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Madoff to Plead Guilty; President Obama Takes on Democratic Party Over Education

Aired March 10, 2009 - 18:00   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: He's accused of being one of Wall Street's biggest swindlers. And now he's ready to plead guilty -- this hour, the breaking news on Bernard Madoff and the price he is going to be paying.

Also, President Obama wants to reward America's best teachers, and he's snubbing some of his party's biggest supporters along the way.

And prisoners charged in the 9/11 attacks declare they're terrorists to the bone. They're mocking the U.S. and calling war crimes charges against them badges of honor -- all of that and the best political team on television.

We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

Bernard Madoff now appears ready to admit the massive fraud scheme that has made him a poster child for Wall Street greed and corruption. His lawyers say he will plead guilty on Thursday to all 11 criminal counts. And that could carry a sentence of up to 150 years in prison.

Let's go to our senior correspondent, Allan Chernoff. He's been covering the breaking news for us from over at the federal courthouse in New York.

All right, update our viewers. Allan, What happened today?

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Wolf, Bernard Madoff said that he intends to plead guilty, but he's not cutting a deal with prosecutors, not agreeing to cooperate with federal investigators.

(BEGIN VIDEOTAPE)

CHERNOFF (voice-over): Bernard Madoff left court moments after his attorney told a judge the former Wall Street kingmaker will plead guilty to running what appears to have been the biggest investment fraud in history.

On Thursday, Madoff intends to plead to 11 criminal counts that carry a maximum sentence of 150 years in prison, essentially a life term for the 70-year-old Madoff. He would also face fines up to double the amount of client losses, which Madoff had estimated at $50 billion.

The plea is not part of a bargain with prosecutors, meaning Madoff is not agreeing to cooperate with federal investigators to try to gain a reduced sentence. In doing so, it appears Madoff is trying to protect his wife, sons and other family members who worked in his business. Madoff has claimed he committed the fraud on his own, which prosecutors don't believe.

IRA SORKIN, ATTORNEY FOR BERNARD MADOFF: No comment. No comment.

CHERNOFF: Madoff's attorney, Ira Sorkin, who has received death threats and anti-Semitic hate mail, refused to elaborate on his client's intentions.

Madoff, a former chairman of the Nasdaq stock market, reported to investment clients that he consistently was earning double-digit returns. But the government says, since the 1980s, Madoff was running a giant Ponzi scheme, using new investment funds to pay withdrawals for other investors, never actually investing the money in the stock market, as he claimed.

(END VIDEOTAPE)

CHERNOFF: Madoff will not be sentenced right away. Judge Denny Chin says it will be a few months before he holds a sentencing hearing, and, at that hearing, Madoff will likely be sent away for the rest of his life -- Wolf.

BLITZER: He's 70 years old right now. All right, Allan, thank you very much.

A stunning rebound on Wall Street today, with stocks scoring their biggest gains of the year. The Dow Jones industrials jumped almost 380 points, to close above 6900. Prices soared after some rare good news from the troubled banking industry. Citigroup -- Citigroup reports it operated at a profit during the first two months of the year.

And the Federal Reserve chairman, Ben Bernanke, also gave investors some hope that the financial system and the U.S. economy can get back on track.

(BEGIN VIDEO CLIP)

BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: It depends critically on our ability to get the banking system and the financial system, more broadly, not necessarily back to 2005, but back to a situation where the markets are reasonably stable.

If we can do that, then I think that there's a good chance that the recession will end later this year and that 2010 will be a period of growth.

(END VIDEO CLIP)

BLITZER: Bernanke says the nation's financial rule book must be rewritten in order to accomplish that.

President Obama today is offering a carrot for America's teacher and a poke in the eye for some powerful labor unions. President Obama today embraced the idea of paying educators based on how well they perform. And he acknowledged it's a proposal that doesn't often play well within his own party.

Let's go to our White House correspondent, Dan Lothian. He's got the story for us.

All right, Dan, the president laid out a pretty ambitious education agenda.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: He really did, Wolf.

And the reason why the president explained it is that the U.S. is falling behind other countries when it comes to education. So, he comes out with this comprehensive plan, including many different points, such as raising, increasing Pell Grant awards.

But the one thing that's been getting a lot of attention today is his push for teacher merit pay.

(BEGIN VIDEOTAPE)

LOTHIAN (voice-over): President Obama is raising the bar for teachers, but he also wants to raise their pay. There are strings attached.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Good teachers will be rewarded with more money for improved student achievement and asked to accept more responsibilities for lifting up their schools.

LOTHIAN: It's a controversial plan that, when tested on the campaign trail before members of the National Education Association, got a smattering of boos.

OBAMA: Find news way to increase teacher pay that is developed with teachers, not imposed on teachers.

LOTHIAN: Mr. Obama knows there's resistance. He acknowledged the friendly fire as he unveiled his education plan before the U.S. Hispanic Chamber of Commerce.

OBAMA: Too many supporters of my party have resisted the idea of rewarding excellence in teaching with extra pay, even though we know it can make a difference in the classroom.

LOTHIAN: Those supporters the president is referring to are union members, the teachers union, a powerful voting bloc that helped get him elected. Some just don't buy that merit pay works.

