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What the Next Flu Season May Bring; Inside the Scene of Horror; Alleged Killer's Warning Signs; Iranian Women Demand Equal Rights

Aired June 11, 2009 - 17:00   ET



Happening now, a CNN exclusive. As authorities charge a white supremacist with murder, we're going to take you inside the U.S. Holocaust Memorial Museum to the very scene where a security guard was gunned down.

It may be Iran's new revolution. Thirty-four million women hold the key to a crucial presidential election tomorrow. Many have gone into the streets and they're demanding equal rights. In just a matter of hours, they'll go to the polls. CNN's Christiane Amanpour is in Tehran.

And as searchers try to find the all-important flight recorders from the Air France crash, their only hope may be a device that can send signals from miles below the ocean's surface.

I'm Wolf Blitzer.


All that coming up.

But first, "the virus is not stoppable" -- those are the words today from the World Health Organization, raising its global flu alert to Phase 6. That's the highest level. Seventy-four countries have now officially reported close to 29,000 cases of the H1N1 infection known as swine flu. There have been 144 deaths.

Let's go to CNN's Mary Snow.

She's taking a closer look at the story for us.

Unstoppable, in the words of the WHO.

What's going on -- Mary?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, this decision today to raise the alert level is based on the fact that the virus is spreading, not that the disease itself is worse. The WHO urged countries that haven't seen swine flu cases to prepare. But for countries like the United States, it won't mean significant changes.


DR. MARGARET CHAN, WHO DIRECTOR-GENERAL: The world is now at the start of the 2009 influenza pandemic.

SNOW (voice-over): And with that, the World Health Organization declared its first pandemic in 41 years. The H1N1 virus, or swine flu, continued spreading in countries like Australia -- now entering their winter season. The move will probably speed up the production of a swine flu vaccine. So far, most cases are mild, say officials, who worry that a move to the highest alert could cause panic.

GREGORY HARTL, WHO SPOKESMAN: We have to try to help people understand that the word pandemic doesn't necessarily mean severe. Pandemic means the geographic spread of the disease.

SNOW: Among the concerns, people crowding hospitals when they are not sick with the disease and closing borders unnecessarily.

But an infectious disease expert criticized the WHO, saying decisions should be based on science, not on how the world will react. He says while the worst may be behind us, it may not be.

MICHAEL OSTERHOLM, UNIVERSITY OF MINNESOTA: The idea that we need the world to be concerned about this is absolutely critical. We don't need to put them to sleep with complacency and saying it's OK.

SNOW: What remains unknown is how the virus will evolve -- become milder or more severe. A haunting reminder is the 1918 flu epidemic, in which the flu virus was mild in the spring, only to return months later in a deadly form. A repeat of that, says influenza expert Dr. Peter Palese, is highly unlikely. But, he says, what is likely is the swine flu will resurface in the U.S. in the fall.

PETER PALESE, MOUNT SINAI SCHOOL OF MEDICINE: I think the recommendation will be that the regular flu shot should be taken in -- in the fall of 2009. And the question will be do we have to also consider a second vaccine against the swine flu.


SNOW: Now, as for a swine flu vaccine, a spokesman for the Department of Health and Human Services says five different manufacturers are developing a vaccine, with testing to be done over the summer. And if the government decides to produce the vaccination, the first doses will be ready early in the fall -- Wolf.

BLITZER: Mary Snow, thanks very much.

So how worried should Americans be about the upcoming flu season?

Joining us now, Dr. Anne Schuchat of the Centers for Disease Control & Prevention.

How worried, doctor, should we be?

DR. ANNE SCHUCHAT, CDC: You know, influenza is always serious. And a pandemic is particularly concerning. As you were saying, the spread of the virus is what this pandemic Phase 6 means, not that the virus has changed and is more severe.

BLITZER: What are you seeing...

SCHUCHAT: If you're in...

BLITZER: What are you seeing in South -- in the Southern Hemisphere right now, where it's approaching winter?

The flu season is already underway in South America, in Australia.

What are you seeing there, because right now, we're not in the flu season up here.

SCHUCHAT: We're still having influenza cases caused by this virus here in the United States. But in Australia and in other countries of the Southern Hemisphere, they're just entering their flu season. And they're seeing increasing cases from this new virus.

BLITZER: How deadly is this virus?

