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THE SITUATION ROOM

New Warning From Osama bin Laden; Interview With White House Chief of Staff Rahm Emanuel

Aired March 25, 2010 - 18:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


WOLF BLITZER, CNN ANCHOR: And you're in THE SITUATION ROOM.

Happening now: President Obama takes a health care reform victory lap, but passing the bill was only part of the battle. Can he now sell it to a deeply divided country?

And with reform accomplished, what is the new top priority for the White House? I talked about that and much more in a one-on-one interview with one of the president's top advisers, his chief of staff, Rahm Emanuel.

Plus, a new message believed to be from Osama bin Laden, warning the U.S. not to execute 9/11 mastermind Khalid Sheikh Mohammed, or else.

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

Two days after he signed health care reform into law, President Obama is back on the road, this time trying to sell Americans on the ambitious overhaul, even as Republicans vow to do everything they can eventually to repeal it.

The president was at the University of Iowa today, where he told an enthusiastic crowd, "This is your victory." And he threw down the political gauntlet to Republicans, daring them to run in midterm elections on a promise to rescind the law.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: This is the reform that some folks in Washington are still hollering about, still shouting about. Now that they passed it -- now that we passed it, they're already promising to repeal it. They're actually going to run on a platform of repeal in November. You've been hearing that. And my attitude is: Go for it.

(APPLAUSE)

OBAMA: If these congressmen in Washington want to come here in Iowa and tell small business owners that they plan to take away their tax credits and essentially raise their taxes, be my guest. If they want to look Lauren Gallagher in the eye and tell her they plan to take away her father's health insurance, that's their right.

If they want to make Darlyne Neff pay more money for her check- ups, her mammograms, they can run on that platform. If this young man out here thinks this is a bad bill, he can run to repeal it. If they want to have that fight, we can have it. Because I don't believe that the American people are going to put the insurance industry back in the driver's seat. We've already been there. We're not going back. This country is moving forward.

(APPLAUSE)

(END VIDEO CLIP)

BLITZER: For all the uproar on the right, there was a critic from the left who interrupted the president to complain about the new law. Listen to this.

(BEGIN VIDEO CLIP)

OBAMA: That's the basic aspects of reform.

AUDIENCE MEMBER: What about the public option?

OBAMA: That's not in it.

AUDIENCE MEMBER: Why not?

OBAMA: Because we couldn't get it through Congress. That's why. So they -- let's -- there's no need to shout, young man, no need to shout.

Thirty-two people -- 32 million people are going to have health insurance because of this legislation. That's what this work is about.

(CHEERING AND APPLAUSE)

(END VIDEO CLIP)

BLITZER: Let's bring in our senior political analyst, Gloria Borger.

He was complaining, that critic, that there's no public option in the bill, and he was angry about that, and the president was a little bit on the defensive right there.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Right. The president was essentially saying, you know, don't let the perfect be the enemy of the good. He couldn't get it through the Congress.

You have 32 million more people who are going to be insured. And that's -- you know, that's how he's kind of marketing this, because, clearly, he's going to go out there and say -- not in these words -- but this bill isn't as bad as you thought it was. He can't say it that way, but he's going to say all the things about the current system that you don't like, preexisting conditions, for example, lifetime caps on your insurance policies, et cetera, that's going to go away. So, if you want to put those things back in the system, fine, repeal this. And that's the way he's going to try to convince the skeptics.

BLITZER: And it was interesting the way he said, you want to have a fight about this going into the midterm elections in November, he said, be my guest. He didn't say, bring it on, but he said, be my guest.

(CROSSTALK)

BORGER: Right. And I think they have no choice, first of all, Wolf. This is their bill. They want to run on it. They're going to run as a governing majority who was able to get something done.

He's going to say this is the change that you voted for. I think the really interesting question that comes next, though is, what does this president do next? Does he turn to jobs and Wall Street? Or does he decide to go for the whole shebang and do immigration and climate change?

Jobs and Wall Street would be the easy way to go, and my sources are telling me that's the most likely way to go, but, you know, he could also say to his base, I'm going to try and get climate change for you, and at least go for it, even though it might not happen.

BLITZER: It's interesting you say all that, because in my interview with the White House chief of staff, Rahm Emanuel, at the White House earlier today -- in this hour, we're going to play the entire interview for our viewers -- I ask him, what is your top priority for the rest of this year? And he answers. And then I say, all right, what else are you going to do? What aren't you going to do?

BORGER: Yes.

BLITZER: I'm know going to tell you what he says, but listen. You will see the interview, because I think you and our viewers will be interested.

