Return to Transcripts main page

THE SITUATION ROOM

U.S. War Against Pirates; Obamas Release Tax Returns

Aired April 15, 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: Plus, are celebrities getting away with being tax deadbeats?

And you wouldn't know to it look at her, but this woman has become an instant sensation on the Internet and around the world. When you listen to her, you will understand why.

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

Right now, the Obama administration is laying the groundwork for an all-out war against pirates targeting Americans on the high seas. A U.S. ship loaded with food is under Navy guard right now, after escaping a new attack by Somali pirates.

Pirates have seized at least four ships and more than 75 hostages since Sunday's dramatic rescue of the U.S. sea captain. And now the secretary of state, Hillary Clinton, is renewing America's vow to bring gangs at sea, her words, to justice.

Let's turn to our Pentagon correspondent, Chris Lawrence. He's following the latest military and diplomatic moves aimed at dealing with this problem -- Chris.

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Well, Wolf, the pirates are answering President Obama's tough talk with threats of their own. And Hillary Clinton says the U.S. is now looking for ways to track down and freeze the pirates' assets.

(BEGIN VIDEOTAPE)

LAWRENCE (voice-over): The Navy SEAL rescue that left three pirates dead did nothing to deter other pirates, so the White House is bringing together the full force of the U.S. government. Justice, State, Homeland Security, and Pentagon officials will meet Friday to find some way to stop pirate attacks on American ships.

HILLARY RODHAM CLINTON, U.S. SECRETARY OF STATE: Let me underscore this point. The United States does not make concessions or ransom payments to pirates.

LAWRENCE: On Wednesday, the French navy tracked down and captured 11 pirates who had just attacked a ship. Another group of pirates fired guns and rockets at this American freighter. The Liberty Sun's crew barricaded themselves in the engine room, where one sailor e-mailed his mother. KATY URBIK, SON'S SHIP FIRED ON BY SOMALI PIRATES: My heart started pounding. I had this, you know, is this really happening kind of moment.

LAWRENCE: The USS Bainbridge detoured to help, but the pirates, unsuccessful, were gone when it got there.

Men claiming to be pirates have said they will now target French and American ships, taking revenge for the SEALs killing three of their own.

In an interview with CNN's Christiane Amanpour, the chairman of the Joint Chiefs said:

ADMIRAL MICHAEL MULLEN, JOINTS CHIEFS CHAIRMAN: I'm very much aware of the comments that were made by the pirates after this event and recognize that as certainly a potential threat.

LAWRENCE: Members of Congress have urged President Obama to take the fight to the pirates' safe havens, saying -- quote -- "We already know the cities in which they're operating and often even the names of those organizing the attacks."

(END VIDEOTAPE)

LAUER: Yes, and, again, pirates told journalists in Somalia that this attack on the Liberty was not about ransom, but revenge -- Wolf.

BLITZER: Well, is it -- I mean, what are they thinking at the Pentagon and elsewhere? I know you have been checking with sources. What do they think about this claim that the pirates are making that they're going out and going to take this revenge?

LAWRENCE: Yes, Wolf, I talked to one defense official, who told me he questions whether these individual pirates really speak for a larger group with one unified goal. And he says, it's easy for them to now say it wasn't about the ransom, after they were unsuccessful and had to turn away.

BLITZER: All right, thanks very much for that, Chris.

Crew members of the ship seized by pirates last week now are heading back to the United States. They're due to land at Andrews Air Force Base outside Washington, D.C., tonight and they will be reunited with their families. They had to leave Kenya, though, without their rescued captain, Richard Phillips.

Phillips was aboard the USS Bainbridge today when it was diverted to help a U.S. freighter that escaped attacked by pirates. That kept him from rejoining his crew in Kenya and delaying his return home. He will be home soon, though. We know that.

Let's get to President Obama's debt to Uncle Sam right now. The first couple just released their 2008 income tax returns.

Our senior White House correspondent, Ed Henry, he has been taking a closer look at these returns.

All right, Ed, give us the numbers, how much the president made, how much he paid in income tax, how much money he gave to charity. What do we know?

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well, Wolf, some eye-popping numbers, the president and first lady revealing that they had about $2.65 million in adjusted gross income in the tax year 2008, that largely coming, of course, from the sale of the president's books, "Audacity of Hope," "Dreams of My Father," both of those very popular all around the world, as you know.

They paid $855,000 in federal taxes, just over $77,000 in state income taxes back in Illinois, so nearly a million dollars paid in taxes, federal and state, by the first family.

Also interesting, CNN producer Shawna Shepherd noting that deep in these returns, it shows that the first family paid about $47,000 in private school for their two daughters. Obviously, the book sales has really enabled them to have a lot more income than they have ever had in their entire life -- Wolf.

BLITZER: And the charitable contributions they made, there's differences between this past year and 2007.

HENRY: Very interesting. The big-picture number is just over $172,000, about 6.5 percent of their income, given to 37 different charities.

What's significant is that, when you go back to the tax year 2007, the couple gave about $26,000 to Trinity United Church of Christ, of course the church of Reverend Wright, caused so much controversy during the campaign.