SCHUCHAT: You know, the WHO is calling this a moderately severe pandemic. The illness can range from self-limited disease, where people get better without even taking medicines, to very severe, where people can be critically ill or even die.

BLITZER: How close are we to a vaccine?

SCHUCHAT: The U.S. government has taken the initial steps to develop a vaccine. Clinical development is ongoing and vaccine manufacturing is beginning. We'll be doing clinical studies over the summer and increasing the production to see whether we can make a vaccine that will be safe and effective against this new virus.

BLITZER: Dr. Schucat, how concerned are you that this virus could mutate into something a lot more than it is right now?

SCHUCHAT: We're actively monitoring the virus around the world, as part of a global partnership. And it's very important to keep our eyes on this virus. It's, of course, already spreading. But we want to see whether it changes its resistance pattern or whether it changes in other ways, to become more deadly or to change in ways that would influence our vaccine development.

BLITZER: Because the fear is if it does mutate, if it does change, any vaccine they're working on right now will simply be worthless.

SCHUCHAT: You know, I think it's too soon to say that. There are a lot of steps going on with vaccine development. And we're optimistic about that. But, of course, it's always important to say that vaccine development and production is quite unpredictable. And we may not have vaccine that works as well as we'd like or that's available as soon as we'd like for this particular issue.

BLITZER: And we'll watch very closely what's happening in the Southern Hemisphere right now, because that will give us clues potentially what could happen here come the flu season.

Dr. Schuchat, thanks very much.

Good luck to all the men and women of the CDC.

We're counting on you guys.

SCHUCHAT: Thank you very much.

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


CAFFERTY: President Obama wants to have it both ways.

Hey, we'd all like that, right?

He wants the government to stick to pay as you go rules in order to keep federal budgets under control. Our deficit is expected to top $1.8 trillion this year -- more than four times last year's record deficit. The president wants Congress to pass a law that requires lawmakers to pay for new spending and tax cuts without adding to skyrocketing deficits.

He said the rule, which was in effect in the '90s, when the U.S. had budget surpluses -- yes, remember those -- is simple. Congress can only spend a dollar if it saves a dollar elsewhere. That's a quote.

But the president apparently wants pay as you go to apply to everybody but him. His plan would make $2.5 trillion worth of exceptions for some of the president's priorities over the next 10 years.

It's one of those do as I say, not as I do deals.

Mr. Obama's health care reform plan would also be able to run huge deficits during its early years, which is hardly the stuff of fiscal restraint.

Republicans are warning health care reform will add to budget deficits for years to come. House Minority Leader John Boehner says the Democrats have ignored calls for fiscal responsibility and he's absolutely right.

Quoting here: "We don't need more rhetoric and gimmicks, we need action to tackle the tremendous challenges facing this nation."

Of course, the Republicans ran up record deficits under President Bush, so Boehner's cries ring a little bit hollow. But nevertheless, he's got a point.

Here's the question -- is it OK to add to the record national debt in order to pay for health care reform?

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

BLITZER: Jack, thank you.

It was the scene of a horrifying shooting. It's still closed to the public. But CNN's Barbara Starr gets exclusive access inside the Holocaust Memorial Museum, where a white supremacist allegedly shot and killed a security guard.

Plus, details of the accused killer -- we're learning more about any warning signs that may have foretold this hate-filled rampage. His ex-wife is now speaking out.

Plus, violence rocks a tourist paradise now overrun by soldiers from both the military and drug cartels.


BLITZER: Authorities today charged an 88-year-old white supremacist with murder in the shooting death of a security guard who opened the door for him over at the U.S. Holocaust Memorial Museum. Now, a CNN exclusive -- we're going to take you inside the museum to the scene of that horror.

CNN's Barbara Starr has some exclusive access today.

It's still -- it's still amazing to think what happened.

BARBARA STARR, PENTAGON CORRESPONDENT: Wolf, we've just come back from a tour inside the museum. It is a place of utter grief right now.

But the staff agreed to let CNN in because they wanted the world to know of the heroism of Officer Stephen Tyrone Johns.


STARR (voice-over): The violence began with a gesture of kindness.

SARA BLOOMFIELD, DIRECTOR, U.S. HOLOCAUST MEMORIAL MUSEUM: He saw an elderly individual and his first response was to help this individual to enter the museum. That's what he thought he was doing.

STARR: Officer Stephen Tyrone Johns -- "Big Johns," his friends called him -- opened the door for the man who shot him.

