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Olympic Torch Turmoil; Showdown Over Trade; Clinton Calls for Boycott of Olympics; Commander in the Crossfire; Sadr City Standoff; Home Foreclosures Surging

Aired April 7, 2008 - 17:00   ET

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


CAFFERTY: Fred in Pennsylvania: "Hillary can turn it around by changing the goal. It's got to be getting obvious, even to those inside the bubble, her chances at winning the nomination are slim and getting slimmer every day. She has, however, shown herself to be the toughest, most resilient candidate in modern memory. If she were to change her goal to take over Harry Reid's position in leading the Senate, she could come out of this election in perfect position to advance her agenda where the law actually gets made. I hope she does."
Sherri in Canada: "I think she quits talking outside the issues, quits telling stories, she may still hang on to a 7 to 9 percent win in Pennsylvania. Just a note to all those bashing the media as being anti-Hillary -- Senator Clinton is the person saying these things. The media just reports it."

And Robert writes: "If I knew, I wouldn't tell her." -- Wolf.

BLITZER: All right, Jack.

Thank you.

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

Happening now, a daring display of anger against China high atop San Francisco's Golden Gate Bridge and massive protests in Paris as the Olympic Torch becomes a lightning rod for demonstrations against human rights abuses.

A big spike in the number of people losing homes -- we're on the foreclosure front lines, as a U.S. Senate panel holds a special hearing in hard hit Philadelphia.

And the U.S. military commander in Iraq preparing to brief Congress on the state of the war. He'll step into the crossfire of the presidential campaign, the candidates hanging on every word.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

The Olympic Torch snuffed out in a bid to escape angry protesters in Paris. And well before the Torch even reaches San Francisco, a dramatic demonstration as the protesters scale the Golden Gate Bridge. Targeting China's human rights record, protesters are shadowing the Olympic Torch along its around the world relay. Let's bring in our State Department correspondent, Zain Verjee.

She's watching this story for us -- it seems, Zain, like the protests are gaining strength.

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: And getting a lot more dramatic, Wolf.

At every stop, the Olympic Torch is running an uphill battle, drawing more anger than spirit.

(BEGIN VIDEOTAPE)

VERJEE (voice-over): The Olympic Torch didn't make the finish line in Paris -- almost half of its planned run canceled as protesters blocked its way. Amid arrests and scuffles, the flame was put out at least twice by officials rushing it onto a bus for safety. At the Eiffel Tower, protesters angry over China's human rights record and its crackdown in Tibet unfold a flag showing the Olympic rings as handcuffs. Thousands of French security forces deployed to prevent similar scenes that gripped London the day before.

Torch bearers caught up in it were torn.

KONNIE HUQ, OLYMPIC TORCH BEARER: It's the perfect opportunity to be able to speak out.

PAULA RADCLIFFE, BRITISH MARATHONER: And I think this is the wrong way.

VERJEE: The flame's next stop -- San Francisco.

UNIDENTIFIED MALE: We look forward to the Olympic Torch coming through our city peacefully.

VERJEE: Already protesters are in action -- scaling the suspension cables on the Golden Gate Bridge with anti-China banners and a Tibet flag. Many more Americans are angered by China's support for Sudan, whose government is accused of killing its own citizens in Darfur.

The State Department's diplomat security is helping the city brace for mass protest.

SEAN MCCORMACK, STATE DEPARTMENT SPOKESMAN: I think everybody, it goes without saying, wants to have this be an event that is secure.

VERJEE: But the route has been scaled down to a six mile run around the waterfront. The Golden Gate Bridge out. A planned Torch journey on a cable car cut. A proposed stop in Chinatown canceled.

Senator Hillary Clinton is calling President Bush to partially boycott the Games: "I believe President Bush should not plan on attending the opening ceremonies in Beijing absent major changes by the Chinese government," she says. President Bush has said the Olympics should be about athletes and not politics. The White House says the U.S. position has not changed -- meaning the president is still going to the opening ceremonies.

TONY FRATTO, DEPUTY WHITE HOUSE PRESS SECRETARY: The Olympics will take place and we expect the Olympic -- American qualifying Olympic athletes to participate in those games.

(END VIDEO TAPE)

VERJEE: Senator Clinton criticized the Bush administration, saying it has been wrong to downplay human rights in its policy toward China, citing violent clashes in Tibet and the failure of the Chinese government to stop the genocide in Darfur. A White House spokesmen responded today, saying there's a great deal of concern about human rights in China and we have never been afraid to express those views directly by the president or by his senior advisers -- Wolf.

BLITZER: All right, Zain. Thanks very much for that report.

These protesters on the Golden Gate Bridge are getting an early start. The Olympic flame isn't due in San Francisco until Wednesday. It's one of 23 cities in the 34-day Torch relay around the world. After its only American stop in San Francisco, the Olympic flame continues through four more continents before arriving in China. The Olympics open in Beijing August 8th.

