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Iraq War End Date: August 31, 2010; A Transformational Budget; Interview with John McCain; President Obama's High-Stakes Week

Aired February 27, 2009 - 17:00   ET


WOLF BLITZER, CNN ANCHOR: Happening now: President Obama makes good on a campaign promise, announcing his timetable for pulling U.S. troops out of Iraq.

John McCain was a sharp critic of the idea during the campaign. I will ask him what he thinks now -- Senator McCain in THE SITUATION ROOM, live, this hour.

Also, a famous Holocaust survivor and Nazi hunter says he's among the victims of Bernard Madoff -- Elie Wiesel and his charity losing millions and millions of dollars to the alleged Ponzi scheme. Now he's venting his anger at Madoff and suggesting an unusual punishment.

And an architectural icon going green -- details of a massive overhaul plan for Chicago's Sears Tower -- why the owners think now is the time.

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


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Let me say this as plainly as I can. By August 31st, 2010, our combat mission in Iraq will end.


BLITZER: President Obama finishing the war President George W. Bush started with broad support, only to see the mission implode. Now, after almost six years, more than 4,000 American lives and perhaps hundreds of thousands of Iraqi lives lost, the end of the war in Iraq is in sight.

President Obama traveled to Camp Lejeune, North Carolina to make the announcement.


OBAMA: Every nation and every group must know, whether you wish America good or ill, that the end of the war in Iraq will enable a new era of American leadership and engagement in the Middle East. This does not lessen our commitment. We are going to be enhancing that commitment to bring about a better day in that region. And that era has just begun.

(END VIDEO CLIP) BLITZER: Our Pentagon correspondent, Chris Lawrence, is joining us now with details of the withdrawal -- Chris, explain what the president has in mind.

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Well, Wolf, when he says that the combat mission ends, that doesn't mean that the troops missions won't involve combat.

Take a look at this. At the height of the surge, you can see the U.S. had a very large presence in Baghdad. Gradually, they had to pare it down and mostly move to the perimeter of the city. And here's where they're going -- out to bases outside the major cities like Balad, very large bases.


LAWRENCE (voice-over): There is no moving day for the U.S. military. They'll leave Iraq arrive gradually -- most of them next year, after the Iraqi elections. But it can take a month or two to move even one brigade and this is tens of thousands of troops, millions of tons of equipment. The Pentagon has been testing possible exit routes through Turkey, Jordan and Kuwait.

ADM. MIKE MULLEN, JOINT CHIEFS CHAIRMAN: We've looked over many, many months now at options and not, quite frankly, being -- wanting to be pinned down to one path.

LAWRENCE: President Obama says 30,000 to 50,000 troops will make up a transitional force after August 2010. They'll have three missions -- train and advise Iraqi troops, meaning they'll embed with them and could be in the line of fire. Two, protect U.S. assets, like civilians and reconstruction teams. That could mean defending them. And three, directly going after terrorists, which could put them at risk.

(on camera): Does non-combat troops accurately describe what these troops will be doing?

BRIG. GEN. MARK KIMMITT (RET.), U.S. ARMY: No. Every one of these soldiers, sailor, airmen or Marines, they're operating in a combat zone.

LAWRENCE (voice-over): The U.S. and Iraq agreed to remove all American troops by the end of 2011. Retired Brigadier General Mark Kimmitt agrees with the secretary of Defense, that keeping some troops...


LAWRENCE: And, again, what we want to try to get at -- what we were talking to the retired brigadier general about was that there needs to be some flexibility, that both the U.S. and Iraq need to have some flexibility. He feels that as we head into 2011, the flexibility to extend that agreement and possibly leave some troops.

Now, he also said that when you take a look at what's going on in there in Iraq and down the road, ironically, more troops could be going before they start to leave. We mean by that is next week the Pentagon could announce another Stryker brigade and possibly some Marine to go into Iraq as part of the normal rotation -- Wolf.

BLITZER: All right, Chris.

Thanks very much.

Chris Lawrence is our Pentagon correspondent.

At least right now, even bigger than the war in Iraq in the mind of most Americans is the U.S. economy. President Obama says his $3.6 trillion budget addresses so many underlying causes of the current crisis.

Let's bring in our senior political correspondent, Candy Crowley.

She's working this story for us.

Let's talk about, at the end of this week, winners and losers in the president's plan.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Absolutely, because you cannot have huge government spending without getting huge government revenues. And that's exactly what happens in this budget and is the basis for our winners and losers.


CROWLEY (voice-over): This is not a book of numbers, this is a sea change.