We looked through this year's tax returns, no money going to that church, obviously, a very sensitive subject, the first family, in fact, right now looking for a new church here in Washington. They haven't settled on one yet. Very interesting, in the past tax year, they didn't give anything to their former church. They have obviously moved on, Wolf.

BLITZER: In their initial release, they said among the charitable contributions, $172,000, that there was $20,000, $25,000 to Catholic Charities, but now they have corrected that to say $25,000 actually went to not Catholic Charities, but to CARE.

HENRY: CARE, yes.

BLITZER: And another $25,000 went to the United Negro College Fund; is that right?

HENRY: That's right. And they had just made a clerical error in terms of which column it had been in.

But we should also note that the first family has been giving smaller donations to various churches around the country where they have been worshipping. And we noted there are several different churches in there they have given $100, $500. So, it's not like not giving money to churches anymore, but they're not giving money to that former church that caused so much controversy.

But you're right, big numbers there, $25,000 to CARE, as well, that's a very big donation, 37 different charities in all, Wolf.

BLITZER: And so if you add the state income tax that they paid in Illinois, another $77,800, they're approaching $1 million in state and federal taxes that they paid this past year.

What about the Bidens? They made a lot less.

HENRY: Absolutely. That was based only on a salary of a United States senator, as well as Dr. Jill Biden, her various teaching in Delaware.

They had about $269,000 in adjusted gross income, much less obviously than the Obamas. They paid $47,000 approximately in federal income taxes. Back in Delaware, they paid about $11,000 in state taxes. They also donated much less than the Obamas in charity, $1,885. The Bidens noted in a press release, though, that they have given a lot of time to their church and other charities. Sensitive subject for a lot of politicians, how much money they give to charity, Wolf.

BLITZER: Certainly is. We look at that number, that line every single year.

All right, thanks very much, Ed Henry. He's our man at the White House.

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

JACK CAFFERTY, CNN ANCHOR: Got those alligator arms going on when it comes to the charitable contributions for the vice president. I mean, $1,800 is not a lot of money on $260,000 in adjusted gross income?

BLITZER: Yes. But he says he gave money at his -- he's Catholic and he goes to church and he would probably just put money in the bucket or whatever.

CAFFERTY: "The bucket or whatever." It's the collection plate. It's not the bucket.

BLITZER: Whatever. Whatever it is.

(LAUGHTER)

CAFFERTY: British parents could soon be -- fined British parents could soon be fined if their kids get out of line in school.

A new government study over there takes a look at different ways to keep children in line in the classroom, and it suggests that it's time for parents to share the responsibility for maintaining discipline. What a novel idea.

Parents can be fined about $75 if their kids are caught in a public place without a good reason within the first five days of being suspended or expelled. And those fines double if they're not paid within a month.

And parents have to be interviewed by teachers before their kid is allowed to return to school. Schools can also require parents of children who are misbehaving to take parenting classes, and if they don't attend, they can be fined up to $1,500.

These guidelines come as teachers warn that existing methods of disciplining students are failing. "The Telegraph" reports that some schools have been handing out prizes if children promise to behave, things like plasma screen TVs and iPods.

This teaches children how to extort things from grownups, instead of punishing them if they act up. U.S. schools ought to pay close attention to how this experiment works out. My guess is that the parents of these disruptive little mutants make take more of an interest in disciplining their kids if they had to shell out a few bucks each time Johnny acts up in class. And then teachers might actually be able to get down to the business of teaching.

So, here's the question: Is it a good idea to penalize parents if their children misbehave at school? Go to CNN.com/caffertyfile and post a comment on my blog -- Wolf.

BLITZER: Teachers deserve gold medals every single day for what they go through.

CAFFERTY: There is not enough money to walk into one of those classrooms every morning at 8:00 and face that.

BLITZER: Yes. We salute that. All right, Jack, thank you.

There's so much blood in the streets, it's being called Mexico's most dangerous city. You are going to go for a ride inside a place where police do daily battle against brutal drug gangs.

President Obama's about to travel to Mexico. Amid the violence there, how tight will security be?

And on this tax day, anger in the streets from people protesting something we all must pay.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I'm worried about obviously our taxes. We can't afford to pay any more taxes. But I'm also really concerned about what my tax money's being spent for.

(END VIDEO CLIP)

(COMMERCIAL BREAK) BLITZER: President Obama plans to travel to Latin America and the Caribbean, tomorrow, Mexico. On Friday, he's off to the Summit of the Americas in Trinidad and Tobago.

There are several important priorities on the agenda.

Let's go to our national political correspondent, Jessica Yellin. She's watching the story for us.

First of all, Jessica, I know security for the president, for any president, is going to be very tight, especially this president.

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Exceptionally tight, Wolf, you're right, especially because the president is not just heading to Mexico, but to Mexico City.