You can track the Torch's progress on CNN.com/olympics, by the way. And stay with CNN for live coverage of the relay and the protests later in the week.

The stage is set for a showdown between President Bush and Congressional Democrats over a free trade agreement with Colombia. And the more contentious it becomes as it is, happening in the midst of an election year political environment.

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

He's joining us now with more.

What's the president saying about the deal -- Ed?

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Well, Wolf, he's trying to say that this will boost the economy -- something Democrats don't really deny. Instead, they're focusing their fire on the fact that so many trade unionists have been killed in Colombia -- an explosive argument at a time when the Democratic presidential candidates are courting labor unions.

(BEGIN VIDEOTAPE)

HENRY (voice-over): Caterpillar tractors like this one President Bush tried out last year are made in the USA.

(VIDEO CLIP) HENRY: But it's no laughing matter. Colombia gets to slap a tariff of up to $200,000 on agricultural equipment -- making U.S. products hard to sell in Bogota, even though Colombian products face no such charge if they're shipped to America.

GEORGE BUSH, PRESIDENT OF THE UNITED STATES: The current situation is one-sided. Our markets are open to Colombian products, but barriers exist to make it harder to sell American products in Colombia.

HENRY: The stakes are enormous with the economy possibly headed for recession, sparking the president to demand Congressional Democrats ratify the trade deal by tend of the year.

BUSH: It's time to level the playing field.

HENRY: Democrats have heard the same argument before -- only to see deals like NAFTA not pan out. So they're opposing this one. But what's telling is Democrats like Hillary Clinton are not attacking the Colombia pact on economic grounds.

SEN. HILLARY RODHAM CLINTON (D), PRESIDENTIAL CANDIDATE: We've got to have new trade policies before we have new trade deals. And that includes no trade deal with Colombia while violence against trade unionists continue in that country.

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Her chief rival, Barack Obama, is also playing to labor unions, whose support is critical in upcoming battlegrounds like Pennsylvania.

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: You've got a government that is under the cloud of potentially having supported violence against unions, against labor, against opposition. That's not the kind of behavior that we want to reward.

HENRY: Mr. Bush insists his Colombian counterpart, Alvaro Uribe, has decreased kidnappings, terror attacks and violence against union members and is battling neighboring Venezuelan strongman Hugo Chavez from expanding his influence in Latin America.

BUSH: President Uribe has stood strong against these threats and he's done so with assurance of America's support because his fight against tyranny and terror is a fight that we share.

(END VIDEO TAPE)

HENRY: You can hear the president there try to make the case this is not just an economic issue, that it's also a national security issue. That's, in part, because he realizes it's a political loser in an election year to tout what is called free trade. So he's trying to broaden the argument out right now.

But Speaker Nancy Pelosi is not on board. This is going to be very much an uphill battle -- Wolf.

BLITZER: Thanks very much. Ed Henry watching this story for us.

While the economy certainly has dominated the presidential campaign lately, the war in Iraq is back in the spotlight right now. There's an upsurge in violence in Iraq, as Iraqi forces and U.S. troops have taken on Shiite militias. And the U.S. military commander in Iraq, General David Petraeus, will give a progress report to Congress tomorrow.

Democrats are stepping up demands for a withdrawal. Senator John McCain, on the other hand, is sticking to his guns, saying those calls by Democratic rivals represent a failure of leadership.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: I hold my position on Iraq not because I am indifferent to the suffering caused by this war, but because I detest war and believe sincerely that should we fail in Iraq, we will face an even sterner test in the very near future -- an even harder war, with even greater sacrifice and heartbreaking loss than we have suffered over the last five years.

(END VIDEO CLIP)

BLITZER: A Barack Obama supporter sent political sparks flying when he called John McCain -- and I'm quoting now -- "a warmonger." A comment Friday by a liberal radio talk show host at an Obama rally drew angry reaction from Republicans and the Obama campaign quickly distanced itself from the remarks.

But the radio host, Ed Schultz, certainly wasn't backing down today on CNN's "AMERICAN MORNING".

(BEGIN VIDEO CLIP FROM "AMERICAN MORNING")

ED SCHULTZ, RADIO TALK SHOW HOST: And we need to speak up and challenge these candidates. John McCain has no end game in Iraq. He's saber rattling with Iran. He wants to throw the Russians out of the G8. And yesterday on your network, he said he wants to increase the military.

Now, I ask the Americans this morning, what kind of message does it send to the rest of the world when we're occupying Iraq and we've got a candidate calling for more of a military build-up?

This is outrageous. The man is a warmonger.

(END VIDEO CLIP)

BLITZER: For the latest political news at any time, you can always check out our Political Ticker at CNNPolitics.com. The Ticker is the number one political news blog out on the Web. That's also where you can read my latest blog posts. I just posted one before the show.