DENNIS VAN ROEKEL, NEA PRESIDENT: Depending on the definition, the answer is probably no, if they mean that it's an arbitrary, subjective decision by some person about who gets more and some gets less. LOTHIAN: But the NEA doesn't think that's what the president means now.

VAN ROEKEL: He talks about rewarding teachers for performance. I don't take that as some of these failed merit pay plans of the past.

(END VIDEOTAPE)

LOTHIAN: But, Wolf, the president was very clear in what he was saying: Reward good teachers. Stop making excuses for the bad ones -- Wolf.

BLITZER: In the last interview, we had our interview with the education secretary. In our last hour, we had the interview with Arne Duncan, the education secretary. And he says he personally would favor an 11- to 12-month school year, would also favor of keeping those schools open until 8:00 at night for a lot of extracurricular activities and studying.

It looks like these guys have a big agenda ahead of them, if they want to compete with schools in India and Japan and China elsewhere around the world.

All right, Dan, thanks very much for that.

He's been in office now for 50 days. What grade do you give President Obama? How is he doing on the economy, the wars in Iraq and Afghanistan, and leadership? Submit your video I-Reports to ireport.com/situationroom. Then watch tomorrow's show to see if your video made the cut.

Jack Cafferty is here with "The Cafferty File." He makes the cut every single day.

(LAUGHTER)

JACK CAFFERTY, CNN ANCHOR: That's true, whether you like it or not.

More Americans are saying they have no religion. That's according to a wide-ranging study that was done by Trinity College. This is a survey that shows 15 percent of those polled say they have no religion. And that's almost double the 8 percent that said the same thing back in 1990.

Northern New England and the Pacific Northwest are the least religious areas. The number of Americans with no religion rose in every single state. Organized religion seems to be playing a smaller role in people's lives. Thirty percent of married couples say they didn't have a religious wedding ceremony. And 27 percent say they don't want a religious funeral.

Nevertheless, almost 70 percent of those surveyed say they do believe there is a God. And another 12 percent say they believe in a higher power, but not the God of traditional organized religions. Some suggest that the rise in evangelical Christianity is actually contributing to the rejection of religion by other Americans. The survey shows that about one in three are evangelicals in this country, the number of evangelicals actually increasing, while the number of Christians overall is declining.

Other findings include these. The percentage of Catholics in the U.S. remained steady since 1990. Percentage of Muslims has doubled since then, but remains statistically a very small number. Mormons have remained steady as a percentage of the population. And the number of Jews is falling, if the category includes only those who define themselves as religious Jews.

So, here's the question: What does it mean when more Americans say they have no religion?

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

BLITZER: Jack, thank you.

The accused mastermind of 9/11 essentially laughs at U.S. attempts to protect you from terrorism, this as a new report criticizes the U.S. as being unable to connect the dots on terror threats.

And fresh bloodshed in Iraq show things not as peaceful as many seem to believe right now. Do fewer U.S. troops mean fewer options in stopping Iraq's violence?

And get this -- the House speaker, Nancy Pelosi, suggests $787 billion to fix the economy may not be enough.

(COMMERCIAL BREAK)

BLITZER: Another Obama administration appointment bites the dust, as the pick for a key intelligence post runs into a wall of opposition.

CNN's Brian Todd has the story.

(BEGIN VIDEOTAPE)

BRIAN TODD, CNN CORRESPONDENT (voice-over): Ambassador Chas Freeman pulls himself from consideration as head of the National Intelligence Council. His critics in Congress say it's the right move.

REP. PETE HOEKSTRA (R), MICHIGAN: The statements that he's made, the relationships that he's made don't disqualify him from being in the administration, but clearly disqualify him from the sensitive position.

TODD: In that post, Freeman would have put together America's most important intelligence documents for the president's consumption. But his past alliances drew concern.

MICHAEL RUBIN, FORMER PENTAGON OFFICIAL: Chas Freeman has a disturbing history of shilling for autocratic regimes and letting his admiration for autocratic regimes, like China, like Saudi Arabia, skew his analysis.

TODD: A former U.S. ambassador to Saudi Arabia, Freeman has headed a Washington public affairs group that has gotten funding from the Saudi government. He's drawn criticism for his views on Israel. In a 2007 speech, he talked about "the brutal oppression of the Palestinians by an Israeli occupation that shows no signs of ending."

Freeman is also a former U.S. diplomat in Beijing. And critics cite an e-mail he once sent saying the Chinese had a right to crack down on dissidents in Tiananmen Square who they felt were disrupting the functions of government.

The man who was looking to appoint him, National Intelligence Chief Dennis Blair, was still defending him just hours before Freeman withdrew, saying Freeman's remarks on China and other matters have been taken out of context and that his strong opinions have always been an asset.

DENNIS BLAIR, DIRECTOR OF NATIONAL INTELLIGENCE: When we go back and forth with him, better understanding comes out of those interactions.

TODD: And one former ambassador is concerned Freeman's free thinking drew so much fire.

RONALD NEUMANN, AMERICAN ACADEMY OF DIPLOMACY: If there are opinions or questions which are so taboo that, in this country, we can't ask those questions, then we're going to have pretty sorry intelligence analysis as a result.

