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Flip-Flop on "Axis of Evil"; Bill Clinton is Back; Fuel Flap Between U.S. Airways and Pilots; Gore Set to Talk Energy, Oil and Drilling

Aired July 17, 2008 - 17:00   ET

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


WOLF BLITZER, CNN ANCHOR: And to our viewers, you're in THE SITUATION ROOM.
Happening now, Bill Clinton says he'll do whatever he's asked to do after a nasty primary campaign. The former president is now back and he says he's ready to help Barack Obama become the next president of the United States.

New hints that the Bush administration might be ready to open up a diplomatic outpost in Iran. As Iran works feverishly on its nuclear program, is President Bush flip-flopping when he comes to his axis of evil comment?

And my exclusive interview with the, House speaker, Nancy Pelosi. More of it coming up.

I'll ask her when she took impeachment off the table, why she said Hillary Clinton would never be on a so-called Democratic dream ticket and whether she's changed her own stance when it comes to Iraq.

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

But we begin with Iran -- a major development. Suddenly, America is ready to talk to Iran directly. And three decades after the seizure of American diplomats in Tehran that led to open hostility and amid Iran's rush to go nuclear, is the Bush administration also ready to set up shop, diplomatically speaking, in Tehran?

Let's bring in Brian Todd. He's working this story for us.

Brian, there seems to be a rather significant change in U.S. policy.

BRIAN TODD, CNN CORRESPONDENT: It does, Wolf. And some people believe that this is an effort by the White House to carve a more positive legacy on Iran before the president leaves office. Now, the administration is doing that. But this does seem to be a sea change from the way the White House dealt with Iran for a long time.

(BEGIN VIDEOTAPE)

TODD (voice-over): For years, the United States and Iran haven't been on speaking terms -- unless you count speaking like this.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: States like these and their terrorist allies constitute an axis of evil.

TODD: Tough talk on Iran and its leader that continued from president to president into this year.

BUSH: His policies are what's creating the deprivation inside Iran.

TODD: Now, what could be a dramatic reversal. The White House isn't denying a report in the British newspaper "The Guardian" that it plans to establish a diplomatic post in Tehran for the first time since the 1979 hostage crisis. The administration is not saying much of anything about it.

SEAN MCCORMACK, STATE DEPARTMENT SPOKESMAN: We're not going to discuss internal deliberations of the U.S. government. But it -- it is quite apparent from our efforts over the past several years that we have a real interest in reaching out to the Iranian people.

TODD: CNN has previously reported the administration was considering setting up a diplomatic office in Tehran.

If this is in the works, it would come after another diplomatic breakthrough -- a U.S. envoy's meeting with Iran's top nuclear negotiator this weekend.

Since the hostage crisis, U.S. administrations have worked back channels with Tehran, but never went as far as setting up a diplomatic post.

Is this a flip-flop?

For years, the Bush White House said all options are on the table with Iran. But for a long time, the military options seemed more likely with both sides flexing their military muscle in the region. Now, with about six months left in office, administration officials deny they're watching the clock -- scrambling to leave a positive legacy on Iran. Analysts are skeptical.

SUZANNE MALONEY, SABAN CENTER FOR MIDDLE EAST POLICY: This is a top tier issue for the administration.

And if they are to leave office without having moved the ball forward in a significant way, I think it will be considered as a major problem in terms of the historical legacy.

(END VIDEOTAPE)

TODD: But the White House also knows how receptive the Iranians are toward this. President Mahmoud Ahmadinejad said recently he's in favor of a U.S. diplomatic post there. An Iranian official at the U.N. told me the same thing. And the Iranians also might have an eye on legacy here. President Ahmadinejad is up for re-election in less than a year, Wolf. So he's thinking about the future, too.

BLITZER: And this diplomatic office or mission in Iran would be what's called an interest section, similar to what the United States has had for years in Havana.

TODD: That's right. Not a full blown embassy, not a consulate, but an office to help set up visas for Iranians to travel here and cultural exchanges. The Iranians desperately want that. But let's also be honest, it's a place where you can have ears on the ground and maybe pick up some intelligence, as well.

BLITZER: To get U.S. people there on the ground -- U.S. diplomats.

We'll see what happens.

Brian, thanks for working the story.

He was a lightning rod for criticism, dished out plenty of his own in a nasty Democratic primary campaign. But after disappearing for a while, Bill Clinton is now prepared to start helping Barack Obama.

(BEGIN VIDEO CLIP)

WILLIAM JEFFERSON CLINTON, FORMER PRESIDENT OF THE UNITED STATES: And he said he wanted me to campaign with him. And I said I was eager to do so. And I, you know, but he's busier than I am, on politics, anyway. So I just told him whenever he wanted to do it, I was ready.

(END VIDEO CLIP)

BLITZER: Let's bring in CNN's Dan Lothian. He's working the story for us.

All right, we heard from the former president today, Dan. What is he up to?

DAN LOTHIAN, CNN CORRESPONDENT: That's right, talking about campaigning for Barack Obama. But right now he's been spending time focusing again on his foundation now that he is off the campaign trail. He's back in the role of senior statesman, this time tackling malaria.