Let's go back to Jack. He's got The Cafferty File -- Jack.

CAFFERTY: And to paraphrase Shakespeare, in this case it's she who doth protest too much. Secretary Condoleezza Rice, it turns out, might be interested in being on the ticket with John McCain as the vice president, despite her numerous claims in recent years that she has no plans to run for office. Republican strategist, former Bush aide Dan Senor stirred the pot yesterday when he told ABC News that Rice has been "actively campaigning" for the number two slot in recent weeks. Senor says she's been cozying up to the elite in the Republican Party, including an appearance before Governor Norquist's group of economic conservatives. Senor suggests Rice's experience would make her a prime candidate and the McCain campaign wouldn't have to waste a lot of time introducing her to the American people.

When asked about Rice's lobbying for the job, McCain said he "missed those signals". But he went on to compliment Rice, calling her a great American, and added that there's very little but the utmost praise that he can give for someone who has served as a role model to millions of people all around the world.

Right.

One little problem -- McCain's been critical of the way the Bush administration's handled the war in Iraq and said that Rice, who was national security adviser, remember, in the run-up and first year-and- a-half of that war, bears some responsibility for that mismanagement.

Some would suggest McCain would have to be crazy to put anybody associated with the Bush administration on his ticket, that it will only lend to the Democrats' argument against a third Bush term.

But having an African-American woman on the ticket could make things interesting in the general election this fall, because on the other side it's going to either be Barack Obama or Hillary Clinton.

The State Department today denied Rice is interested in the job. They said that if she's actively seeking the position "she's the last one to know about it."

Sort of like some other things.

Here's the question -- would you be more or less likely to vote for John McCain if Condoleezza Rice is his running mate?

You can go to CNN.com/caffertyfile and post a comment on my blog -- Wolf.

BLITZER: Good question, Jack.

Thanks very much.

Families are forced from their homes by the mortgage meltdown. Senators get a firsthand look at one of the cities hit hardest by the foreclosures.

But can they do anything, really, to help?

Also, the stand-off in Sadr City in Baghdad -- we're on the scene as U.S. troops are battling Shiite militias right in the heart of the Iraqi capital.

Can the Americans count on their Iraqi allies?

And an unlawful killing -- a British inquest into the death of Princess Diana delivers a final verdict and points the finger of blame.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: John McCain has put together his best fundraising month since he began his presidential campaign. Campaign sources telling CNN McCain raised more than $15 million in March. That's still less than the Democrats. Barack Obama raised more than $40 million last month. Hillary Clinton raised more than $20 million. Fifteen million in March for McCain.

Growing talk of some kind of U.S. Olympic boycott, with Democratic presidential candidate Hillary Clinton now calling on President Bush not to attend the opening ceremonies in Beijing.

Let's talk about that and more with Democratic strategist, CNN political contributor Paul Begala. He's a Clinton supporter. And former Bill Clinton campaign manager back in 1992, David Wilhelm. This time around, he's backing Barack Obama.

Thanks, guys, for coming in.

Let me -- David, quickly to you.

Hillary Clinton says the president should not attend the opening ceremony at the Olympic Games in Beijing in August.

What does Barack Obama think about that?

DAVID WILHELM, FORMER BILL CLINTON CAMPAIGN MANAGER: Well, I don't think he's issued a statement one way or the other at this point. I think to the extent he's said anything, he's said -- you know, he's kind of of two minds on this thing.

I mean, clearly, he understands the motivation for the kind of statement that Senator Clinton said today. I mean China's behavior when it comes to Tibet, to Sudan, you name it, these are things worthy of being strenuously opposed and he opposes them.

The question is, is this the right vehicle for doing so?

Maybe it is. It's an option we ought to have on the table. But it is a moment -- it is a singular moment, those opening ceremonies, where we celebrate our common humanity. And so I think it's tough.

And, also, it's sometimes difficult to figure out how these things unwind. I'm sitting right now in the City of Chicago, which is competing for the 2016 Olympics.

Would our position affect that somehow?

Would it boomerang?

BLITZER: Sure...

WILHELM: So, I don't know. It's a tough call, but I certainly think it's an option that should be on the table.

BLITZER: What do you think, Paul?

PAUL BEGALA, DEMOCRATIC STRATEGIST, CLINTON SUPPORTER: Well, it's a presidential level call. These are the kind of tough ones (ph). David is right -- the equities are difficult. China is both a competitor and, in some instances, an ally -- not very many instances. I think Hillary has got the right tone here. The president made his decision. He's going to go come hell or high water no matter how many people they kill in Tibet or no matter how much they continue to support the genocide in Darfur.

Hillary has taken her presidential decision here, right, as a presidential wannabe. She says no, the president should not attend the opening ceremonies. Now, that's less than Jimmy Carter boycotting the 1980 Games in Moscow after the situation invaded Afghanistan, but it would be a powerful presidential message to say we don't approve of China's human rights record or, frankly, the fact that they are selling us poison toys and poison dog food.