BLOOMFIELD: It all happened very quickly -- I think in a matter -- it was, you know, like a minute-and-a-half, the whole thing, something like that. It was extremely quickly. But it happened outside the museum.

STARR: Sarah Bloomfield is the director of the U.S. Holocaust Museum. Holocaust survivors were in the building when the shots echoed around the somber museum.

BLOOMFIELD: Yesterday, one of our survivors, Nessie (ph), who was a young girl herself -- a young teenager in Lithuania and was in and out of several ghettos and labor camps. And, of course, she heard the shots. And you can imagine what -- what hearing guns for these people is.

STARR: Nessie jumped under a desk in reaction when the violence erupted.



UNIDENTIFIED FEMALE: He was a big guy.

STARR: Even before Officer Johns died protecting the museum's visitors, he touched those who knew him.

UNIDENTIFIED FEMALE: A contagious smile. He could just make anybody's day really happy no matter what was going on. And we will really miss him.


STARR: And you saw that desk, Wolf, where the Holocaust survivors -- about 70 of them, actually -- still work at the museum, where they sit everyday to educate youngsters and people who come through about the Holocaust. We had actually expected to be able to talk to Nessie today. They were going to have her come meet with us. But the survivors say they're all just too upset about what has happened. They're just not ready to come back.

The museum hopes they do come back tomorrow. Everyone wants them back on the scene.

BLITZER: And the museum will be reopened tomorrow?


BLITZER: And they're hoping a lot of people come and see what's going on?

STARR: They are absolutely determined this will not stop them, they will be open and that it will be a safe place for visitors and everyone to come visit and learn about what the Holocaust Memorial is all about.

BLITZER: Nearly two million visitors a year visit the U.S. Holocaust Memorial Museum. And hundreds of thousands of them are young kids -- high school kids who want to learn about the Holocaust.

Thanks very much for that.

STARR: Sure.

BLITZER: Were there any warning signs in the personal history of the alleged killer? CNN's Brian Todd is joining us now from Eastern Maryland, where he's been digging into the past of the white supremacist, James Von Brunn.

Brian is joining us now -- Brian, what are you finding out?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, we're getting accounts from several people who recall their encounters with James Von Brunn, from local merchants here on Maryland's eastern shore who to a woman who was once married to him. They portray a frustrated, embittered man.


TODD (voice-over): She insists her name and face not be identified, but the ex-wife of Holocaust Museum shooting suspect, James Von Brunn, told Tampa affiliate Bay News 9, if she could speak to him now at his hospital bed, she'd tell him...

UNIDENTIFIED FEMALE: I'm sorry that you chose this way of going out. And I'm terribly sorry that you killed the young man.

TODD: She tells CNN, her former husband was a good American, a very good father, but says his anti-Semitic views were the reason for their divorce three decades ago.

In 1968, Von Brunn was convicted of assault and disorderly conduct during a DUI arrest. He served a six year sentence for the 1981 attempted kidnapping of members of the Federal Reserve Board. In Easton, Maryland, where Von Brunn lived for several years, police say he crossed paths with them more than once.

GREGORY WRIGHT, EASTON, MARYLAND POLICE: In 1991, our agency served a criminal summons on Mr. Von Brunn for a second degree assault. That charge was later (INAUDIBLE) in the courts.

TODD: And there were other signs of simmering anger. In the mid-'90s, Douglas Hanks was a reporter for the "Eastern Star Democrat" newspaper. Once during an interview about an anti-Semitic TV programs, he says Von Brunn got upset when he learned he'd be quoted by name.

DOUGLAS HANKS, NEWSPAPER REPORTER: And that's when he reached over and tried to grab the notebook out of my hand. He didn't go very far. He was probably 70 or something. But that was the end of the meeting.

TODD: James Von Brunn was also an artist. And it was at this gallery in Easton that other disturbing warning signs began to surface. Co-owner Laura Era says Von Brunn asked them to market his paintings. She describes them as average in quality, with patriotic themes. When the gallery politely turned Von Brunn down...

LAURA ERA, CO-OWNER, TROIKA GALLERY: He got very angry, went storming out of the gallery and said: "I am never coming in here again." TODD: But he did come back. About a year-and-a-half ago, Era says, Von Brunn popped into the gallery after glimpsing an outdoor interracial wedding.

ERA: He started spewing not nice words. And one of the owners -- the other owners told him that we do not talk like that here.