(END VIDEOTAPE)

TODD: But Freeman has a financial tie with China as well. He's been a paid board member of an oil company that has direct ties to the Chinese government, a company that's done business in Iran.

Now, Admiral Blair has said that Freeman only met with that group once a year, made it clear he could not deal with anything regarding Iran. But, in the end, all the scrutiny over Chas Freeman was just too much to bear, Wolf, and he had to bow out this afternoon.

BLITZER: There was also some added pressure because of, what, intelligence estimates? What's going on here?

TODD: Right. You know the history of these, the infamous one in 2002 where they said Iraq had weapons of mass destruction. There was the one in 2007, where the intelligence estimate said that Iran had stopped its production of a nuclear weapon. That was under heavy question.

Because of those documents, the scrutiny over this particular job was such that they felt someone had to be completely objective. I guess, in the eyes of too many people, Chas Freeman didn't meet that test.

BLITZER: Brian Todd, good report. Thanks very much.

Suicide bombers on a new killing spree in Iraq right now -- at least 33 people are dead in today's attack in Baghdad alone. And the violence could take a dangerous toll on President Obama's plans to end combat operations in Iraq by August of next year.

Let's go to our Pentagon correspondent, Chris Lawrence -- Chris.

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Wolf, 12,000 U.S. troops are leaving by the fall. And the U.S. commander in Iraq is considering whether to bring another brigade home by the end of the year. But what happens to the withdrawal plan if the last few weeks in Iraq are just the beginning?

(BEGIN VIDEOTAPE)

LAWRENCE (voice-over): In a matter of days, a suicide bomber broke up a reconciliation between tribal leaders; another drove his motorcycle into a crowd of potential police recruits, and a car bomb tore through a cattle market -- three attacks, more than 70 dead.

LIEUTENANT GENERAL LLOYD AUSTIN, DEPUTY U.S. COMMANDER IN IRAQ: There are things that can pull us off track and cause -- cause violence to -- to really reignite in a -- in a greater way.

LAWRENCE: These attacks were in areas that are supposed to be peaceful. But it's northern Iraq that really concerns U.S. commanders. There, tensions are rising over who controls the oil and the cash that comes with it.

LIEUTENANT GENERAL MICHAEL MAPLES, DIRECTOR, DEFENSE INTELLIGENCE AGENCY: Control of disputed areas, particularly in Nineveh and Kirkuk, may be the greatest potential flash point in Iraq for 2009.

LAWRENCE: Some analysts say more of these attacks could damage the upcoming national elections.

NORA BENSAHEL, SENIOR POLITICAL SCIENTIST, RAND CORPORATION: They could have a disproportionate political impact, and I think that's a lot of what the insurgents are hoping to get out of these.

(END VIDEOTAPE)

BLITZER: And, Chris, what are military officials telling you about this increased violence?

LAWRENCE: Well, Wolf, one of the U.S. commanders in Iraq says they are close to sustainable security, but they aren't there yet. He says, they do have some contingency plans if the violence keeps spiking.

But when I asked him, don't fewer troops mean fewer contingencies, he admitted it does reduce the military options.

BLITZER: Are you hearing any talk of the Iraqis perhaps asking for a new deadline for the combat forces getting out by the end of August of next year and all U.S. troops out by the end of 2011?

LAWRENCE: It's possible. But the U.S. commander in Iraq says he has not talked to the Iraqis as of yet about that. And he believes they still want the U.S. out by 2011, although he did add, "I never say never" -- Wolf.

BLITZER: Chris Lawrence, at the Pentagon, thank you.

And almost two decades after the first Gulf War, a U.S. Navy review board has now changed the status of the first American pilot shot down in operation Desert Storm. Captain Michael Scott Speicher now is listed as missing in action, a move that essentially gives him up for dead.

There had been controversy over the possibility that he might have survived and been captured by the Iraqis. A final decision on Speicher's status will be up to the next secretary of the Navy, who has yet to be named by President Obama.

We're standing by for the vote right now. You're looking at some live pictures coming in from the floor of the U.S. Senate. They're speaking, senators. Are they finally ready to sign off on the president's $410 billion budget plan?

And the accused mastermind of 9/11 essentially laughs at U.S. attempts to protect you from terrorism, this as a new report criticizes the U.S. as being unable to connect the dots on terror threats.

Plus, he wants to pay the best teachers more and fire those who don't measure up. President Obama takes the wraps off his education plan.

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

(COMMERCIAL BREAK)

BLITZER: Five suspects in the 9/11 attacks have now unleashed new threats against the United States, predicting the U.S. will fall like the Twin Towers did over seven years ago. And they staunchly defend, even brag, about the acts of terror that ended almost 3,000 lives.

Let's go to CNN's Elaine Quijano. She's got the latest -- Elaine.

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Wolf, these 9/11 terror suspects called the war crimes accusations against them badges of honor, that they carry with pride.

(BEGIN VIDEOTAPE) QUIJANO (voice-over): A chilling new response from the mastermind behind the September 11 attacks, Khalid Sheikh Mohammed. He and four other 9/11 terror suspects held in Guantanamo scoff at U.S. efforts to protect its citizens.

"Your intelligence apparatus, with all its abilities, human and logistical, had failed to discover our military attack plans," the detainees said. "Blame yourselves and your failed intelligence apparatus and hold them accountable, not us."