(BEGIN VIDEOTAPE)

LOTHIAN (voice-over): Stumping for his wife, Bill Clinton said he was fighting to save the country. Now he's fighting to save the world -- his foundation working to make a life-saving malaria drug more affordable and available.

W. CLINTON: Our foundation, working with the government of Tanzania, has demonstrated a model of how we can reduce retail ACT Prices.

LOTHIAN: It's a return to his old days after a bruising primary season, where, at times, some say he appeared unpresidential.

DAVID MARK, SENIOR EDITOR, POLITICO.COM: And he seemed to have lost some of his political sharpness and edge. He made real misjudgments and errors. LOTHIAN: In case you forgot, let's rewind a bit.

In New Hampshire, Clinton criticized Barack Obama's early opposition to the war in Iraq this way.

W. CLINTON: Give me a break. This whole thing is the biggest fairy tale I've ever seen.

LOTHIAN: In South Carolina, some thought Clinton was unfairly bring up the issue of race when he said this.

W. CLINTON: Jesse Jackson won South Carolina twice, in '84 and '88, and he ran a good campaign. And Senator Obama has run a good campaign here.

LOTHIAN: The former president later said he was misinterpreted. It wasn't just Obama that he went after -- the press was also in his crosshairs -- an angry side the public had rarely seen.

W. CLINTON: Shame on you. It's sleazy. He's a really dishonest reporter. But he's a real slimy guy.

LOTHIAN: Even when the dust had settled and Obama was the clear winner, Bill Clinton seemed to take his time extending a warm embrace. He finally did endorse Obama.

Some political observers say Clinton is now trying to polish his image.

MARK: I think slowly but surely, he's trying to rebuild his own brand. But it's going to take time.

LOTHIAN: Clinton supporters downplay the image problem. They say he has a lot of political capital from his successful years as president and his foundation work only builds on that.

DOUG HATTAWAY, DEMOCRATIC CONSULTANT: It's from doing substantive good work. I think that's what will really come to the forefront as passions from the primary continue to die down.

(END VIDEOTAPE)

LOTHIAN: And, again, Wolf, the former president, as we talked about earlier, says he has now eager, willing and ready to campaign for Barack Obama, even though he says he hasn't been personally asked. It's one more step forward and away from a tough primary season.

BLITZER: But, as you say, the main purpose of his news conference today was to talk about his foundation's work on behalf of millions of people around the world suffering from malaria.

LOTHIAN: That's right. And, you know, in the past years he has talked about AIDS and bringing prices down so that people can afford the medication, have access to the medication when they're suffering from AIDS. And this is another example he hopes to do the same thing with malaria -- Wolf. BLITZER: He's saving lives, that foundation. And he's going to be heading off to Africa soon, as well. We'll watch that trip.

Dan Lothian working the story for us.

All right, let's go back to Jack. He's got "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: When Barack Obama travels overseas to Europe and the Middle East, he's not going to be alone -- not by a long shot. Obama's trip is turning into a media extravaganza. All three broadcast network anchors will join him, broadcasting their nightly newscasts from stops along his route. Also along to record Obama's every move are top political reporters from major newspapers and magazines all over the country. Two hundred journalists requested to accompany Obama on the trip. But the campaign says they're only going to be able to accommodate about 20 percent of that number, or around 40 or so.

Meanwhile, Republican John McCain has taken three foreign trips in the last four months -- and not a single network anchor has gone on any of them. It's causing some concern among Republican that the news media is not giving balanced coverage.

They might have a point. The three broadcast network newscasts, which have 20 million viewers combined, spent about 114 minutes covering Obama since June, compared to 48 minutes for McCain.

Obama's been on the cover of "Time" and "Newsweek" 12 times in the last three years. Five for John McCain.

In the last few weeks, Obama has also landed on the cover of "Rolling Stone" and "Us Weekly." And, of course, there was that interview with his family, including the girls, on "Access Hollywood."

The television executives, of course, have lots of reasons for why the Obama trip is such a big deal. It's his first overseas trip since becoming the presumptive nominee, he's a fresh face in politics. His campaign is historic and he's the first African-American to ever head a major ticket in the run for the White House. And there is an overwhelming interest in Barack Obama overseas.

Those are all valid reasons. But that doesn't mean John McCain has to like any of it.

Here's the question: Why does Barack Obama get more news coverage than John McCain?

Go to CNN.com/caffertyfile and you can post a comment on my blog.

I was reading on that Gallup Web site this afternoon that this trip, according to Gallup, has the potential to change race. Those are their words.

BLITZER: Change on his -- for his -- on his behalf or against him? What are they suggesting?

CAFFERTY: Well, I guess it would have the potential to go either way. But I got the feeling, reading what they were writing, is that if he doesn't make any huge mistakes, he could do himself a lot of good here.

BLITZER: Because you know he's going to be very, very enthusiastically received in Europe. There's no doubt about that.

CAFFERTY: They can't wait. I mean it's like the Rolling Stones tour coming to town.

BLITZER: Yes. It certainly is.

All right, Jack, stand by. We've got lots to talk about.

