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Plot to Kill Americans; Loose Nukes Over United States

Aired September 5, 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: To our viewers, you're in THE SITUATION ROOM.
Happening now, a plot to kill Americans with powerful explosives. Under arrest, alleged Islamic militants with ties to Al Qaeda. The targets said to include discos, airports and U.S. facilities in Germany.

Loose nukes over America -- a B-52 flies across the country loaded with nuclear warheads. The crew had no clue.

How did this happen?

And word that Larry Craig may cancel his resignation from the Senate if he can get his bathroom bust dismissed. Senator Craig was a big critic of Bill Clinton during his scandal. Now CNN gives the former president a chance to fire back. You're going to want to hear what Bill Clinton had to say to Larry Craig.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

The target -- Americans. The motivation -- hatred. The weapon -- powerful explosives. German authorities say they've arrested three suspected Islamic militants who allegedly were planning "massive and imminent attacks." Those words from the authorities. The suspects are said to have eyed facilities frequented by Americans over there, including discos, pubs and airports. U.S. officials say the targets may have included the huge U.S. air base at Ramstein and the nearby Frankfurt international -- Frankfurt International Airport.

Let's go straight to CNN's international security correspondent, Paula Newton.

She's on the scene for us -- Paula, how well equipped and trained were these three suspects?

PAULA NEWTON, INTERNATIONAL SECURITY CORRESPONDENT: German officials describe them as highly professional. They were categorical about saying they had had training in Pakistan. Their weapon of choice -- hydrogen peroxide, relatively easy to get, difficult to detect. What they have to do is concentrate it to a certain level, which authorities say they were well on their way to doing.

Wolf, you're talking about explosions that would have been bigger than what happened in London and Madrid. Certainly, hydrogen peroxide mixed that way becoming the stock in trade of these kinds of Al Qaeda cells.

BLITZER: They're said to have received some training in Pakistan.

Was it extensive?

What are German authorities alleging on this front?

NEWTON: They're alleging, in fact, that it was definitely that deep hatred of Americans that drove them to try and come up with these kinds of targets.

What is so interesting here, Wolf, is how categorical they actually were. These guys were under surveillance for more than five months. Authorities believe they were given a lot of evidence about how Al Qaeda operates right now.

BLITZER: Paula Newton on the scene for us.

Thanks, Paula, very much.

Let's take a closer look now at the possible targets described by U.S. and German authorities.

Tom Foreman is here in THE SITUATION ROOM.

A lot of Americans in Germany, tourists and civilian -- a lot of American tourists, as well.

TOM FOREMAN, CNN CORRESPONDENT: Yes, a tremendous number of targets, if you look at it that way.

This is where these guys were arrested, up here to the north. This is Berlin down here, the red dots up there -- there it was. This is Berlin down here.

But look down here at Ramstein, the air base down there. This is part of the cornerstone of the military complex throughout Germany and there are a tremendous number of people here. Not only is this the base where many of the soldiers who come out of Iraq and Afghanistan who are wounded come to get treatment -- treated. But, also, you've got 12,000 military people based here, 7,000 Department of Defense people here, and along with their families and everyone, else 53,000 Americans gather around this base, in one way or another, and spread out through the country in the military community. That's one big potential target.

Then, when you look at Frankfurt airport over here, again, a huge connecting hub. When you fly in and out of Europe, many times you're going to pass through Frankfurt. This is an airport that sees 50 million people pass through it every year. It's one of the top 10 airports in the world and the single biggest employer in Germany.

So a tremendous amount of targets there and here. Fortunately, those guys were caught up north. But that's the kind of concern we've been talking about over and over again -- the targets not just here at home, but overseas.

BLITZER: German intelligence -- German law enforcement security generally pretty good on this front.

All right, we're going to watch this together with you, Tom.

Thanks very much.

A plot with the potential to kill a lot of Americans abroad.

Here at home, the homeland security boss may be saying I told you so.

Let's go to our justice correspondent, Kelli Arena -- Kelli, the details are shocking.

But should we have expected something like this sooner or later?

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Well, Wolf, unfortunately, yes.

And we all heard Homeland Security Secretary Michael Chertoff's warning that he had a gut feeling that the U.S. was in a particularly vulnerable period.

Just last month, Al Qaeda member Adam Gadahn threatened new attacks. So, Wolf, we were definitely warned.

(BEGIN VIDEO TAPE)

ARENA (voice-over): U.S. officials have been worried for months. Terrorists have been threatening and now it's happened again.

MICHAEL CHERTOFF, HOMELAND SECURITY SECRETARY: It is a sobering reminder of the fact that six years after 9/11, the intent of Al Qaeda and its allies to wage war on the West remains very much unabated.

