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Supreme Court Slams Brakes on Chrysler; Health Care Battles Lines

Aired June 8, 2009 - 18:00   ET


WOLF BLITZER, CNN ANCHOR: Crews recover human bodies after that Air France crash, and they're running out of time to find the so- called black boxes.

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

ANNOUNCER: This is CNN breaking news.

BLITZER: And let's get right to the breaking news. Chrysler wants to speed a deal to stop the company from crashing, but the Supreme Court slams the brakes, big-time.

We're following a major breaking news story for you right now, the U.S. court delaying Chrysler's sale of its -- most of its assets to the Italian carmaker Fiat. This is a development with a potentially huge impact, the ramifications for Chrysler, as well as General Motors.

Let's go straight to CNN's Brian Todd. He's been looking into the story for us -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Huge ramifications, Wolf, because there are deadlines looming at every corner of this deal.

The Supreme Court has, as Wolf said, just delayed Chrysler's proposed sale to Fiat, because it says it needs more time to look at a challenge filed by three entities that hold a portion of Chrysler's nearly $7 billion in secured debt.

Those three funds representing Indiana state teachers and police officers filed an emergency appeal over the weekend. They are looking for more compensation for their share of Chrysler's debt. Now, after having its sale to Fiat approved by the courts, Chrysler was expected to emerge soon from bankruptcy.

It had pinned its hopes on the restructuring plan pushed by the Obama White House, which included shutting down hundreds of new car -- new Chrysler dealerships.

This afternoon, I spoke with top executives of two of those dealerships who we profiled a couple -- a couple of weeks ago, Pohanka Chrysler Dodge and Dulles Motor Cars, both in Leesburg, Virginia. Now, those execs both say, so far, they don't see any effect this has on their deadline to shut down new car sales of their Chryslers and Jeeps. Now, that deadline, tomorrow -- they have gotten no notice from Chrysler on that. Pohanka has until tomorrow to sell the 10 new Chryslers and Dodges it has left on its lot. After that, they say Chrysler has found other dealerships that would buy those cars from them, but far below invoice.

Dulles Motor Cars sold the last of its Jeeps Friday to another dealer, but they say they have about $150,000 worth of parts, and they say they are not sure how this affects that, Wolf. These dealers are just now waiting on bated breath to see what happens beyond tomorrow and what happens -- you know, the gentleman at Dulles Motor Cars said he is still holding out a possibility that maybe they will let him sell new Jeeps even after tomorrow. So...

BLITZER: And Fiat is anxious to get this deal done, I assume, as well?

TODD: That's right. It is -- June 15 is the deadline for Fiat. If this does not go through, Fiat can walk away from this deal. So, they are waiting for this decision as well to kind of come through in a final form.

We are told that the final decision by the court could really come any time, even as early as possibly later tonight.

BLITZER: All right, let's -- thank you very much, Brian.

Let's discuss what -- what this means from the financial side, as well as the legal side.

Joining us right now, our senior business correspondent, Ali Velshi, and our senior legal analyst, Jeff Toobin.

Ali, first to you. The ramifications are significant, because, if this deal collapses, Fiat doesn't buy Chrysler, what happens?

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Yes, Fiat can walk away, as Brian said, as of June 15.

And, you know, Bob Nardelli, who's the chairman of Chrysler, testified after this deal was announced that there was no one, there were no other bidders. In his words, no one would put up a nickel to buy Chrysler. That's the bad shape the company is in.

So, it is entirely likely that if somehow this deal is scuttled or Fiat walks away from it, that there won't be a deal. And who knows what that means. Chrysler won't have the financing to continue on, on a day-to-day basis. That could actually have far greater impact than we have seen either from Chrysler or GM so far, not downsizing. That could mean far more dire things -- Wolf.

BLITZER: When you say far more dire things, Ali, does it mean the end of Chrysler, that it's just over?

VELSHI: Well, someone's got to pay for these factories to be open every day. Right now, the government is underwriting this because it's a supervised bankruptcy. If this falls through, the government is going to have to sit there and say do we put more money into trying to keep this company afloat that no one would paid a nickel for?

BLITZER: All right, let's talk about the legal side of this story as well. Jeff Toobin is with us.

Jeff, this was a surprise to a lot of folks. One justice, the Supreme Court Justice Ginsburg, decided that she wanted all the justices to review it, and the process could go on for a few days or it could go on for a few weeks.

JEFFREY TOOBIN, CNN SENIOR ANALYST: It is a very mysterious order. Judge Ruth Ginsburg, she is the supervisor of the federal appeals court in New York City from which this case came, and she issued an order just minutes before the 4:00 deadline. And it's a simple one-sentence order. And all it says is, "The case is stayed until further order of the court."