The top agenda item for him will be drug trade and related violence. As we have been reporting, drug deaths in Mexico skyrocketed. Last year, more than 6,000 people died in the country of drug-related violence, and the Obama administration is acknowledging that the U.S. is feeding the problem by supporting a drug market and allowing a huge number of illegal guns to cross from the U.S. into Mexico.

So, setting up this meeting with Mexican president Felipe Calderon, which will take place tomorrow, the Obama administration today announced two new get-tough efforts.

First of all, the White House will impose financial sanctions on three organizations it says are run by drug kingpins. And, second, the Department of Homeland Security has named a new border czar. And he's expected to help stop the flow of guns and drugs. Let's listen.

(BEGIN VIDEO CLIP)

JANET NAPOLITANO, U.S. HOMELAND SECURITY SECRETARY: We need to act now, and we need to act with some extra manpower, technology here, and then have a plan to sustain it over time. And that's what we are doing.

(END VIDEO CLIP)

YELLIN: That's the new drug czar's boss.

And, of course, there will be other issues on the agenda, Wolf, immigration, economic development, trade, and a big new one, clean energy -- Wolf.

BLITZER: I know it's sort of unusual for an American president to go to Mexico City. Usually they meet with Mexican leaders elsewhere in Mexico. What's going on now?

YELLIN: You're right, Wolf. It's a massive -- Mexico City, massive, chaotic city, which is a security nightmare for the Secret Service. Last year several Mexican officials were assassinated in that city. And because of all the violence, presidents don't usually go to the city itself. But President Obama is going there because it's a show of the support for the Mexican president, Calderon, whose party is trailing badly in upcoming congressional elections.

Washington, D.C., President Obama wants to back Calderon, because he's been such a strong supporter combating drug violence. And, in fact, President Obama recently compared Mr. Calderon to Eliot Ness, the famous American anti-mob crusader -- Wolf.

BLITZER: Thanks very much for that.

And we will, of course, have extensive coverage of the president's visit to Mexico and the Caribbean.

What issues would like to see President Obama address while he's abroad in the coming days? Submit your video questions to ireport.com/situationroom. We are going to try to use some of your I- Reports right here in THE SITUATION ROOM.

President Obama will likely hear tales about murders, gangs, and drugs during his visit tomorrow to Mexico. In one place, so much of that is happening, it's being called Mexico's most dangerous city.

CNN's Karl Penhaul reports.

(BEGIN VIDEOTAPE)

KARL PENHAUL, CNN CORRESPONDENT (voice-over): The police radio crackles. Shots are being fired downtown. A city cop asks these transvestite prostitutes if they heard. Six shots, they say, a few blocks away.

It's midnight in Juarez, dubbed Mexico's most dangerous city. The gunmen seem to have faded away, so the patrol heads up into gangland, the hillside slums that ring Juarez.

"We're arresting gang members before they get together, because then they will be killings," he says.

Police say there are 1,000 gangs in the city. They go by names like the Skulls, the Sharks, the Aztecs and the Artist Assassins. They peddle cocaine, crack and heroin and fight gun battles for turf.

The gangs, too, have become a recruiting ground for narco- traffickers looking to hire hit men.

"Organized crime recruits from these gangs. There's evidence that they come and choose the most dangerous members," the captain says.

Captain Pinedo and his men on the anti-gang patrol know the labyrinth of alleyways by heart. They pull suspected gang members out of vehicles, even sniffing their fingers to see if they have been using drugs.

(END VIDEOTAPE)

BLITZER: And Karl Penhaul will have much more. You can see a lot more of this compelling reporting from the place called Mexico's most dangerous city later tonight on "ANDERSON COOPER 360," 10:00 p.m. Eastern, right here on CNN.

Guess who's accused of being a tax cheat? Our reporter is knocking on doors, and some of your favorite celebrities are accused of not paying their taxes.

Plus, tax day protests, big story or media hype? We're looking behind the so call Tea Parties around the country.

And North Dakotans fear flooding again, a dam crumbling and threatened right now.

(COMMERCIAL BREAK)

BLITZER: Time's quickly running out here in the United States. If you hope to meet the tax-filing deadline, you have only a few hours left.

This week, CNN is giving you the real deal on your taxes. We're trying to dig deep to give you the facts about what you're paying and where your money is going on this tax day.

Did you know that some famous celebrities are wanted for allegedly not paying taxes?

Let's go to CNN's Dan Simon. He's in San Francisco.

Dan, what's going on?

DAN SIMON, CNN CORRESPONDENT: Well, hi, wolf.

This is California's most wanted list when it comes to taxpayers. And you're right. It does contain some celebrities. Take a look.

(BEGIN VIDEOTAPE)

SIMON (voice-over): Burt Reynolds is on it. So is singer Dionne Warwick, Sinbad, too. They made California's list of the 250 most delinquent taxpayers. The list is published annually, by law. Lawmakers thought it would motivate people to settle up. But does it really work?

UNIDENTIFIED FEMALE: Actually, it has. We have collected over $14 million this year, based on this current list and our activities in letting people know that they were going to potentially be on the list.

SIMON: But unless they're celebrities, chances are you would not recognize the rest of the names. Who ranks number one?

