki is flawed and has failed.

TOM CASEY, STATE DEPARTMENT SPOKESMAN: The problem in applying that strategy to an ethnic and sectarian civil war is it throws gasoline on the fire. It makes things worse rather than better.

MCINTYRE: The course direction is called "The Joint Campaign Redesign Plan" and aims to foster political reconciliation with a series of manageable small scale efforts. The essential element of the revamped strategy is to engage what's been dubbed "reconcilables" -- insurgents who can be reasoned -- with while continuing to eliminate "irreconcilables" -- terrorists who cannot be negotiated with.

A U.S. official close to the planning told CNN: "We have been focused too long on defeating the enemy. We need to bring them to the table.

It's something Steven Biddle, an outside expert who helped with some preliminary planning, advocated forcefully in a CNN interview last year.

STEPHEN BIDDLE, COUNCIL ON FOREIGN RELATIONS: Iraq amounts to a race between the pace at which we can get the power sharing deal between the parties and the pace at which the sectarian body count draws down the reservoir of goodwill among the parties and makes them unwilling to trust one another.

(END VIDEO TAPE)

MCINTYRE: Military sources say the U.S. is unlikely to be able to sustain the troop buildup, the so-called surge, until much past March of next year, but will likely need the troops until then.

At the same time, this new strategy doesn't envision major troop cuts until January of 2, 2009 -- Wolf.

BLITZER: Jamie McIntyre at the Pentagon.

Jamie, thanks.

And even as the United States moves to get the upper hand in Iraq, tensions with Iran are heating up, with both sides making moves that could push the situation to a boiling point. Let's bring in our State Department correspondent Zain Verjee -- Zain, just how intense is the relationship between Washington and Tehran?

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Very tense, Wolf.

Really, it's a face-off between the United States and Iran -- and neither side is blinking.

(BEGIN VIDEO TAPE)

VERJEE (voice-over): An American armada flexing muscle in broad daylight -- war games, nine U.S. warships steaming into the Persian Gulf, ever so close to Iranian shores. On board, 17,000 sailors and Marines.

Miscalculations can happen, especially with military drills in Iran's backyard.

This in-your-face drill comes as both Iran and the United States turn up the heat. Iran has detained a fourth Iranian-American, Kian Tajbakhsh, a consultant working in Iran.

CALDWELL: The idea that somehow these people represent a threat to the regime is just absurd.

VERJEE: And now a top U.S. military commander tells CNN of a disturbing development, accusing Iran of forging a new alliance to spread terror in Iraq.

CALDWELL: There are Sunni extremist elements that are, in fact, being funded by Iranian intelligence agents. And they're also providing some training for them, too.

VERJEE: The United States has been trying to isolate the Iranian regime by supporting tough U.N. sanctions, cutting it off from international banks, detaining five Iranians in Iraq and stepping up propaganda and democracy programs inside Iran to fuel opposition against the regime.

Both sides trying to one-up the other in a battle of wills that shows no sign of letting up, even as they prepare to sit down on Monday for direct talks on Iraq.

KARIM SADJADPOUR, CARNEGIE ENDOWMENT FOR INTERNATIONAL PEACE: Well, I think there's elements in both capitals, both in Washington and in Tehran, who don't want to see improved ties between the U.S. and Iran, and don't even want to see a dialogue between the U.S. and Iran. and they're doing their best to torpedo the talks.

(END VIDEO TAPE)

VERJEE: Wolf, the International Atomic Energy Agency came out with a report today really blasting Iran, saying it's continuing its nuclear activity in defiance of international demands to suspend it -- Wolf.

BLITZER: Is the State Department, Zain, telling academics not to go to Iran?

VERJEE: No, they're not saying that Iranian-American academics shouldn't go. What the State Department is saying, though, is that in spite of policy differences with Iran, the people-to-people contacts should go on, and that it's good for the two countries to do that. But with these detentions it seems that it may affect that -- Wolf.

BLITZER: All right, Zain.

Zain Verjee reporting for us from the State Department.

Let's check back with Jack Cafferty for The Cafferty File -- Jack.

JACK CAFFERTY, CNN CORRESPONDENT: Here we go again.

President Bush cited newly declassified intelligence today that he says ties Iraq to the war on terror.