Since the attacks, new laws have required intelligence-sharing among agencies. But a new bipartisan report by the Markle Foundation says old habits die hard.

ZOE BAIRD, PRESIDENT, MARKLE FOUNDATION: Seven years after 9/11, unfortunately, we still can't connect all the dots.

QUIJANO: Dots like the fact that two of the hijackers were in the U.S. and on of the CIA's radar in the weeks before 9/11, a fact not shared with the FBI in time to possibly prevent the attacks.

Zoe Baird with the Markle Foundation says, even now, some within intelligence circles are still clinging to information because of worries that data could be compromised.

BAIRD: Unfortunately, the nation still is very much at risk that we don't know what we know, that there are too many pockets of information that doesn't get shared with other people who are looking at the same problems.

QUIJANO: The foundation recommends policy-makers have direct access to information that is now too unwieldy to manage.

Obama intelligence officials admit more needs to be done, but they say intelligence sharing is improving. They point to the National Counterterrorism Center, where threat information from the CIA, FBI and other sources all come together.

One 9/11 Commission member warns against the new administration making any major shifts in intelligence policy.

(END VIDEOTAPE)

QUIJANO: Now, as for the 9/11 suspects, all of them al Qaeda members, they show no signs of changing their mission. And they're predicting the U.S. will fall politically, militarily, and economically -- Wolf.

BLITZER: Elaine Quijano, thank you.

A volcano boils over, and so do fears of residents nearby. The smoke, the fumes and the danger, that's ahead.

New evidence of the danger in Darfur to Americans and others traveling there to help victims or mass -- or to deal with mass slaughter. Stay with us. We have got new information. And President Obama complains that Washington and his own party are trapped in some old ideas about education. You're going to hear from the president of the United States, unfiltered, in his own words.

(COMMERCIAL BREAK)

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

Happening now, concerns mounting over the safety of Westerners in Sudan. The U.S. Embassy says protests against the International Court's indictment of Sudan's president are increasing the danger.

In an impassioned speech, the Dalai Lama says the Tibetan people are nearing extinction under decades of Chinese rule. It's the 50th anniversary of the failed uprising against China's rule that forced him into exile.

And a volcano in southern Japan erupts in the early morning, spewing lava and thick black smoke -- all of this, plus the best political team on television.

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

The U.S. Senate nearing a critical vote on a massive spending bill. It's been stalled for days in large part because of outrage over lawmakers' pet projects.

Let's check in with our senior congressional correspondent, Dana Bash.

They're getting ready for a vote, Dana?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: That's right. They're now voting on the final amendment. We do expect final passage, probably in the past -- in the next half-an-hour to an hour.

And we do expect this $410 billion spending bill to pass, but just barely. And you said it, Wolf. It has definitely been caught up in partisanship and in rhetoric, specifically from Republicans, saying there's too much wasteful spending in here. But, in the end, those same Republicans, as well as Democrats, are going to get millions to send back home.

(BEGIN VIDEOTAPE)

BASH (voice-over): It's a big increase in spending, billions more taxpayer dollars for everything from energy to education to law enforcement to nutrition programs for infants and poor women.

SEN. HARRY REID (D-NV), MAJORITY LEADER: Agencies of our government have been so underfunded and under-resourced during the Bush years that these at agencies need this money, so that they can function properly.

BASH: But Congress is also giving its own budget a 10 percent increase, to $4.4 billion. For example, the Capitol architect is getting $530 million, a 28 percent boost, mostly for the new Capitol visitor center.

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: The bill costs far too much for a government that should be watching every dime. If the president is looking for a first bill to veto, this is it.

BASH: Republicans emphasize that they tried to cut excess spending from the bill, but failed.

So, Republicans, as well as Democrats, will bring home tens of millions of dollars in pet projects. Republican Senator Mitch McConnell's earmarks for Kentucky total $75 million, according to Taxpayers For Common Sense, a watchdog group, Democratic Leader Harry Reid, $108 million for Nevada.

Meanwhile, in the House, Speaker Nancy Pelosi suggested Congress may have to spend even more money to stimulate the economy.

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: We have to keep the door open to see how this goes.

BASH: That may be because of what House Democrats heard in a meeting with top economists, who predicted the president's $787 billion stimulus plan will fall short of saving or creating three million to four million jobs as he promised.

ALLEN SINAI, ECONOMIST: Over the first two years, about 2.5 million jobs saved or created. It's a little less than the administration and perhaps Speaker Pelosi has said. Initially, the jobs created may be a little disappointing.

(END VIDEOTAPE)

BASH: Now, that economist did say that, over time, that the jobs will probably be created and that the American people, they just need to be patient. But Wolf, we're hearing more and more from Democrats who say they're hearing from their constituents that their patience is running out. And they are urging the White House to come up with other ideas to inspire confidence.

BLITZER: So, Dana, we expect this vote, you say, within the next half hour?

And you assume it's going to get the 60 needed to be passed?

BASH: The next half hour or hour, we believe. And, yes, Democratic leaders are saying after a delay last week, they do believe they have the 60 votes to get over the procedural hurdle to get this passed, but probably just barely. Not a lot of votes to spare.

BLITZER: Dana Bash.