But Senator Obama claims to have good judgment -- and he does have excellent judgment. He's also, I think, quite a moral leader. And I think he needs to lead on this the way Hillary is leading, the way Nancy Pelosi, the speaker of the House, who has been one of the strongest proponents for human rights in China for all of her career -- Speaker Pelosi, I believe, has taken the same position as Hillary even before Hillary.

So I think Senator Obama is probably going to wind up there. I just hope he does so quickly.

BLITZER: David, is there any difference between those two Democratic candidates on the issue of a free trade area agreement with Colombia?

WILHELM: Not that I know of. I think both candidates have taken firm positions in opposition, as they should given the cloud that hangs over the country of Colombia when it comes to possible involvement in the murders of labor union leaders and organizers. So until that cloud disappears -- if we're going to have the kind of trade that is not a race to the bottom but instead lifts both countries up and provides better jobs and better wages for people who live in both countries, then we need to -- we need to walk carefully. And the country of Colombia still has a cloud over it. And I think both candidates have taken the right position.

BLITZER: You want to weigh in, Paul?

BEGALA: Yes. I think they're connected. We saw in the clip we showed before the break Senator Obama speaking out, I think right -- Hillary saying the same thing. As David said, they have the very same position on this. I think it then extends. If you're opposed to human rights abuses in Colombia so much so that you'll kill a free trade deal -- which is a very big deal -- surely you can find your way to make a symbolic statement in Beijing by just not showing up.

We're not saying kill trade with China, for goodness sake. There's too much of it. But certainly a position -- it is complicated for Senator Clinton that her chief strategist, as of last night -- apparently he's been demoted -- was working for the Colombians at the same time. And I think it's likely to hurt Hillary in Pennsylvania, where there's a strong pro-union vote in that state.

BLITZER: What's the inside story -- you're a Clinton insider, Paul -- on that decision Mark Penn would be demoted because he's got this other job as an adviser, if you will, to the government of Colombia?

BEGALA: Yes, I think demoted is the right verb. And I think some of our colleagues and competitors are overstating this. Maybe to paraphrase Mark Twain, the rumors of Mr. Penn's demise have been greatly exaggerated.

I am told by people who are covering the campaign and by allies who Support Senator Clinton, but frankly don't like Mark Penn, that he's still going to be very engaged doing polling, doing direct mail. So it's far from being fired and, frankly, far from what a lot of Senator Clinton's supporters -- especially in the labor movement -- want to see. I think a whole lot of them, in and out of labor, would like to see Penn completely fired...

BLITZER: What do you think, David?

BEGALA: ...and he has not been fired.

WILHELM: And then I -- then I would suggest, if that's the case, that there really is a difference between the two candidates on the Colombian agreement, because if he's still involved -- and I've read a number of reports today that he is still involved -- then Senator Clinton has still Involved, as a leading strategist in her campaign, an individual who is working on behalf of the country of Colombia in support of the free trade agreement.

So one wonders what was that all about last night?

Was it really to let him go or was it just to, you know, do some politics that needed to be done?

BEGALA: Let me just correct one thing. And David and I have been on the same side of so many fights and I just love him to death, and his family. But the Colombians did fire Penn. We know that. They fired him flat out for disloyalty.

WILHELM: Well the Colombians did, but did Senator Clinton?

BEGALA: Well, yes, apparently not. But he's no longer working for the Colombians, because they fired him because he said it would -- you know, he said bad things that the Colombian government didn't like, apparently.

But, look, there's -- I'm not going to lie to you. There's a lot of pressure among pro-Clinton labor leaders, but also non-labor leaders, who've been unsatisfied with Penn's strategy, who've been disappointed in Penn's conflict of interest. And there's still a clamor to eliminate him entirely from that campaign. And I don't -- I don't think the Clinton campaign has done that yet. I think Penn is still very much Involved.

BLITZER: He's been demoted, but he's not out yet.

WILHELM: And...

BLITZER: All right, guys, we've got to leave it right there. Unfortunately, we're out of time. But both of you will be back, I promise.

Thanks, guys, very much. (INAUDIBLE).

WILHELM: Thanks, Wolf.

BEGALA: David, great to see you, buddy.

WILHELM: Thank you.

Good to see you.

BLITZER: Political theater on the war In Iraq -- we're going to preview tomorrow's much anticipated progress report to lawmakers by the U.S. military commander in charge.

Also, you're going to find out why a prostitution scandal may be coming back to haunt Republican Senator David Vitter of Louisiana.

Plus, new developments as authorities remove children from a polygamist compound in Texas. We have some surprising new Information to update you on this story.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Let's go back to Carol Costello.