He was delivering a commencement address at the Coast Guard Academy in new London, Connecticut when he referenced a previously classified report on Osama bin Laden. This report said bin Laden had discussed sending a top Al Qaeda lieutenant in 2005 to set up camp in Iraq. The plan is to drive out the United States and establish Iraq as a new terrorist state, one that could then launch attacks against the United States.

My question is why would bin Laden and Al Qaeda want to go set up shop in the middle of a civil war, when, presumably, there are quieter neighborhoods, like the one in Pakistan where they presumably are now from which to operate their terror network?

Just a thought.

The president went on to talk about several foiled terror plots in the last couple of years, and he spent time drawing a comparison between Iraq and the Vietnam War.

You know, it was a nice upbeat message full of hope for the future and inspirational life lessons for the young men and women at the Coast Guard Academy on the occasion of their commencement.

Here's the question -- is it appropriate for the president to declassify intelligence at a commencement address?

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

BLITZER: Thanks, Jack.

We'll be back with you shortly.

Up ahead, the long-awaited testimony from a former key Justice Department official on the firing of federal prosecutors.

So how much influence did she have?

(BEGIN VIDEO CLIP)

MONICA GOODLING, FORMER JUSTICE DEPARTMENT WHITE HOUSE LIAISON: I wish to clarify my role as White House liaison. Despite that title, I did not hold the keys to the kingdom, as some have suggested.

(END VIDEO CLIP)

BLITZER: Monica Goodling testifying to Congress under immunity.

Will she implicate the attorney general, Alberto Gonzales? Also, frustration with immigration reform boiling over for the House Republican leader. We're going to have details of a report that he used a four letter description of the controversial bill before Congress.

Also, growing outrage over soaring gas prices. We'll show you what's being done and why it may not be enough.

Stay with us.

You're in THE SITUATION ROOM.

COMMERCIAL

BLITZER: Cameras from around the world watching as a former top Justice Department official finally testifies before Congress about the firing of those eight federal prosecutors.

Monica Goodling, the former counsel to the attorney general, Alberto Gonzales, answering questions from the House Judiciary Committee under immunity from prosecution.

Why are lawmakers so eager to hear from her?

Goodling is a key insider with an impressive Justice Department resume. After graduating from Pat Robertson's Regent University in 1999, Goodling joined the Department in 2001.

In 2005, she teamed up with former Chief of Staff Kyle Sampson in the executive office for U.S. attorneys, where she started dealing with hiring and firing over at the Justice Department.

And in 2006, she became senior counsel to the attorney general while also working as White House liaison.

Let's bring in our Justice correspondent, Kelli Arena -- Kelli, what did Goodling tell the committee members today?

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Well, Wolf, what Monica Goodling had to say today was not at all what lawmakers were expecting to hear.

(BEGIN VIDEO TAPE)

ARENA (voice-over): Lawmakers expected her immunity and were expecting Monica Goodling to finally shed some light on why those U.S. attorneys were fired.

GOODLING: I wish to clarify my role as White House liaison. Despite that title, I did not hold the keys to the kingdom as some have suggested.

ARENA: Goodling says she did not know the reasons for firing those eight federal prosecutors and says she never discussed the process with top White House officials. But she did cause a potential new problem for the attorney general. Goodling said when she told Alberto Gonzales that she wanted to leave her job, he started to lay out what he remembered about the firings and asked her for a reaction.

REP. ARTUR DAVIS (D), ALABAMA: Do you think, miss Goodling, the attorney general was trying to shape your recollection?

GOODLING: No. I think he was just asking if I had any different...

DAVIS: But it made you uncomfortable?

GOODLING: I just did not know if it was a conversation that we should be having.

ARENA: Goodling also took aim at Gonzales's number two, Paul McNulty, saying his testimony before Congress was incomplete and inaccurate, and that it wasn't her fault, as McNulty claimed.

GOODLING: I didn't believe he was fully candid. And the point I was trying to make is I did give him some information. I didn't withhold information.

ARENA: In another revelation, Goodling admits she hired some people for non-political jobs at Justice based on whether they were Republicans or Democrats. That could be a violation of federal law.

UNIDENTIFIED MALE: Was that legal?