ROBERT REICH, FORMER LABOR SECRETARY: This is a transformational budget. This is the first budget I have seen since the Reagan era -- since Reagan's first budget -- that really made a fundamental statement, we are going in a different direction, folks.

CROWLEY: In essence, it is the use of the tax system to redistribute wealth. In the economic version of the biggest loser, upper income seniors, who will pay more for prescription drugs; farmers with sales over $500,000 a year, who will lose their subsidies, and households making over $250,000 a year will get a tax increase.

One person with a taxable income of $200,000 will pay $6,000 more. Taxes for a family of four with a $500,000 income will increase by $11,300.

The budget also limits the deductions wealthier taxpayers can take for interest on home mortgages and charitable contributions. Charity organizations think that makes them a loser.

KEN BERGER, PRESIDENT, CEO, CHARITY NAVIGATOR: Discouraging the wealthiest from giving in this way could be devastating for some charities. We've already gotten estimates that a couple hundred thousand charities may close their doors as it is because of the economy. Then you add stuff like this and it becomes all the more frightening.

CROWLEY: On the winning side, middle and lower class taxpayers and the poor, who will see the stimulus tax cuts made permanent, an extension of child tax credits for those too poor to pay taxes and higher benefits. The federal government would use the tax revenues to pay for huge increases in spending on education, energy and, most of all, health care.

This is not just a budget, this is a change in direction.

REICH: This country is no longer taking this road. Call it, for want of a better term, the right road. We're taking more of a left of center road. But it's a road that we have to take because of the big problems in front of us.

CROWLEY: It is the end of Reaganomics and the beginning of Obamanomics.


CROWLEY: Of course, this was only a budget blueprint, because now, all of these numbers go up to Capitol Hill. And one of the things we're noticing, Wolf, up on Capitol Hill -- things like farm subsidies don't split easily along party lines. Although Republicans don't like the gist of this budget, there are plenty of Democrats who don't like some of the specifics, including those farm subsidy cuts.

BLITZER: So what you're saying is there's going to be a big fight?

CROWLEY: Absolutely.

BLITZER: There always is.



BLITZER: Candy, thanks very much.

Let's check in with Jack once again for The Cafferty File -- Jack.

CAFFERTY: That's what keeps us in business, when they have big fights.

The U.S. is losing the war in Afghanistan -- so says Senator John McCain. Quoting here: "When you aren't winning in this kind of war, you're losing. And in Afghanistan today, we are not winning."

The former presidential candidate says although he approves of President Obama's plan to send an additional 17,000 troops there, he thinks additional Allied and Afghan troops will be needed to beat back a resurgent al Qaeda and Taliban.

He's calling for the U.S. to set up larger military headquarters and to boost non-military assistance. The Arizona senator says the situation in Afghanistan is nowhere near as bad as it was in Iraq, but that insurgent attacks were up sharply last year and violence has increased more than 500 percent in the last four years.

McCain's comments come after those of Defense Secretary Robert Gates, who has said that the U.S. faces a "very tough test in Afghanistan," although Gates is confident that we will rise to the occasion.

A new CNN/Opinion Research Corporation poll shows that most Americans agree with McCain. Only 31 percent say the U.S. is currently winning the war in Afghanistan, although 62 percent say the U.S. can eventually win there.

Meanwhile, when it comes to the other war, the one in Iraq, McCain is among several Republicans who are supporting President Obama's plan to pull out most U.S. troops by August of 2010. McCain says the plan is a reasonable one and he's "cautiously optimistic" that it can lead to success.

So here's the question -- is John McCain right that the war -- that the U.S. is losing the war in Afghanistan.

Go to and post a comment on my blog -- Wolf.

BLITZER: Jack, thank you.

And we're going to talk to him about that. Senator McCain is standing by live. He'll talk about President Obama's decision to end the U.S. combat mission in Iraq, as well.

Also, a blood-smeared letter sent to President Obama. The man who sent it has HIV. Now, we're learning more about him and why he did it.

And Holocaust survivor and Nobel Prize winner Elie Wiesel has some choice words for Bernard Madoff. Wiesel says the former investor bilked him and his charity out of millions of dollars as part of his massive alleged Ponzi scheme.

And the GOP in search of a leader -- is Louisiana Governor Bobby Jindal the man the Republicans need?

We'll talk about that and a lot more with James Carville and Bill Bennett. They're both standing by this hour.

Stay with us.