ARENA: Since 9/11, Islamic extremists have been caught plotting or carrying out attacks against several U.S. overseas targets, including U.S.-bound airplanes, diplomatic posts, even housing complexes. Terrorism experts say the overall jihadist movement is growing and the fact that there are more extremists abroad makes the threat against overseas U.S. targets that much greater.

DANIEL BENJAMIN, FORMER WHITE HOUSE OFFICIAL: There is a much larger pool of people who seem to have bought into the bin Laden world view and who have joined up with the global jihadist movement. So, as a result, those installations are going to be at greater risk.

ARENA: But experts are quick to point out that does not mean we can let our guard down against attacks on the homeland.

JOHN MCLAUGHLIN, CNN NATIONAL SECURITY ADVISER: Europe is an easier target. But the United States is still the brass ring for these folks. ARENA: McLaughlin says this latest case in Germany raises some new concerns on that front, even though officials say there is no intelligence suggesting a threat against the homeland is imminent. This is the first time that we've heard of Germans allegedly attending training camps in Pakistan, and the plot included Muslim converts who don't necessarily fit the physical profile that law enforcement has become used to looking for.

MCLAUGHLIN: The potential here is for a group of terrorists who don't match the most common profile that people use for detecting them being able to come easily into the United States.

(END VIDEO TAPE)

ARENA: It makes for a lethal combination because the better they blend in, Wolf, the worse off we are.

BLITZER: And two of these suspects were Germans who converted to Islam.

ARENA: Yes.

BLITZER: Next Tuesday is the sixth anniversary of 9/11.

Are law enforcement -- what are you hearing from your sources over at the Department of Homeland Security about increasing threat levels or anything along those lines, given the anniversary, if you will, of 9/11 coming next week?

ARENA: Well, the FBI did send out an alert to its law enforcement partners around the country saying, look, you know, the anniversary is coming up. We have no specific intelligence. But be on guard. We know that this is -- this is an event that may spur somebody to act.

But as far as we know, Wolf, there's nothing specific being done on the security front. I mean we've heard from many major cities who say look, we're doing all we can already and without something specific to act on, we're just going to keep doing what we're doing.

BLITZER: And we know New York City is always on a high state of alert.

ARENA: That's right.

BLITZER: Understandably so.

All right.

Thanks very much for that.

Kelli Arena, our justice correspondent.

Let's check in with Jack Cafferty.

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

JACK CAFFERTY, THE CAFFERTY FILE: He's back. That's Senator Larry Craig. We thought he was gone away, but we couldn't be that lucky.

You may remember, he pleaded guilty to a -- unless you've been in a coma -- he pleaded guilty to a misdemeanor charge of disorderly conduct, which stemmed from an encounter with a police officer in the men's room of the Minneapolis airport. The cop was involved in a undercover sex sting operation. The senator pleaded guilty to a misdemeanor. Then he said he didn't do anything wrong.

So why did you plead guilty, Senator?

Then over the weekend, the senator announced that he intended to resign by the end of September. Now we're hearing he might reconsider his resignation and fight to remain in the Senate.

Won't the country be lucky if he succeeds at that?

Craig's lawyers are asking the Senate Ethics Committee to reject a complaint, saying the events were "wholly unrelated to official duties."

You can't even read this stuff with a straight face.

They say there's no precedent for the Senate considering a lawmaker's private conduct.

That's right and that's a big part of what's wrong with the federal government, that statement right there -- no precedent for considering the lawmaker's private conduct.

Now, the GOP leadership -- Craig says he won't resign if he can get the disorderly conduct case dismissed by the end of this month. That's a tall order. In a few weeks, he would need to have his guilty plea overturned. That is very difficult to come by.

Meanwhile, this can all put the Republican leadership in a tough position. Remember, they're the ones who complained to the Ethics Committee last week. Senate Minority Leader Mitch McConnell says now that he still believes that Craig made the "difficult but correct decision to resign."

Apparently, Craig's change of heart stemmed from a phone call from Senator Arlen Specter, who urged Craig to consider fighting the guilty plea and trying to hold on to his seat in the Senate.

Thank you, Senator Specter.

So here's the question -- should Senator Larry Craig reconsider his resignation?

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

Fiction writers -- the best ones in Hollywood -- couldn't duplicate this stuff.

BLITZER: Yes, you can't make this kind of stuff up. And later, we're going to be playing the excerpt from Larry King's interview with Bill Clinton when Larry asked him about the whole Larry Craig sex scandal. You're going to be anxious -- we're going to be -- you're going to be -- you and our viewers will like to hear what Bill Clinton has to say about this, as well.

We'll play that clip.

That's coming up this hour here in THE SITUATION ROOM.

CAFFERTY: All right.

BLITZER: Still ahead, though, a massive search for the missing aviation adventurer, Steve Fossett. We're on the scene right now in Nevada and we're going to take you up in a similar plane to the one that vanished.

Plus, there has been a major security breach over the skies above the United States. A B-52 flies across the country with nuclear warheads that nobody knew about.