TODD: He left without further incident. Laura Era says that was the last time she ever saw James Von Brunn -- Wolf.

BLITZER: You're also getting some interesting accounts from some of his former neighbors.

TODD: That's right. Neighbors in nearby Annapolis, Maryland, where Von Brunn lived on and off for past couple of years, recall him as being sometimes a little hostile, sometimes standoffish. There was one neighbor who says he had a drink with him once at a time in which Von Brunn said that there was way too much media coverage of the Holocaust. This neighbor said that that made his lady friend uncomfortable. She got up and left.

So those are the kind of accounts we're getting of his anti- Semitic views.

BLITZER: And he's right now at George Washington University Hospital, listed in critical condition.

All right, Brian.

Thanks very much.

Brian Todd reporting from Easton, Maryland.

And we're also learning that James Von Brunn had been voicing contempt for his Maryland neighbors online.

Our Internet reporter, Abbi Tatton, has been digging into that -- Abbi, what are you seeing?

What is he saying?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, we just heard from that art gallery owner in Easton, Maryland, who didn't want his art work. Well, online, on this Web page, James Von Brunn really railed against people like that -- against his very neighbors in Maryland, writing that: "They are hiding behind political correctness, refusing to display his paintings" and they refuse to engage in business with him.

This is a Web page where James Von Brunn promoted his work as an artist. He just posted one painting. It appears he has done this collage.

But apart from that, he lists a lengthy bio of his career in art, in advertising, taking art classes -- all of this online.

In fact, "The Baltimore Sun" has dug up this photo from the early '60s of James Von Brunn with some of his illustrations at that point, when he was made president of a local arts academy. That, an extremely different picture to 40 years on, when he was online rambling and writing posts not just about his art, but about bar fights with local Jewish businessmen.

A spokesman for the site asked -- where this material appears -- says they have had no contact with him since he submitted the material in 2002 -- Wolf.

BLITZER: All right, Abbi.

Thanks very much.

California facing drastic cuts in spending, including millions of dollars that help people with HIV pay for their medicine.


UNIDENTIFIED FEMALE: We're going to be back to the '80s where people start dying because we can't afford the medicine.


BLITZER: And that's just the beginning of the fallout from a $24 billion budget deficit.


BLITZER: And it's the sound search crews are desperate to hear -- pings from the so-called black boxes of Air France Flight 447. We're going to get an inside look at where they're made and how they work.


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

WHITFIELD: Hello again, Wolf.

Well, former President Jimmy Carter is on a private peace mission to the Middle East. He met today with Syrian President Bashar Assad and warned that U.S. peace efforts cannot succeed without direct talks with the militant Palestinian group Hamas.


JIMMY CARTER, FORMER PRESIDENT OF THE UNITED STATES: The United States government will find a way to have direct discussions with Hamas leadership. I don't believe there's any possibility to have peace between Palestinians and Israel unless Hamas is involved directly. (END VIDEO CLIP)

WHITFIELD: Carter also stressed that he's in Syria has a private citizen, not representing the Obama administration.

Somalia is putting together a navy to help fight piracy off its coast. Recruits are training right now and officials hope to have an operational force in about two months. It's been two decades since the country last had a navy or an effective national government, for that matter.

A drug tunnel found near Nogales, Arizona is being described as one of the longest ever along the U.S./Mexican border. It is 83 feet long, stretching 48 feet into Mexico and 35 feet into the U.S. Police were tipped off by someone who heard the construction noise. They arrested two people and will begin immediately filling it in -- Wolf.

BLITZER: Fred, thanks very much.

They're -- they have filled the streets for rallies like this one.

Listen to this.


BLITZER: Why women will play a key role in Iran's crucial elections, only hours away.

Our Christiane Amanpour is in Tehran.

And controversy again catching up with President Obama's former minister. You're not going to believe what the Reverend Jeremiah Wright said this time.

Plus, a bloody gun battle on the streets of one of Mexico's most famous resorts. We're on the scene in Acapulco.



Happening now, President Obama takes his push for health care reform on the road.

Can uninsured Americans get the same kind of coverage members of Congress get?

A closer look at what makes their health insurance so special.

Also, the hunt for Osama bin Laden -- the CIA director, Leon Panetta, says the agency now believes the world's most wanted terrorist is still in Pakistan and that more officers, agents and locals are now helping with the search.