Thanks very much.

No child should be left behind when it comes to a quality education -- that's essentially President Obama's message. Let's get some more now on our top story -- the president of the United States flushing out some of the details of his plan to overhaul the nation's education system. He's adamant education is a prerequisite to opportunity.

(BEGIN VIDEO CLIP)

OBAMA: The source of America's prosperity has never been merely how ably we accumulate wealth, but how well we educate our people. This has never been more true than it is today. In a 21st-century world, where jobs can be shipped wherever there's an Internet connection, where a child born in Dallas is now competing with a child in New Delhi, where your best job qualification is not what you do, but what you know -- education is no longer just a pathway to opportunity and success, it's a prerequisite for success.

That's why workers without a four year degree have borne the brunt of recent layoffs -- Latinos most of all. That's why, of the 30 fastest growing occupations in America, half require a bachelor's degree or more. By 2016, four out of every 10 new jobs will require at least some advanced education or training.

So let there be no doubt -- the future belongs to the nation that best educates its citizens. And my fellow Americans, we have everything we need to be that nation.

(END VIDEO CLIP)

BLITZER: The president also says it's time to expect more from America's students.

(BEGIN VIDEO CLIP)

OBAMA: For decades, Washington has been trapped in the same stale debates that have paralyzed progress and perpetuated our educational decline. Too many supporters of my party have resisted the idea of rewarding excellence in teaching with extra pay, even though we know it can make a difference in the classroom.

Too many in the Republican Party have opposed new investments in early education, despite compelling evidence of its importance. So what we get here in Washington is the same old debate about it's more money versus more reform, vouchers versus the status quo. There's been partisanship and petty bickering, but little recognition that we need to move beyond the worn fights of the 20th century if we're going to succeed in the 21st century.

(APPLAUSE)

OBAMA: I think you'd all agree that the time for finger-pointing is over. The time for holding us -- holding ourselves accountable is here. What's required is not simply new investments, but new reforms. It is time to expect more from our students. It's time to start rewarding good teachers and stop making excuses for bad ones.

(END VIDEO CLIP) BLITZER: And the president says there's no excuse for having teachers who underperform.

(BEGIN VIDEO CLIP)

OBAMA: Just as we've given our teachers all the support they need to be successful, we need to make sure our students have the teacher they need to be successful. And that means states and school districts taking steps to move bad teachers out of the classroom. But let me be clear...

(APPLAUSE)

OBAMA: Let me be clear, the overwhelming number of teachers are doing an outstanding job under difficult circumstances. My sister is a teacher, so I know how tough teaching can be. But let me be clear, if a teacher is given a chance or two chances or three chances but still does not improve, there's no excuse for that person to continue teaching. I reject a system that rewards failure and protects a person from its consequences. The stakes are too high. We can afford nothing but the best when it comes to our children's teachers and the schools where they teach.

(END VIDEO CLIP)

BLITZER: A church-state controversy raging right now in Connecticut.

(BEGIN VIDEO CLIP)

MSGR. JOHN MCCARTHY, ARCHDIOCESE OF HARTFORD: I was shocked when I read it. It just seemed incomprehensible to me that a bill which, on its face, is so blatantly unconstitutional, would even be proposed by the legislature.

(END VIDEO CLIP)

BLITZER: But are lawmakers just getting caught in the middle of a clash between the Catholic Church leadership and parishioners?

Stand by.

And we'll also get back to our top story -- he wants to fire teachers who don't meet standards and keep students in school virtually year round. The best political team on television weighs in on the president's education plan.

(COMMERCIAL BREAK)

BLITZER: Let's get right to our senior political analyst, Gloria Borger; our CNN political analyst, Roland Martin; and our political contributor, Steve Hayes of "The Weekly Standard." They're all part of the best political team on television.

Is the president sort of picking a fight with the teachers' union right now, Gloria, sort of the way Bill Clinton picked a fight with eliminates in the Democratic Party who opposed his welfare reform plan?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Sure. You know, this is something that, when you talk to folks in the White House, they say is good for President Obama. President Obama appeals not only to Democrats, but also to independent voters. And if he wants to keep that coalition together, sometimes he has to show a little distance between himself and the teachers' union.

And I think the big question here, though, Wolf, what is he going to do about school vouchers?

He says he's opposed to them, but he also says he's open to the idea. That would be a real whack at the -- at the teachers' union.

BLITZER: We heard Arne Duncan, his Education secretary, Steve, he told us here in THE SITUATION ROOM just a little while ago that he personally opposes those school vouchers. He wants the kids to stay in the public schools, not create an opening for them to leave public schools and go to Catholic schools or other private schools.

STEPHEN HAYES, SENIOR WRITER "THE WEEKLY STANDARD": Right. And I think there we -- there we have our answer. But it's interesting, the Democrats in Congress are trying to kill the Washington, D.C. School voucher program, which has been, I would say, by most measures, pretty successful. And there was a very compelling ad -- an Internet ad that the students have put out asking them to save the program. I think it will be one of the early tests as to just how far he's willing to go to challenge the teachers' unions.