Washington, D.C. residents start registering their guns, but the man who spearheaded it still isn't happy.

Plus, Al Gore's warning. He says the country's survival as we know it is at risk.

Also, lights, camera, action -- as Jack just mentioned, Barack Obama's trip will be a media extravaganza. We're taking a closer look at what John McCain can endure as far as his coverage is concerned.

And our I-Reporters demanding answers from the House speaker, Nancy Pelosi, about the war in Iraq. Her answer and what she says about impeachment proceedings.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: I ruled out impeachment before the election.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: It was certainly a top concern for voters back in 2006. And the frustration the war in Iraq helped the Democrats gain control of the Congress. It's still a huge issue right now, playing a pivotal role in the current campaign, as well.

And when we asked our CNN I-Reporters questions for the House speaker, Nancy Pelosi, Iraq was topic number one for many of you.

I spoke with the speaker just a few hours ago in her office up on the Capitol.

(BEGIN VIDEOTAPE)

BLITZER: Here's a question that was sent in by our I-Report from Ryan Petty in Canada. RYAN PETTY, IREPORTER: When you were voted into power, my understanding was the largest single issue at the time was the war in Iraq. You've been in power now for, I would say, about a year-and-a- half or two years, well, in the House, and nothing has been accomplished.

So, can you comment on just the lack of your ability to get the job done?

PELOSI: Thank you, Ryan, for your question. Again, it's similar to the other question because the obstacle has been the 60 votes in the Senate.

But I'm very proud of what we were able to do from right to left. Blue dogs (ph), news blues (ph), every caucus of the House joining together and sending a bill over to the Senate over and over again for a time certain of a goal of when we would redeploy our troops out of Iraq. The House has performed and we have delivered over and over again.

We can't get past that 60 votes.

Am I disappointed?

Thoroughly.

BLITZER: All right...

PELOSI: ...because we are losing lives. We're losing our reputation in the world. We're losing our capability to protect the American people, wherever they may be. And we're losing $3 trillion.

BLITZER: In February when we spoke, you said no gains had been achieved as a result of the military surge in Iraq. But now it seems like a lot of the indicators, the numbers are going down. The situation...

PELOSI: What numbers?

BLITZER: The situation seems to be improving on the ground.

Do you acknowledge that?

PELOSI: What I said to you in February was that the security opportunity that the surge was supposed to provide, the purpose of that was to enable the government to make the political change for reconciliation in Iraq. It wasn't true then and it isn't true now. So when you say the numbers are going down, I don't know what numbers...

BLITZER: The number of Americans killed, for example.

PELOSI: Well, that's a very important number. But the purpose of the surge was to provide the window of opportunity for political reconciliation.

BLITZER: But hasn't there been some improvement between the Sunnis and the Shia?

PELOSI: A very little. Not enough to justify us going into the sixth year in this war. This is meager. The most promising thing that we've heard is that Al-Maliki wants us to leave. I think we should sit down with him and set a date for that.

But we will always fight terrorism wherever it exists. And credit to George Bush, it now exists in Iraq and we have to fight it there. But it doesn't take 135,000 troops to do that.

BLITZER: All right...

PELOSI: So, no, I've been -- I visited the troops over Memorial Day weekend to thank them for their courage, their patriotism, the sacrifices that they and their families were making for our country. I saw nothing there politically at the time that justified the boasting that's going on about the success of the surge, because it was to be about political change.

BLITZER: Kris Craig of Olympia, Washington sent this question in, which we got a lot of questions very similar to this one.

KRIS CRAIG, OLYMPIA WASHINGTON: I'm Kris Craig from Olympia, Washington. Speaker Pelosi, in 2006, you asked us to vote your party into power so that you could hold this administration accountable. And yet a few moments after we did just that, you said that oh, by the way, impeachment, it's off the table.

PELOSI: Yes.

BLITZER: I'm sure you're asked this question all the time.

PELOSI: Constantly.

BLITZER: Why did you immediately rule out impeachment?

I guess that's the thrust of this question.

PELOSI: Well, I ruled it out before the election. I ruled out impeachment before the election in terms of a priority for the new Congress. Impeachment's always on the table, depending on the behavior of the president of the United States. But in terms of where we plan to go, I said before the election that impeachment was off the table, and for the following reasons.

Our country has serious, serious problems. Some of it spring from this president's backward-looking policies. We came in, we had our six row six (ph). Most of it is the law of the land, relating to our energy bill, raising the minimum wage, having the biggest package for college affordability since the G.I. Bill in 1944, the biggest increase in health benefits for our veterans in the 77-year history of the Veterans Administration, to -- again, the G.I. Bill, for at least Afghan and Iraqi vets coming home, about education, about energy policy, about health care. We just passed a Medicare reform bill.

It was my view that the priority was to get something done for the American people.

BLITZER: And that would have been a diversion?

PELOSI: And that would have been a diversion of the time and the...

BLITZER: All right...

PELOSI: And it would have divided the country. And it would have divided the country.

Should there be a look into the irresponsible use of power by the president of the United States in taking us into a war on the basis of a false premise without a plan on how we would succeed and without a strategy to leave?

Certainly. And Congress has had that oversight over and over again and we will continue to do so.