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

After countless thousands have turned out for noisy rallies like this, the streets have turned strangely quiet on this, the eve of Iran's crucial presidential election. That voting is now just hours away. And women will certainly play a key role.

Our chief international correspondent, Christiane Amanpour, is in Tehran -- Christiane.

CHRISTIAN AMANPOUR, CNN INTERNATIONAL CORRESPONDENT: Wolf, one day before the polls open, there's been no official campaigning and none of the massive crowds that we've seen in the streets over the last few days. But people do expect a huge turnout -- perhaps the biggest yet -- when the polls open tomorrow at 8:00 a.m. local.

One of the big issues here has been women's rights and human rights. And that's because one of the main campaigners has been a woman for the first time ever.


AMANPOUR (voice-over): This is Mother's Square in Tehran. The center statue was sculpted by Zahra Rahnavard. An artist and academic, some of her other work displayed in this downtown gallery, which was designed by her architect husband, Mir Hossein Mousavi, who also happens to be President Ahmadinejad's leading rival in the Iranian election.

For the first time ever in Iran, a candidate has campaigned with his wife. And Rahnavard has brought huge crowds to her husband's rallies -- especially women.

"I'm here to say that men and women are equal," she tells us.

More women than men have voted in the past few elections and Rahnavard promises them it will count this time if Mousavi wins. "We've made this promise to the women and we'll stand by it," she says.

"Mousavi! Mousavi! Get my Iranian flag back for me!" chant these women. With their demands growing, all leading candidates were forced to listen.


AMANPOUR: On the day before the election, the graffiti is being spray-painted off the walls. But change was a slogan used by one of the reformists -- the only cleric in the race, who promised to campaign for women's rights if he became president. And the hard-line conservative, Mohsen Rezai, also said that he would have female ministers if he won the election.

(voice-over): Women were allowed to register for the presidential race for the very first time. But the religious vetting body deemed none fit to run." 34 million women demand female cabinet ministers. 34 million women demand to be eligible to run for president," Zahra Rahnavard says. 34 million women want the civil law and family law revised. Women remain legal second-class citizens in criminal, divorce, child custody, and inheritance cases despite making up 65 percent of university students.

Ahmadinejad's fundamentalist government has even tried to make polygamy easier for men and public sector careers harder for women. Even Zahra Eshraghi, granddaughter of a revolutionary leader Ayatollah Khomeini, was banned for running for parliament as a reformist. "For Ahmadinejad's government, women are just living things," she says. "A woman is there to fill her husband's stomach and raise children." Not these women, who are demanding change after a fair election. No cheating, they chant, ass they prepare for the polls to open.

Having seen the massive crowds that turned out, one of the leaders of the Iranian revolutionary guard posted on the website a warning accusing the reformists of trying to foment a velvet revolution and vowing to crush it. On the other hand, senior Iranian officials and religious leaders have been talking to the supreme leader, Ayatollah Khamenei to insure there's calm and fairness at the ballot box.


BLITZER: Christiane Amanpour reporting for us from Tehran. Those elections is only a few hours away.

Let's discuss what's going on with our CNN political contributors. Joining us now, the Democratic strategist Donna Brazile and the Republican strategist Mary Matalin.

I don't know about you, Mary, but I'm pretty surprised to see that lively debate and some of the things especially these women are saying about Ahmadinejad openly on the streets of Tehran. What does that say to you?

MARY MATALIN, REPUBLICAN STRATEGIST: It says this is the legacy of eight years of working towards freedom and democracy, a central tenet of democracy programs under the Bush administration was human rights, which reads women's rights, in the region. We just saw the election to parliament of four women in Kuwait who didn't have the right to vote even before these programs. So, but what they say and what they get done and what happens even if they get elected are -- it's a disparate thing. Mousavi is not really a reformer. The clerics control the country. Even if he beats Ahmadinejad, which is not clear. And the thing we need to be concerned about is not that we should stop talking about reform or women's rights in particular, but no matter what gets elected, the threat of a nuclear state will exist.

BLITZER: He does sound, Donna, a little more reasonable than Ahmadinejad, although Mary is right that on some of the fundamental issues like a nuclear program there doesn't seem to be a whole lot of difference. He does say very openly that this isolation of Iran under Ahmadinejad is awful and Ahmadinejad shouldn't be saying stupid things like there was no holocaust. DONNA BRAZILE, DEMOCRATIC STRATEGIST: I totally agree with Mary on that point. But, Wolf, the real issue tomorrow is the economy. The Iranian people have suffered under the president, and I think when they go to the polls tomorrow they will bring not just their hopes and aspirations but they will also bring concern about bread and butter issues.