Well, when might that order come? Doesn't say. Could happen later tonight, when all the justices have reviewed it and decided to let it go through. It could go on for a few more days or even weeks. This is not a situation where it's safe to predict what the outcome will be, but the one thing we know for sure is that this deal cannot go through while the law case is stayed.

BLITZER: And what does that mean for GM, potentially?


VELSHI: ... case came up -- oh, sorry, Jeff, go ahead.

TOOBIN: Well, no.

I mean, just the legal issues are very similar. If the court is concerned about the way the TARP money was given to the various creditors in the Chrysler bankruptcy, it is quite likely that some of the dissatisfied creditors in the GM case would go forward. And, if the court is receptive to Chrysler, they may be receptive to a challenge to GM as well.

BLITZER: You wanted to add something, Ali?

VELSHI: No, that -- I couldn't have said it better than Jeff just said that. That's exactly the case.

BLITZER: All right, so, we -- we all agree the stakes right now enormous.


BLITZER: We will see how long it takes the Supreme Court to resolve this matter.

The Chrysler case, by the way, isn't the only one getting lots of attention today from the Supreme Court. The court rejected a veteran's challenge to the don't ask/don't tell policy preventing gays from serving openly in the United States military.

The former Army captain was dismissed under the law which, as I said, bans gays from serving openly. He wanted the law declared unconstitutional. The court refused to hear the appeal, an important development today at the Supreme Court.

Meanwhile, justices also ruled Iraq's current government can't, can't be held responsible for actions under Saddam Hussein. The court unanimously turned away lawsuits from Americans held in Iraq during the first Gulf War.

And when campaign contributions are involved, the court says judges must step aside. The ruling stems from a West Virginia case in which a judge remained involved in a suit filed against one of his campaign supporters. The court ruled the judge deprived the other side of the -- the right to a fair trial, and they said that is not good.

Broken, but unbowed -- today, Supreme Court nominee Sonia Sotomayor broke her ankle on her way to Washington. She tripped at New York's La Guardia airport. She was traveling for another round of meetings with senators on Capitol Hill. The White House says an X-ray showed Sotomayor suffered a small fracture in her right ankle and that she had been treated and released. Sotomayor continued her meetings afterwards.

We hope she does well with the recovery.

President Obama's promising to put more Americans back to work, but is all that stimulus money sitting around unspent? We are adding up the dollars and the jobs.

And was it flying too fast or was it flying too slow? Why that Air France jet which went down in the Atlantic may have been doomed by a very small speed sensor.

Plus, the battle lines are drawn on government-run health insurance. As Democrats rally their forces, Republicans begin to fire a warning shot.


BLITZER: Six hundred thousand jobs in the next 100 days, President Obama says, that's his goal, to create or save 600,000 jobs for the next phase of his so-called road map to recovery.

The president today unveiled a plan to speed up spending of the $787 billion stimulus plan.

Let's go to our White House correspondent, Suzanne Malveaux. She's following all of these developments for us.

Suzanne, what's the latest?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, clearly, the timing is no surprise here, the administration under an increasing pressure from critics, really, who want to prove if this investment money is really worth it, it's creating the kind of jobs, a lot of people saying these shovel-ready projects far from actually being ready, and by the time the money gets to these projects, that the economy will ultimately improve on its own.

So, the administration is trying to fast-track a lot of these projects to get that money flowing.


MALVEAUX (voice-over): President Obama is promising to put more Americans back to work this summer.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The goal here is that we're going to create or save 600,000 jobs over the next 100 days.

MALVEAUX: Whether Obama can deliver on this promise is another story.

TAMI LUHBY, SENIOR WRITER, CNNMONEY.COM: The information that we're getting now, the 150,000 jobs they said were created in the first 100 days, and the 600,000 jobs they're estimating will be created in the next 100 days, those are based on formulas. So, that's fuzzy math at this point. They don't really know yet how many jobs have actually been created.

MALVEAUX: Vice presidential economic adviser Jared Bernstein disputed that.

JARED BERNSTEIN, CHIEF ECONOMIST TO VICE PRESIDENT JOE BIDEN: This is an absolute tried-and-true economic methodology.

MALVEAUX: But the administration has already had to do some backpedaling.

Back, in January, when the president was selling his $787 billion economic stimulus package, he promised to save or create between 3.5 million to four million jobs over the next two years. That was based on an assumption that unemployment wouldn't go above 8 percent.

But, with unemployment at a 25-year high of 9.4 percent, Bernstein acknowledged they had incomplete information, and got it wrong.

BERNSTEIN: Our forecast seemed reasonable. Now, looking back, it was clearly too optimistic. What I...

MALVEAUX: But the White House is continuing to shop the silver lining, this on the latest unemployment numbers:

OBAMA: This was the fewest number of jobs that we have lost in about eight months. So it was about half of the number lost of just a few months ago. And it's a sign that we're moving in the right direction.