BLITZER: We got a lot of questions from our viewers about your decision weeks -- months ago -- to simply reject or rule out the notion of the so-called dream ticket, Barack Obama and Hillary Clinton.

He's still considering who his running mate is going to be.

Are you still thinking this is a bad idea?

PELOSI: I didn't say it was a bad idea. I just said it was never going to happen.

BLITZER: Tell us why.

PELOSI: Well, that's ancient history. Now we're going into the future and...

BLITZER: But do you think he shouldn't even be considering her right now?

PELOSI: Well, he -- look, my point was that Hillary Clinton, should she be the nominee, and Barack Obama, should he be the nominee, should have the right to choose their own vice presidential candidate. And that has always been the way.

I didn't want the first woman to have to say we're telling you who should be on your ticket or the first African-American candidate, we're telling you who should be on your ticket.

So it's up to the nominee to decide who the vice president is.

BLITZER: So you would be stunned if he picked her?

PELOSI: I'm not stunned at anything. If I told you surprised, stunned, you know, I've been around too long to be stunned by anything here. But I do think that there are many great choices. Hillary Clinton has emerged from this campaign, as I said, when she came here, the most respected political figure in America. She is a great leader, vice president or not, a senior -- a respected leader in the United States Senate, the most recognized figure, probably, in America, or certainly one of. And she has influence and strength beyond being a junior senator from New York, but being a national figure.

So I don't think her -- the impact that she will have on policy depends on her being the vice president of the United States. We're very proud of her candidacy. It broke new ground in so many ways.

BLITZER: We're out of time.

Let me thank you.

PELOSI: Well, thank you.

(END VIDEOTAPE)

BLITZER: And doctors say it's a one in a million chance -- twin babies, the same parents, with different skin color.

How did it happen?

The story, that's coming up next.

And what market slump?

A record price for an American home and guess who sold it -- "The Donald." Find out how much it went for.

That's coming up right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

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

Carol, what's going on?

CAROL COSTELLO, CNN CORRESPONDENT: Well, good news today on Wall Street, believe it or not. For a second straight day, the Dow soared as energy prices plummeted. Stocks surged more than 200 points, bringing the two gain to more than 480 points. The price of oil plunged more than $15 in the past three days. It's now down to $129 a barrel.

At least one person is able to sell his home in this weak housing market -- for $95 million. Real estate tycoon Donald Trump signed over the deed to his Palm Beach mansion on Tuesday. The highest bidder -- a Russian fertilizer billionaire. Now, this may be the most expensive sale of a single family home in U.S. history, but Trump, remember, was asking for $125 million and he got $95 million. So even "The Donald" has to suffer just a little bit.

Take a good look at these twins. Both boys, but one has white skin, the other black. The twins were born in Germany to a mother of Ghanaian descent and a German father. Doctors say the chance of this happening is one in a million.

Back to you, Wolf.

BLITZER: All right. Congratulations to mom and dad and the twins. They look adorable.

COSTELLO: They do.

BLITZER: Thanks, Carol, very much.

Very strong words from the vice president, the former vice president, that is, Al Gore.

(BEGIN VIDEO CLIP)

AL GORE, FORMER VICE PRESIDENT OF THE UNITED STATES: I do not remember a time in our country when so many things seemed to be going so wrong simultaneously.

(END VIDEO CLIP)

BLITZER: This challenge to an energy-strapped country -- what Al Gore wants America to accomplish within a decade. A pretty big idea.

Can it be done?

Also, a nasty fight over fuel goes public -- pilots saying they're being pressured to fly with less.

But are passengers in danger?

And Barack Obama heading overseas -- why much of the country's news media seems to want to tag along.

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

(COMMERCIAL BREAK)

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

Happening now, the survival of our country as we know it at risk -- the warning from the former vice president, Al Gore, as he pushes for a new energy policy.

Also, gas may only be the beginning. The price of electricity is now skyrocketing, as well. Why brownouts could soon be in our future.

And it's the kind of high technology U.S. military commanders in Afghanistan say they desperately need. We have exclusive video.

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

He said the entire polar ice cap could disappear within five years and warns America's very survival right now at stake. Al Gore sounding an urgent alarm on climate change today.

Let's go to CNN's Kate Bolduan. She's working the story for us.

Kate, so what is his solution?

KATE BOLDUAN, CNN CORRESPONDENT: Well, Wolf, he definitely has a goal. And his resume now includes an Oscar and a Nobel Peace Prize.

But as you said it, does Al Gore have the answer to the ongoing energy debate?

He says yes.

(BEGIN VIDEOTAPE)

GORE: I challenge our nation to commit to producing 100 percent of our electricity from renewable energy and truly clean carbon-free sources within 10 years.

BOLDUAN: Former Vice President Al Gore calling for drastic change in U.S. energy policy, producing all of the nation's electricity from clean sources, such as wind, solar and nuclear power within a decade. Gore warned that the consequences of anything less are dire.

GORE: The survival of the United States of America as we know it is at risk. And even more, if more should be required, the future of human civilization is at stake.