She's monitoring some other important stories incoming into THE SITUATION ROOM right now -- Carol, what's going on? CAROL COSTELLO, CNN CORRESPONDENT: Well, Wolf, Texas officials now say they have more than 400 children in custody from their search of a reputed polygamist compound. The search has been underway for the past four days.

(BEGIN VIDEO CLIP)

MARLEIGH MEISNER, TEXAS CHILD PROTECTIVE SERVICES: Now, I want to reiterate, this is not about numbers. This is about children who are at imminent risk of harm -- children that we believe have been abused or neglected. And we are doing everything that we possibly can to be as sensitive to this situation as possible.

(END VIDEO CLIP)

COSTELLO: State troopers have also arrested a man on the sprawling El Dorado compound. He is not the man listed on the warrant that prompted the raid. A 16-year-old girl alleged that she had been forced to marry a 50-year-old man and had a baby at the age of 15. Authorities are still trying to find the girl who made that report.

There is word today that Senator David Vitter might have to testify in the trial of a woman accused of running a high priced prostitution ring in Washington. Defense attorneys say the Louisiana Republican's name is on a list of potential witnesses in the trial of reputed Madam Deborah Palfrey. Last summer, Vitter publicly admitted to having used the escort service.

And for opera fans, a startling revelation. Late renowned tenor Luciano Pavarotti lip-synched his performance during the opening ceremony for the 2006 Winter Olympics in Turin, Italy. The maestro, who conducted what was to be Pavarotti's final performance, says it was so cold and the star was so sick, that a live performance was impossible. He says Pavarotti pre-recorded the performance and then pretended to sing. The orchestra pretended to play and he pretended to conduct. Pavarotti died of pancreatic cancer in September of 2007 -- back to you, Wolf.

BLITZER: Thanks very much, Carol, for that.

The candidates and the general -- David Petraeus set to brief lawmakers on the Iraq War, including the three leading presidential candidates. We're going to get a preview plus a reality check of the situation on the ground.

Also, home foreclosures surging across the country. We'll show you how the crisis is putting lawmakers under growing pressure to act. Plus, should the U.S. boycott the Olympic opening ceremonies?

You're going to find out which presidential candidates are now calling on President Bush to take action.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

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

Happening now, New York lawmakers are scrapping plans to charge drivers using Manhattan streets during prime business hours, a so- called congestion fee of $8 for cars, $21 for trucks. It was designed to cut traffic and pollution.

The official British inquiry into Princess Diana's death blames grossly negligent drives by her drunk chauffeur and the paparazzi that were chasing her. The ruling equates to manslaughter but new criminal charges are unlikely since the alleged crime occurred in France. Princes William and Harry thanked the jury and said they agree with the verdict.

And for topnotch service, fly low cost carriers. Air Tran, Jet Blue and Southwest Airlines claim the top three spots in the latest airline quality rating survey.

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

The U.S. military commander in Iraq starts briefing congress tomorrow on the state of the war. But General David Petraeus will be stepping into the cross fire of the presidential campaign. The candidates will be working their day jobs on Capitol Hill tomorrow hanging on every word.

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

Barbara?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Wolf, this is where it all begins, the senate hearing room, the first of several congressional appearances throughout the week.

(BEGIN VIDEOTAPE)

STARR: When General David Petraeus and Ambassador Ryan Crocker go to Capitol Hill, a lot of attention will be on the presidential candidates. Senators McCain, Clinton, and Obama, likely to use the hearings as their bully pulpit. Petraeus is widely expected to say no more troop cuts till the surge ends in July. So the only suspense, when will the political theater begin?

UNIDENTIFIED MALE: Petraeus was already in a sense in the middle of the presidential campaign.

STARR: Senator McCain, an administration supporter will say Iraq needs more time.

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: All this will require that we keep a sufficient level of American forces in Iraq until security conditions are such that our commanders on the ground recommend otherwise.

STARR: Senator Clinton's position, the U.S. has given Iraqis their freedom. Now bring the troops home.

SEN. HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE: We have acted honorably, we have fulfilled the mission that our troops were given and it is time to bring them home.

STARR: The Democrats problem? Challenges General Petraeus's case for holding on to 140,000 troops. With U.S. troops helping Iraqis in the recent fighting against Shiite militias, Republicans will say troops need to stay, Democrats will disagree.

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: We're going to bring one to two brigades out per month. At that pace, it will take about 16 months to get all of our combat troops out.

STARR: Michael O'Hanlon is a previous Clinton adviser.

MICHAEL O'HANLON, BROOKINGS INSTITUTE: For McCain to say stay the course doesn't explain how you handle Basra. For Obama to say get out in 16 months doesn't tell you how if you get out in 16 months --

STARR: And Senator Clinton?

O'HANLON: She's also been in favor of getting out fairly fast and that leaves the same questions for her as Senator Obama.

(END VIDEOTAPE)

STARR: A top aide to Petraeus tells CNN the general is well aware everything he says will be viewed through the political prism. But that he is determined to stay out of the fray once he sits down at this witness table, stay out of it if he can. Wolf?