MALVEAUX: President Obama also defended the administration against what some say was a slow start in getting that money to create jobs, those projects, saying that he would rather put these safeguards in place than have taxpayer money wasted on potential boondoggles -- Wolf.

BLITZER: Suzanne, thanks very much.

Republicans want to know, where is the proof this stimulus plan is working? Some key GOP members are arguing that the giant spending plan is simply a total waste of taxpayer dollars.

Let's go to our congressional correspondent, Brianna Keilar. She has that side of the story.

What's going on, Brianna?

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: Wolf, Republicans say speeding up the rollout of stimulus dollars is just wasting money more quickly.


KEILAR (voice-over): As the president announced plans to jump- start job creation by spending stimulus dollars more quickly, Republicans said the White House is trying to distract from dismal job numbers.

REP. ERIC CANTOR (R-VA), HOUSE MINORITY WHIP: When we spend money in Washington, we have got to have results. There just has not been any sustainable job creation started in this country. And I think this is what the administration is trying to do, is to put some type of cover on what it is that's actually gone on.

KEILAR: And that, says Congressman Eric Cantor, the number-two Republican in the House, is a waste of $787 billion of your taxpayer dollars.


KEILAR: In February, it was Democrats who pushed the stimulus through Congress, with almost no Republican support. Republicans opposed to unprecedented government spending are calculating that, if the stimulus falters or fails, voters will blame Democrats.


SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: I'm very skeptical that the spending binge that we're on is going to produce much good, and, even if it does, anytime soon. And I think the economy is just as likely to begin to recover on its own, wholly aside from this, before much of this has an impact.

So, I'm very skeptical. (END AUDIO CLIP)


KEILAR: Republicans are minimizing the types of jobs the Obama administration says it plans to create this summer, jobs for teachers, create or preserve, teachers, police officers, summer jobs for young people.

We heard Congressman Cantor say, that's well and good, but it's small businesses that are being ignored, and that's where jobs really need to be grown, Wolf, to recover the economy.

BLITZER: About a half-an-hour ago, Brianna, you were telling us about a little scare over at the U.S. Capitol Visitors Center, an evacuation of that area. what happened?

KEILAR: Yes. We have now been given an all-clear for the area, Wolf. However, it's still closed for investigation.

There was actually a hazmat team here. And authorities, they disrupted the suspicious package. Essentially, they blew it up. They sent in hazmat officers in full gear to check it out. Right now, they are trying to investigate and figure out exactly what that package was, Wolf.

BLITZER: But there is an all-clear right now, and everything is back to normal?

KEILAR: Almost back to normal, Wolf.

BLITZER: Thanks very much.

Brianna is up on Capitol Hill.

A grim discovery -- search crews pulled pieces of that doomed Air France flight and bodies from the Atlantic Ocean -- ahead, the two items searchers are still hoping to find and what they might reveal.

An airstrike in Afghanistan, it was supposed to hit the Taliban, but civilians, lots of them, died. Did the U.S. make a major mistake? An investigation is now complete.

And two American journalists sentenced to 12 years hard labor in North Korea -- what's it like inside those prison walls?


BLITZER: It was a very bloody battle against the Taliban in Afghanistan. U.S. airstrikes were called in, and that may have had a devastating result for local villagers.

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

Barbara, you remember Hamid Karzai, the president of Afghanistan, was here at the time, and he bitterly complained that U.S. warplanes killed dozens and dozens of innocent men, women and children. Now the Pentagon has investigated. What have they concluded?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Wolf, the investigation is done into this airstrike in southern Afghanistan last month. The results are not terribly good news, a tragedy, indeed.

The U.S. military has concluded about two dozen civilians or so died. They have found that U.S. warplanes violated two procedures in these airstrikes. And you see some of the aftermath video once again. First, B-1 bombers, when they engaged in dropping bombs on three separate occasions in this location, they failed to keep eyes on the target.

They moved off for several minutes, so they could circle around, make their bombing run. And there was a four- to five-minute period in which they did not have eyes on the target.

Second, a compound was struck when the troops were not taking direct fire from that compound. That is also a violation of procedures. U.S. investigators say they cannot conclude definitively that the civilians died as a result of these procedural violations, but the procedural violations occurred, indeed -- Wolf.

BLITZER: What a story. All right, thanks very much, Barbara Starr, at the Pentagon.

There are also some major developments related to North Korea this hour. U.S. spy satellites are seeing new indications North Korea may be preparing to launch a long-range missile and several medium- range missiles. Satellite imagery shows new activity on the ground in a site along North Korea's Yellow Sea coast, but, so far, there doesn't seem to be a completed missile on the launch pad. We're watching this story.