ROLAND S. MARTIN, CNN POLITICAL ANALYST: Well, actually, Wolf, first of all, I talked to the White House yesterday. The president is dead set against school vouchers. He talks about it being in the short-term, not the long-term. And, so, frankly, they are not going to do anything about this provision by Senator Dick Durbin that effectively is going to kill the program. I'm actually writing about it because I'm offended by it.

And so -- and now on the teachers union, they are also against charter schools. He supports those.

BORGER: Right.

MARTIN: And so he only goes so far when it comes to school choice as it relates to charter schools. But he will not go as far as school vouchers, which I think is a serious mistake, because I am a big supporter in vouchers. He should be backing that -- a wide variety of choice, not just limited choice.

BORGER: And, you know, during the campaign, he had said he was opposed to those vouchers. But he said if someone could show him the research that showed that that works, that he might be a little more open-minded about it.

HAYES: Oh, I wish he would.

BORGER: Yes. HAYES: Well, somebody should show him that research.

BORGER: And that can happen.

HAYES: There's plenty of research available if people want to see that school vouchers are effective. Somebody should put that in front of him.

BLITZER: You know, he also -- we heard from Ed Henry, Gloria, our senior White House correspondent, that he's going to have a regular Wednesday morning meeting with Harry Reid, Nancy Pelosi, the Democratic leadership in Congress.

How much of a problem does he have right now -- forget about the Republicans -- with members of his own party?

BORGER: Always. Has had a lot of problems with them. And now there's lots of moderate Democrats in particular balking at some things he wants to do in his budget, for example. And I think it's clear that these folks are not going to march in lockstep with -- with President Obama.

What he has to do is say to them, it's in your own self-interest to be on my side, because that's the only way we're going to get big things done around here.

BLITZER: I'm sort of surprised, Steve, I don't know if you are. Some of these Democrats in the Senate and the House, they're -- they're pretty brazen right now in going up and saying that the president, who is very popular, is wrong.

Are you surprised by that?

HAYES: You know, I'm not, just because of how bold and brazen the president has been. What he's talking about doing with sort of one massive program after another after another -- flies in the face of things that Senate -- moderate Senate Democrats like Evan Bayh, moderate House Democrats have been saying for years.

So for them not to challenge the president, I think, at this point, would make them look a little (INAUDIBLE)...

BLITZER: And

(CROSSTALK)

BLITZER: Roland, this is a marked difference than what we saw when President Bush was in the White House and the Republicans controlled the House and the Senate. I don't remember when they disagreed pretty much with what he was doing.

They pretty much went along with almost everything he did, didn't they?

MARTIN: Well, part of the issue is Democrats know how to screw a good thing up. (LAUGHTER)

MARTIN: And so the Republicans have always been extremely good when it comes to party discipline. The Democrats have always had that problem. So they've always had folks who sort of splinter -- and actually, you have the blue dogs and then you have the moderates. And even, in some instances, you have the Congressional Black Caucus. I mean you have -- here you've got Menendez, a leader in the Senate, who, frankly, has been given Harry -- the Senate majority leader, Harry Reid, fits when it comes to supporting this whole -- the plan (INAUDIBLE) tomorrow.

So the Democrats have never learned to stay disciplined in terms of moving their agenda forward. Republicans have always been good at it. And that's why they've always been, I think, more effective.

HAYES: Yes, but they actually...

BORGER: But, you know...

HAYES: Go ahead, Gloria.

BORGER: This isn't about President Obama and his agenda. This is about Democrats deciding that they need to do what's good for them back home. And you have a large group of moderate and even conservative Democrats who feel that some of the stuff that's in President Obama's budget just won't work for them back home. And that's why some Democrats also are giving him a lot of grief on earmarks. Some of those Democrats think those earmarks are going to work for them back home, too.

HAYES: Yes. And, Wolf, just to pick up on what Roland was saying, you know, I think Congressional Republicans, you ask them now, should they have been more vocal in their opposition to certain spending proposals from President Bush, I think almost to a person they would have said absolutely. We might have been in better shape in 2006 and in 2008.

BLITZER: Guys, we'll leave it right there. But we'll continue tomorrow.

Thank you.

He's been in office exactly 50 days.

So what grade do you give President Obama?

How is he doing on the economy, the wars in Iraq, Afghanistan?

What about his leadership?

Submit your video iReports to iReport.com/situationroom. Watch tomorrow's show to see if your video made the cut.

A church-state controversy raging right now over legislation in Connecticut -- but are lawmakers just caught up in the middle of a clash between Catholic Church leaders and parishioners?

And a stunning turnaround on Wall Street follows the comic Jon Stewart's stunning tirade against financial news network CNBC.

What's going on?

Guess what?

Jeanne Moos, she's here to pick up the pieces.

(COMMERCIAL BREAK)

LOU DOBBS, CNN ANCHOR: Coming up at 7:00 Eastern here on "LOU DOBBS TONIGHT," President Obama giving his first major speech on education -- not from the Department of Education, not from a classroom or a college, but from the U.S. Hispanic Chamber of Commerce.

What is the president doing?

Is he pandering to the pro-amnesty, open borders lobby?

You bet -- as he addresses an issue that should concern all Americans.

Also tonight, the Congress finally paying attention to the escalating war by drug cartels against the government of Mexico -- a war we've been reporting on here for the past two years. Thanks for noticing.