BORGER: And, by the way, they don't call it financial regulation. They call it Wall Street reform. That has a little ring for it for the American public.

BLITZER: Yes, Wall Street not always all that popular.

BORGER: Right.

BLITZER: All right, thank you, Gloria.

President Obama is also portraying the new law as a win/win for entrepreneurs.

(BEGIN VIDEO CLIP)

OBAMA: Starting today, small business owners can sit down at the end of the week, look at their expenses, and they can begin calculating how much money they're going to save. And maybe they can even use those savings to not only provide insurance but also create jobs. This health care tax credit is pro-jobs, it is pro-business, and it starts this year, and it's starting because of you.

(CHEERING AND APPLAUSE)

(END VIDEO CLIP)

BLITZER: But some of America's largest companies are saying they will take a big hit on their bottom line.

CNN's Brian Todd is following that part of the story for us.

What are you picking up, Brian?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, today, the industrial equipment giant John Deere announced that it expects new expenses of about $150 million, thanks to the new health care bill.

Yesterday, Caterpillar said it would take a hit of about $100 million. The day before that, the AK Steel company said that the bill would cost it $31 million. Over 1,000 large companies that give good retirement benefits will be similarly affected.

Why is that? Well, a decrease in government subsidies for companies who give drug coverage. Right now, the subsidy averages $665 per retiree per year. Under the Obama health care plan, that government subsidy will be considered taxable income. After taxes, it would be worth $432 per retiree per year that each company gets.

So, companies lose $233 per employee per year. Most of it has to be paid up front. So, when it's projected ahead for however many years a retiree lives after that, according to a study by the consulting firm Towers Watson, it costs an estimated $2,800 per retiree total right now. The subsidy started in 2003 to get companies to keep giving their retirees private coverage for prescription drugs, instead of dumping them on to the new Medicare drug coverage, Wolf. So, these companies are saying, hey, we're going to start to hurt pretty soon.

BLITZER: So, specifically, what does it mean for a company like Caterpillar?

TODD: Well, a spokesman said that having an additional cost like this is not great timing. Over the course of the recession, they laid off 19,000 workers worldwide, but in the last three months, they have hired 700 or 800 people back.

Now, they're one of 10 blue-chip companies that sent a letter to Congress begging them not to reduce the subsidy, because they would take a hit. So, it's a lot of the top companies now, Wolf, saying, this is going to cost us hundreds of millions of dollars.

BLITZER: Will this change retirees' benefits?

TODD: Not immediately, no. But, in the long term, this letter from these companies warns that this is going to cause some of them to reduce or eliminate benefits to their retirees and send them into Medicare. White House spokesman Robert Gibbs says, actually, this is going to close a loophole, because a lot of the money they spent on their retirees is still going to be tax deductible.

And defenders of this he plan say that, look, before 2003, these companies got no subsidies at all, so they're still coming out ahead.

BLITZER: The debate will continue.

TODD: That's right.

BLITZER: All right, Brian, thank you.

Jack Cafferty is coming up next with "The Cafferty File," then my one-on-one interview with the White House chief of staff, Rahm Emanuel, outlining what could be the next hot button issue as another hot-button issue moves to the top of the president's agenda.

Plus, Osama bin Laden's warning to America -- what he says will happen if -- if the United States executes the 9/11 mastermind, Khalid Sheikh Mohammed.

(COMMERCIAL BREAK)

BLITZER: Let's get right back to Jack for "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Here we go again.

It is time now for another chapter in the tawdry tale titled the pope and the pedophile priests. "The New York Times" reports that top Vatican officials, including the future Pope Benedict XVI, refused to defrock a Wisconsin priest who molested as many as 200 deaf boys. Deaf boys? It doesn't get much sicker than that, does it?

This is despite the fact that several American bishops repeatedly warned the Vatican about this creep. Church files show that, although officials disagreed about whether the priest should be dismissed, their top priority was protecting the church from scandal, of course.

This Wisconsin priest, the Reverend Lawrence Murphy, was never tried or disciplined by the church -- 200 deaf boys. He also got a pass from the police and the civilian criminal justice system. We all know the story by now. Instead, he was quietly moved to a different diocese, where he spent the last 24 years of his life freely working -- Ready? -- with children.

He died in 1998. He was still a priest. The Vatican calls the case tragic and says part of the reason the priest was never defrocked was his poor health and lack of recent accusations.