GOODLING: Sir, I'm not able to answer that question. I know I crossed the line.

(END VIDEO TAPE)

ARENA: Now, Paul McNulty responded to Goodling's testimony, saying that her characterization of his testimony is plain wrong.

And Republicans, meanwhile, keep trying to end it all, Wolf, today complaining about the amount of money that's been spent on this investigation without any proof of any illegal activity.

But I can tell you, there's little chance of that happening.

BLITZER: This investigation, I'm sure, will continue.

Thank you very much.

Kelli Arena reporting.

Skyrocketing gasoline prices are no doubt behind the House of Representatives' passage today of a bill to impose some stiff penalties on anyone found guilty of gouging fuel prices.

Let's go to CNN's Tom Foreman.

He's joining us now -- is this the beginning of Washington's response, Tom, to this jump in the price of a gallon of gas?

TOM FOREMAN, CNN CORRESPONDENT: Well, at least it's a response to what they're hearing from their constituents.

Look, Americans burn more than 300 million gallons of gasoline every day. And voters out there are paying more and more and more for the privilege.

(BEGIN VIDEO TAPE)

FOREMAN (voice-over): Another day, another record.

UNIDENTIFIED FEMALE: Gas prices is ridiculous. It's too much money.

FOREMAN: For the eleventh straight day, gas prices reached new highs.

UNIDENTIFIED MALE: By the summertime, I think the price will at least get to $4 a gallon.

FOREMAN: And he's not alone. Our latest CNN/Opinion Research Corporation poll shows most of you think you'll soon be paying $4 a gallon.

What's behind this jump at the pump?

It's apparently not oil prices. They're actually a bit lower than at this time last year.

RAY DOUGHER, AMERICAN PETROLEUM INSTITUTE: They should be blaming the marketplace. They should be blaming the supply and the demand.

FOREMAN: It's true. The nation's oil refineries are running below capacity. The industry blames post-Hurricane Katrina problems and a spate of recent fires.

Some critics challenge that explanation.

One thing is for sure, though, Americans are angry. Eight in 10 of you say gas prices are unreasonable. That's 20 percentage points higher than during the first gas crisis back in the 1970s.

Lawmakers are listening.

SEN. ARLEN SPECTER (R-PA), JUDICIARY COMMITTEE: If we don't do something now about the future, right now will look good compared to a year or two years from now, when the price, unfortunately, would be $5 or even $6 a gallon.

FOREMAN: Yesterday, the House voted to take on OPEC, passing a bill that would give the government power to sue the oil cartel over production quotas. And today, the House pass add bill to give the government more money to probe price profiteering.

But will any of this make a difference?

MICHAEL SALINGER, FTC: The only way we're going to bring down prices is to increase supply or curb demand.

(END VIDEO TAPE)

FOREMAN: Today, Senate Democrats unveiled their new energy plan. It called for higher fuel-efficiency standards, tackling price gouging and a new push for alternative fuels, stuff we've heard before. But they hope to try and pass the bill next month, although, Wolf, as you know, many motorists just hope they can pass a gas station without hearing an enormous sucking sound from their bank account.

BLITZER: It's not going to happen for some time, I suspect.

Thanks very much.

Tom Foreman reporting.

Coming up, fresh violence rocking Lebanon right now. We're going to have late developments. There are details now of a new bombing near Beirut. This is the third in three days.

Also, an urgent appeal on behalf of Iraq's children. Find out why wars are the only crisis they're facing.

Stay with us.

You're in THE SITUATION ROOM.

COMMERCIAL

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

Carol is joining us.

What do you have -- Carol.

CAROL COSTELLO, CNN CORRESPONDENT: Well, Wolf, the great Coca- Cola caper is over and this is what happens when you conspire to sell cola secrets to archrival, Pepsi. You go to federal prison.

Two former Coca-Cola employees, Joya Williams and Ibrahim Dimson, have been sentenced to five to eight years behind bars. Both were also ordered to pay $40,000 in restitution.

Williams was convicted in February of plotting to offer stolen samples of a new Coke product to Pepsi.

Dimson pled guilty to conspiracy last fall.