His name, Winson T. Lee, a self-described investor and owner of apartments. According to the state, he owes nearly $10 million. He lives in this house outside of San Francisco. No one came to the door. And he wasn't at this apartment complex either that he owns. But, to our surprise, Lee was OK talking to us when I reached him on the phone.

(on camera): When you saw that you were number one on the list, what did you think?

WINSON T. LEE, OWES BACK TAXES: I was embarrassed.

SIMON (voice-over): Lee admitted to us that he hasn't filed any tax returns for the last 10 to 15 years. He says he knows he's wrong and likened it to some kind of illness.

LEE: I think my illness is the inability to deal with this, you know, the tax season, every year and to deal with the mound of paper that one needs to go through in order to prepare their tax returns.

SIMON: He says he's now trying to make amends, though he disputes the amount California says he owes.

The state says it doesn't comment on specific cases, but that California taxpayers each year fail to pay around $6.5 billion. That would more than pay the annual salaries for every high school teacher in the state.

If you think that figure is large, the IRS says its unpaid taxes for the last several years total about $300 billion. That would cover half of the entire U.S. defense budget. And experts say unpaid taxes will increase because of the recession.

CHUCK SWENSON, UNIVERSITY OF SOUTHERN CALIFORNIA: That gap's going to get bigger in tough times, as people go from private sector, where they're losing their jobs, to self-employment, where it's much easier to -- to evade taxes.

SIMON: As for those celebs we mentioned, a rep for Dionne Warwick told us she's addressed this situation and has worked out a payment arrangement. Burt Reynolds' spokesman says the actor has paid all his taxes and says the actor should be removed. And, Sinbad, his rep just said, no comment.

(END VIDEOTAPE)

SIMON: Well, if you want to get your name off of this list, you either need to pay in full, you have to work out some sort of compromise with the tax board, or you have to file for bankruptcy, Wolf. And we will see what happens with Mr. Lee if he gets his name off -- back to you.

BLITZER: All right, thanks very much, Dan, for that -- Dan Simon reporting.

President Obama promises to simplify the tax code and take the dread out of April 15. Was there anything he might have dreaded about releasing his returns? The best political team on television is standing by. And what else should the U.S. be doing to stop pirates on the attack? Our I-Reporters are weighing in on that.

And a charitable effort to rebuild after Hurricane Katrina is now tainted by potentially dangerous drywall.

(COMMERCIAL BREAK)

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

Happening now: rising tensions between North Korea and the world. The communist country kicks out international inspectors and vows to escalate its nuclear program after the U.N. Security Council condemns North Korea's recent missile launch.

A car bombing in Iraq kills 10 policemen in the same troubled area of the country that remains an al Qaeda stronghold.

And North Dakota bracing for more floods and hoping that the levees will hold -- all of this, plus the best political team on television.

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

The people in these crowds say they're paying too much in taxes and they claim there are too many government bailouts and too much government spending. They're taking their gripes to the streets today. Many groups were small, but the anger was large in what they called Tea Parties.

Protesters shoved tea into bodies of water, even threw tea bags over the White House fence. Behind those gates, President Obama said his tax policies will help the middle class.

How are the news media covering these protests?

Let's go to CNN's Howard Kurtz of "RELIABLE SOURCES" -- Howie.

(BEGIN VIDEOTAPE)

HOWARD KURTZ, CNN CONTRIBUTOR (voice-over): Wolf, much of the media seems to have chosen sides for tea day. FOX News sees today's Tea Party tax protests as a big story, CNN as a modest story, and MSNBC as a great story to make fun of.

And, for most major newspapers, it's a non-story.

(voice-over): FOX began with a series of live shots this morning in cities such as Philadelphia, Washington, and Sacramento.

(BEGIN VIDEO CLIP, FOX NEWS CHANNEL)

UNIDENTIFIED MALE: There will be a rally starting here in two hours, just like maybe 300 or 400 other rallies across the nation.

UNIDENTIFIED MALE: Welcome to the Tax Day Tea Party in D.C. (CHEERING AND APPLAUSE)

NEIL CAVUTO, FOX NEWS ANCHOR: I think what they're saying is, we hate big government and we don't like the direction that it's headed.

(END VIDEO CLIP)

KURTZ: For days, Rupert Murdoch's network had been touting the fact that several of its high-profile hosts would be at the April 15 protests. And, today, the network was pushing its online coverage as well.

(BEGIN VIDEO CLIP, FOX NEWS CHANNEL)

UNIDENTIFIED FEMALE: You can join the tea party action from your home if you go to thefoxnation.com.

(END VIDEO CLIP)

KURTZ: MSNBC's liberal hosts, meanwhile, have openly mocked the Tea Parties.

(BEGIN VIDEO CLIP, "COUNTDOWN WITH KEITH OLBERMANN")

KEITH OLBERMANN, HOST, "COUNTDOWN": FOX News can't keep its mouth shut about tea bagging. It's claiming all of America is worked up about this.