BOLDUAN: The proposal is estimated to cost $1.5 trillion to $3 trillion. But Gore argued those costs pale in comparison to the ever- increasing costs of oil and coal. His speech comes as Democrats and Republicans continue to butt heads over how to cut prices at the pump and whether to open up new areas for domestic drilling.

GORE: It is only a truly dysfunctional system that would buy into the perverse logic that the short-term answer to high gasoline prices is drilling for oil 10 years from now in areas that should be protected.

BOLDUAN: Initial reaction on Capitol Hill was predictably partisan.

PELOSI: The general thrust of what he is doing is something that is not extreme. It is long overdue.

SEN. GEORGE VOINOVICH, (R) OH: Carbon-free in 10 years is ridiculous. We could take and put wind mills from the Atlantic to the Pacific and yes, it will increase the amount of carbon-free energy production, but the fact of the matter is, it's not going to get the job done.

BOLDUAN: But Gore did get some support from at least one key Republican.

SEN. JOHN MCCAIN, (R) PRESIDENTIAL CANDIDATE: I've admired the vice president on this issue. He was earliest and outspoken advocate on the issue of climate change. (END VIDEOTAPE)

BOLDUAN: Now, the answer to critics who think his goals are unrealistic, Gore compared his challenge to President Kennedy's challenge of putting a man on the moon. Armstrong took the first step in eight, Wolf.

BLITZER: Kate, thank you.

By the way, Al Gore will talk about this entire new strategy he is undertaking later tonight on LARRY KING LIVE. The interview with Al Gore starts at 9:00 p.m. Eastern.

You may have noticed the cost of electricity is rising along with seemingly everything else. Some experts are now warning the time may soon come when you won't be able to get electricity, at least temporarily, at any price. Wow.

Let's bring in Carol Costello. She is working the story for us.

What's going on with electricity?

COSTELLO: I know. Well, what's going on, sounds depressingly familiar. High demand, not enough power plants, energy speculators, sounds a lot like the oil crisis, doesn't it? But high electricity costs, and the high gas prices are doing a number on our economy.

(BEGIN VIDEOTAPE)

COSTELLO (voice-over): You think gas prices are out of control? Get a load of what utilities cost these days. In Maryland and D.C., from 2006 to 2007, electric bills rose a whopping 46 percent in one year. The Hernandez family from Atlanta can relate. Their utility bill is also high.

JANE HERNANDEZ, ATLANTA GEORGIA: I think that we can give you a good visual.

COSTELLO: That's the family's vacation money. The Hernandezes are so strapped for cash, they raised that money in a garage sale so they could pay for a family trip to our nation's capital.

HERNANDEZ: We've used these coins to buy drinks over there by the mall. We had one woman look at us because we gave our 50 cents in pennies.

COSTELLO: The reasons for skyrocketing utility bills, well, high demand is one. We're using so much electricity, there's barely enough coal, natural gas and nuclear power plants to keep up. In fact, within three years, experts say we will exceed supply. Leading to widespread power outages like those many who suffered through in 2005. Still, consumer groups say generating more electricity is not the answer.

DOUG HELLER, CONSUMERWATCHDOG.ORG: Every time we build a new power plant that uses gas or coal we're ensuring that we are going to be stuck with whatever the future markets are going to charge us for commodities.

COSTELLO: They say the answer to our power problem is part conservation and part regulation. Ten years ago, when the government deregulated utilities and allowed them to set prices for consumers, it was supposed to help consumers.

MARK CRISSON, AMERICA PUBLIC POWER ASSN.: That is an experiment that was intended to produce competitive rates and to incent and encourage the development of new transmission capacity and new generation capacity. But it simply failed to do that.

COSTELLO: And unless Congress steps in, that's unlikely to change. After all, the industry is turning a profit. That leaves consumers like the Ponthier of New Orleans to take matters into their own hands. They were able to vacation in D.C. by doing without.

WADE PONTHIER, NEW ORLEANS, L.A.: We've tried to do everything we can to cut back on energy costs. You know, especially during the summer months. We have two air conditioning systems in the house, a two-story house. On a regular basis the kids will sleep downstairs so we can turn off the air conditioning system upstairs to save some money, save some dollars.

(END VIDEOTAPE)

COSTELLO: A lot of people are afraid what's going to happen when winter comes and you're paying the high natural gas prices. Utility companies, by the way, say the sharp increase in price in the mid- Atlantic is due to rate caps that were in place because of deregulation. D.C.'s utility says if you adjust the rate to inflation, bills actually rose just 15 percent over five years.

BLITZER: It's still all nevertheless very scary stuff.

COSTELLO: Oh, when you get hit with a bill that's 46 percent higher one day than you're used to paying, that's tough.

BLITZER: Get ready for a tough winter for a lot of people.

All right. Tonight you're going to New York. You've got a big exclusive interview tomorrow morning. Tell us about it.

COSTELLO: Yes, I'm going to interview the Dalai Lama. And of course he'll have a lot to say about Tibet and of course how China is dealing with Tibet. They had those violent crackdowns a while back. China has the Olympics. President Bush has decided to go to the opening ceremonies. I would expect that the Dalai Lama will have much to say about that because he is upset that the French president has decided to go to the opening ceremonies. He had wanted everybody to boycott that.