BLITZER: Barbara, thanks very much. Barbara Starr reporting from the hill.

Fresh violence in Baghdad today as U.S. and Iraqi troops go after Shiite militias who've been raining rockets down on the heart of the capital. Another U.S. soldier was killed and Iraqi officials say at least 18 Iraqis died, nine of them they say in a U.S. air strike. The U.S. military says none of the casualties appear to be civilians.

CNN's Nic Robertson is with the troops in the sprawling Baghdad slum known as Sadr City.

(BEGIN VIDEOTAPE)

NIC ROBERTSON, CNN CORRESPONDENT: As gunfire erupts, American soldiers take cover.

UNIDENTIFIED MALE: Is he on the ground or is he on the rooftop?

ROBERTSON: Captain Logan Veath must find the gunman, stop the attack.

CAPT. LOGAN VEATH, U.S. ARMY: We've got one or two shooters located, they'd positively identified where they're at. They're being signaled on the rooftops by a couple guys with flags.

ROBERTSON: For the past ten days, U.S. and Iraqi forces have been trying to take control of these neighborhoods, neighborhoods militias have been using to fire rockets at the U.S. embassy in Baghdad's allegedly secure green zone, militias turning the people against the U.S. troops.

LT. COL. DAN BARNETT, U.S. ARMY: They turn us into the guys that move forward and shot innocent women and children deliberately. And that didn't happen.

ROBERTSON: U.S. forces can patrol barely one-fifth of Sadr City because of Iraqi government restrictions.

About 800 yards, about half a mile up the road here is the vast majority of Sadr City where U.S. troops are only allowed to go on very rare occasions. It's become, they say, an effective safe haven for the militias, from where they're able to plan and prepare their attacks.

But there's one more problem here. U.S. troops must let Iraqi soldiers take the lead in fighting the militias. Captain Veath must convince his Iraqi counter parts to go after the gunmen and it's not going well.

UNIDENTIFIED MALE: He told me he has little forces.

VEATH: Little forces? He's got as many people on the ground as I do. There is no reason that you cannot do this. We are behind you 100 percent. But you need to move forward.

ROBERTSON: The gunmen are still shooting. The Iraqi captain reluctant to lead.

VEATH: We can provide support, but we need you to action it.

ROBERTSON: Just when it's all agreed.

VEATH: Now is not the time. It is to move out. I need you to get your -- your forces over to the mosque and to isolate it.

ROBERTSON: They discover the Iraqi troops have gone to lunch. Fortified with food, they head off around the corner to take on the gunmen. The shooting intensifies. Captain Veath, ready for backup. Breaking into a store for cover, he loses contact with the Iraqi captain.

VEATH: We're hearing a lot of volume of fire. I got to figure out what's going on, if they're taking it or if they're giving or receiving. Over.

ROBERTSON: Ten minutes later the Iraqi troops return. Three soldiers are injured. They say they killed one of the gunmen.

VEATH: I'm proud of your men and what they've accomplished. I swear you have my -- (END VIDEOTAPE)

BLITZER: Nic Robertson reporting for us from Sadr City in Baghdad.

As the Democrats push for a withdrawal and John McCain digs in on the war, let's get an Iraq reality check. Joining us now, our own Michael Ware has been covering the war from the beginning in Iraq. He's joining us now from New York.

Michael, thanks for coming in. Welcome back to the United States.

MICHAEL WARE, CNN CORRESPONDENT: Great pleasure to be here.

BLITZER: Quick question, we just heard Nic's report from Sadr City. Can the Iraqi forces loyal to the prime minister crush these Shiite militias in Sadr City with U.S. military help?

WARE: Well, first of all, I think you'd have to find which of these Iraqi units actually have soldiers loyal to Nuri al Maliki. Much like the government itself, the Iraqi security forces are comprised of and drawn from the militias themselves. Now, you do have other recruits who've just shown up for a paycheck. At the end of the day, the troops on the ground are drawn from the militias, are drawn from the political factions. These are the building blocks of Iraqi political power. And Nuri al Maliki, the prime minister, doesn't have a militia and given the barrel of the gun is still the currency of political power in Iraq; Nuri al Maliki has little but words and some influence. Real power rests elsewhere.

It's no great surprise to see a commander not wanting to go into battle. My first question would be what's his name, where's he from, and you can roughly figure out what militia he was probably dragged from.

BLITZER: Who's more popular in Iraq among Iraqi Shiites, would it be Nuri al Maliki the prime minister or Muqtada al Sadr, the anti- America Shiite cleric?

WARE: That's something very hard to gauge. I can tell you now my gut instinct would say Muqtada would have it hands down. Certainly he's got the more vocal support. In so many ways Muqtada owns the Shiite street.