(END VIDEO CLIP)

KURTZ: MSNBC has mentioned today's protests in a couple of political discussions. And CNN has aired occasional reports.

UNIDENTIFIED MALE: The kind of spending that -- that is going on in this country is just out of control.

MARY SNOW, CNN CORRESPONDENT: Many of them said that they oppose bailing out private companies.

KURTZ: Conservative talk radio has rallied behind the Tea Parties.

(BEGIN VIDEO CLIP, "THE RUSH LIMBAUGH SHOW")

RUSH LIMBAUGH, RADIO TALK SHOW HOST: They are petrified and scared to death of the 500 tea parties scheduled for today in 50 American states. They're out there snarling: "It was created by Fox News. It's a right-wing plot. This is all Limbaugh's doing."

KURTZ: Laura Ingraham, a Fox contributor, showed up at a protest outside the Treasury Department.

LAURA INGRAHAM, RADIO HOST: Regardless of whether the media covers this or not, I think the people are beginning to wake up.

KURTZ: As for the nation's newspapers, "The New York Times" hasn't run a single word in its news columns for the past month. The paper did post an online story this afternoon.

And "The Washington Post" has its first story today in the Metro section -- on page B4.

(END VIDEOTAPE)

KURTZ: By tonight, we'll know whether the tax protests warranted more coverage from the mainstream media or whether the events were largely driven by media hype -- Wolf.

BLITZER: Howard Kurtz, thanks so much.

These so-called tea parties across the country protesting taxes, President Obama's fiscal policies -- even the president himself. Mr. Obama didn't specifically take note of the tea parties today, but he did appear to be responding to some of the protesters.

Listen to what he says.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: And that's why my administration has taken far-reaching action to give tax cuts to Americans who need them. We start from the simple premise that we should reduce the tax burden on working people. We've passed a broad and sweeping tax cut for 95 percent of American workers. Make no mistake -- this tax cut will reach 120 million families and put $120 billion directly into their pockets. And it includes the most American workers ever to get a tax cut.

We know that tax relief must be joined with fiscal discipline. We're also doing away with the unnecessary giveaways that have thrown our tax code out of balance. We need to simplify a monstrous tax code that is far too complicated for most Americans to understand.

(END VIDEO CLIP)

BLITZER: All right. Let's talk about this and more with our senior political analyst, Gloria Borger; our CNN contributor, Steve Hayes, of "The Weekly Standard;" and our CNN political analyst, Roland Martin -- Gloria, what's going on here behind-the-scenes, the sort of -- the undercurrent of these tea parties?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well, I think these tea parties are not organized by elected Republican officials. They're organized by some conservative groups. And we don't know how many people are at these tea parties, by the way, Wolf.

But in talking to Republican strategists today, they're telling me, look, if this helps them at all -- and that's a big if -- it could help them in getting the Republican base back together, because it's very hard to reconstitute yourself as a party when you've just lost an election.

They know they've got a lot of work to do. Only one out of every four voters in this country now identify themselves as Republicans. But the folks you're seeing out there are the part of the base of the Republican Party.

BLITZER: And when we asked last month -- a poll -- our CNN/Opinion Research Corporation poll, Steve, how is Obama handling taxes, 62 percent of the American public approved of the way he's dealing with it, 37 percent disapprove. I assume a lot of though protesters are among the 37 percent.

STEPHEN HAYES, SENIOR WRITER "THE WEEKLY STANDARD": Yes, I would say so. And I think -- you know, one of the reasons that one out of four Americans now -- only one out of four Americans now identifies themselves as Republican is because, I think, of the Republican establishment's failure to capitalize on the kind of anger or, you know, outrage -- call it whatever you want -- that is animating these kinds of protests.

I think there are people who are really alarmed. And these are not just sort of Republicans -- conservative activists. I think more and more moderate Democrats are really alarmed at the rate of spending, at the projected deficits. And I think they're very skeptical that they're actually going to see this broad tax cut that Barack Obama keeps promising them.

BLITZER: Roland, there's nothing wrong with Americans going out and peacefully demonstrating their grievances.

ROLAND S. MARTIN, CNN POLITICAL ANALYST: Well, look, I mean I've long maintained that we need to have people of all ideologies -- or, frankly, if you don't have any idion -- any ideology at all -- see, I even hate the word -- out protesting and campaigning.

But the real issue is not really what happens on April 15th. It's what happens on April 16th, then the 17th. You know, I can show you any number of protests and rallies of people all excited, but where was the follow-up?

I think back to 1992, when you had people who were angry with President George H.W. Bush when he rescinded his position when it came to taxes. And they rallied behind Ross Perot, the Reform Party. They made a significant impact on that presidential race.

And so the issue should be what happens next as opposed to today. Use today as a rallying cry, but you have to organize. Otherwise, you simply got together for one day.

BLITZER: Speaking...

BORGER: And that's the big issue for Republicans, Wolf, right now, because it's fine to -- to have these rallies, but you have to take the next step.. You have to have a vision. You have to have new ideas.