How could this happen?

And vet versus vet -- they fought in Iraq. Now they're lining up on opposite sides in the battle line over the fight involving the war in Iraq.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: He dazzled the world with his 'round the world exploits. Now friends and admirers are hoping the adventurer, Steve Fossett, will wow the world once again with his survival skills. A massive search and rescue effort is now underway in the rugged Western Nevada. But a Civil Air Patrol spokesman says it's a large haystack and Fossett's plane is a very small needle.

CNN's Brian Todd is standing by in Maryland.

He flew a similar plane earlier today.

But let's go out to Ted Rowlands.

He's on the scene for us in Nevada. He's following this search -- Ted, what's the latest?

TED ROWLANDS, CNN CORRESPONDENT: Well, Wolf, as you can imagine, with every hour that goes by, the level of concern goes up. There is still no sign of Fossett or his plane. Searchers did get a break today from Mother Nature. The winds have died down considerably, enabling them to bring their altitude down considerably, meaning they can see much better, clear more area. The reality here, the sobering reality here is that it will take them at least a week, they estimate, to clear the 600 mile plus -- square mile plus area that they have designated to where Fossett could be. Because he didn't file a flight plan, this is where -- taking into account how much fuel he had when he left on Monday morning -- where he could be. It's a huge area that you alluded to, this needle in a haystack scenario that they're crisscrossing. They're hoping to get lucky.

Another area of concern to those close to him is the fact that he had with him, apparently, a watch that he could use to send out a distress call, a call that has not been made. That worries sir Richard Branson especially.

He talked to CNN earlier today about that.

(BEGIN VIDEO CLIP FROM CNN's "AMERICAN MORNING")

It seems perhaps more likely than not that he's injured, because he does have a (INAUDIBLE) watch on him which could send out an emergency (INAUDIBLE). But he would have to operate that manually. And we just have to hope that -- that people can get to him as early as possible today.

(END VIDEO CLIP)

ROWLANDS: That is the hope, that they'll be able to get to him today or tomorrow, especially when the conditions are favorable. The winds are expected to pick up late this afternoon. But right now, they are still able to fly at those low altitudes. And, Wolf, they're hoping to exploit that and then find some sight of this plane -- hopefully find him alive and well -- and make the rescue. But time, obviously, a very major concern with each passing hour.

BLITZER: All right, Ted.

Let's hope they find him alive and well, indeed.

Stand by, because soon as you get some more information, we're going to share it with our viewers.

You'll update us on this search and rescue operation.

The plane Fossett took off in was a single engine aircraft fueled for a few hours of flight.

Let's go to Brian Todd.

He went up in a similar plane earlier today out in Ridgely, Maryland -- Brian, what could have gone wrong, based on what you're seeing, what you're hearing from the experts who flew you around today?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, going up in one of these planes, you get the feeling that the actual possibility for some kind of catastrophic accident is actually pretty -- pretty rare. (BEGIN VIDEO TAPE)

TODD (voice-over): George Rousseau flies a Super Decathlon at least once a week from an airstrip near his home on Maryland's Eastern shore. He's logged about 1,500 flight hours in the same model plane that Steve Fossett went missing in. He says this is a fundamentally safe aircraft that pilots often learn how to fly aerobatics in.

GEORGE ROUSSEAU, SUPER DECATHLON PILOT: I don't think a pilot like Steve Fossett would need any of these instruments to fly the plane with authority.

TODD: It's a single engine tandem seat plane -- one seat in front of the other. When we first go up, I'm shooting video from the back while George pilots. This plane can turn completely upside down and its engine won't stall. We can't completely invert on these runs, because we're not wearing parachutes. But we do some steep pitches at nearly 90 degree angles, sometimes pulling four out of the maximum six Gs.

Like Fossett's, this plane is equipped with an emergency locator transmitter -- a beacon designed to go off if there's impact.

Why didn't Fossett's beacon go off?

ROUSSEAU: It could be that it was -- it was damaged either before or after the landing. It could be that it was -- it was inoperative. That's kind of rare. But it's hard to say why.

TODD: Our landings are smooth. But George Rousseau says this is sometimes where this plane runs into trouble in windy conditions, because its steering mechanism is toward the tail.

ROUSSEAU: The center of gravity is -- sits right behind the pilot. And so that when it starts to -- if it starts to swerve a little, it wants to continue to turn. And so you sometimes get some low speed accidents with this type of airplane in landings. But, again, a pilot like Steve Fossett, so experienced, is not going to have any problem like that.

(END VIDEO TAPE)

TODD: Still, what does George Rousseau think might have happened to Steve Fossett?

Well, he said it could have been some kind of mechanical failure. He could have run out of gas. He could have had a problem with that tail steering mechanism, maybe trying to come in for a landing. But, again, as you just heard, he says none of that should have thrown off a pilot like Steve Fossett. He says Fossett could have landed that plane even if the engine completely stopped running -- Wolf.