So, I think this is a very important election. And clearly, if there is a change of the presidential palace, we will still -- this country will still have to work with our allies internationally to make sure that the Iranians don't move forward with their nuclear ambitions.

BLITZER: You give President Obama, Mary, any credit for the election results out of Lebanon a few days ago when moderates were elected, defeating the Iranian-backed Hezbollah, which a lot of polls earlier before the president's speech in Cairo thought Hezbollah would win?

MATALIN: I don't discredit him. But you know because you've covered this part of the world for so long we think like we think, those sovereign states, they care about what they care about. No matter what they say, they're going to act in their own interests. And the talk is often different from what happens behind closed doors. So, I don't think anything he could say would change the outcome of the election, did change that election, nor will it change the one in Iran.

BLITZER: Donna, I want to switch gears to talk about the reverend Jeremiah Wright because he had an interview with the daily press in Hampton, Virginia, and I'm going to play a little clip of what he said. It might be hard to understand what he's saying, but we put his words up on the screen. Listen to this.

All right. The question was, in case people couldn't hear it or read it, have you spoken with him since he's been in the white house, referring to a conversation between the Reverend Wright and President Obama, and Wright said, "Them Jews ain't going to let him talk to me. I told my baby daughter I'll talk to him in five years when he's a lame duck or in eight years when he's out of office." Do you understand this guy at all, Donna?

BRAZILE: No, I do not, Wolf. And let me just say this, that I think Reverend Wright would agree that that kind of commentary has no place in our society. The hateful words at a time when not just the president but many others are mourning what has occurred here in Washington, D.C. I went earlier today to a vigil that was organized by the American Jewish committee, the interfaith council of Washington, D.C., where blacks and whites today gathered at the holocaust memorial, a very sacred place, to join hands and say we shall overcome, we shall overcome this form of bigotry, anti-Semitism, and I'm just outraged that those words would be played at a time when this city, this area, this nation is mourning the loss of a heroic officer who his child today is mourning his father and Reverend Wright has no place in this -- during this period of mourning. BLITZER: And I know that Mary totally agrees with you on that issue, so we'll leave it alone for now. Guys, thanks very much for coming in.

It's the sound that searchers are desperate to hear. Listen to this. That's the pinging sound of so-called black boxes from Air France flight's 447. We'll go inside the facility that manufacturers them to find out how they work.

Plus, will California's budget crisis end up costing lives? Why some say deaths are inevitable.


BLITZER: California is now facing very painful cuts to close its $24 billion deficit. Let's go to California, CNN's national correspondent Jessica Yellin is standing by, our national political correspondent, Jessica, I should say. A lot of folks are worried. They're watching California and worried what happens there very often could happen and spread elsewhere, as well. That's why we're paying a lot of attention.

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: That's exactly right, Wolf. So often California is the leader in the nation and a sign of what's to come. And California is in what is truly a fiscal catastrophe. Right now, the governor is down to what is effectively his last option -- balancing the budget in this state by cutting essential programs to the state's most vulnerable people. And one of those programs on the chopping block, $80 million for programs that help keep HIV-positive patients alive.


YELLIN: Karla Bailey is scared that the California state budget crisis will cost her life. She's HIV positive raising three adopted children, and now Governor Arnold Schwarzenegger threatens to cut the funding that pays for her five-drug regimen.

KARLA BAILEY, HIV PATIENT: We're going to be back to the '80s where people start dying because we can't afford the medicine.

YELLIN: With the $24 billion budget deficit, California is effectively teetering on brink of bankruptcy. Forced to balance is budget and with few options, Governor Schwarzenegger proposes cutting billions in education, health, child welfare, and prisons.

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: Our wallet is empty, our bank is closed, and our credit is dried up. I know for many of you, these will be the hardest votes that you will ever make. But the people send us here to be here not only in times of prosperity but also in times of crisis.

YELLIN: The governor also wants to siphon some money from California's cities, taking some of the gas tax and borrowing almost $2 billion in city property taxes. Both proposals have mayors howling. MAYOR ANTONIO VILLARAIGOSA (D), LOS ANGELES: That is a series of proposals which is just unacceptable. This will decimate city services.