There is a different electorate now than there was when Ronald Reagan won on an anti-tax platform. You know, they're younger voters, minority voters, suburban voters who voted Democratic. So the party really has to kind of reconstitute itself and figure out where it does go next. BLITZER: And speaking of taxes, Steve, the White House released the president and the first lady's income tax returns for 2008 just a couple of hours or so ago. They had a gross income of $2.6 million. They paid $855,000 in federal income tax. They gave, in charitable contributions, $172,000.

They gave -- they had another $75,000 or so in state income tax. As I've been saying, nearly $1 million in federal and state taxes they paid, largely because of the enormous book sales that the president had last year.

HAYES: Yes, that's a pretty sweet income tax return. I would like to have my name associated with that.

You know, I think it's -- it's good that he seems to have been generous -- more generous, I think, to charity this year. I think, you know, what he said at the end of the sound bite that we played earlier was that the tax system -- the tax code needs to be simpler and fairer. I think that is certainly true.

And, you know, I hope he didn't use TurboTax.

(LAUGHTER)

HAYES: I hope he had good accountants, unlike Tim Geithner, so that he doesn't have to go back and revise this.

BLITZER: And people are already pointing out, Roland -- and you're from Chicago, so you know this. In 2007, the Obamas gave the Reverend Wright's Trinity United Church of Christ $26,270. Last year, they didn't give that United Church of Christ anything.

MARTIN: Well, obviously because he was, in essence, run out of his own church. And so it's no shock he didn't give any money to that particular church. And so I think folks ought to be reminded of that, as well.

You know what, also, let me throw this out there. People all, they say, well, you know, he gave X amount in charitable contributions. Keep in mind, that's still voluntary. You can do whatever you want to do. And so for those who give more, great.

But I'm not going to sit here and criticize anybody for their charitable contributions when I don't also know what they're doing beyond simply giving money to an organization.

So for those of you who are ripping them folks, check yourself. Ask yourself what are you doing for charity, not necessarily someone else.

BLITZER: Good point.

All right. Stand by, guys. I don't want you to go away. We have more to discuss, including Somali pirates -- they're threatening right now to slaughter Americans.

So what should the U.S. do?

Our iReporters are weighing in, along with the best political team on television.

Plus, she's a certainly unlikely sensation, first on television, now on the Web -- why millions are watching and cheering her on.

(BEGIN VIDEO CLIP, COURTESY FREMANTLE MEDIA)

SALLY BOYLE: Right near Bathgate, West Logan.

UNIDENTIFIED MALE: That's a big town.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: We're back with the best political team on television -- our senior political analyst, Gloria Borger; our CNN contributor, Steve Hayes, of "The Weekly Standard;" and Roland Martin, our CNN political analyst.

We asked our iReporters out there -- folks to send us in a comment or a question about piracy, because it's becoming a huge issue right now.

Listen to this one, Gloria.

This is David J. White from Washington, D.C.

(BEGIN VIDEO CLIP)

DAVID STONE, WASHINGTON: They should change the maritime law so people can arm themselves to be able to defend their cargo, as well as themselves.

(END VIDEO CLIP)

BLITZER: All right. This is a problem that's growing right now. These pirates, they think they can make a lot of money. They already have. And they're not -- they're showing no signs of stepping down.

BORGER: No, they aren't. And Secretary of State Hillary Clinton was very clear today that we're not going to negotiate with these pirates. And I think -- look, all things are on the table right now. It was clear that the president said we have to do something more about this problem. The secretary of Defense has said that he's going to meet with the Joint Chiefs to try and figure out how to best handle this. I think the solution is clearly going to be multilateral, because it's obvious we're not the only ones who are in trouble in this situation.

BLITZER: I had a viewer send me an e-mail today, Steve, saying the U.S. should simply send an aircraft carrier to the region off the coast of Somalia. And whenever there's word of some little boat with a bunch of pirates on, they send an F18 off there. Within 15 or 20 minutes, the F-18 simply blows that boat out of the water. And pretty soon the pirates get the message and they don't -- they stop doing this.

What do you think of that theory?

HAYES: Well, I'd love it if the pirates were to hold up some kind of a card that said, you know, we're pirates, we're about to go attack this book...

(LAUGHTER)

HAYES: ...I think that would work. I don't think it works that way, unfortunately.

Look, this is a big issue now. But I don't think we should lose sight of the broader context here. I mean, you know, it's important that the administration respond and respond forcefully to these kind of attacks. I think some of the things that they've done have been good first steps.

But I think we can't lose sight of the fact that this is a relatively small issue when compared to the bigger crises or problems that he faces -- like a potentially nuclear-armed Iran; like a Pakistan that's, you know, moving more and more toward an Islamist state, that has an ISI that's continuing to cause problems; like Iraq; like Afghanistan; like North Korea.

And those are really the big issues. So while I think it's important to address the piracy issue, we shouldn't lose sight of the fact that it's relatively a minor problem compared to what the other things he's dealing with.

BLITZER: I think Steve makes a good point -- Roland.