The Federal Aviation Administration is bracing for a record number of flights this summer, with an expanded program aimed at reducing travel delays. It'll allow carriers to choose to fly around a storm rather than sit on the tarmac to wait it out. The so-called Airspace Flow Program was introduced last summer in seven high traffic regions in the Northeast. This year it expands to the South and Midwest. Checking the bottom line now, it was an off day for U.S. stocks thanks to comments from

former Fed Chairman Alan Greenspan about an overheated Chinese stock market. The Dow Jones average ended down slightly, slipping 14 points to end the day at 13,525. The tech heavy Nasdaq lost about 11 points. And the S&P 500 lost about two.

That's a look at the headlines right now -- Wolf.

BLITZER: Carol, thanks very much.

And still to come, are Iranian agents crossing sectarian lines and training Sunni insurgents in Iraq, as well as Shia?

We're going to get the latest from the top U.S. military spokesman in Baghdad, Major General William Caldwell.

Plus, Vice President Dick Cheney a grandfather again.

Stay with us.

You're in THE SITUATION ROOM.

COMMERCIAL

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

Happening now, Lebanon's internal security forces tell CNN five people were injured when a bomb exploded in a town only 11 miles north of Beirut. The Lebanese defense minister warned Islamic militants in a Palestinian refugee camp to surrender or face military action. Thousands began fleeing the camp yesterday after three days of fighting.

The controversial immigration bill undergoes some changes in the U.S. Senate. Senators voted 74-24 today to cut the number of allowable guest workers in half, from 400,000 to 200,000. Another amendment would have eliminated the guest worker component entirely, but that was voted down yesterday.

And Vice President Dick Cheney is the proud grandfather of his sixth grandchild. His daughter Mary gave birth to Samuel David Cheney this morning. She'll raise her son with her longtime partner, Heather Poe. Congratulations to the Cheney family.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

There are new developments in the search for those three missing American soldiers in Iraq. The body of one of them may -- repeat may -- have been found.

CNN's Arwa Damon is embedded with U.S. troops conducting the search -- Arwa. ARWA DAMON, CNN INTERNATIONAL CORRESPONDENT: Wolf, the U.S. military is not officially confirming the identity of a body that was found by the Iraqi police in the Euphrates River in Musayaf (ph), some 20 miles south of where the attack took place.

The body was taken to the Escandelia Base (ph) and a representative from the 4th Battalion, 31st Infantry Regiment was flown to that location to try to make a positive identification.

The U.S. military right now saying that they are still conducting tests and will not be releasing any information until families are notified. Only then will this information be made public.

But this has been a very difficult day for the soldiers here. For the last 12 days they have been conducting missions around the clock, relentlessly searching for their missing men and for those that carried out this devastating attack.

The conditions out here have been brutal with the heat, the terrain, the intertwining canals, and the constant dangers that exist out there. The troops that are here have expressed sorrow, anger. Some have said that they are looking for closure, and just about all have said that they came to Iraq expecting to get shot at, expecting to be hit by roadside bombs, but none of them really expected this, the nightmare of not knowing the fate of one of their fellow soldiers -- Wolf.

BLITZER: Arwa Damon on the scene for us.

Arwa, thanks.

U.S. military officials in Iraq say they should know very soon, within 24 hours, whether that body is, in fact, one of those missing soldiers. I spoke about that and more earlier with U.S. Army Major General William Caldwell in Baghdad.

(BEGIN VIDEOTAPE)

BLITZER: If it is one of the three missing, the hunt still goes on for the two other soldiers that you're still looking for, is that right?

MAJ. GEN. WILLIAM CALDWELL, SPOKESMAN, MULTINATIONAL FORCE, IRAQ: That's absolutely right, Wolf. I mean, all this does is intensify our determination to find our missing soldiers.

BLITZER: There's reports now, and you're familiar with these reports, that Iran is not only supporting and providing weaponry and IEDs, other sophisticated training devices to various Shiite militia groups in Iraq, but also some Sunnis as well.

What can you tell us about this?

CALDWELL: Wolf, that's exactly correct. We now have some very credible intelligence based on both debriefings of individuals we've captured and other sources that now confirm there are Sunni extremist elements that are, in fact, being funded by Iranian intelligence agents, and they're also providing some training for them, too.