BLITZER: Withdrawal dates announced for U.S. troops in Iraq, as President Obama shifts the country's military focus to Afghanistan increasingly.

Let's talk about all of this and more with Republican Senator John McCain. He's the ranking member of the Armed Services Committee and, of course, last year's Republican presidential nominee.

Senator Mitchell, thanks for coming in.


BLITZER: I want to play a little clip of what Senator Obama said at Camp Lejeune, North Carolina today.

Listen to this.


OBAMA: This plan gives our military the forces and flexibility they need to support our Iraqi partners and to succeed.


BLITZER: In your opinion, is he right?

MCCAIN: I believe he's right. I am cautiously optimistic. I think the success, which has been phenomenal, is still very fragile. The elections in December are an important milestone and they have to go well. But this -- and this will leave 50,000 troops there to help the Iraqi military and police with their mission.

So I am guardedly optimistic and I think it's a reasonable plan and one -- the president's going through the process of consultation and recommendations from the military leadership, including General Petraeus and General Odierno.

BLITZER: I know you're close to that military leadership, including General Petraeus and General Odierno.

Based on everything you know, are they on board with the president?

MCCAIN: I think they think there is medium risk, is the best way that I've heard in described -- that there is a risk because of the fragility and the -- of the successes and the ethnic tensions and other problem areas that you discuss almost every day. In fact, they also have signed on to the proposal and the plan. So I'm -- I think they have signed on to it. They're obviously very nervous. That's their job.

BLITZER: The president says by the end of August 2010, next year, there will only be 35,000 to 50,000 U.S. troops in Iraq. Right now, about 140,000, 150,000 U.S. troops in Iraq.

But then says this. I want to play another clip for you.


OBAMA: Initially, this force will be made up of 35,000 to 50,000 U.S. troops. Through this period of transition, we will carry out further redeployments. And under the Status of Forces Agreement with the Iraqi government, I intend to remove all U.S. troops from Iraq by the end of 2011.


BLITZER: And that was an arrangement worked out with the previous administration, the Bush administration and the government of Prime Minister Nuri Al-Maliki.

But in your opinion, is that wise, to make such a hard and fast commitment that all U.S. troops will be out of Iraq by the end of 2011?

MCCAIN: Well, I wouldn't have said it exactly like that. But the president's also clearly stated that as commander-in-chief, he will be dictated by the situation as it exists. He has the optimism that this plan will succeed, which will then allow the Status of Forces Agreement to fully be implemented.

But, look, if things change for the worse, he's made it very clear that he will act as commander-in-chief. And I think that's perfectly appropriate.

BLITZER: Do you have confidence in President Obama?

MCCAIN: Yes, I do.

BLITZER: Let's talk about the troop levels in Afghanistan, because some of those troops in Iraq will eventually wind up in Afghanistan. Seventeen thousand more troops are heading in that direction. You said the other day, in a major speech you delivered, that the U.S. is losing the war in Afghanistan right now.

Explain what you had in mind.

MCCAIN: Well, I said that -- and I'd like to be perfectly clear. When you are not winning in a counter-insurgency situation, you are losing.

And so all the indicators -- the casualties, the attacks, the areas under Taliban or other extremist control -- all of the indicators are in the wrong direction and some very significantly in the wrong direction. The 17,000 additional troops may have to be supplemented by additional troops. There has -- General Petraeus and the Joint Chiefs and the National Security Council are developing a strategy for victory. We can and will.

It's not nearly as bad as it was in Iraq before the surge started, you know, let's be very clear. Iraq was on the verge of collapse before the surge began.

BLITZER: Well, but the surge strategy that worked in Iraq, does that apply to Afghanistan?

MCCAIN: In many principles. But it is -- you know, Afghanistan is a much larger country. It's a rural country. The Pakistan situation complicates it, although the Iranian situation was harmful, as well, to progress. But the same principles have to be employed. But it has to be tailored to a very, very different situation, in many respects. There's the corruption problem. There's the poppy problem. There's the situation on the border with Pakistan -- a number of other significantly different circumstances. But the strategy has to be the same -- will be the same.

BLITZER: Are the NATO Allies doing enough in Afghanistan to help?

MCCAIN: Of course not. But I think it's time we stop beating up on them and find ways that they can contribute. There is police training, there is economic development, there's help with alternative crops to poppy. There's a whole lot of areas where our European and NATO allies can be helpful. I think we ought to start stressing that.

BLITZER: I know you agree with President Obama more or less on Iraq and Afghanistan right now. But he also said this in his remarks today over at Camp Lejeune. And I'm going to play it for you and tell me if you agree with him on this.