BLITZER: and did he -- he also mentioned that those desert winds, they can be pretty tricky for the pilots out there in Nevada.

TODD: Absolutely. And, again, with this type of plane, what's unique to this type of plane is it's got what he calls a tail wheel mechanism near the back. It means the steering mechanism is near the back, as opposed to most planes this size, where it's like -- what they call the nose steering or the nose wheel type of mechanism -- where it's in the front. He says with that type of steering incline, when you're coming in for a landing, if it's windy, that can throw you off. The tail can spin a little bit and it could cause some kind of an accident.

But, again, he says Fossett should have been able to handle that.

BLITZER: Brian Todd's out in Ridgely, Maryland.

Brian, thanks very much.

Steve Fossett's dangerous adventures aloft have almost cost him his life on more than one occasion. In January 1998, his attempt to fly solo around the world in a balloon was cut short when he crash landed in Russia.

August that same year brought his most spectacularly dangerous close call. Fossett almost died when a storm shredded his balloon and he plunged five-and-a-half miles into the Coral Sea.

During yet another round the world balloon attempt back in 2001, bad weather forced him to land on a cattle ranch in Brazil.

We're going to watch this story closely for you.

Up ahead, CNN gives the former president of the United States, Bill Clinton, a chance to sound off on Senator Larry Craig.

(BEGIN VIDEO CLIP FROM "LARRY KING LIVE," SEPTEMBER 5, 2007)

LARRY KING, HOST: Do you get any sense of satisfaction, since he was such a critic of yours during the impeachment thing and using terms very demeaning about you?

(END VIDEO CLIP)

BLITZER: It's pay back time for the former president. You're going to want to hear what he told Larry.

And vet versus vet -- they fought in Iraq, now they're fighting over the war.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Bill Clinton took flak from all directions during his White House sex scandal. But one of his chief antagonists was Senator Larry Craig -- now facing a major sex scandal of his own.

CNN's Larry King gives the former president a chance at payback. (BEGIN VIDEO CLIP FROM "LARRY KING LIVE," SEPTEMBER 5, 2007)

KING: Did you get any sense of satisfaction, since he was such a critic of yours during the impeachment thing, using terms very demeaning about you?

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: No.

KING: No?

CLINTON: No, because when it was going on I knew that, you know, a lot of them were outed for hypocrisy long before this. And everybody knew that -- every serious student of the constitution knew that the whole thing was bogus and that they were just jumping on a terrible personal mistake that I made.

But I -- one of the things I did to try to get through that period was to think long and hard about times in my past when I had judged people too harshly because they had a problem I didn't have. And I promised myself that I'd never do that again. And I'm trying to keep that promise.

And so I honestly didn't feel any great joy.

(END VIDEO TAPE)

BLITZER: The former president, Bill Clinton, on LARRY KING LIVE tonight, 9:00 p.m. Eastern, here on CNN.

You're going to want to see the whole interview with the former president.

Let's go back to Carol Costello.

She's monitoring some other incoming stories to THE SITUATION ROOM -- Carol.

CAROL COSTELLO, CNN CORRESPONDENT: Hi, Wolf.

What happened?

It was the question front and center on the minds of senators hearing testimony today about that deadly disaster at the Crandall Canyon Mine in Utah. Mine safety chief Richard Stickler defended his work to find those nine trapped miners in the collapse. Mine owner Bob Murray was not at the hearing.

The stifling eight day heat wave in Southern California is blamed for the deaths of more than two dozen people in four counties. Temperatures soared past 110 degrees in desert regions, with nighttime temperatures giving little relief. Utility crews struggled today to restore electricity lost to tens of thousands of customers because of strained power grids. Today's highs were expected to be much cooler.

British scientists have gotten the go-ahead for a new kind of stem cell research. They'll be allowed to mix human and animal cells to create hybrid embryos. Researchers say the experimental procedure would allow them to study how debilitating diseases are caused. Today's approval is only in principle. The use of hybrid embryos will be decided on a case by case basis.

Back to you -- Wolf.

BLITZER: Thanks, Carol, very much.

Up ahead, nuclear warheads over America and nobody seemed to know anything about it. There has been a major security breach involving a B-52 bomber.

What's going on?

What went wrong?

Stand by for that.

And they laid it on the line in Iraq fighting for our country. Now they're on opposite sides of the battle lines right here at home. It's vet versus vet.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

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

Happening now, Congressman Paul Gillmor found dead today in his Washington, D.C. apartment. The Ohio Republican was 68.

And retired GOP Representative Jennifer Dunn of Washington State also died today. Dunn, who was 66, left Congress back in 2004.