BLITZER: Because there was a report in a British newspaper over the weekend that Iran is doing this to launch some sort of summer offensive against the U.S. military to cause as much embarrassment and death and destruction as possible to hasten the U.S. withdrawal. I don't know if you saw that report in "The Guardian," but I wonder if you'd want to comment on it.

CALDWELL: Wolf, we did see it, and that's one of the reasons why we keep asking Iraq's neighbors to let Iraqis decide their future and to stop interfering in the affairs in this country so that the Iraqi people can, in fact, make those critical decisions they need to make to move this country forward.

BLITZER: And -- but the notion that U.S. officials are concerned that Iran is plotting some sort of summer offensive, is that true?

CALDWELL: Well, I would say it's been an ongoing offensive, Wolf. We've been seeing that kind of activity already now for several months from the explosively-formed penetrators, all the way to the shipment of arms and munitions, to the training that they're given inside of Iran, to Iraqi extremist elements, to the funding of these extremist elements. It has not at all been helpful in the efforts here in Iraq.

BLITZER: That's all the time we have, General Caldwell. But this is going to be our last interview between Baghdad and Washington. I know you're getting ready to wrap up this tour of duty there, heading off to Fort Leavenworth in Kansas.

You've got a major assignment. You've been promoted from Major General to Lieutenant -- Lieutenant General. The Senate has confirmed that now.

I want to thank you, first of all, for all the help you've given us. And I want to thank you on behalf of all the American people for all the good work that you've done for our country.

General, thanks very much.

CALDWELL: Well, thank you, Wolf. It has been my privilege and honor to have represented the men and women serving over here in uniform.

(END VIDEOTAPE)

BLITZER: He's a good man, General Caldwell. We'll be speaking with him from Fort Leavenworth, Kansas, once he gets back to the United States.

The United Nations Children's Fund, UNICEF, says it needs $42 million in the coming months just to provide basic needs to the children of Iraq.

CNN's Mary Snow is following this very important story.

Mary, UNICEF does incredibly important work. What can you tell us about their latest appeal?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, UNICEF is very anxious about the next six months, and it's bracing for conditions to only get worse for Iraq's children. It says it's trying to prevent deaths from outbreaks.

(BEGIN VIDEOTAPE)

SNOW (voice over): They are the most vulnerable victims of the Iraq war, and they're facing growing danger not just from everyday violence, but disease.

DANIEL TOOLE, UNICEF: We are at a tipping point for children in Iraq.

SNOW: UNICEF, the U.N.'s Children's Fund, is raising a red flag, saying deteriorating conditions like this are reaching a critical point. It estimates two-thirds of Iraq's children don't have access to the most basic necessity to survive, clean drinking water. And summer is approaching.

TOOLE: With the dry season coming, with the heat coming, with illnesses increasing, with malnutrition increasing, we're worried.

SNOW: Worried, UNICEF says, because there are cases of cholera that can spread quickly and be fatal. Diarrhea is also a big concern. Fewer children are getting vaccinated, and getting access to medical treatment is becoming more difficult as doctors, nurses and professionals leave the country.

It's not just medical concerns. Education is under threat. About 75 percent of the country's children were estimated to be in school two years ago. Now it's down to about 30 percent.

And when CNN's Hugh Riminton spoke with these kindergarten children in Baghdad, it was clear the war had invaded their games.

HUGH RIMINTON, CNN CORRESPONDENT: "When I hear the bombs, I'm afraid," says Sharuk (ph). "I close my ears."

"I'm going to bomb, bomb, bomb the school with everyone in it," says 5-year-old Omar (ph). "When I hear explosions I start shooting planes."

SNOW: These children are considered more fortunate because they can go to school. Some relief organizations say some kids have been out of the classroom for two to three years with no hope of returning anytime soon.

CARL TRIPLEHORN, SAVE THE CHILDREN: One of the things we're seeing in Iraq is that a lot of children are going into child labor to be able to support their families, families with resources.

(END VIDEOTAPE)

SNOW: And the concern spreads outside Iraq. Relief organizations are working to help hundreds of thousands of Iraqi women and children who fled to Jordan and Syria -- Wolf.

BLITZER: Mary Snow reporting for us from New York.