OBAMA: Going forward, the United States will pursue principles and sustain engagement with all of the nadjens in the region -- all the nations in the region. And that, by the way, will include Iran and Syria.


BLITZER: Are you on board with him on that?

MCCAIN: I think it depends on what you mean by engagement. America is willing to engage with anybody at any time in the cause of peace. But obviously, I still would not agree that it's a good idea to sit down across the table from the Iranians. There has been and will be communications between ourselves and Syria and Iran in particular.

But so -- no, we're not -- we want to engage everybody in the area and in the world. But we don't want to give them enhanced prestige, influence or send them, inadvertently, some kind of green light for the activities that they've engaged in, such as Iranian development of nuclear weapons, support of terrorist organizations, etc.

BLITZER: Senator McCain, thanks very much for coming in.

MCCAIN: Thanks for having me on, Wolf.

BLITZER: We'll have you back here soon.

Appreciate it very much.

MCCAIN: Thank you.

BLITZER: Thousands of letters each month are sent to the president, but a recent letter caused real concern. It was streaked with HIV-tainted blood.

Also, watching North Korea -- could the U.S. shoot down a missile, if necessary?

We're asking the experts.

All that coming up, right here in THE SITUATION ROOM.


BLITZER: Zain Verjee's monitoring some other important stories incoming into THE SITUATION ROOM right now -- Zain, what's going on?

VERJEE: Hi, Wolf.

Entertainer Ed McMahon seriously ill. His spokesman tells CNN McMahon's been in hospital for nearly a month suffering from pneumonia and other medical problems. He's best known as Johnny Carson's sidekick on "The Tonight Show" from 1962 to 1992.

A man's been charged with mailing his own HIV-tainted blood to President Barack Obama back in December. Authorities say the Ethiopian immigrant living in Chicago has a history of mental problems. When the letter containing the dried blood arrived at the Illinois Department on Aging, it triggered a two hour lockdown of the building. The man claims he wanted government help and tickets to Obama's inauguration.

The new secretary of Education wants a longer school year. Arnie Duncan is studying programs that keep students in school longer as a way to boost academic achievement. He says U.S. students are at, what he calls, "at a competitive disadvantage" because the U.S. has a shorter school year than other countries, like India or China. Duncan is also pushing for new benchmarks that would use international standards to compare American students with those overseas.

And, Wolf, its last headline -- "Good-bye Colorado." Sadly, the "Rocky Mountain News" published its final edition today, after nearly 150 years in business. The paper says it's a victim of the bad economy. Scripps, which owns the paper, had been unable to find a buyer. The paper's 230 editorial employees, though, will be paid right the way through April -- Wolf.

BLITZER: It's a sad day for all journalists.

Indeed, a sad day for everyone.

Thanks very much, Zain.

Zain will be back.

When Republicans look to their future, one man's name keeps coming up -- Bobby Jindal, the governor of Louisiana. But ahead, why he's taking a position that Americans might not be able to get past.

Plus, charities say their coffers are about to take yet another hit, not just because of the rescission, but because of President Obama.

And a famous Holocaust survivor has a few choice words for the man he says ripped him off -- Bernie Madoff.

Stick around.



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

Happening now, an extreme measure involving one of the nation's largest banks. The government takes greater control -- why that means you will see less money.

Also, a deadly and growing problem has prompted the U.S. to warn terrorists -- tourists, that is -- excuse me -- tourists, be careful in Mexico. A CNN correspondent got a rare look at the violence firsthand -- what he in his own words. That's coming up.

And Laura Bush on life after the White House -- what she worries Americans will forget now that she's no longer the first lady.

I'm Wolf Blitzer.


More now on our top story -- President Obama announcing an end date for the U.S. combat mission in Iraq.

Here's what he told the audience of Marines in Camp Lejeune, North Carolina.


OBAMA: As a candidate for president, I made clear my support of a timeline of 16 months to carry out this draw dawn, while pledging to consult closely with our military commanders upon taking office, to ensure that we preserve the gains we have made and to protect our troops.

These consultations are now complete. And I've chosen a timeline that will remove or combat brigades over the next 18 months.

So let me say this as plainly as I can. By August 31st, 2010, our combat mission in Iraq will end.


BLITZER: The president of the United States speaking earlier today at Camp Lejeune, North Carolina.

What a week it's been for the president.

Let's talk about that with our CNN political contributors, the Democratic strategist, James Carville. And Bill Bennett -- he's the host of the national radio show "Morning in America." He's a fellow at the Claremont Institute.