A federal judge in Miami stays the extradition of Manuel Noriega to France. Attorneys for the former Panamanian dictator have until tomorrow to produce evidence supporting concerns over how France will treat him. Noriega is scheduled for release from prison in Florida on Sunday.

And three U.S. Marine Corps officers are sanctioned after the killings of 24 Iraqis in Haditha. They've received letters of censure for failing to take proper action in reporting and investigating the November 2005 killing. The letters will go into their official military records. But the Marine Corps says the officers committed no crime.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

Nuclear warheads in the skies over America loaded aboard a B-52 bomber on a cross-country flight and the crew had absolutely no clue.

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

She's working the story -- Barbara, how big of a security breach was this?

BARBARA STARR, PENTAGON CORRESPONDENT: Well, Wolf, for the U.S. military there is nothing more serious than a problem with their nuclear weapons.

(BEGIN VIDEO TAPE)

STARR (voice-over): Military officials tell CNN it's an unprecedented mistake with nuclear warheads -- the most secure weapon in the U.S. arsenal.

Last Thursday, a B-52 took off from Minot, North Dakota loaded with six cruise missiles. When it landed three-and-a-half hours later in Barksdale, Louisiana, ground crews were horrified to discover the missiles had nuclear warheads. The pilot and crew had no idea they had been carrying nuclear weapons.

GEOFF MORRELL, PENTAGON PRESS SECRETARY: Secretary Gates was quickly informed of this incident. He was called, I believe, early Friday morning. And he has been receiving daily briefings.

STARR: One squadron commander has been relieved of duty, several airmen reassigned. An inventory of all U.S. nuclear weapons was quickly ordered.

The story was first published by the "Air Force Times" newspaper, a private publication. Military officials say the warheads were not armed, there was no risk of a nuclear explosion, but experts say that's not the issue.

MAJ. GEN. DON SHEPPERD (RET.), U.S. AIR FORCE: There was no way that the weapons could have been used in a nuclear weapon detonated, but it was still a major screw-up and a major, major concern. You don't want any screw-ups, none, when it has to do with nuclear weapons.

STARR: For the Bush administration, already trying to convince allies that Iran and North Korea posed a nuclear threat, this could not be more embarrassing.

SHEPPERD: This will require a flurry of diplomacy in many places to reassure our allies where our nuclear weapons are.

STARR: Wolf, President Bush was informed of the incident within hours of it happening, and results of an air force investigation into what went wrong are expected as soon as next week.

Wolf.

WOLF BLITZER, CNN ANCHOR: Barbara, thanks very much. What a story. Barbara Starr is watching that story for us.

They fought for their country on the front lines of Iraq. Now they're on the home front, facing off over the war, vet versus vet.

Let's go to CNN's Kathleen Koch.

Kathleen, what's this all about?

KATHLEEN KOCH, CNN CORRESPONDENT: Wolf, lots of Iraq war veterans come home from the battlefront, and they basically just want to forget about the war. They don't want to talk about it. But as the political debate proceeds over how to proceed heats up, the veterans on both sides are joining in.

(BEGIN VIDEOTAPE)

REP. JOHN BOEHNER (R), OHIO, MINORITY LEADER: After 3,000 of our fellow citizens died at the hands of these terrorists, when are we going to stand up and take them on?

REP. JOHN MURTHA (D), PENNSYLVANIA: I know what rhetoric is and I know what fighting on the front lines are. I know the difference between them. I know standing here does not solve the problem.

KOCH: The voices Americans hear the most often on the war. Now they're hearing new ones.

UNIDENTIFIED MALE: We were a fig leaf. We were there to make them look good, and they still failed miserably.

KOCH: Former marines' sergeant Adam Kokish worked in civil affairs in Fallujah for seven months. Though he and 26 year old Jeff Millard believed the administration's reasons for going to war were wrong, they decided to serve to help fix the situation.

UNIDENTIFIED MALE: Because I was a soldier and at the time I really believed that when soldiers are called to fight that's what we do.

KOCH: They paid a price for their opposition.

UNIDENTIFIED MALE: I've had horse manure thrown at me by a Vietnam veteran.

UNIDENTIFIED MALE: I get death threats. I get just people talking -- that I'm a traitor.

UNIDENTIFIED MALE: I know what I lost. I also know if we pull out now everything I've given and sacrifice will mean nothing.

KOCH: Iraqi veterans backing the war are speaking out more too. Some in a series of pro war ads crafted by a new republican funded lobbying group.

ARI FLEISCHER, FREEDOM WATCH: I can't think of a better voice for what is at stake in Iraq than somebody who has fought there or for parents of someone who gave their life there and they're not being used. This is how debates get handled in our society.

KOCH: And this debate is passionate, but Iraq war veterans on both sides agree now is not the time for any of them to remain silent.

PETE HEGSETH, EXECUTIVE DIR., VETS FOR FREEDOM: There just isn't enough informed topic about what's actually happening on the ground in Iraq, and the veterans that can articulate it and explain it are in short supply. So I think there's a lot of value to be added if the motive is correct, if the motive is we want to bring about the best outcome for America.