People who are interested in making contributions can, of course, go to the UNICEF Web site. They'll have information there.

UNICEF does really important work, not only for children in Iraq, but all over the world.

Still ahead, the White House homeland security adviser, Fran Townsend, standing by to join us live here in THE SITUATION ROOM. We'll talk about that alleged al Qaeda plot that President Bush says he has managed to thwart.

Why declassify the information right now? We'll ask her.

Also, first there was this so-called "F" bomb. Now the "S" word enters political discourse on Capitol Hill.

Carol Costello tells us about John Boehner's off-color comment.

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

(COMMERCIAL BREAK)

BLITZER: What do you get when you combine the hotly-debated immigration bill with an expletive we choose not to repeat? You apparently get another blunt, unwanted criticism by the House minority leader, John Boehner.

Let's go back to Carol Costello. She's standing by to fill us in with the details -- Carol.

CAROL COSTELLO, CNN CORRESPONDENT: Well, Wolf, another politician lets an expletive fly. If there was ever any doubt the immigration bill is the proverbial political hot potato, there isn't now.

(BEGIN VIDEOTAPE)

COSTELLO (voice over): It's a heated debate over an immigration bill that few seem to like. Maybe Congressman John Boehner did say it best when he told a group of Republican activists at a private gathering the immigration bill was a piece of (EXPLETIVE DELETED).

Really, he did.

MARC AMBINDER, NATIONAL REVIEW "HOTLINE": He said, "I told President Bush this morning that I wouldn't say anything bad in public about this piece of (EXPLETIVE DELETED) bill."

COSTELLO: Boehner's office told us his colorful description was merely "... an off-the-cuff wisecrack..." but some observers say Boehner's (EXPLETIVE DELETED) speaks to the growing frustration over an immigration bill that's become so controversial, there can be no compromise. BOB BARR, FMR. U.S. REPRESENTATIVE: Republicans, and conservatives in particular, have made the immigration such an emotional issue that now that we have a piece of legislation that gives conservatives many, many things that they used to want, they really don't know how to react to it.

COSTELLO: It isn't the first time a politician has let emotions take over. Senator John McCain dropped the "F" bomb over the immigration bill just last week. Back in 2000, President Bush didn't know the mic was on when he let loose how he really felt about a certain reporter.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: A major league (EXPLETIVE DELETED).

COSTELLO: The vice President has also released the "F" word on occasion. And John Kerry was overhead telling supporters exactly how he felt about Bush's campaign people.

SEN. JOHN KERRY (D), MASSACHUSETTS: These guys are the most crooked, you know, lying group that I've ever seen.

BARR: It really is unfortunate the example it sets for our children and government officials at other levels to use language like that.

COSTELLO: Perhaps. But the bloggers responding to Boehner's description of the bill liked it. Compared to his politically correct statement on the immigration bill, where it took him 167 words to say what he objected to, his more colorful rejection took only four words.

AMBINDER: The congressman actually spoke his mind.

(END VIDEOTAPE)

COSTELLO: And that was refreshing to some.

Just another thought. There are some, namely Senator Harry Reid, who think a heated, emotional debate could actually produce a better piece of legislation.

I guess we'll see -- Wolf.

BLITZER: All right, Carol.

Thank you.

(NEWSBREAK)

BLITZER: Still to come here in THE SITUATION ROOM, the White House homeland security adviser, Fran Townsend. She is standing by to join us live. That's coming up.

We're going to talk about al Qaeda plots that President Bush says were thwarted. Why was the information, the intelligence just now declassified? I'll ask her. And later, my conversation with Democratic presidential hopeful John Edwards. Find out what he says the Bush administration has done to the country's moral authority. That airs in our 7:00 p.m. Eastern hour.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: President Bush talking terror at his commencement speech today over at the U.S. Coast Guard Academy. He said Osama bin Laden ordered a terror cell set up in Iraq two years ago to plot against American targets, and he listed some of those plots saying they underscore the need for U.S. resolve in Iraq.

Joining us now from the White House to join about it, Fran Townsend, the assistant to the president for homeland security.

Thanks very much for coming in.

Why now? Why declassify this intelligence today?