Guys, thanks very much.

An address before a joint session of Congress, a budget and now a troop withdrawal plan from Iraq.

How's he doing this week?

JAMES CARVILLE, CNN CONTRIBUTOR, CLINTON SUPPORTER: Well, I'll tell you, look, at lot. He's doing a lot. And he's doing very well. I think he's quite popular. He came in promising action. And the one thing he's delivering is a lot of action. He's a man that had a lot on his plate. And he's dealing with it, and I think dealing with it quite well.

BLITZER: You've covered a lot of presidents, Bill, and you've seen a lot of presidents, as well. It's almost breathless, the amount of stuff he's doing.

WILLIAM BENNETT, CNN CONTRIBUTOR: There's no question about it. I mean, a neutral and, I think, fair observation is he's acting very presidential. He's acting like it's the first 100 days. He's acting like his polls are at 75 percent, which they are, and that he won the election. This is what you're supposed to do.

A lot of people have said to me, this is kind of Ronald Reagan style -- we won, we're going to do it our way.

Now, what consequences it has we'll debate over the next four or eight years. But it's big. He's thinking big.

You know that commercial, big, big?

BLITZER: Yes. He's thinking very...


BLITZER: He's thinking huge.


BLITZER: He's got the support. You just heard Senator McCain say he likes what he's doing as far as his timetable in Iraq is concerned. What's ironic is that some democrats are saying 35 to 50,000 troops that will still remain after august of next year, that's not what they say they bargained for.

CARVILLE: Look, it's going to be a seven and a half year war. That's a pretty long war by any standard. You can't please all of the people all the time, but I think he's moving as fast as he can. He says 35 to 50,000 --

BLITZER: Somebody would have told you McCain would be on board but the left of his own party not so happy.

CARVILLE: Some things people are happy about. Look, the one thing about this president is he's moving and you know, if some don't want to move with him, he's just going to keep moving in the direction.

BLITZER: Here's another clip of what the president said today.


PRESIDENT BARACK OBAMA (D), UNITED STATES: We sent our troops to Iraq to do away with Saddam Hussein's regime and you got the job done. We kept our troops in Iraq to help establish a sovereign government. And you got the job done. And we will leave the Iraqi people with a hard earned opportunity to live a better life.


BLITZER: In fact, in effect, the troops --

Sounds like it was a pretty good idea.

BLITZER: I'm not sure he's convinced of that. He opposed it from the beginning.

WILLIAM BENNETT, CNN POLITICAL CONTRIBUTOR: I understand that but remember the debate during the primary, he was to the left of Hillary Clinton. He tried to stake out that ground. You look at those words and those words were loudly applauded. Not too many were.

BLITZER: Military men and women, they're not supposed to be politically oriented. They're supposed to sit there and listen to the commander in chief.

BENNETT: But they responded a couple of times. The words, this was dumb, this was a mistake and I would have ended it. It was an achievement.

BLITZER: I suspect he still believes the war from the beginning was dumb and a mistake.

CARVILLE: They didn't tell us about seven and a half years and $3 trillion, which it's going to cost, but if whether or not that is, he's moving decisively to get us out of there which is good news and the troops have done a hell of a job.

BENNETT: Not decisively enough for the liberal democrats in the house. This is what interested me. I could not figure out why he yielded to the house democrats on the budget stuff. He believes that they believe. I think maybe there's not much difference. Much bigger spender than Bill Clinton. But when it comes to the war, they are speaking out quite critically of him as you have been reporting.

BLITZER: He's carving out his own line.

BENNETT: That's right. BLITZER: You want to make a point?

CARVILLE: I think he's adapting to the times and dealing with it. I wouldn't be surprised if things happen, he'll try to get out sooner. You know, he's president of the United States, he's got a lot of competing interest.

BENNETT: It's an interesting point because several of us after the address said not much on foreign policy there. I wonder if this is going to be vulnerability. He wants to do domestic policy like Johnson did.

BLITZER: Economy is the issue right now.

BENNETT: Of course it is, but in the 50,000 troops, what he's reminding his fellow democrats of, he's the commander in chief and isn't going to blow this one. That's encouraging.

BLITZER: What's happening, conservative movement right now? There's a big conference going on.

BENNETT: James Carville, he's writing about -- a chronicle, the Edward Gibben.

BLITZER: He's the leader of the conservative and republicans. Who do you think the leader of the conservative movement?

BENNETT: It won't be me, I promise. There are a lot of people I think. We looked in the senate, the house, at the governors. That's a natural place for us to look.