And a stunning sentence for two American journalists who were seized near North Korea's border with China. Three months after the two women were arrested, a North Korean court has now ordered them to do a dozen years of hard labor in North Korean prisons.

CNN's Deborah Feyerick is taking a closer look at the chilling, really chilling, implications of that.

What are you discovering, Deb?

DEBORAH FEYERICK, CNN CORRESPONDENT: Well, Deb -- well, Wolf, you know, there are just so many unanswered questions.

Did the two journalists actually cross into North Korea, as officials there allege? What are the grave crimes they have been convicted of, and did they even have any kind of legal representation? All of this as these two women face what many describe as a potentially horrendous incarceration.


FEYERICK (voice-over): The prison camps of North Korea, like Yodok prison, seen here in video provided by a human rights group, are notorious. People go in, many never come out, or, if they do, they are often broken by years of starvation and torture, like this man, one of the few to ever escape and speak in public.

SHIN DONG-HYUK, FORMER PRISONER (through translator): I still have scars from the fire and cuffs, even after 10 years.

FEYERICK: It is a fear facing two U.S. journalists, Laura Ling and Euna Lee, sentenced in a secret trial to 12 years hard labor.

According to Amnesty International, the two women have been held in solitary confinement in a state guest house near the nation's capital of Pyongyang. It's unclear where or even if the journalists will ultimately serve time in one of North Korea's notorious prison camps, should diplomatic efforts succeed.

Even so, human rights watchers say some 200,000 people, including entire families, are being held under dire conditions.

CHUCK DOWNS, U.S. COMMITTEE ON HUMAN RIGHTS FOR NORTH KOREA: If they are in fact sent to concentration camps, life there is admittedly extremely miserable. People there, if they are lucky, eat rats.

FEYERICK: North Korea denies the existence of the camps, but satellite images taken in 2001 by Space Imaging Asia show otherwise. Human rights groups say the majority are political prisoners, though others have been convicted of some type of crime.

U.S. officials do not know details of the charges against the two or where they are now being held.

HILLARY RODHAM CLINTON, U.S. SECRETARY OF STATE: This trial was conducted totally in secret, with no observers. And we're engaged in all possible ways, through every possible channel to secure their release.


FEYERICK: And hard labor could include working in logging, farming or even mining -- Wolf.

BLITZER: What a heartbreaking story this is.

All right, thanks very much, Deb, for that.

The New Mexico governor, Bill Richardson, has spent much of his career as a diplomatic troubleshooter. He helped free Americans in trouble in North Korea before. So, what's his take on the jailed journalists?


GOV. BILL RICHARDSON (D), NEW MEXICO: I think eventually they will be released. I'm an optimist here.

But North Korea's unpredictable. They play a high-stakes poker game. They know the international community is watching them. They want attention.


BLITZER: Speaking on CNN's "AMERICAN MORNING" this morning.

Analysts say North Korea, faced with chronic massive food shortages, may want more humanitarian aid. Since 1995, the U.S. has provided the North with more than $1 billion worth of assistance, but that aid fell significantly this decade. After progress in nuclear talks back in 2007, the U.S. provided the North with fuel oil and provided food through the United Nations. But those food shipments were suspended last December.

The search continuing for those two small boxes in an area the size of Nebraska and almost certainly under water -- they alone may be able to answer the question what brought down Air France Flight 447.

Also, some experts are focusing in on one particular piece of equipment that Airbus was recommending for an upgrade -- what role speed sensors might have played in the crash.

And it's the weather phenomenon that caused havoc around the world, taking lives and causing immense damage. Now there are signs El Nino may be coming back.



Happening now: Experts say finding a needle in a haystack would be easier, but the odds aren't holding back the hunt for the voice and data recorders from Air France Flight 447. We have new details of the search and what it's yielding.

Also, the U.S. Supreme Court delays the sale of Chrysler to the Italian automaker Fiat. Three pension funds here in the United States that hold Chrysler debt are challenging the deal.

Secretary of State Hillary Clinton takes a hard line as North Korea sentences two American journalists to 12 years hard labor -- all of this coming up, plus the best political team on television.

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

But, first, let's get to the breaking news.

The number of bodies recovered after the Air France crash has reportedly gone up. According to the Brazilian military, the remains of 24 bodies have now been found in the Atlantic Ocean -- as crews comb a wide area, two items they're also desperate to find, the so- called black boxes.

Meanwhile, speed may have been a critical factor. There's a recommendation regarding the plane's speed sensors that's now being called into question.

Let's go to CNN's Brian Todd. He has been investigating this story for us.

What are you finding out, Brian?

TODD: Well, Wolf, we're learning that there were questions at least as far back as last year about the reliability of air speed sensors on these planes.

This is an issue that keeps cropping up in this investigation.