BLITZER: President Bush is going as well.

COSTELLO: (INAUDIBLE) Tibet. That's right. I'll also ask him his feelings on Americans. He said he had interesting things to say last Sunday about how Americans want more and more and how that's harmful. So I really want to get inside his head to see what he meant by that.

BLITZER: The Dalai Lama and Carol Costello, right here in THE SITUATION ROOM on the eve of the Olympics. Good work.

COSTELLO: Thank you.

BLITZER: The Pentagon says U.S. troops in Afghanistan need help. We have exclusive pictures of the kind of real time intelligence they're missing in a bloody fight against the Taliban. Nine American soldiers were killed.

And new developments in an airline's high octane fight over fuel use. Now pilots are taking their safety concerns to the American public.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Just today after the Pentagon brass promised to find urgent reinforcements for Afghanistan, Pentagon sources say no significant numbers will be sent until after the so-called fighting season. That comes as the U.S. military investigates what went wrong when U.S. forces were overwhelmed by Taliban fighters in the past few days.

Let's go to our senior Pentagon correspondent, Jamie McIntyre. He's working the story for us.

You've got some exclusive pictures now to show our viewers the extent of what we know.

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT: Even though it's beginning to look like sending fresh troops to Afghanistan anytime soon is turning out to be mission impossible, what may be going much faster are more spy planes that provide more eyes in the sky.

(BEGIN VIDEOTAPE)

MCINTYRE (voice-over): In this video, obtained exclusively by CNN, an f-16 pilot uses his targeting system to track an insurgent on the ground.

UNIDENTIFIED MALE: Walking along the edges of the field approximately seven meters up on the left is a hot spot. That's where the dismount jumped into the brush.

MCINTYRE: Even leading the U.S. to his hiding place in the tall grass.

UNIDENTIFIED MALE: Alongside of it. Appears to be pointing at something.

MCINTYRE: It's exactly the kind of overhead real-time intelligence that was missing when some 200 Taliban fighters were able to mass in Afghanistan's Kunar Province. And launch an attack that while repelled did result in nine American deaths. The deadliest firefight since the start of the war.

Now the U.S. military has launched a formal investigation to determine what went wrong. Manned and unmanned spy planes like the heavily armed Reaper are among the things the Pentagon wants to send more of to Afghanistan.

Planes from the aircraft carrier Abraham Lincoln in the Arabian Sea are also flying spy and attack missions over Afghanistan. But the critical need needs more boots on the ground, something sources say the Pentagon is having a hard time finding.

ADM. MICHAEL MULLEN, JOINT CHIEFS CHAIRMAN: It's very clear that additional troops will have a big impact on insurgents coming across that border.

(END VIDEOTAPE)

MCINTYRE: So while defense secretary Robert Gates promised to find reinforcements to send in his words sooner rather than later, pentagon sources tell CNN that because of the practical limitations, they won't be able to send a significant number of additional ground troops until much later this year. As you said, Wolf, that's well after the so-called fighting season in the summer ends.

BLITZER: All right. We'll watch this story. Lots of ramifications. Jamie, thank you.

BLITZER: There are new developments in that fuel flap between U.S. Airways and its pilots who are now taking their battle public in a very high-profile way.

Let's go to our chief technology and environment correspondent Miles O'Brien. He's got the story for us.

What do we know, Miles? We reported this yesterday, but there have been significant developments.

MILES O'BRIEN, CNN CHIEF TECHNOLOGY & ENVIRONMENT CORRESPONDENT: Yes. Really heated up, Wolf. The back story on this is the airlines are looking to make their planes as light and thus fuel efficient as they can. They've taken out magazines, they've stopped carrying food, they've even taken out in-flight entertainment systems. That might be bother some travelers. But when the pressure grows to take on less fuel, that's when the pilots start squawking.

(BEGIN VIDEOTAPE)

O'BRIEN (voice-over): With fuel costs soaring, it should come as no surprise pilots are feeling pressure to leave home with less in their tanks. It is surprising to read about it in the papers. At U.S. Airways that internal struggle is fueling a high-octane, public squabble.

CAPT. JAMES RAY, U.S. AIRLINE PILOTS ASSN.: This is a safety of flight issue. This has to do with the captain's authority granted by the FAA saying he or she has the final authority to add whatever fuel they find necessary for the safety of flight.

O'BRIEN: Captain James Ray is with the U.S. Airline Pilots Association, which represents U.S. Airways' 5,000 pilots. The union bought this full-page ad in the "Washington Post" and "USA Today," airing the company's dirty laundry on a nasty fuel fight. The airline recently singled out eight senior captains whose fuel orders were consistently above average.

CAPT. ROBERT SKINNER, U.S. AIRWAYS: What we're doing is asking them to come in and have an interactive conversation and demonstration with us, so we can learn why they're choosing to add fuel.

O'BRIEN: But the pilots see this in a different light.

RAY: It's designed to threaten the captain's authority, and the training is there to intimidate the line pilot.