MARTIN: Wolf, we could sit here and talk all day about bombing this particular boat, going after these pirates. But if you don't deal with the larger issue of Somalia in terms of an unstable government, in terms of warlords, then you're going to see this go on. You also have the issue in terms of where those individuals are -- how that whole fishing population has been destroyed because of pollution. Boats were destroyed in the tsunami.

And so there are multiple issues here. And so we cannot always respond to everything with a military response. It goes much beyond that. So this really is a question of how do you deal with the situation outside of just blowing somebody up, but dealing with what's happening on the land.

BLITZER: All right. Guys, we've got to leave it there, unfortunately. But we'll continue the conversation, as we always do, tomorrow.

Roland will be back in an hour and 15 minutes. He's hosting "NO BIAS, NO BULL" tonight.

Tomorrow, President Obama begins a trip to Mexico and Trinidad and Tobago.

What issues would you like to see him address while he's abroad?

Submit your video questions to ireport.com/situationroom. We'll try to use some of them on the air tomorrow. We love your iReports.

Our question to you this hour -- is it a good idea to penalize parents if their parents misbehave at school?

Jack Cafferty is standing by with your e-mail.

Plus, defective drywall -- it's another nightmare for victims of Hurricane Katrina. And guess where it's made?

(COMMERCIAL BREAK)

BLITZER: It's an amazing story -- a contestant turns Internet sensation.

Abbi Tatton has the story.

(BEGIN VIDEO CLIP, COURTESY FREMANTLE MEDIA)

BOYLE (singing): There was a time when I was living (INAUDIBLE).

UNIDENTIFIED MALE: (INAUDIBLE).

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: Fredricka Whitfield is monitoring some other important stories incoming into THE SITUATION ROOM right now -- Fred, what's going on?

FREDRICKA WHITFIELD, CNN ANCHOR: Hello again, Wolf.

The case of an eight-year-old Saudi girl married to a 47-year-old man may prompt the Saudi government to change its laws on underage marriages. Just days after a Saudi judge sparked outrage after refusing to annul that controversial marriage, the country's justice minister promised to enact a law to protect young girls from such unions. No details on the restrictions were given.

Wall Street wraps up Wednesday in positive territory. The Dow rose 109 points today, closing at 8029. Experts say investors were encouraged by several economic reports indicating the recession is not deepening.

And a real scare today in Southern California. A hillside collapsed, sending a 50-foot mudslide into the yard of an unoccupied house. Luckily, there were no injuries or major damage. But several people living near the slide had to evacuate as a precaution. Officials say a water leak may have caused the collapse. An investigation is now underway -- Wolf.

BLITZER: Thanks very much, Fred, for that.

Here's a story that's generating some outrage -- drywall is pouring into New Orleans now as part of Hurricane Katrina rebuilding efforts. But it turns out the product is tainted and causing serious problems.

Let's go to New Orleans.

Sean Callebs has all the details -- Sean, tell our viewers what's going on.

SEAN CALLEBS, CNN CORRESPONDENT: Yes, Wolf. With all the reconstruction in this area, when this story broke, a lot of people cringed. Now there have been concerns, complaints and involvement by the state health department.

(BEGIN VIDEOTAPE)

CHIEF THOMAS STONE, ST. (PH) BERNARD PARISH, LOUISIANA FIRE DEPARTMENT: I was never told it was Chinese.

CALLEBS (voice-over): Chalmette's fire chief, Thomas Stone, couldn't believe it a year ago when his contractor deliver drywall made in China. He's always been a "buy American" kind of guy.

STONE: When we bought dress uniforms for the fire department, we bought made in the USA, union made.

CALLEBS: Against his better judgment, Stone signed off on the drywall.

STONE: What it does is it's attached to metal.

CALLEBS: This is one of the telltale signs -- corrosion blamed on a gas given off by the drywall in question called hydrogen sulfide.

STONE: Even the hinges, the pins, are rusting out. I mean the rust just comes right off in your hand.

CALLEBS: Habitat for Humanity has built more than 210 moments in New Orleans since Katrina and has almost exclusively used drywall from this 2007 shipment that came from China.

ALEIS TUSA, NEW ORLEANS HABITAT FOR HUMANITY: I mean we've probably received more drywall in Louisiana since Katrina, you know, almost more than any other state.

CALLEBS (on camera): Habitat hired a local lab and tested this mountain of Chinese drywall for hydrogen sulfide and other potential harmful chemicals when they first learned of possible problems. They got the results back and they came back clean. So Habitat says it sees no reason to stop using this drywall to build area homes.

(voice-over): Stone, who has been outspoken about his problem, says people are calling him to ask for advice and vent about tainted Chinese drywall. STONE: This is one of our local business owners who has it in his home. And he's upset.

CALLEBS: Louisiana officials are planning to investigate to see if there are any possible health effects. Stone is urging New Orleans Habitat to stop using this drywall, for now, arguing there are just too many unknowns.

(END VIDEOTAPE)

CALLEBS: Now, Stone says humidity brings out this harmful gas and he expects more complaints as the summer months move in and New Orleans gets more humid.