TODD (voice-over): Investigators say automated messages from Air France Flight 447 suggest the plane may have been flying too fast or too slow through severe thunderstorms before it went down.

Experts say the potential malfunction of a small device which looks like a ballpoint pen sticking out of the fuselage could have triggered a potentially deadly air speed. They are called pitot tubes, speed sensors, which experts say may have a flaw.

JOHN COX, SAFETY OPERATING SYSTEMS: This particular sensor has shown on rare occasion this icing issue to come up at cruise before.

TODD: The plane's manufacturer, Airbus, tells CNN that, last year, it sent out a service bulletin recommending that pitot tubes be updated on the Airbus A-330, the type that crashed last week.

Airbus says it sent out the bulletin because it found that newer models were more reliable, but did not make the change mandatory.

A former inspector general for the Department of Transportation who now represents crash victims says this.

MARY SCHIAVO, FORMER DOT INSPECTOR GENERAL: But what we frequently find is what brings down a plane is often the subject not of an airworthiness directive -- because those are mandatory -- but of a service bulletin or an air warning.

TODD: Investigators say Air France had not replaced the pitot tubes on the plane that crashed, though the airline has accelerated a program to modernize the probes. Among U.S. carriers, only U.S. Airways and Delta fly the Airbus 330. Between them, they have about 40 of those planes. Both carriers say they've begun updating pitot tubes on their A330s, but they won't elaborate on how many have been replaced so far.


TODD: It's not easy to find out which airlines have replaced the tubes because Airbus did not issue a directive -- an airworthiness directive, which is much more serious. Only they issued a recommendation to update them. That's a recommendation that is not binding on the airlines -- Wolf.

BLITZER: There was a more serious directive that was issued involving this specific piece of equipment several years ago. TODD: That's right. This is an airworthiness directive from the Australian aviation authorities for pitot tubes. This was issued in late 2002 for these air speed sensors. It mentions them icing up. It mentions a loss of and fluctuation of air speed.

But it's important to point out it was a different manufacturer -- a different maker of these tubes at that time than there is now and that this was well before the Airbus in question in this particular crash was even built. So you would assume that the Airbus in this crash had newer air speed sensors.

But it at least speaks to serious questions about pitot tubes as far back as 2002.

BLITZER: A good story.

All right, Brian.

Thanks very much.

And the search continues, meanwhile, for those two so-called black boxes. It's critical to find those black boxes to be able to understand and learn the lessons from this horrible crash.

Abbi Tatton is here to show us exactly what they're looking for.

One expert said, you know, finding a needle in a haystack would be easy compared to what they're going through right now.

ABBI TATTON, CNN INTERNET REPORTER: It's an absolutely vast search area that they're looking at right now. It's roughly the size of the State of Nebraska. We're going 400 miles to the northeast, away from the Fernando de Noronha, the island chain that they've been focusing around.

It's a 24/7 operation there that they're looking at -- 77,000 square miles. And it's so big because they're dealing with winds, with currents, with tides that can drag bodies and debris.

Right now, the search has been focused on that surface area -- this very large area. But next, when they get more technical capabilities there, they'll be going underwater. And we're talking about 10,000, 12,000 feet down, at a minimum. In some areas, it's double that -- Wolf.

BLITZER: The debris that they found on the Atlantic Ocean so far -- we saw some of the pictures of the tail fin and all of that -- how close is that debris to the flight path that the plane was on?

TATTON: Well, the flight path was going northeast, heading toward France. We know that about four minutes before the plane disappeared, a series of error messages were sent out. And we can pinpoint where that happened.

The Associated Press is reporting that over the weekend, the bodies were found about 45 miles away from there. But we don't know the exact location of the crash site.

BLITZER: Winds and the tide and everything else could be moving things around, obviously.

TATTON: That's what they're going to be looking at right now.

BLITZER: Yes. All right.

Thanks very much for that.

Oceanographers are getting involved, as well.

The battle over health care reform is growing more intense right now. Democrats are trying to rally thousands of activists, as Republicans fire a warning shot.

Plus, a closely watched Apple conference and major announcements about the iPhone.

What's new?

What's cheaper?

New details are coming into THE SITUATION ROOM right now.


BLITZER: Deborah Feyerick is monitoring some other important stories incoming into THE SITUATION ROOM right now -- Deb, what's going on?

FEYERICK: Well, Wolf, the mayor of New Orleans is under a quarantine in China. The mayor's spokeswoman says Chinese authorities quarantined Ray Nagin, his wife and a security guard yesterday after someone on his flight showed symptoms of swine flu. They're being kept in a Shanghai hotel. The mayor's office says Nagin has no flu symptoms. He's in China as part of an economic development trip.