(END VIDEOTAPE)

KOCH: So just what do most Iraq veterans think about the ongoing war? Both sides say no definitive reliable polls have yet been done on the subject.

Wolf.

BLITZER: All right, Kathleen. Thanks very much.

A new report assessing the status of Iraqi security forces has some promising words for Iraq's armed forces but leveled stinging criticisms for their country's interior ministry and police force.

CNN obtained a copy of the so-called Jones report, to be released tomorrow. Despite its outlook for the Iraqi military forces, it also says they won't be ready for independent operations over the next year to 18 months.

I spoke with U.S. Army Major General Kevin Bergner. He's the chief spokesman for multinational forces in Baghdad. And asked him if this progress could make it possible for U.S. troops to begin pulling out.

(BEGIN VIDEOTAPE)

MAJ. GEN. KEVIN BERGNER, MULTI-NATIONAL FORCES-IRAQ: Well, it is a sign of encouragement and progress, and in fact, I would say that capability of the Iraqi army is already showing itself as taking over in certain places. And I would point to a place I served in 2005, in Nineveh province. The 2nd Division and the 3rd Division there are increasingly operating on an independent basis.

In fact, just last night soldiers from the 2nd Iraqi army division in Mosul unilaterally, independently captured the finance emir of Mosul, an al Qaeda in Iraq individual, with a very large sum of money, about $200,000. He'd been involved in kidnapping and so forth. So you do see more and more of those kinds of operations from the Iraqi army. And it is an important part of the way forward for U.S. forces as well.

BLITZER: General Bergner, is Muqtada al-Sadr and his militia, are they honoring their pledge to withhold military engagement for six months, or are they breaking that already?

BERGNER: Well, we've seen significant parts of Sadr's organization comply with the declaration that he made. And we have seen it also manifest itself in lower numbers of security incidents. We have also seen some who apparently are operating outside his control or disregarding the pledge that he made, continuing to use -- continuing those attacks. And we've seen a couple of EFP attacks and we've seen some rocket attacks.

Overall, though, it appears that his followers are complying with the commitment. That's important because it's going to allow us to focus more on al Qaeda in Iraq. It's going to create a window of opportunity for better reconciliation among the people of Iraq. So we're hopeful.

(END VIDEOTAPE)

BLITZER: Major General Bergner speaking with me earlier.

Bill Clinton talks about his wife's high negative numbers.

(BEGIN VIDEO CLIP)

BILL CLINTON: From the day I took the oath of office I never got a honeymoon. They tried to undermine the legitimacy of my presidency, and they took after her too.

(END VIDEO CLIP)

BLITZER: And there's more. You're going to hear what the former president has to say about why so many people don't like him or his wife, what's going on. He spoke to Larry King about that.

Also, Oprah's clout. She can certainly sell books. But can she sell Barack Obama?

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Norman Hsu is a big donor to democratic candidates and he was a fugitive for a decade and a half. Now just days after turning himself in he's apparently on the lamb once again.

Let's go back to Carol. She's watching this story.

What's this all about, Carol?

CAROL COSTELLO, CNN CORRESPONDENT: This has turned into quite a mess, Wolf, a lot of unanswered questions like why wasn't Hsu's passport take away and why was a fugitive who skipped the country 15 years ago let out on bail anyway?

Hsu, who has donated hundreds of thousands of dollars to politicians like Hillary Clinton and Barack Obama and other democrats, was supposed to appear before a California judge for a reduction of bail hearing. He'd been free on $2 million bail. Now he's nowhere to be found. His lawyer says he doesn't know where he is.

Originally, this guy was convicted of grand theft for defrauding investors of $1 million. That was back in 1992. He never showed up for his sentencing hearing at that time. Prosecutors suspect he skipped the country at that time and was hiding out in his native Hong Kong. At some point he came back to the United States as an apparel executive and he lived the high life in New York. Authorities found him indirectly because he gave all of that money to democratic politicians.

So tonight, Wolf, he's gone again, and there is a warrant out for Hsu's arrest.

BLITZER: All right. We'll watch it. What a mess. Thanks very much, Carol, for that.

The toy maker Mattel is pulling more than 800,000 toys off the shelves because of excessive levels of lead paint. It's the third major recall of Chinese-manufactured toys by Mattel this summer. Now three lawmakers are trying to make sure these toys stay off the online auction site eBay.

Let's go to our Internet reporter Abbi Tatton.

What have you found on the site, Abbi?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, take this kid's toy that appeared on the Mattel recall list last month because of a lead- based hazard, a toy with the same serial number showing up this month on eBay with a starting bid of $9.99. Now, this is against eBay's policy. The site clearly states in their online rules that items identified by the Consumer Products Safety Commission as hazardous are not permitted for sale.