Now Nuri al Maliki is seen as someone who's tried but failed to deliver on security, basic goods and services and any kind of stability. Now, Muqtada on the other hand is seen as a rallying point. Now his militia command structure and his militia military structure has been eroded away, chipped away primarily by the Iranians. From Muqtada's militia, they've built better harder lined, better trained organizations called the special groups who are directly linked to Lebanese Hezbollah. So Muqtada is under political and militia attack as they borrow out from within him. Nonetheless, he owns the street. Who wields the mechanisms of power, Wolf?

BLITZER: We're going to be spending a lot of time talking this week. Michael, thanks very much.

Homeowners pleading for relief as record numbers face foreclosure. Now lawmakers get an earful. What might they do about the growing crisis?

Plus, my interview with the former governor, the former wrestler Jesse Ventura. You're going to find out what he says is all wrong with all the presidential candidates.

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

(COMMERCIAL BREAK)

BLITZER: U.S. homes are now going into foreclosures by the thousands every single day. There's growing pressure on congress to do something about it.

Let's go to CNN's Jim Acosta. He's in Philadelphia. He's watching the story for us, a very sad story.

What's the latest, Jim?

JIM ACOSTA, CNN CORRESPONDENT: Wolf, we're standing in front of a home right now that's in the middle of foreclosure. The homeowner insists it's not her fault.

(BEGIN VIDEOTAPE)

ACOSTA: Baring a miracle, Yajaira Cruz Rivera is losing her home. No longer able to keep up with rising mortgage payments, she got a notice from the sheriff that her Philadelphia home is scheduled to be seized and sold at auction.

YAJAIRA CRUZ RIVERA, HOMEOWNER FACING FORECLOSURE: It is not our fault that these greedy, predatory lenders are stealing our American dream.

ACOSTA: Cruz Rivera claims her mortgage lender misled her letting her think she was getting a fixed rate mortgage when in fact it was an adjustable rate loan. When her rate went up, she fell behind.

What would you say to folks out there who think this is your fault?

CRUZ RIVERA: It is not. That is the consensus on Capitol Hill. What happened to us is pure, plain fraud.

ACOSTA: Cruz Rivera testified at a field hearing of the Senate Banking Committee where she found an ally in Pennsylvania Senator Bob Casey who puts some of the blame on foreclosure crisis on unethical lenders.

SEN. BOB CASEY (D), PENNSYLVANIA: Too often unscrupulous players in the market have led families down a path of ruin financially. ACOSTA: That path of ruin is widening in Philadelphia where more than 6,200 homes went into foreclosure last year, an 18 percent increase over 2006. Across the country, the Senate Banking Committee says there are more than 7,700 foreclosures a day during February alone.

SEN. CHRIS DODD (D), BANKING CHAIRMAN: If you're a neighbor living in that block and you have a neighbor that has a fore closed property the value of your home has just gone down by at least 1 percent on the very day that foreclosure goes forward.

ACOSTA: Senate Banking Chairman Chris Dodd is backing legislation that would allow homeowners new or affordable mortgages through the federal housing administration. Some in congress aren't buying it, just look at the hearing in Philadelphia where there were no Republican lawmakers in sight.

CRUZ RIVERA: A dream that has never been realized.

ACOSTA: As for Yajaira Cruz Rivera who had to stop renovating her home when the money dried up, she dreads telling her four children what's coming.

CRUZ RIVERA: I do not bother young people's minds with what I call big people business.

(END VIDEOTAPE)

ACOSTA: This homeowner, we should mention, does have a small window of opportunity. That's because leaders here in Philadelphia have imposed a one month moratorium on house seizures. The question is whether that's going to be enough time.

BLITZER: Jim Acosta with the story. He's monitoring it. Thank you.

The four states, by the way, with the highest foreclosure rates are Nevada, California, Florida, and Arizona. Hillary Clinton won the primaries in all of those states although at the moment the Florida delegates, as you know, don't count because that state broke party rules by moving up its primary. In all four states at least 46 percent of the voters said the economy was the single most important issue in the election.

Conservatives meanwhile online are upset about an ad that Absolut Vodka put out, an ad campaign in Mexico that actually redraws the borders with the United States. Let's bring in our Abbi Tatton. She's watching this story.

Abbi, what does the ad show?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, it says in an Absolut world a map of the United States and Mexico would look like this. This is an ad campaign from Absolut Vodka used an 1830s era map to suggest that in an ideal world much of the southwestern part of the U.S. would belong to Mexico. It ran in Mexico, not in the United States but was picked up here online and led to conservator bloggers calling for a boycott. Well, that led to Absolut trying to explain themselves in the last few days posting blog post saying, "It was created with a Mexican sensibility, was in no way meant to offend." Well pages and pages of angry comments later lead to this post. "We apologize." A spokesperson for Absolut said this is part of a global campaign with local variations. This, the Mexican version has now run its course. Wolf?