And a big price drop on a popular phone and new options to choose from -- Apple says it's knocking down the price of its cheapest iPhone from $199 to just $99. Apple also announced today that new iPhone models will include new functions like a video camera. The new phones go on sale next week.

And an old elevated rail line is being converted to a landscaped public park in New York. It's called The High Line and the first section opens to the public tomorrow. It takes advantage of views of the Hudson River and landmarks like the Statue of Liberty, just in time for summer -- Wolf.

BLITZER: It looks like a nice place.

Deb, thanks very much.

Battle lines appear to be hardening right now over an issue of major importance to all of us -- health care. On one side, Democrats with their ideas for health reform; on the other, Republicans suggesting gloom and doom if Democrats get their way.

Let's go straight to our senior Congressional correspondent, Dana Bash.

She's watching both sides for us.

And what's the latest -- Dana?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, you know, for months, Wolf, there really has been a genuine bipartisan effort among key players here working on this incredibly complex task of trying to reform the health care system. But now, the atmosphere is changing very fast, because we are now seeing some details of Democrats' plans.


UNIDENTIFIED MALE: We want to thank you so much for coming.

BASH (voice-over): In this Virginia living room...

UNIDENTIFIED MALE: And this is a time in history when there may be a chance to change things.

BASH: ...President Obama's foot soldiers recruiting grassroots help for his looming battle -- health care reform.


OBAMA: To get this done, I need your voice to be part of the debate.


BASH: But even as Democratic organizers start to rally thousands of activists across the country, Republicans are firing a warning shot -- calling the president's push to expand health coverage with a new government insurance option a deal breaker.

SEN. ORRIN HATCH (R), UTAH: There are a lot of people in my party, on the Republican side, who want to work with Democrats, who want to get this done, but who are totally against a public plan.

BASH: Orrin Hatch is one of nine Republicans on the powerful Senate Finance Committee who wrote the president arguing a government- run program competing with private insurers would: "inevitably doom true competition."

GOP senators insist that would jeopardize quality.

HATCH: There is no way that we can pay for a public plan option, because that will put the government between you and your doctor. It will rise -- raise costs dramatically.

BASH: But many Democrats, from the president on down, argue Americans will benefit from a public plan that gives private insurers competition.

SEN. TOM HARKIN (D), IOWA: This is both about coverage and costs, because we believe now with a public option plan, that will act as a cost check on the insurance companies. And I think that's a good thing.

BASH: So far, Ted Kennedy is the only key Democrat to draft health care legislation. It would require all Americans to have health insurance and create a government run-insurance program that would offer essential benefits, including doctor and hospital care and prescription drugs.


BASH: Now, most Democrats say they like Kennedy's plan. But most also say that they do not think it has any chance at getting bipartisan support. So as we speak, really, Wolf, there are moderate Democrats considering various ideas to scale back this idea -- this concept of a government-run program. And the idea would be to give some kind of assurance that a public plan would compete fairly with private insurers -- Wolf.

BLITZER: The debate is going to heat up, we know that, this summer.


A look at some of the numbers shows how badly health reform in the United States is needed. The most recent numbers show at least 46 million Americans are without health insurance.

How much money was spent on their health care?

$116 billion. While most of that came from the uninsured patients themselves -- government programs and charities -- about $43 billion came from you. That's because that amount made its way into premiums charged by private insurance companies to businesses and individuals.

President Obama wants health care reform, but it's not clear how he's going to pay for it.

We want to know what you think -- are you willing to pay higher taxes for universal health care?

Submit your video comments to Watch the program tomorrow to see if your video makes it on the air.

Let's check in with Lou Dobbs to see what's coming up right at the top of the hour -- Lou?

LOU DOBBS, CNN ANCHOR: Wolf, thank you.

Tonight, we'll have complete coverage of the president's relaunch of his economic stimulus plan. The Obama administration has already spent tens of billions of dollars to create, they say, 150,000 jobs. Well, how do they know how many jobs were created and how will they create another 600,000 jobs, which they say they want to?

And how much will those jobs cost?

We'll have the answers.

Also, rising concern that the Obama administration is planning even higher taxes to pay for any massive overhaul of our health care system. That's the subject of our face-off debate tonight.

And the Supreme Court delaying the sale of Chrysler to Fiat of Italy. The Supreme Court refusing, as well, to rule on the Pentagon's don't ask/don't tell policy on gays in the military. Tonight, we'll both ask and tell.

We'll examine, as well, the rising threat to this country from North Korea and Communist China and what, if anything, the United States plans to do about it.

Join us for all of that and a lot more coming up right at the top of the hour -- Wolf, back to you.

BLITZER: All right. Lou, thank you.

The U.S. Supreme Court puts the brakes on Chrysler's sale to Fiat.

How will that impact President Obama's hopes for a quick restructuring?