BLITZER: Bobby Jindal the governor of Louisiana?

BENNETT: Well Bobby Jindal is one, but it's way too early to identify one leader. You need a coherent position. I think we've got the start on that with united opposition of the party to the stimulus package. I've looked to governors, the house and the senate where a number of people are emerging. But governors always.

CARVILLE: United by -- Rush Limbaugh was able to galvanize congressional opposition because he's the person that these congressional republicans look to. He couldn't galvanize Charlie Crist. He couldn't galvanize Schwarzenegger or people like that. I think that's the interesting dynamic that's happening within the Republican Party and I do think he is the most influential republican.

BLITZER: Why do you think Bobby Jindal made a mistake and say he's not going to accept all of the stimulus package? He doesn't want to accept because it requires a tax increase in effect among your state in Louisiana.

CARVILLE: Hypothetically, it could clause three years from now. What I'm saying is the Republican Party has a lot of things to stand on. There's a patch of ground to which it can say here we stand. We could do no other. I don't think unemployment compensation is that patch of ground they ought to be standing on. I think they made a mistake.

BENNETT: Not a forced, federal mandate. Governor Bredesen who's a democrat of Tennessee has the same objection but accurately governors, a couple said they won't take the money. Several said they'd be selective.

BLITZER: How badly hurt was Jindal by the speech he gave the other day?

BENNETT: He was badly hurt, but not as badly as Bill Clinton was in his debut speech and you remember he recovered from that. It's a long way away.

CARVILLE: I agree, but he did not take this serious. The Baton Rouge newspaper -- I mean, you're supposed to play up to the thing. I think it's pretty clear and he realizes that. This thing is recoverable. He can still go out, crack a couple of jokes about it and learn from this. I think the republicans of Louisiana were looking for something better. He's a smart guy.

BENNETT: The party didn't listen to Rush in the nominating process. He did not want John McCain. The party nominated John McCain.

CARVILLE: John McCain got 35 percent of the vote. He is the most influential republican and we should acknowledge that.

BLITZER: Don't forget Kathleen Sebelius the governor of Kansas gave the democratic response a few years ago. She might become the secretary of health and human services.

CARVILLE: Very good point.

BENNETT: You should be dulled.

BLITZER: Thank you very much.

The bailout for one of the biggest banks is growing larger and larger. We have details of the move that increases your stake in Citigroup.

And why we could all be getting less bang for our buck.

It was the world's tallest building for years. Now, Chicago's Sears Tower trying to make a name for itself once again with an ambitious undertaking. Details of what's in store inside and out. We'll tell you here in THE SITUATION ROOM.


BLITZER: The banks charities are about to take another hit. We're talking about the proposal in the president's budget. Let's go to CNN's Ted Rowlands. He's looking at this story and he's joining from Los Angeles.

What's going on? TED ROWLANDS, CNN CORRESPONDENT: Nobody really knows how much a tax break motivates somebody to give, but a lot of non-profits are worried that Obama's proposed budget could hurt them.


ROWLANDS: Direct Relief International's central California warehouse is busier than ever these days because demand for help is way up. Direct Relief donates medical supplies to the needy in the United States and around the world and responds to disasters like the recent ice storm in Arkansas. The organization relies on donors and could be hurt by Obama's proposal restricting charitable donation tax write offs for people making more than $250,000 a year.

ANNIE MAXWELL, COO, DIRECT RELIEF INTERNATIONAL: I think the change in the tax code could potentially affect giving, but I think there are a large number of things that are affecting giving right now, mostly, people's own personal wealth that has been shrinking.

ROWLANDS: Many in the non profit world say they were blind sided by the proposal and fear it will hurt contribution levels at a time when they've seen donations drop and demand for help go up. Online ratings service Charity Navigator released a statement saying in part quote, for many charities, 80% or more of their individual contributions come from the wealthy. A reduction of such giving could have horrific consequences. But the white house says there's help for non profits in the recovery act and that giving is not motivated by tax write-offs.

PETER ORSZAG, DIR., OFFICE OF MANAGEMENT AND BUDGET: I think what drives charitable contributions is overall economic growth, it's other motivations, typically again, it's not done for a tax incentive, but out of benefits or some other related desire.


ROWLANDS: And Wolf a Bank of American study back in 2006 basically supports that. They interviewed a lot of wealthy donors and only 7% of donors said they would change their donations even if there were no breaks at all. A lot are saying they needed a tax incentive not a change in the tax code which might be a decentive for their wealthy donors. If that stays in the budget and see what effects it transpires.