MAYOR JERRY SANDERS, SAN DIEGO: We're here to call on the legislators and to call on the governor to balance the budget without balancing it on the back of cities and counties and school districts.

YELLIN: That echoes the message from Karla Bailey and more powerful interest groups across the state who are demanding the governor cut someone else's programs but spare their own.


YELLIN: And, Wolf, some of the headlines in this state say things like California is on life support, California has just days to live. The governor himself has said he'll let the state come to a grinding halt before he takes out extra loans. He is trying to force the legislature to make these painful cuts. And then, of course, after state cuts, cities will begin cutting their programs for the needy, as well.

BLITZER: A desperate situation out of the west coast. Thanks, Jessica, for that.

Despite the fiscal crisis that's out there, California lawmakers are working on a slew of unrelated legislation, including some that are raising eyebrows. Among the bills, one that will create a blueberry commission, another that would require a large type on medical workers' name tags. There's a bill that would require teaching high school students the importance of organ donation. And there's a bill that would force daycare providers to serve only healthy food to children.

The situation in California is so dire that a type of lending usually seen in third-world countries is now becoming much more widespread in the golden state. CNN's Dan Simon is joining us now live with more on this story.

What is it all about, Dan?

DAN SIMON, CNN CORRESPONDENT: Hi, Wolf. While most people associate micro money with the developing word, it is taking hold here in the United States and especially in California. Here in the San Francisco Bay area, for example, we profile one company where it has truly made a big difference. Take a look.


SIMON: Simonida Cvejic grew up in the former Yugoslavia. A single mother of two, she wanted to start a business that could be both profitable and serve the common good.

SIMONIDA CVEJIC, BUSINESS OWNER: We have helped a lot of people get jobs, hundreds of them, and what I'm really proud of is how we've been able to help people improve their economic status and improve their lives. Cerebral vascular accident.

SIMON: Here's how she did it, by launching an academy that trains people how to draw blood and become medical assistants. She has no medical background. She came up with the idea five years ago after California mandated that all blood drawers, or phlebotomists, as they're called, undergo state-certified training.

CVEJIC: It's not often you get your blood drawn, so there's a lot of job tons out there for phlebotomists.

SIMON: To grow the business, she needed money. She says she went to the bank but couldn't qualify for a loan. So she turned to microfinance. A micro lender called Opportunity Fund stepped in, loaning Simonita nearly $10,000 to help her buy equipment and office furniture. Eric Weaver is its CEO.

ERIC WEAVER, CEO, OPPORTUNITY FUND: Small and micro businesses are the only type of businesses right now that are actually generating jobs. The larger businesses getting these bailouts are actually shedding these jobs.

SIMON: Micro lending has been traditionally about helping countries in the third world. Websites allow individual investors to lend money directly and get as much as a 6 percent return. But with the economy in shambles, it is likely to be a growing investment area in the U.S. the Obama administration has directed more than $100 million in new funds towards programs that make loans to small businesses or low-income individuals. Simonita isn't sure where she'd be without the help.

CVEJIC: I wouldn't be able to have my school. I can't fund the school without tables, chairs, and white boards and also medical equipment that is sometimes expensive.


SIMON: And the micro lender just announced this week for the first time ever you can go onto their website and actually lend money directly to small businesses here in the United States. Right now they're starting with a few dozen businesses, but if the program is successful, they plan to expand it. Wolf?

BLITZER: All right, Dan. Thanks very much. Dan Simon reporting from San Francisco.

As searchers try to find the all-important flight data recorders from the Air France crash, their only hope may be a device that can send signals from miles below the ocean's surface.

Stand by. You're in THE SITUATION ROOM.


BLITZER: A Brazilian military official says there is little chance of finding all victims from Air France 447. Bad weather is hampering today's search for remains and debris. Under water, a French submarine is listening for a signal from the plane's voice and data recorders. Fascinating material. Let's go to CNN's Susan Roesgen. She saw close how these pingers work. It's pretty fascinating material Susan.

SUSAN ROESGEN, CNN CORRESPONDENT: It really is Wolf. If there is any chance of finding the recorders, the pingers, that will guide them. The trouble is the time is running out.


ROESGEN: This could guide a search team across miles of open water. Attached to each voice recorder is a white tube called a pinger, because when it is dropped in water, it starts to accepted out a sound, a ping, every second. Normally, you couldn't actually hear the pinging because the audio frequency is too high. Search teams have the ability to pick it up.