Meanwhile, this comes on the heels of a sex abuse scandal spreading like wildfire across Europe, from the pope's native Germany to Ireland, Austria, and the Netherlands. There are other accusations against Pope Benedict, that he didn't alert authorities or discipline priests who were sexually abusing children when he was both an archbishop in Germany and the Vatican's top doctrinal enforcer.

Critics say it's time for the pope to resign, but that has only happened a handful of times throughout history, and it hasn't happened for 600 years, so don't hold your breath.

Nevertheless, we feel compelled to ask, in light of the pope's role in the Catholic Church sex abuse scandal, should he resign?

Go to CNN.com/caffertyfile. Post a comment on my blog. Abused 200 deaf boys, and nobody did a thing about it.

BLITZER: It's hard to believe, Jack. It's stunning. I don't know another word. It's just hard to believe.

CAFFERTY: Yes.

BLITZER: All right, thank you.

Meanwhile, new threats today from an audiotape purportedly recorded by the al Qaeda leader, Osama bin Laden. The message rails at the White House and warns that if suspected 9/11 mastermind Khalid Sheikh Mohammed is executed, al Qaeda will in turn execute any Americans it captures.

Let's discuss here in THE SITUATION ROOM with our national security contributor Fran Townsend. She was homeland security adviser to President Bush, worked in the Justice Department during the Clinton administration.

Fran, walk us through the process. Somebody on a Web site posts this audiotape from bin Laden. It comes -- they hear it obviously here in Washington. What goes on?

FRANCES TOWNSEND, CNN NATIONAL SECURITY CONTRIBUTOR: Well, the first thing, Wolf, is the intelligence community, analysts will listen to it and compare it to known samples of bin Laden's voice and they will verify that it actually is bin Laden.

(CROSSTALK)

BLITZER: That usually takes about a day or two, right?

TOWNSEND: Right. They can do it pretty quickly because we have enough of a body of intelligence now that they are able to do that pretty quickly.

The second thing they're listening for is whether or not there are indications, signs of life. Now that we know it's him, what is the indication of when this would have been made? Is he referring to a particular public event? This one refers to the controversy over Khalid Sheikh Mohammed. Will he be tried in a criminal court? Will he be executed if convicted?

And so that gives you a sense it's certainly done some time in the last several months, probably the last six months. And, so, we know that he's alive. That's what that basically -- that's what the intelligence community takes of it.

The third thing, if you get really lucky, is, is there some indication about where he is that you can glean from the tape? It doesn't sound like there is that in this one, not unusual. He's usually pretty safe, because, after all, he knows they're looking for him.

BLITZER: Yes, it's one thing for an audiotape. A videotape would be more useful, presumably, because you might see things in there that could help pinpoint where he is.

TOWNSEND: That's exactly right, Wolf.

The other interesting thing about this is, it's released when, of course -- you interviewed the Pakistani foreign minister. There's a very senior-level delegation here. General Kayani in town, Pakistani army chief of staff, meeting with administration officials. I understand from sources I talk to in the administration that the hunt for bin Laden itself did come up.

There's a sharing of intelligence between U.S. and Pakistani authorities. And interesting bin Laden chose to release a tape when the very people who can help us catch him or kill here were here in Washington.

BLITZER: I have spoken to top U.S. officials who are working this story right now, and they have told me they feel much better about capturing or killing bin Laden. They think they're getting closer and closer precisely because of the cooperation they're now getting from the Pakistanis, the Pakistani military, the Pakistani intelligence community.

Cooperation they didn't have before, they're getting it now, and they said, you know what, one of these days -- and we can only hope it's sooner rather than later -- all of us are going to wake up or get the word they got him.

TOWNSEND: I hope so, Wolf.

BLITZER: And that will be a moment a lot of people will remember.

TOWNSEND: Absolutely.

BLITZER: And Pakistanis will have a moment, presumably, to share that.

TOWNSEND: That's right.

BLITZER: Thanks very much.

With health care reform a done deal, the White House has a new priority number one. We're going to find out what it is and how the president plans to accomplish it. We will speak with one of the president's top advisers, his chief of staff, Rahm Emanuel. We will talk about that and much more -- the full interview with the White House chief of staff this hour.

(COMMERCIAL BREAK)

(NEWS BREAK)

BLITZER: With health care reform in the bag, the White House now looking ahead. What battle is the administration gearing up for next?

When we come back, my interview with the man behind the president, the White House chief of staff, Rahm Emanuel.

(COMMERCIAL BREAK)

BLITZER: The major battle is over, but there's still one last showdown remaining for President Obama's health care reform package. The House is expected to vote soon on two minor amendments the Senate approved as it passed the package of fixes to the main bill.