Also, Secretary of State Hillary Clinton takes a hard line, as North Korea sentences two Americans to 12 years hard labor.

The best political team on television discusses all of that and more.

Plus, Pat Robertson inspires a song about duck love. CNN's Jeanne Moos takes a "Moost Unusual" look.


BLITZER: It was supposed to be a done deal -- Chrysler going to Fiat. But the U.S. Supreme Court intervenes and says not so fast.

What's going on?

Let's talk about this and more with our senior political analyst, Gloria Borger; our senior political correspondent, Candy Crowley; and our senior political analyst, David Gergen -- now, Gloria, the White House issued a very terse little statement, trying to play down what's going on: "We understand this to be an administrative extension designed to allow sufficient time for the court to make a determination on the merits of the request for a stay."

But, potentially, this has enormous ramifications for Chrysler, the future of Chrysler and even G.M.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: It injects a tremendous amount of uncertainty into the situation and, in many ways, puts everything back on the table. You have Congress investigating whether it was appropriate to use this TARP bailout money to help the car companies. And now this. And you have Chrysler losing, by some estimates, $100 million a day. So the question of whether Chrysler is at all viable now is back on the front burner.

BLITZER: And Fiat, as you know, Candy, was under enormous pressure to go ahead and do this deal. But if it's not done in the next few days, Fiat can walk away from it. And there are some who would be pretty happy about that.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, June 15th is the walk away date. And I would suggest that the Supreme Court members have shown in the past that they are not unaware of things that happen out in the real world, outside their chambers.

So if they -- if within a couple of days, Judge Ginsberg, you know, says on her own OK and kicks it back out and agrees with the appeals court or says we're not going to hear this, it gets back on track.

I'm not sure right this second is the time to worry about the long-term ramifications. I think there's a couple days in there the Supreme Court could act.

BLITZER: How much of a setback, potentially, could this be for the White House, David?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST, FORMER PRESIDENTIAL ADVISER: Well, if the deal comes unraveled, it would be a huge setback and it would raise all sorts of questions about General Motors' bankruptcy proceedings, as well.

I think there are two issues here, Wolf, that need to be kept separate. One is the court itself. And that, as Candy says, is likely to be a short-term problem. What we've got is some secured creditors in Indiana who feel, as do other secured creditors, that they haven't been treated fairly and they've appealed.

But -- but both the lower court, the federal district court bankruptcy judge and the Court of Appeals have approved this sale. And it's likely that after a delay of a couple days, as Candy says, the court will get it back on track. We'll have to wait and see. It would be a big surprise if they called it off.

But the other issue is whether Fiat, separately, because of economic reasons, may get cold feet. That, I think -- it's hard to fathom. But I guess it's always possible up until June 15th.

BLITZER: And we'll see what happens.

All right, guys, let me move on to talk about North Korea right now -- Gloria, the -- the North Korean decision to sentence these two American journalists to 12 years hard labor caused the secretary of State, Hillary Clinton to say this today.


HILLARY RODHAM CLINTON, U.S. SECRETARY OF STATE: Obviously, we are deeply concerned about the length of the sentences and the fact that this trial was conducted totally in secret with no observers. And we're engaged in all possible ways, through every possible channel, to secure their release.


BLITZER: Now, potentially complicating this is what she said yesterday, Gloria, that the U.S. is once again considering putting North Korea back on the State Department list of countries that sponsor international terrorism. And, yes, the U.S. is considering, together with South Korea, interdicting ships going to and from North Korea to see if they have any military equipment -- both of which North Korea sees as -- as actions that would trigger a response.

BORGER: Well, I think you see an increasing frustration on the part of the administration. And these two young women's so-called trial is, in fact, an opportunity for them to continue to talk about their continued frustration.

And I think you're probably going to see, at some point, although it hasn't been confirmed, some kind of envoy going over there -- it could be Al Gore, whose television company they worked for -- to try and deal with them, to try and get these young women removed.

BLITZER: Because that has worked in the past, Candy. Bill Richardson, back in '94 and '96, he went to North Korea and he got folks out.

CROWLEY: Absolutely. So it has been done before. There's precedence.

And the question is, what does North Korea want?

I mean I think that's -- you know, as you're looking at it, is this just a kind of a saber rattling thing and they can be talked out of it diplomatically?

I mean what is -- what is the end game here, because...

BORGER: Attention.

CROWLEY: ...there are so many people that look at it and think, you know, they want something here. They do want the attention. But there's something else going on here. And they've been talked out of it before.

And this is a man, let's face it, who is looking for some prestige. And a good way to get the world's attention is to arrest and say for 12 years these young women are going to be in jail.

BLITZER: Here's, potentially, not such a hypothetical question, David. In the next few days, if they launch another long-range missile, if they do some sort of nuclear test, does the U.S. have to be gingerly in response because of the sentencing of these two American journalists?