But a recent study showed that some are getting on there, and citing that study, three U.S. senators have written to eBay's president, asking what they're going to do about it. And we spoke to an eBay spokesman today who said they work closely with the CPSC and they ask the eBay community to flag items that are subject to recall. But they did tell us as well that with so many recalled items out there right now some are slipping through.

Wolf.

BLITZER: Thanks, Abbi, very much. Abbi Tatton reporting.

The Larry Craig controversy, should the Republican Senator from Idaho reconsider his resignation? Jack Cafferty, standing by with your e-mail.

And Oprah Winfrey helps make books into best-sellers. Can her influence help Barack Obama become president?

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. He's standing by to give us a little preview.

Hi, Lou.

LOU DOBBS, CNN ANCHOR: Hi, Wolf.

Coming up at 6:00 eastern here, we'll be reporting on the Bush administration's astonishing failure to even respond to the Mexican president's insults and threats. The Bush administration and this congress apparently agree with the Mexican president's declaration that Mexico does not stop at our southern border.

Also, democratic and republican presidential candidates frequently say they're standing up for our middle class, but it turns out some of those candidates are simply ignoring one of the biggest threats to working men and women and their families in this country. We'll tell you all about it.

And another massive recall of dangerous toys imported from communist China. Another example of corporate America's rising dependency on cheap overseas labor markets. We'll have that special report.

And a debate between two leading experts on whether or not People's Republican of China is a communist nation. Two leading authorities on China with opposite views of the issue join us here tonight. We hope you will as well at the top of the hour.

Wolf, back to you.

Thanks, Lou. Sounds good. We'll be watching.

It's day two of John McCain against two young people, one of whom he jokingly called, and I'm quoting now, "a little jerk." Yesterday at a forum in New Hampshire the republican presidential candidate faced biting words from the two young men. One of them questioned McCain's age. The other questioned his leadership. Today McCain explained it all this way.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: You mean the little guy that said that I was suffering from Alzheimer's? He was a little jerk. No, you've got to have, especially with young people, but everybody, you've got to have a sense of humor.

And the other young man I could see is very, in his comments, he's entitled to his views, and I respect him, and that's why I made sure that he was able to respond three or four times. I think that's what young people expect.

(END VIDEO CLIP)

BLITZER: John McCain and his straight talk.

We're going to continue to watch all the political news, including this story. When Oprah Winfrey speaks, people listen. And the talk show diva is uncharacteristically throwing her considerable cloud behind a presidential candidate. Let's go to our senior political analyst, Bill Schneider. He's watching this story for us.

She can certainly sell books, Bill, but what about candidates?

BILL SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well, Wolf, that's about to be tested. This year Oprah Winfrey is doing something she's never done before.

LARRY KING: Have you endorsed a candidate before?

OPRAH WINFREY, TALK SHOW HOST: Never.

SCHNEIDER: She's endorsing Barack Obama for president. She's hosting a fund-raiser for Obama in California this weekend. But she doesn't just bring in money.

WINFREY: I think that my value to him, my support of him, is probably worth more than any check that I could write.

SCHNEIDER: Oprah Winfrey has more than an audience. She has a following.

MARTY KAPLAN, UNIVERSITY OF SOUTHERN CALIFORNIA: I think what Oprah can do is potentially bring out the congregants in the church of Oprah. She is a charismatic leader of a lay congregation.

SCHNEIDER: Oprah's core audience is women. Her endorsement could help Obama compete with Hillary Clinton for women's votes.

KAPLAN: One of his campaign officials in California told me Oprah is everything. So they have high hopes for the endorsement.

SCHNEIDER: Oprah's relationship with her audience is personal. So is her relationship with Obama.

DAVID MENDELL, AUTHOR, "OBAMA: FROM PROMISE TO POWER": They met way back here in Chicago in sort of the African American social circuit here in Chicago back in, I believe, either the late 1990s or around 2000 when he was running for congress.

SCHNEIDER: Obama's campaign message is not ideological. It's personal.

MENDELL: I think what he is trying to sell is a hope and an optimism and a message that, you know, a new day can come, that we can change things for the better.

SCHNEIDER: When Oprah Winfrey tells her audience that she likes Obama and she trusts him, she's helping him sell his political message.

KAPLAN: She can make the case, as Obama makes, that it's not about experience, it's about judgment.

SCHNEIDER: A source close to the Obama campaign tells CNN that there's a chance Oprah may take a more visible role in the campaign, although there are no definite plans at this point. Might we be seeing Oprah Winfrey at Obama campaign rallies or in TV ads? She is, after all, the second most admired woman in America, according to a December Gallup poll. Who's the first? Hillary Clinton.

Wolf.

BLITZER: Very interesting. Thanks very much for that. Bill Schneider reporting.