O'BRIEN: U.S. Airways pilots called on the carpet, took off with an average of 15 minutes extra fuel. The cost of carrying that fuel on a long haul? About $80.

Eighty dollars is what we're talking about?

JOHN WILLEY, AVIATION CONSULTANT: Well, again, this gets multiplied over and over and over again. And the shot across the bow on the international pilots will be noticed by the domestic pilots.

O'BRIEN: No one is suggesting U.S. Airways management is asking pilots to ignore FAA minimums for fuel, which require an airliner to have enough to reach its destination, plus 10 percent, then fly to an alternate airport, plus another 30 minutes. It is fuel orders above and beyond that which are in dispute.

SKINNER: U.S. Airways agree with captain's authority. We have not denied one pilot to date the opportunity to add more fuel. However, we're asking our pilots to work with all the assets that we provide them with.

(END VIDEOTAPE)

O'BRIEN: There was a time when the captain's wishes were written in stone and planes frequently flew with plenty of excess fuel. But that was when gas was cheap. Those days are probably gone forever. Today pilots must balance the rules, the real-world conditions and reality that accompanies our drowning in red ink. And Wolf, it doesn't mean you're less safe, but it may mean there will be more planes that have to divert because they weren't carrying a big cushion of fuel.

BLITZER: What about, Miles, the other airlines? U.S. Airways, one airline. But what about the others?

O'BRIEN: It's interesting. In some ways it's unfair to single out this airline. Continental and American successfully petitioned the FAA to actually reduce the margins from the 10 percent cushion to five percent by showing that they never dipped into it. And there's some anecdotal evidence that there are increased requests for immediate landings, because of minimum fuel. So it's across the board. Fuel cost is the number one cost of these airlines, Wolf. And that's only getting worse.

BLITZER: You're absolutely right. Miles working the story.

Thanks, Miles, very much.

Barack Obama is heading overseas. And if you think the news media covers him a lot right now, just wait. Jack has your e-mail on this one. And more.

And Obama's talking about the one thing that's really bothered him during this presidential race and it involves his wife. Plus, we'll have more of my exclusive interview with the House Speaker Nancy Pelosi. She had some harsh words for the president of the United States.

(BEGIN VIDEO CLIP)

PELOSI: Bless his heart, the president of the United States, a total failure. Losing all credibility with the American people.

(END VIDEO CLIP)

BLITZER: That, plus what she says about the crisis over the economy.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: If you think Senator Barack Obama is already closely covered by the news media, just wait. Let's go to CNN's Howard Kurtz.

He's taking a closer look at what's in the works right now -- Howie.

HOWARD KURTZ, HOST, "RELIABLE SOURCES": Wolf, when the Democratic presidential candidate makes his swing through Europe and the Middle East next week, he won't exactly lack for media exposure. In fact, he'll be everywhere.

(BEGIN VIDEOTAPE)

KATIE COURIC, CBS NEWS ANCHOR: Barack Obama.

BRIAN WILLIAMS, NBC NEWS ANCHOR: Barack Obama.

CHARLIE GIBSON, ABC NEWS ANCHOR: Barack Obama.

KURTZ: The three broadcast network anchors will travel halfway around the world, lured by an offer of interviews with the candidate. With Katie Couric, Brian Williams and Charlie Gibson getting an exclusive on successive nights. (on camera): That means the CBS, NBC and ABC evening newscasts will do exactly what the Obama camp wants, use their big megaphones to certify the trip as a major campaign event. The television chatter is already starting, including on CNN, which will also be all over the story.

KURTZ (voice-over): Obama intends to show how much he knows about the threats the U.S. faces.

KRYSTA FREELAND, "FINANCIAL TIMES": The economy is in bad shape. I think this trip by Obama is risky, but brilliant.

KURTZ: Of course, it's always big news when a presumed presidential nominee travels abroad, right? Wrong. John McCain has taken three trips abroad to Europe, the Middle East, Canada, Colombia and Mexico in the last four months. No anchors tagged along. In fact, some broadcast and cable networks didn't even send correspondents on some of these trips.

The imbalance doesn't end there. Obama has received more than twice as much air time as McCain on the network evening newscasts since last month. Although more coverage doesn't always mean positive coverage. Obama, who is on the cover of "Newsweek" again this week, has been on "TIME" or "Newsweek's" cover in the last three years, more than twice the amount of McCain.

And in some venues, Obama and his wife on the cover of "Us Weekly", Obama and his family on "Access Hollywood." It's not even close.

(END VIDEOTAPE)

KURTZ: With Obama expected to draw big crowds in Europe, McCain may struggle to stay in the headlines. Journalists say much of this is driven by the novelty factor. Obama is a new player on the world stage while McCain has been making international trips for decades.

But at what point does that become unfair? Wolf.

BLITZER: Howie Kurtz reporting for us.

I know Jack Cafferty posed this question to our viewers today.

I assume you got flooded with a lot of reaction, Jack?

CAFFERTY: A lot of mail. Like I tell my kids, nobody said life is fair.

The question we posed is: Why does Barack Obama get more news coverage than John McCain?