The speaker, Nancy Pelosi, says she has the votes she needs to send it to the president. He will sign it into law.

Earlier today, I sat down with one of the president's top advisers to talk about the reform fight and what's next on the president's agenda.

(BEGIN VIDEOTAPE)

BLITZER: And joining us here at the White House, Rahm Emanuel, the White House chief of staff.

Thanks very much for joining us.

RAHM EMANUEL, WHITE HOUSE CHIEF OF STAFF: Thank you, Wolf.

BLITZER: Now that you passed health care, what is the president's number-one priority for this year?

EMANUEL: Well, as it has been since he got into office, getting the economy moving again.

On the legislative front, there's been a post-health care -- in addition to health care, and what's kind of not gotten a lot of coverage, Wolf, is the education, higher education that's part of this legislation.

BLITZER: Is that your top priority?

EMANUEL: Well, that is a top priority and is one -- if you go back to the president's speech at Georgetown, he laid out four things that were part of the new foundation, health care reform, access to college education, the funding for that, which is part of this legislation as well.

There's financial regulation reform. And...

BLITZER: You going to get that passed this year?

EMANUEL: I feel -- well, as you saw probably in the press, even the Republicans acknowledge we're going to get that done. I feel better about it today than before.

But the key goal is putting the right types of reforms, so you have an insurance policy that the kind of problems we had in the past don't repeat themselves, and you have the clear transparency, the enforcement mechanisms and the tools necessary to prevent that, in addition that, stronger education reforms that are necessary to keep America competitive and their kids can get educated, and also dealing with the Supreme Court decision...

(CROSSTALK)

BLITZER: What are you going to do about that?

EMANUEL: Well, there's legislation moving both in the House and Senate to make sure that we deal with a lot of the loopholes that were left in that decision by the Supreme court, which allowed corporate money to run rampant over our campaigns.

BLITZER: But, in this election cycle, that will happen. Do you think that legislation can be passed...

(CROSSTALK)

EMANUEL: Well, we can -- we're going to make a good effort in making sure that our campaigns are not literally -- unfettered access by corporate resources and special interest money into those campaigns.

So, but job one since day one, it will always be true, is getting the economy moving and working for the American people.

BLITZER: If unemployment is at 10 percent in November, how much will you suffer, the Democrats?

EMANUEL: Look, I don't want to make -- it will not be -- obviously, if unemployment's high, more importantly, it won't be good for the American people, so there will be no doubt political impact, but the key priority is reducing the unemployment, keeping the -- and also making sure the economy...

(CROSSTALK)

BLITZER: Do you think it's going to go down, unemployment, between now and November?

EMANUEL: Wolf, I think -- I think this. We had inherited what is known now as the great recession.

When we first got into office, our first task, stabilize the financial system. That has been achieved. The second, we were losing 750,000 jobs a month. We have now gotten about two months where it's at a break-even point. The key goal now is to get that into the positive territory.

The third task is starting was starting to put our fiscal house in order, which is what this health care system -- health care legislation was about, and we have done that and what you have seen is basically reducing the deficit.

BLITZER: I know a lot of Republicans think that's -- it's going to skyrocket the deficit.

EMANUEL: Yes, but you know what? There's a scorekeeper here. That scorekeeper is the Congressional Budget Office. They are clear and unambiguous. And you can't disagree with them -- and you agree with them only when you like it and disagree when you don't like the decision.

BLITZER: Well, they disagree on the assumptions that the CBO was given.

EMANUEL: But everybody's acknowledged that, in fact, it will reduce the deficit, will strengthen Medicare, and will ensure that we reduce the deficit by a little over a trillion dollars.

(CROSSTALK)

BLITZER: Let me ask you this. How do you strengthen Medicare, when you are going to cut, over the next 10 years, a half-a-trillion dollars in projected growth from Medicare?

(CROSSTALK)

EMANUEL: You're going to make sure -- but the projected growth is in expenses. You are going to make sure it's got a 10-year longer lifespan than it had before. And that's an important piece of entitlement reform.

And one other thing...

BLITZER: Because a lot of seniors, you know, are nervous about these Medicare cuts.

EMANUEL: Well, first of all, there's a lot of waste and inefficiencies. And that's what...

(CROSSTALK)

BLITZER: But a half-a-trillion dollars?

EMANUEL: No. And there's a lot of misspendings and mispriorities.