He's kept a pretty low profile while Senator Hillary Clinton campaigns for the democratic presidential nomination, but when he comes out he's a big gun on the campaign trail. The former president, Bill Clinton, talks to our own Larry King about his wife's presidential prospects and some of the hurdles she faces.

KING: Why do you think she engenders so much hate in people? In other words, she has a high favorable standing and a high unfavorable standing. How do you explain that?

CLINTON: Well, some of it may be that she's a strong woman and the first person in her gender ever to be seriously considered as, you know, a presidential possibility. But I think most of it, frankly, is that she took a lot of hits along with me beginning in 1992, when we threatened what the Washington republican right wing thought was their permanent hold on the white house.

From the day I took the oath of office I never got a honeymoon. They tried to undermine the legitimacy of my president, and they took after her too. So she had nine years of that. Then she had six years in the senate of that.

And so I think a lot of what people who don't like her think they don't like about her is either consciously or subconsciously affected by all those 15 years, 16 years now of hits.

And this is just the tip of the iceberg. You can hear the entire interview with former president Bill Clinton tonight, "Larry King Live," airs 9:00 p.m. eastern only here on CNN. I think you're going to want to hear what the former president has to say.

Over the weekend Senator Larry Craig of Idaho said he'd step down. At least that was his intention, to step down from the senate, after word got out that he was caught up in a men's room sex sting. Now he's reconsidering his decision to resign. But should he? Jack Cafferty with your e-mails coming up right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: This just coming in. Let's go to our congressional correspondent, Dana Bash. There's a new development on the Larry Craig story.

What are you picking up, Dana?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well, the senate ethics committee has rejected an argument made just today by Senator Larry Craig's attorney that they simply don't have jurisdiction over any investigation into what happened with Senator Craig in that men's room. The attorney argued that it's because it had to do with something other than his duties here in the senate. But the ethics committee wrote a letter to the republican leadership here. They're the ones who requested this investigation. And the ethics committee chairman and vice-chairman made pretty clear that they do think they have a right to look into this matter because they can look into anything at all, regardless of whether it's directly involving the senator's duties here, because they say if it reflects poorly on the senate, it is their right and responsibility to look into it.

BLITZER: All right. Thanks very much, Dana. Reporting that, Dana Bash on the hill.

Let's go to Jack Cafferty. He's also watching this story. Another setback for Larry Craig as he tries to, shall we say, make a comeback.

JACK CAFFERTY, CNN CORRESPONDENT: Yeah. In a manner of speaking, yeah. The question is should Senator Larry Craig reconsider his resignation, which he has said he is planning to do?

Karen in Twin Falls, Idaho, where the good senator hails from, "Of course he ought to resign. Are we, his constituents, under some obligation to allow him to rescind his resignation? I think not. This continues the saga of his ongoing attempt to deceive the very people he's supposed to represent. This man has become an embarrassment to this state and to the country. To quote Larry, jiminy god, man, go home."

Mujai (ph), Cupertino, California, "He seems nothing more than a typical sordid politician, the kind that discredits themselves through their hypocrisy and then adds insult to injury by refusing to be held accountable. It's not the senator's preferences we judge but rather his lack of transparency and outright effrontery that we find despicable."

Al in Massachusetts, "Absolutely, he should be allowed to withdraw his guilty plea and clear his name at trial, which I would pay to see. In fact, the republicans could raise a fortune turning their recent scandals into pay per view specials."

Jay in Libby, Montana, "Of course the senator should reconsider his resignation. As a democrat, I don't understand what he did wrong in the bathroom. He obviously pleaded guilty only because he knew what sanctimonious, hypocritical republicans like Larry Craig would do to him if they ever found out."

Brent writes, again from Idaho, "I'm a registered Idaho republican. Senator Craig should have resigned years ago. This recent instance is not an exception for him. It's proved to be the rule. Between his inappropriate sexual behavior and his support of illegal aliens, he is certainly not what Idaho needs as a senior senator." Bryce in Waterford, Michigan, "How about you start reporting the news and not injecting your personal bias into the story? If the senator wants to get this guilty plea overturned, good luck. But I'm sure he doesn't need you running his name more into the ground than he already has done himself. Just tell what the senator is doing, not how you personally feel about it."

Joe in San Luis Obispo, California, "Is he gay or straight? Guilty or not? Staying or gone? Senator Craig continues to perplex. He's made his decisions without the media spotlight, and now wants to reconsider, given the attention his behavior has drawn. Senator, your inability to make choices and stick to them should prove to the people of Idaho that you're the last person they ought to have representing their state."

And finally, Charles in Lansing, Michigan, "It's a hard call. Half the republicans want him to resign and the other half want his phone number."

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. I love our viewers.

BLITZER: Yes, me too. They're great. See you back here in an hour. Thanks very much.

Let's go to "LOU DOBBS TONIGHT." Lou is in New York.

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