Bob in North Carolina says: "Because news is not really about news. It's about ratings and ad revenue. Currently Obama is hotter than McCain and has more juice. So he creates better ratings and more revenue. It's all about the money, stupid." Susan in Culver City, California: "For better or worse, the first African American Democratic nominee is a much bigger story than the same old same old of John McCain."

Bob in California: "Real simple. The media hacks like you are selling the Obama con job."

Thank you, Bob.

Dave in Brooklyn: "What are you asking me for? You're the news guy. I don't get to choose what you guys decide to talk about."

Tina writes: "God bless John McCain. He's a war hero. But every time he gives a speech, I fall asleep. On the other hand, I actually surf channels looking for coverage of Barack Obama. I can't seem to get enough of him. He makes me feel there is hope for this country. I imagine the media senses the same thing and wants to be there to record it all."

Laura writes: "Give me a break. Obama is no more exciting than anyone else. He's the same thing wrapped in a different type of bow. The reason he gets more coverage is simple. And everything you and your colleagues have denied for months now is the reason. Media bias."

Brad writes: "Not to worry, when John McCain visits Czechoslovakia, the media will cover him in droves."

And one of the best e-mails we've gotten around here in a long time. Mike in Las Vegas writes: "It's the same reason that Wolf gets more air time than you, Jack. Charisma."

If you didn't see your e-mail here, you can go to my blog at CNN.com/cafferty. You've got to check it out. I know I say that all the time. But there is some very good stuff on this particular question. You are a charismatic person and a handsome fellow as well.

BLITZER: Jack, we'll discuss Nancy Pelosi in the next hour. OK.

CAFFERTY: Fine.

BLITZER: I know you've got some questions. And thanks to Mike in Vegas. Old friend of mine.

It's not just the news media that seems to be obsessed with Barack Obama. Online buyers are actually snatching up everything with his image.

Let's go to our Internet reporter Abbi Tatton. She is working this part of the story.

All right, Abbi, what's for sale?

ABBI TATTON, CNN INTERNET CORRESPONDENT: Some of the stuff is going for big bucks. Take a look at this. This is an Obama collage from artist Shepard Fairey currently being auctioned off on the Web site charitybuzz.com. And look at the current bid, $75,000 is the current bid. That's an extreme example.

But for a long time, Barack Obama's image has been a hot commodity online. Whether high-end art or products for pets, T- shirts, jewelry. This is the Web site cafepress.com where anyone can sell their own products and designs online. They say that Obama- related products count for about 70 percent for their candidate- related sales. That's well above Senator John McCain. And an eBay spokesman says it's a similar deal over there. The Barack Obama campaign sells its own merchandise through its Web site. Then it gets the proceeds directly.

That Shepard Fairey print was on the Web site but it's currently sold out. If you do want your hands on the original, the next minimum bid is 80 grand -- Wolf.

BLITZER: Eighty, whoa. Thanks very much. We'll check back with Abbi. She'll work the story.

A nationwide salmonella scare. Now a new announcement that could make you change your mind about tonight's dinner.

And the House speaker breaking significant news about offshore oil drilling in my exclusive interview with her. Stay tuned for that.

(COMMERCIAL BREAK)

BLITZER: We want to check in with Lou. He's got a show coming up in an hour.

But Al Gore delivering a major speech, Lou, on what he called, "the perverse logic of solving our energy problem by drilling for more oil."

I assume you had a chance to look at his speech. You're going to be covering it in detail in your show. But give us a thought.

LOU DOBBS, HOST, "LOU DOBBS TONIGHT": Here's the thought. Al Gore, whatever else he is, his lapsed into some sort of black hole of environmental nonsense from which he can't extricate himself. We have to do everything in this country, it's not an ideological issue or partisan issue. I know Nancy Pelosi telling you there won't be a floor debate on drilling offshore, which is absolutely nuts. We've got to do everything we can to relieve the burden, on our working men and women, their families and middle class. Because these prices are going to go higher, not lower, if we don't lift that ban.

And to have Al Gore saying it's dysfunctional to drill for oil and natural gas in this country when we have got 600 trillion cubic feet of natural gas to be produced in this country, that is a solution. It's a bridge. It's a transition. While we're developing alternate, renewable, sustainable sources of energy. That has to be done. But this almost, this rigidity and orthodoxy growing up around drilling offshore oil or in ANWR, this is madness. It's got to stop.

BLITZER: Is it realistic? He wants within a decade, 10 years, to have only so-called clean energy? DOBBS: Is it realistic? Probably not.

But that has nothing to do with the fact we should be trying and desperately trying, working as hard as we possibly can, innovating to create those alternate energy sources. But we can't have troglodytes running around suggesting we're not going to drill for oil, we're going to drill for natural gas or develop shale oil and for that matter coal and make -- create clean consumption of coal. This is all within our scope.

We have enough people in this country in both parties saying what we can't do. And Al Gore among them. We need leaders now telling us how to get things done, showing us the way and demonstrating that, yes, it's OK to do the right thing, irrespective of your ideology, your political party or the orthodoxy that seems to be overwhelming both the national media, business and politics of this country.

BLITZER: All right, Lou. We'll see you in one hour.

DOBBS: You got it.

BLITZER: That's coming up.

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