BLITZER: All right. Ted, thanks very much.

A famous holocaust survivor, a noble prize winner says he and his charity lost millions of dollars in Madoff's alleged investment fraud. He has harsh words for Madoff. Brian Todd is working the story for us.

How did it go?

BRIAN TODD, CNN CORRESPONDENT: We know him for his commitment to fighting hatred and intolerance. He was no less eloquent but clearly very angry when venting about about those losses in the Madoff scandal.


TODD: It now appears that even the world's best known holocaust survivor didn't touch the conscious of Bernard Madoff.

ELIE WIESEL, NOBEL LAUREATE: Psychopath is too nice a word for him. I would simply call him a thief, scoundrel, criminal.

TODD: Elie Wiesel says his foundation lost more than $15 million to Madoff's alleged Ponzi scheme and that he and his wife quote, gave him everything in their personal savings. How? He said a mutual friend got them together.

WIESEL: He made a very good impression in this together. But we have no idea, of course. I know that we checked the people who had business together. I am not a genius in finances.

TODD: His misfortune touched off a sensitive discussion. He is Jewish and some believe he perpetrated a white collar scam called affinity fraud.

PROF. JACK COFFEE, COLUMBIA UNIV. LAW SCHOOL: You get the trust and confidence from investors because you share the same religious, social, cultural, national background as they do and they tend to trust those like them.

TODD: CNN spoke to Madoff's attorney, who wouldn't comment. When asked how he thinks Madoff should be punished if convicted the Nobel laureate gave an unforgettable answer.

WIESEL: I would like him to be in a solitary cell with a screen and on the screen for at least five years, every day and night, there should be pictures of his victims, one after the other after the other, all the same look. Look what you have done to this old lady. Look what you have done to this child.


TODD: When we asked him to respond, Madoff's attorney says he understands where Elie Wiesel is coming from, but Madoff has not been indicted so there is a presumption of innocence. Madoff's attorney also told us what they have said before, that this is a great tragedy and they're doing everything they can to assist the government in recovering funds.

BLITZER: You had a chance to speak with Mr. Wiesel. Give us a little more perspective.

TODD: Fascinating. He said he does not want to be considered a victim and is holding a benefit in May to recover some of the money. He's got a book coming out. In a very chilling sentence, he said, I've lost more than this clearly. He's got a very healthy perspective on what he's lost.

BLITZER: We inadvertently called him a Nazi hunter. He's a victim of the holocaust to be sure and a noble prize winner.

Besides a launch within days, the U.S. is watching closely why North Korea's missile launch is raising serious questions about America's missile defense.

And Laura Bush is back in Texas. The former first lady opens up about her family's new freedom. What she saw her husband doing that could have never been done while president. We'll explain, right here in THE SITUATION ROOM.


BLITZER: U.S. intelligence to a launch by North Korea, perhaps only a few days from now. All this raising new questions about whether the United States could defend against such a missile. Let's go to our pentagon correspondent, Barbara Starr.

What are you picking up over there, Barbara?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well you know Wolf, you'll remember it was back in 2006 when North Korea last tried a long-range missile launch. That failed after a few seconds. Now it looks like they're getting ready to try again.


STARR: U.S. spy satellites are watching this North Korean missile launch site 24/7. They're gathering snippets of communications and radar readings, everything U.S. official also say is now pointing to a North Korean missile launch within days. It's believed North Korea is planning to launch a typo dong 2 missile. What the U.S. doesn't know is whether the missile will carry a satellite meant to go into orbit or be fired as a long-range ballistic missile that would be a threat to the U.S. there are renewed questions about whether the U.S. military's multibillion dollar system of radars and interceptor missiles in Alaska and California could shoot down an incoming North Korean threat. The pentagon's former chief weapons tester is skeptic in chief.

PHILIP COYLE, FORMER DEFENSE DEPT. OFFICIAL: Quite simply, the public statements made by pentagon officials and contractors have often been at variance with the facts at hand.

STARR: Even Coyle's successor says it's not absolutely certain the U.S. could shoot down an incoming missile.

CHARLES MCQUEARY, FORMER DEFENSE DEPT. OFFICIAL: If the North Koreans launched an attack against us this afternoon, we wouldn't say we need more test data before we try to intercept that. We'll see how the system works and find out.


STARR: So if North Korea does launch a missile, the U.S. military says it will be able to make a decision within seconds of a North Korean launch about whether it looks like that missile is flying successfully and the U.S. has to try to shoot it down. Wolf?