We'll have complete coverage on hostility on our college campuses to Second Amendment rights to bear arms is threatening your First Amendment right to free speech. We'll have that report. I'll be joined by Robert Shibley, vice president of the Foundation for Individual Rights in Education. He says guns are a fact of life and we should be discussing them as adults.

Join us for all of that and more, at the top of the hour.

THE SITUATION ROOM with Wolf Blitzer returns right after this.

(COMMERCIAL BREAK)

BLITZER: Is it a battle between church and state in Connecticut or are lawmakers just caught up in a battle between the clergy and parishioners?

There's a fury going on right now over church finances.

Mary Snow is working this story for us -- all right, explain, Mary, what has happened.

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, this clash in Connecticut over a controversial bill has been so intense the bill's been put on hold. A highly anticipated hearing tomorrow is now canceled. But this hasn't silenced the debate. (BEGIN VIDEOTAPE)

SNOW (voice-over): Catholic leaders in Connecticut call it an assault. And while a proposed bill may be dead on arrival, they are protesting a measure that essentially aimed at removing church officials from having direct control over church finances.

MCCARTHY: Well, I was shocked when I read it. It just seemed incomprehensible to me that a bill which, on its face, is so blatantly unconstitutional, would even be proposed by the legislation.

SNOW: Two Democratic lawmakers who introduced the bill have distanced themselves from it. They say they didn't author it, but that a group of Catholic parishioners did. They say they only acted on behalf of constituents who want more transparency, especially after a priest was convicted in 2007 of stealing more than $1 million of church money.

Fairfield University's Paul Lakeland supports the measure and says at the core, churchgoers want more of a financial say.

PAUL LAKELAND, FAIRFIELD UNIVERSITY THEOLOGIAN: They give the money, it's appropriate that they should have some involvement in the way in which it is spent and the way in which it's watched over. That's the bottom line here, I think.

SNOW: Opponents say the idea is not for a state to decide.

LARRY CAFERO (R), CONNECTICUT STATE HOUSE: By any measurement, that is going way too far and injecting the state into religious affairs. And that's what has called -- caused the outrage, frankly, amongst the public.

SNOW: Supporters say they want to change state laws governing religious corporations.

LAKELAND: This has nothing to do with the responsibilities of the bishop. We are not trying to get into that. We're solely talking about fiduciary and financial responsibility in the parish.

SNOW: But legal experts say the measure doesn't have a prayer.

PROF. DOUGLAS LAYCOCK, UNIVERSITY OF MICHIGAN LAW SCHOOL: It is a violation of the separation of church and state. It puts the state squarely inside the church, changing governance and organization.

(END VIDEOTAPE)

SNOW: With this bill now tabled, Connecticut lawmakers have asked the state's attorney general now for his opinion before moving forward -- Wolf.

BLITZER: Mary Snow, thanks for that explanation.

Let's go back to Jack.

He has "The Cafferty File" -- Jack.

CAFFERTY: The question this hour: Is what does it mean when more Americans say they have no religion?

Gordon in New Jersey: "It's certainly nothing to worry about. I have a great relationship with God, while organized religion leaves me cold. I'm much more afraid of the wrath of the religious than I am of the wrath of God."

Marie in South Carolina writes: "It means Americans now know the difference between religion and spirituality. They equate religion with a manmade set of bureaucratic rules that are set up by a church. Spirituality speaks to people's relationship with their God."

Steve in Florida: "I think the conservatives have actually given religion a bad name, in a lot of ways, made it overbearing, divisive, seemingly narrow-minded, way too political and pretty much a caricature of itself. If what we've seen in the last eight years is the definition of a religion, I certainly wouldn't want to be put in that particular box."

Jim in Willowick, Ohio: "As a cradle and lifelong Catholic, I've been feeling incrementally disappointed with my official Roman Catholic Church and its leadership from the Vatican, diocesan and even local levels for many years. Organized religion is all about money and my God is better than your God. Hundreds of millions of lives have been taken over the centuries in the various names of God and it's all a load of sheep dip."

Theresa in Atlanta writes: "It means that Americans have grown tired of and wise to the ways of organized religion. They all have one political agenda -- to get their beliefs inserted into our legal system. Our country would go to the dogma."

If you didn't see your e-mail here, you can go to my blog at CNN.com/caffertyfile and spend the rest of your waking hours tonight searching for yours there -- Wolf.

BLITZER: And people will do that, Jack.

CAFFERTY: That's sad.

BLITZER: See you back here tomorrow.

Thank you.

Wall Street's stunning surge -- it follows a stunning tirade by the comic, Jon Stewart, aimed at the financial network, CNBC.

Jeanne Moos finds all of this "Moost Unusual"

(COMMERCIAL BREAK)

BLITZER: Here's a look at some "Hot Shots" coming in from our friends over at the Associated Press -- pictures likely to be in your newspapers tomorrow. In Haiti, former President Bill Clinton works the room as he visits a factory.

In Belgium, a climate activist is carried away by police.

In Poland, a child sets down a candle during a pro-Tibet rally.

And in India, soldiers throw colored powder on each other to celebrate a holiday.

Some of this hour's "Hot Shots" -- pictures worth a thousand words.