BLITZER: Abbi, thank you.

Do protests and politics belong in the Olympics? The Olympic torch is bringing out plenty of anger. We'll talk about it with our own Lou Dobbs. He's standing by.

The former governor and former pro-wrestler, Jesse Ventura, he's here in THE SITUATION ROOM. He talks about a possible senate run in Minnesota and why he wants a revolution to change America's political process.

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

(COMMERCIAL BREAK)

BLITZER: We're back with Jack Cafferty. He's got the Cafferty File.

JACK CAFFERTY, CNN CORRESPONDENT: A little correction from last hour. We were discussing the movie career of the late actor Charlton Heston and I was talking about how much I enjoyed the movie "The Robe," which I did. Problem was Charlton Heston wasn't in "The Robe." That was Richard Burton who was married to Elizabeth Taylor. Charlton Heston was in the "Ten Commandments." I did enjoy both those. Most of you were pleasant about pointing out the mistake. Some of you used things like early Alzheimer's, knuckle head. I guess I deserved that. But it was a long time ago. I'm very old and I forget things.

By the way, do we have a couple extra seconds? I bumped into a guy who went to camp with you yesterday. ***** BLITZER: Oh, my god.

CAFFERTY: In Massachusetts. What was the name of the camp?

BLITZER: In Palmer, Massachusetts.

CAFFERTY: This guy's now a doctor in New Jersey.

BLITZER: Must be a very smart guy.

CAFFERTY: He told me some great stuff about things you used to do at camp.

BLITZER: Oh, my god.

CAFFERTY: The question this hour, would you be more or less likely to vote for John McCain if Condoleezza Rice is his running mate? Here's some of what you wrote to us.

Terry in Virginia writes, "Less likely. Ms. Rice is the same woman who didn't bother to read the intel reports on al Qaeda until 9- 12-2001. She's part of the worst administration in the history of the U.S. If she's McCain's VP come November we'll see the closest thing to a unanimous election for president for the Democrats."

John writes, "Less likely. Collin Powell is the secretary of state I can see as a running mate."

Terry in Texas writes, "There's no way. McCain's already Bush II and with Rice no way. She's done nothing for this country. All she's ever been is a servant to Bush."

Mark in Pennsylvania, "If Hillary is his opponent, I'll vote for McCain regardless of his running mate. But if Obama is the nominee I would need Condy on the ticket to vote for John McCain over Barack Obama. My hope would be McCain retires after one term. Condy then is the president for the next eight years.

Elizabeth, Massachusetts, "Every time I see Condoleezza Rice I remember that mushroom cloud statement that she told us was threatening us."

Bob in Ohio says, "I'd be equally apt to vote for a McCain/Rice ticket as I would a McCain/Limbaugh ticket."

Marie in South Carolina, "I think she's well qualified to be vice president or president should she want to do that one day. That being said, there's almost nothing that would make me vote for the party that's given us the past seven years and in particular for a person, Ms. Rice, who's key to the current administration."

Finally, Bonnie writes, "I wouldn't vote for John McCain if you were his running mate and I like you most of the time. Condoleezza Rice is another Bush robot. Not what we need after eight years of the Bushies."

If you didn't see your e-mail, go to my blog at CNN.com/CaffertyFile and look for yours there along with the hundreds, hundreds of others that are posted along with these.

Wolf?

BLITZER: All right, Jack. See you in a few moments.

Calls for a U.S. boycott of the Olympic opening ceremonies. Lou Dobbs standing by. We'll get his take on this growing controversy.

We'll be right back.

(COMMERCIAL BREAK)

BLITZER: Lou's show is coming up in one hour but let's talk to him right now about this call. Hillary Clinton among others, Lou, suggesting the U.S. boycott the opening ceremonies of the Olympic games in Beijing in August. What do you think?

LOU DOBBS, CNN ANCHOR: In protest of communist China's suppression of human rights in Tibet, it is exactly the right message. At least Senator Clinton is one of the few American elected officials who remembers that this is a nation and that the American people are first citizens before we are consumers or units of labor, whatever, the construction on the part of corporate America and its enablers in this administration may think. She's saying exactly the right thing. If this nation doesn't stand for human rights, individual liberty, this country stands for nothing. And this president, as he has said, to suggest it's just sport and politics has no role, I mean those are the views of I can't even describe those views that calculation. It's an absurdity.

And the International Olympic Committee bears great responsibility because these are the chumps who chose Beijing and then to sit there and order today as they did that the athletes in the nations will be punished if they in any way remark on the human rights violations in Tibet by China, you know it's time this country stood up its president its elected officials and said you are going to pay attention to democracy and individual freedoms which is what this country, remember, remember Wolf, that's what we stand for.

BLITZER: I think I remember something about that. I learned about it in elementary school.

DOBBS: Exactly.

BLITZER: All right, Lou. I'll see you in one hour. Thanks very much.

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