BLITZER: Barbara Starr, thanks very much.

Let's go back to Jack. He has the Cafferty File.

JACK CAFFERTY, CNN CORRESPONDENT: The question this hour is, is John McCain right that the United States is losing the war in Afghanistan?

Chuck says, "It isn't that we're losing, it's that we can never within. We can pour billions into that hole for years and be right where we are right here. Even the Russian generals tell us to leave."

Rob in Maryland, "Imagine John McCain giving a speech in front of the battalion of soldiers in Afghanistan and telling them that we're not losing the war because we're not winning it. I respect you tremendously, Senator McCain, but it's just not World War II."

Jim in Washington writes, "Afghanistan's not a nation. It's a geographical myth invented by outsiders. We won in Kabul. Installed our preferred puppet there. But the remainder of what foreigners call Afghanistan is an anarchy of near independent, near medieval tribal areas. They would never succumb to outside rulers and they won't succumb now."

Khalid writes, "As an American-Afghan, I don't think we can win a war in Afghanistan through military means alone. Look and see what history says about Afghanistan when it comes to wars. We need to win the hearts and minds of the Afghan people and that's when we'll start seeing the success. What have the Afghan people seen since our presence there, only more violence."

Terry in Greensburg, Indiana, "Was John McCain ever right? Let's not call it a war. Terrorist hunt sounds much better. And we'll get much more help from the British that way. My suggestion is, we send a bunch of Kentucky coal miners over there, they can make a mountain disappear in nothing flat. And if they need reinforcements, send West Virginia's also."

Richard Las Cruces, New Mexico, "Yes, we're losing the war in Afghanistan, but more than that, this is like Vietnam. It's an un- winnable war. Un-winnable because the country's controlled by tribal chiefs, has no effective central government and thousands of more allied troops will only result in more death to them and more for the Afghan people."

And finally Donna writes this, "If McCain was right about anything, he would be president."

If you didn't see your e-mail here, go to my blog at CNN/Cafferty file. Look for yours there among hundreds of others.


BLITZER: All right. Jack, see you in a few minutes. Jack Cafferty, thanks very much. I want to point out to our viewers, remember, tomorrow 6:00 p.m. eastern, the Saturday edition of "THE SITUATION ROOM." we'll have more on what's happening in Afghanistan. And Pakistan. The hunt for al Qaeda. 6:00 p.m. eastern tomorrow in THE SITUATION ROOM.

Going green, with a silver paint job. That's just one of the major changes planned for an American landmark. Details of what else is in store and why.

Drug violence in Mexico reaching disturbing new levels. Now there are new warnings that are going out to prospective travelers.

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


BLITZER: The tallest building in the country could soon standing out a little bit more. In the process, perhaps revive an old reputation as a premier address. CNN's Susie Roesgen is following this story in Chicago.


SUSAN ROESGEN, CNN CORRESPONDENT: Wolf, you know the Sears Tower used to be the envy of the world. It is 110 stories tall. But the envy of the world again the Sears Tower may soon go green.


ROESGEN: The Sears Tower was the tallest skyscraper in the world when it was built in 1973. But over 36 years, the tower lost the title, and technology passed it by. Making this proud building as outdated as Sisco.

PROF. ANTHONY WOOD, ILLINOIS INSTITUTE OF TECHNOLOGY: In the early 70s, climate change sustainability was not an issue that it was now.

ROESGEN: Anthony Wood is the executive director of the council on tall buildings and urban habitat.

WOOD: What to you do when a tall build gets to the end of a 40- year life? Do you knock it down? Or do you continue with it operating in the inefficient ways that it has to for the past 40 years? It's going to be a much wider issue about can humanity actually continue to operate with these buildings being as inefficient as they are, using up the resources, polluting the earth and changing the whole pattern of life that we've gotten used to.

ROESGEN: The owners of the Sears Tower don't want to tip their hand yet, but we learned that the preliminary plans call for letting in more natural light, installing solar panels and wind turbines, planting gardens on the buildings' small balconies. The owners may decide to change the black exterior to reflect heat and cut down on air conditioning.

WOOD: The Sears Tower now has an opportunity to lead the way for the world to show how these buildings can be reinvented.


ROESGEN: So now you're wondering how much is this going to cost. Well, the straight answer is millions of dollars. The ecoanswer is an energy efficient building could save millions of dollars and maybe help save the planet, too, Wolf.

BLITZER: Susie Roesgen, thanks very much.

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