Jon Stewart is not letting up. The host of Comedy Central's "The Daily Show" has been relentless in his ridicule of a CNBC anchor's pro-Bear Stearns' pitches before the giant brokerage firm flamed out.

CNN's Jeanne Moos takes a "Moost Unusual" look at this TV feud.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): You know that movie about the bitter divorce?

(BEGIN VIDEO CLIP FROM "KRAMER VS. KRAMER," COURTESY COLUMBIA PICTURES)

UNIDENTIFIED MALE: Kramer vs. Kramer.

(END VIDEO CLIP)

MOOS: Well, this is Kramer versus Stewart. It started as a "Daily Show" rant against the financial network, CNBC.

(BEGIN VIDEO CLIP, COURTESY COMEDY CENTRAL)

JON STEWART, HOST "THE DAILY SHOW WITH JON STEWART": If I'd only followed CNBC's advice, I'd have a million dollars today -- provided I'd started with $100 million dollars.

(END VIDEO CLIP)

MOOS: In an eight-and-a-half minute tirade, Stewart ripped, eviscerated, vaporized CNBC -- mostly by showing clips of seemingly bad prognostication.

(BEGIN VIDEO CLIP, COURTESY COMEDY CENTRAL)

(BEGIN VIDEO CLIP FROM MARCH 11, 2008, COURTESY CNBC)

UNIDENTIFIED MALE: Bear Stearns is fine. Do not take your money out. Bear Stearns is not in trouble.

(ON SCREEN)

Bear Stearns went under six days later. (END VIDEO CLIP)

MOOS: Stewart mocked how CNBC interviewed now disgraced CEOs back when they were still riding high.

(BEGIN VIDEO CLIP, COURTESY COMEDY CENTRAL)

(BEGIN VIDEO CLIP, COURTESY CNBC)

UNIDENTIFIED MALE: Is it fun being a billionaire?

UNIDENTIFIED MALE: Well, yes. Yes. I have to say it is fun being a billionaire.

(END VIDEO CLIP)

MOOS: Stewart responded with two words you didn't have to be a lip reader to get. And when Jim Kramer lashed back, saying he'd been taken out of context, Stewart attacked again.

(BEGIN VIDEO CLIP, COURTESY COMEDY CENTRAL)

(BEGIN VIDEO CLIP FROM "TODAY," COURTESY NBC)

UNIDENTIFIED MALE: We're watching this video to buy Bear Stearns.

(END VIDEO CLIP)

(LAUGHTER)

(END VIDEO CLIP)

MOOS: And the "Today Show" had Kramer listen on a split screen, as his smile faded.

(BEGIN VIDEO CLIP, COURTESY COMEDY CENTRAL)

STEWART: He's not saying, literally, I'm asking you to buy Bear Stearns. For that, you'd have to go back a full seven weeks before the stock completely collapsed.

(BEGIN VIDEO CLIP FROM "THE TODAY SHOW," COURTESY NBC)

UNIDENTIFIED MALE: I'm asking people who are watching this video to buy Bear Stearns.

(END VIDEO CLIP)

(LAUGHTER)

(END VIDEO CLIP)

(BEGIN VIDEO CLIP FROM "TODAY," COURTESY NBC)

UNIDENTIFIED FEMALE: Did you make a mistake?

UNIDENTIFIED MALE: Did I make a mistake?

OK, well, first of all, anytime you recommend a stock and it goes down, you've made a mistake. Here's the shocker -- almost every stock is down.

(END VIDEO CLIP)

MOOS: Stewart even bashed the financial networks on "Letterman," saying first they act like they know what's going on on Wall Street, then they don't.

(BEGIN VIDEO CLIP, COURTESY WORLDWIDE PANTS INC.)

STEWART: It would be like turning on the Weather Channel in a hurricane and they're just doing this -- why am I wet?

(END VIDEO CLIP)

MOOS: CNBC wouldn't comment, but the network's supporters say Stewart is cherry picking mistakes.

(BEGIN VIDEO CLIP FROM "TODAY," COURTESY NBC)

UNIDENTIFIED MALE: This is a terrible market, which is why I told people to sell everything.

But you think he's going to run that tape?

No, because he's got a comedy show.

(END VIDEO CLIP)

MOOS (on camera): Yes, well, since this isn't exactly a comedy show, we might as well run the clip illustrating that Kramer was right about something.

(BEGIN VIDEO CLIP FROM "TODAY," COURTESY NBC)

KRAMER: Whatever money you may need for the next five years, please take it out of the stock market right now.

(END VIDEO CLIP)

MOOS (voice-over): Since then, the Dow has plunged several thousand points.

Stephen Colbert tried to soften all the bad news.

(BEGIN VIDEO CLIP, COURTESY COMEDY CENTRAL)

STEPHEN COLBERT, HOST: Or, Jim, we could just have puppies and kittens behind you.

Jimmy?

UNIDENTIFIED MALE: I think this is a time when you want... (LAUGHTER)

UNIDENTIFIED MALE: ...you want to try to put as many people to work as possible.

(END VIDEO CLIP)

MOOS: If you're going to fight like cats and dogs, you might as well look at them.

Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

BLITZER: That's it for me.

I'm Wolf Blitzer in THE SITUATION ROOM.

Let's go to Lou Dobbs in New York -- Lou.