GERGEN: I don't think they're going to be overly gingerly. I think, again, it's a two track process.

The envoy they ought to send is Steve Bosworth, who had a former -- a distinguished former ambassador. They named him as the special envoy to North Korea a long time ago, you know, the Obama administration. But he hasn't been able to get in over there. And so he seems to be the appropriate person.

But, Wolf, it -- there are a lot of indications now that some big shifts are going on in U.S. policy. And we may be heading to a showdown with North Korea. In the last two administrations -- both the Clinton and the Bush administration decided that the way to deal with North Korea was to try to buy them off. You know, if they would -- if they would call off their nuclear ambitions, we would send them money, we would send them food, oil, nuclear power plants.

Neither time has it worked. And now the Clinton administration was saying, over the weekend -- Bob Gates said, I'm tired of buying the same horse twice, a vivid phrase.

But what they're -- what they're pointing toward is we're not going to bargain anymore. We're going to -- we're going to -- we have to recognize these folks are determined to get a nuclear weapons capacity and we've got to stop them.

That suggests to me we may be heading toward a showdown. We have -- the last two administrations tried to do it through negotiations. We're seeing a very hard line starting to come out of the Obama administration.

BLITZER: All right. And we'll watch it very closely, because, as you say, not only the diplomatic stakes, but the lives of these two young women are at stake, as well.

Guys, thanks very much for that.

GERGEN: Thank you.

BLITZER: Pat Robertson's comment on a hate crime bill inspired a Moost Unusual duck love music video.

Jeanne Moos has it.

That's coming up.


BLITZER: When the televangelist, Pat Robertson, brought up duck love in reference to a hate crime bill, he probably wasn't expecting a whacky response, but that's exactly what he's getting.

CNN's Jeanne Moos shows us a "Moost Unusual" music video.


JEANNE MOOS, CNN CORRESPONDENT (voice-over): When televangelist Pat Robertson brings up a duck's love life during a discussion of sexual orientation...


PAT ROBERTSON, HOST: He likes to have sex with ducks.


MOOS: Well, he'd better be prepared to duck.


UNIDENTIFIED FEMALES: Duck, it takes a duck.


MOOS: Prepared for the parody.


UNIDENTIFIED FEMALES: God, I hope he's right, because if gay marriage becomes lawful, then I'll find myself a duck and legally do something awful...




RIKI "GARFUNKEL" LINDHOME, ACTRESS: The first thing my mom said is, Riki, what if they don't know you're not kidding?

People think we -- we really want to have sex with ducks and, you know...

UNIDENTIFIED FEMALE: That would be weird.


MOOS: They call themselves Garfunkel and Oates -- two straight actresses who happen to be pro-gay marriage.


UNIDENTIFIED FEMALES: We'll find a pond, we'll find a puddle. Put your beak in mine and we'll cuddle.


LINDHOME: Last night, we played it at a lesbian baby shower and they loved it.


UNIDENTIFIED FEMALES: It's a feeling I can't (INAUDIBLE), when sex with ducks and gay marriage are one in the same.


MOOS (on camera): Actually, the singing duo didn't quite have all their ducks in a row. Pat Robertson wasn't really talking about legalizing gay marriage when he made the duck remark. He was referring to a hate crimes bill, arguing that protection based on the term "sexual orientation" could cover way too much.


ROBERTSON: If he likes to have sex with ducks, is he protected under a hate crime?


LINDHOME: That's ridiculous. Sexual orientation does not cover sex with ducks. I'm sorry. That's ridiculous.

MOOS: But after viewing the parody, Pat Robertson's spokesman told CNN: "This video is an obvious deceptive attempt to create offense where no offense exists."

Garfunkel and Oates say they're just a parody on an argument against gay marriage they hear all the time.

For instance, from Bill O'Reilly.


BILL O'REILLY, FOX NEWS "THE O'REILLY FACTOR": He could marry 18 people, you can marry a duck. I mean...




O'REILLY: Well, why?

You know, if you're in love with the duck...


MOOS (on camera): And since we're on the subject of ducks and sex, did you hear about the gay penguins? (voice-over): Two apparently male penguins at a German zoo were given an egg abandoned by its parents and sat on it until it hatched and are now caring for the baby.

But penguin or duck, there's nothing like a steamy bird bath...


UNIDENTIFIED FEMALES: Duck, it takes a duck...


MOOS: ruffle feathers.


MOOS: Jeanne Moos, CNN, New York.


BLITZER: Leave it to our Jeanne Moos to find those stories.

That's it for us today.

Thanks very much for watching.

I'm Wolf Blitzer in THE SITUATION ROOM.

Up next, "LOU DOBBS TONIGHT" -- Lou.