UNIDENTIFIED MALE: Our units have been recovered all over the world unfortunately in crashes and as deep as 18,000 feet.

ROESGEN: The Duquesne Corporation is the largest supplier of pingers. This is one way they test the pingers. Underneath me is 65,000 gallons of water. They will take a pinger, drop it down and then they are able to both hear it and see it. The Air France search team knows which pingers to look for because each has a slightly different frequency.

UNIDENTIFIED MALE: It is so important when they give the serial numbers. They can do an effective search pattern.

ROESGEN: But there is one big problem.

UNIDENTIFIED MALE: It's battery operated device.

ROESGEN: A Pinger runs on a battery, programmed to stop after 30 days. The Air France crash was more than 11 days and counting.

UNIDENTIFIED MALE: As soon as that device went in the water, it started timing out just like here. It has 30 days.


ROESGEN: In case you are wondering why they don't have some kind of GPS signal that would be able to find the boxes, the recorders, under water. The GPS won't work under water. It is a radio frequency. No way for the satellite signal to make it under deep water.

BLITZER: The clock is clearly ticking. Thanks very much for that Suzy.

Let's go to Jack Cafferty. He's got the Cafferty File.


JACK CAFFERTY, CNN CORRESPONDENT: The question this hour, is it okay to add to the record national debt to pay for health care reform. Nobody is talking about how we are going to pay for this little program.

Brian in Philadelphia writes, "Social Security is going broke, everybody in Washington knows it. Medicare is going broke. Everybody in Washington knows that too. Do we really want them to be in charge of another multi-trillion dollar program they can mismanage? This time our lives could be at stake, no thank you."

Peg in New York says, "I honestly don't know. It would have seemed that health care would have been a top priority. I am a cancer survivor who had to declare bankruptcy because of health care costs. If you are fortunate enough to survive, I can assure you, bankruptcy is not anything to look forward to. Something has to be done. It is long overdue."

Fred writes, "I certainly think so. They have added billions to the debt. Give something to the people who finance the bailout, the taxpayers."

Matt writes, "The only way we will be able to stop the balloons national debt is by health care. The former administration is getting old. For heaven's sake, do not continue to pile on more debt for health care reform and don't think about raising taxes on those who have health insurance by taxes that insurance. This is obscene."

Mark in Arkansas writes, "Jack, France can offer health care as can Canada, Great Britain even nasty old Cuba has it. Why in the world can't the most advanced economy on the planet figure out how to do the same? How about this idea, have the president pick up the phone, call one of these countries and ask the following question, hey, how do you guys do that?"

BLITZER: You will be hearing a lot about it this coming week. A hot, hot debate here in Washington. Thanks, Jack.

How the hate groups operate. We are about to hear from an investigator who penetrated white supremacist organizations.

And she's a good luck charm for the Orlando Magic. Can a 7-year- old with a special talent turn things around in the NBA finals?

Stick around. You're in THE SITUATION ROOM.


BLITZER: Most athletes have something they believe causes them luck. With Orlando Magic, it's a seven-year-old girl. And with game four of the NBA Finals tonight, they're counting on her. CNN's Alina Cho.


ALINA CHO, CNN CORRESPONDENT: When the Orlando Magic take on the Los Angeles Lakers at Amway Arena tonight, the team will have a good luck charm front and center. The Magic are undefeated whenever 7-year-old Gina Marie Incandela sings that national anthem at their games.

GINA MARIE INCANDELA, 7 YEAR OLD SINGER: They need my singing power.

CHO: So far, she is 7-0.

J.J. REDNICK, ORLANDO MAGIC PLAYER: When you got something going good, you have to stick with it.

UNIDENTIFIED MALE: She is our magic weapon.

CHO: Whatever is more remarkable is that this girl was diagnosed with a form of autism at two and you unable to speak until she was three. The family is trying to make sure the daughter doesn't get disappointed if the winning streak is broken. Maybe she knows a little something that we don't.

Alina Cho, CNN, New York.


BLITZER: Now, to our viewers, you are in THE SITUATION ROOM.

Happening now, President Obama wants you to have better health care. You should hear the health care perks that congress receives.

We are about to talk to a man who infiltrated a Nazi group and ran into the alleged museum killer. David letterman's joke makes the top list of bombs. The joke about Sarah Palin's daughter that she calls her burden. We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You are in THE SITUATION ROOM.