Wolf, Habitat says they've had no complaints so far and they are going to continue to use that wall -- the Chinese drywall you saw inside that warehouse.

BLITZER: And, saw you say, it's stinky, too?

It leaves an odor?

CALLEBS: It can leave an odor, a rotten egg smell. But, again, Stone says that with all the primer and paint that's gone on that drywall, he thinks it may be masking the problem right now. But he expects we're going to hear a lot more about this in this area.

BLITZER: Sean, thanks very much.

Let's go to Jack Cafferty right now for The Cafferty File -- Jack.

CAFFERTY: The question is: Is it good idea to penalize parents if their children misbehave at school?

Why, yes, it is.

Brian in Chester Springs writes: "I'm a big fan of symmetry. So we ought to take this one step further. Award moneys collected from the miscreants to the families of children who do behave. That would provide an extra dose of humiliation to those thinking that a little $75 fine is a small price to pay for letting little Johnny express himself freely."

John in San Diego writes: "If my parents had been fined for poor behavior in school, there would have been hell to pay -- for me. It could work."

Mike said: "It's a stupid idea. It's up to the teachers to maintain discipline. The parents should be notified of any actions taken, but to penalize parents is about as dumb as it gets. The school should be given authority, within reason, to punish the kids. That's one of the problems -- the schools don't have enough latitude."

Terry writes: "Thank you so much. At long last, someone seems to be getting it. As a classroom teacher, I commend this effort to control behavior in our schools. Parents have been unwilling, school districts refuse to address the issue. Instead, the hallways have become war zones controlled by thugs and misguided students who think they come to school to get a handout."

Erica in New York writes: "As a nanny and former teacher's aide, I know that as good as it sounds, it won't work. No matter what fines or penalties are imposed, you cannot make the parents care. Too many of today's parents are stressed out and would rather give the kid what he wants rather than do the right thing."

And Dave in Florida writes: "Thank God. This needs to happen all across society -- not just in school. Finally, parents being forced to take responsibility for the kids they give birth to. Like you said, Jack, it's a novel idea."

If you didn't see your e-mail here, you can go to my blog and look for yours there, among hundreds of others.

We've got lots of lots of mail on this question. A lot of interest in this idea -- Wolf.

BLITZER: I know there always is. And it's an important subject, Jack.

Thanks very much.

See you tomorrow.

CAFFERTY: OK.

BLITZER: A star is born and she's unlike any other -- you're going to find out why this middle-aged charity worker has become an overnight sensation on YouTube.

(COMMERCIAL BREAK)

BLITZER: She's certainly an unlikely Internet sensation. A 47- year-old church volunteer who says she's never been kissed appeared on a British talent show on Saturday. And since then, people all over the world are forwarding the video.

Let's bring in our Internet reporter, Abbi Tatton, because it's amazing video and she's an amazing lady.

ABBI TATTON, CNN INTERNET REPORTER: And it's going all around the world. It's this woman right here, Susan Boyle. She's got eight million views on YouTube in just about four days. She's got -- her name is the most Googled online today -- or one of them. She even has Demi Moore Twittering about her.

All because of this appearance on Saturday on the U.K. show, "Britain's Got Talent" -- an appearance that didn't start off that well.

Watch the audience take one look at her and they laugh.

(BEGIN VIDEO CLIP, COURTESY FREMANTLE MEDIA)

UNIDENTIFIED MALE: How old are you, Susan?

SUSAN BOYLE: I am 47.

(LAUGHTER)

BOYLE: And that's just one side of me.

UNIDENTIFIED MALE: OK.

What's the dream?

BOYLE: I'm trying to be a professional singer.

(END VIDEO CLIP)

TATTON: Some uncomfortable moments. But then Susan started singing...

(BEGIN VIDEO CLIP, COURTESY FREMANTLE MEDIA)

BOYLE (singing): I dreamed a dream of time gone by, when hope was high and life worth living.

UNIDENTIFIED MALE: (INAUDIBLE).

BOYLE (singing): I dreamed that love would never die. I dreamed that God would be forgiving. So different now, from what it seemed. Now life has killed the dream I dreamed.

(END VIDEO CLIP)

TATTON: As you can see, the audience on their feet. The judges were on their feet. One of the judges said it was the biggest yes he has ever -- ever given to an contestant of the show.

And as for Simon Cowell, let's take a look at his expression. I don't believe I've ever seen something like that before from that judge.

BLITZER: It's amazing. You know, you get chills just listening to that beautiful voice that she has.

How is she dealing with this fame?

TATTON: Well, she says with the Internet fame, she says that she's gob-smacked, which, roughly translated, means she's very, very surprised. But lots of people thinking that she's really going to go all the way. She's through to the next round, at least. And the book makers in England are saying that she's the odds-on favorite.

BLITZER: I hope she wins. She's amazing.

All right. Thanks very much.

A beautiful, beautiful voice.

That's it for us, thanks very much.

Thanks very much for watching.

I'm Wolf Blitzer in THE SITUATION ROOM.

Up next, "LOU DOBBS TONIGHT".