FRANCES TOWNSEND, ASST. TO PRESIDENT FOR HOMELAND SECURITY: Wolf, as you know, we get this intelligence and then we have to action it. We have to do everything in our power to make sure that we take advantage of the intelligence we get to protect the American people. It's taken some time.

Two of the guys that the president referred to have been killed. One has been captured. So, now is the time when the president is able to talk about it.

But he has said for some time, as you know, that he's worried if we don't fight the enemy, our enemies overseas, that we're going to face them here at home. Today he was able to share with the American people why he worries about that.

BLITZER: As you know, there's intelligence and there's intelligence. Some intelligence is better than other intelligence.

On a scale of one to 10 -- you know the sources and methods, you know how this intelligence was collected, who provided this intelligence, what it's all about -- how good is the allegation that Osama bin Laden personally tried to set up this al Qaeda operation in Iraq to go after U.S. targets not only in Iraq, but outside of Iraq as well?

TOWNSEND: More importantly than what I think, it's what the intelligence community has advised the president. This intelligence is very, very credible. We feel very confident in it that not only did bin Laden task Zarqawi in Iraq to set up an external operation cell to target the United States, but Zarqawi's response to that was positive to the point of him indicating that he had some good proposals already.

BLITZER: I spoke earlier with Democratic presidential candidate John Edwards, and I told him you were going to be on our program here in THE SITUATION ROOM. And I want you to hear what he said, because he blames the Bush administration for this whole al Qaeda mess in Iraq right now.

Listen to what he said.

(BEGIN VIDEO CLIP)

JOHN EDWARDS (D), PRESIDENTIAL CANDIDATE: They created this mess in Iraq, Wolf. And what is Osama bin Laden doing still at large?

I mean, this is all the responsibility of the president of the United States and this administration. The reason there are terrorists actively engaged in what's happening in Iraq right now is because of the mess that George Bush and his administration have created.

(END VIDEO CLIP)

BLITZER: All right. Do you want to respond to Senator Edwards?

TOWNSEND: I would tell you I think Senator Edwards' comments are irresponsible. I think they're offensive and outrageous.

The fact of the matter is, the president, not this president, not any president, is responsible for the tragedy that happened on September 11th. This president did not, by his actions, force al Qaeda to target innocent civilians in Iraq or any place else in the world.

What the -- the point the president was making today was to show the American people what is at stake here, why victory in Iraq is so important, why we have to stay on the offense. The lesson of September 11th is we have got to fight them so they don't come here, because we know in their own words that's what they want to do.

BLITZER: Because I guess the point he's making, like a lot of the critics are saying, that under Saddam Hussein's regime there really wasn't much of an al Qaeda presence in Iraq. It was the U.S.- led invasion that helped create the ground for al Qaeda now to establish this base in Iraq.

TOWNSEND: Look, al Qaeda was active overseas in places like Afghanistan and around the region before September 11th. Have they taken advantage of the chaos in Iraq? Sure they've taken advantage of it, and what we're worried about today is the threat to the homeland. The president was trying to impress upon the American people the importance and the very seriousness of that threat and the persistence of our enemy.

BLITZER: I want to switch gears for a second while I have you and ask you about Congressman Tom Tancredo. He's a Republican presidential candidate.

He's today calling for an investigation into who leaked this information to ABC News about this alleged covert finding, this order the president has given to try to overthrow the regime in Iran. I wonder if you think that's appropriate to go ahead with an investigation into this leak.

TOWNSEND: You know, it's really -- it will be the responsibility of the Central Intelligence Agency to decide whether or not they have enough information to make a criminal referral to the Justice Department.

I'll tell you, Wolf, every time sensitive intelligence information is leaked to the public, the people who take advantage of that are our enemies. Frankly, they understand then better our plans, our operational capability, and it makes our job harder.

With the Iranians, what we're trying to do is convince them, persuade them to change their behavior. They are the largest state sponsors of terrorism, and they use terrorism as a tool of their foreign policy. It's unacceptable, and what we want to see is behavioral change out of the Iranians.

BLITZER: Was the ABC report accurate?

TOWNSEND: I'm not going to comment on it, Wolf, because it's -- in spite of the fact that somebody has been talking to the press, I'm not going to do that. It's classified at this point, and it's going to remain that way.

BLITZER: Fran Townsend is a senior adviser to the president on homeland security.

Thanks very much for joining us.

TOWNSEND: Thank you.

BLITZER: And still ahead here in THE SITUATION ROOM, your chance to weigh in on President Bush's speech today. Jack Cafferty with your e-mail.

All that when we come back.

(COMMERCIAL BREAK)

BLITZER: Let's check back with Jack Cafferty for "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Wolf, the question this hour: Is it appropriate for the president to declassify intelligence at a commencement address?

Glynn in South Carolina, "So what's new? No, it's not appropriate. But it's just the same old fear factor talk trying to make everyone think that al Qaeda is going to invade the U.S. If they wanted to do that, why wouldn't they just walk across the border, like 12 million illegal aliens have?"

James in Glencoe, Oklahoma, "It's totally reasonable for the president to declassify information in any speech he gives. A commencement is no different than any other speech. In this case, the new Coast Guard officers are likely to be impacted by the war on terror, and new information about that war is valuable information and appropriate for the audience."

Tony in South Carolina, "It might have been proper had it been done by someone with a little credibility. But for Bush to do so was just an insult to the graduates. Most Americans don't believe this intelligence any more than we believe the intelligence they use to get us into Iraq."

Ray writes, "Who cares? 2005? If in fact this is true, the only reason bin Laden would have been able to do so, set up a terrorist training operation inside Iraq, would be because Bush made it possible via the invasion in March of 2003, which was two years earlier. It's revisionist history at its finest."

Sean in Miami, "I usually agree with you, Jack, but quite frankly, he's the president. And as such, the classifying authority. He can declassify anything and anywhere he pleases."

Patricia in New York, "Yes, it's appropriate for the president to declassify intelligence at a commencement. My daughter Colleen is a cadet at the coast guard Academy. Today she officially moved up from 3C, third class, a sophomore, to 2C, which is second class, a junior. She said the speech and the delivery were great."

And Maureen in British Columbia, "At least he didn't dance, play the drums, or attempt to conduct the band. At this point we're forced to give thanks for small blessings."

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 this stuff -- Wolf.

BLITZER: And our viewers love those video clips, Jack.

CAFFERTY: Me too.

BLITZER: A lot of people do. Stand by. We're going to be bringing you back in an hour.

In California, meanwhile, two lost and wounded whales are still stranded in the Sacramento River about 70 miles from the Pacific Ocean. That's where they're supposed to be.

Our Internet reporter, Jacki Schechner, is joining us now. She's got some new video from our CNN I-Reporters.

This is a sad story, but let's hope it has a happy ending.

JACKI SCHECHNER, CNN INTERNET REPORTER: It's not now looking good, Wolf, unfortunately. I wish I could be the bearer of better news.

This was sent to us by I-Reporter Ed Truthan, who lives in Rio Vista, California, and this is actually the view out of his back yard. He lives off the Sacramento River.

These two whales have been stranded, circling in this neighborhood of a bridge for about three days now. The Coast Guard is trying to get them to go past the bridge into the Pacific.

They are wounded. And their wounds now, scientists say, are showing signs of infection. They're in fresh water. They need to get back to salt water in order for those wounds to heal. They think that what happened was they had some sort of run-in with a boat.

What you're watching here is the tail slapping by the calf. If you can hear a little bit of that sound in that background, that is Coast Guard radio. And Ed said he was listening to that, and that's how he knew that it was the calf that we're watching.

And unfortunately, Wolf, scientists and experts say that this tail slapping is most likely a sign of distress. So things aren't looking good at this point. These whales far from where they need to be, unfortunately.

If you want to send us something you catch on camera, do so at cnn.com/ireport -- Wolf.

BLITZER: All right. Those are amazing pictures. Let's hope this does, when all is said and done, have a happy ending for those two whales.

Thanks, Jacki.

And remember, we'll be back here in one hour, 7:00 p.m. Eastern.

Coming up at that time, my one-on-one interview with Democratic presidential candidate John Edwards. He is taking on fellow Democrats in his own party for backing down on the situation in Iraq.

Until then, thanks very much for joining us.

I'm Wolf Blitzer in THE SITUATION ROOM.

"LOU DOBBS TONIGHT" starts right now.

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