Second is it does strengthen. And third is, if you look at the history, usually, while Congressional Budget Office has ruled that it will achieved X savings, many times, those savings are greater than what Congressional Budget Office originally assumed.

So, the most important thing to know is that this will actually reduce our deficit and begin to put our fiscal house in order.

BLITZER: All right. I know there's a big debate on that, but let me...

(CROSSTALK)

EMANUEL: And that debate will continue.

BLITZER: This new CBS poll says 62 percent of the American public, since the vote Sunday night, want the Republicans to keep on fighting to change this health care bill.

John McCain says -- and I'm quoting him now -- "The one thing that has people enraged is the sleazy backroom deals, sausage-making that is going on."

And John Boehner, the Republican leader in the House, calling this Armageddon, goes on to say this:

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), HOUSE MINORITY LEADER: Look at how this bill was written.

Can you say it was done openly?

UNIDENTIFIED PEOPLE: No.

BOEHNER: With transparency and accountability?

UNIDENTIFIED PEOPLE: No.

BOEHNER: Without backroom deals and struck behind closed doors, hidden from the people?

UNIDENTIFIED PEOPLE: No.

BOEHNER: Hell no you can't!

Have you read the bill?

UNIDENTIFIED PEOPLE: No.

BOEHNER: Have you read the reconciliation bill?

UNIDENTIFIED PEOPLE: No

BOEHNER: Have you read the manager's amendment?

Hell, no you haven't!

(END VIDEO CLIP)

BLITZER: What do you say to John Boehner?

EMANUEL: Well, first of all, I think -- I mean I don't -- I have not heard him call it Armageddon. I -- I think that we've had a long debate in this country about health care. This year alone, over a year. But it's been a big debate, not just this year, about how best to reform health care.

I think that it is important now to implement this correctly and make sure that the benefits get to the American people. I'll give you an example. One of the first things that's going to happen, there's going to be a tax credit for small businesses. There's about four million small businesses that don't provide health care who will now have a tax credit to provide that. I don't think that's a right thing to want to repeal or call Armageddon.

The next thing kind of -- coming up, Wolf, is helping seniors pay for their prescription drugs. I'm not sure that's a place where I would go calling it Armageddon or want to repeal it. And that's not a special deal except for...

BLITZER: But you think it will -- the positive things this year will help you going into November?

EMANUEL: Not only -- it's -- it -- A, it's not, first and foremost, Wolf, about November. Obviously, there may be political benefit. But the primary thing is dealing with the problems in the health care system.

And let -- and, third, what also will happen quickly is the insurance reforms that will make sure that insurance agencies and -- insurance companies, rather -- do not control access to a doctor and the health care decisions that patients and doctors make.

BLITZER: Big picture, you there were in '93-'94 during the Clinton administration when health care failed...

EMANUEL: When I had a head full of black hair.

BLITZER: When -- you were a young guy and I remember covering you then...

EMANUEL: You sure did.

BLITZER: I was a younger guy, but you were a young guy.

EMANUEL: Wolf, a lot of people say we've traveled many miles but then you I haven't gone very far.

BLITZER: But it failed then, during the Clinton administration.

EMANUEL: Yes.

BLITZER: It passed now during the Obama administration.

Why?

EMANUEL: Well, a couple -- first, there's -- there's some fundamental -- there are some differences. I will say this, as -- as President Obama said to President Clinton when he thanked him and -- and the Secretary of State is -- you probably couldn't have gotten to this point if it wasn't for the -- at least the effort tried in '93-'94. That was an important precedent. It was part of clearing the air of the debate and also understanding kind of the dimensions of how you do this. There were things that were done different that were important lessens to be learned from that (INAUDIBLE).

BLITZER: Some lessons -- and you learned those lessons personally...

EMANUEL: Well...

BLITZER: -- and you helped this president get it through?

EMANUEL: Well, there -- there's no doubt -- I mean there's simple things like when President Clinton gave -- launched health care, he started with a major speech in a joint session. For us, that didn't come until the back kind of third of this process, which was when we hit the impasse, that giving a speech and giving new energy to it.

The idea of doing a bipartisan conference to begin it -- begin the process and a bipartisan meeting at the Blair House that we did just a couple weeks ago to also give it another sense of energy.

Also, while some have criticized it, the difference of involving the Congressional committees in writing and drafting the legislation on the front end rather than giving them a product, I think...

BLITZER: You think

EMANUEL: so...

BLITZER: You think that was a good idea?

EMANUEL: Well, in the end of the day, you've got the legislation.

BLITZER: It took 13 months -- it took 13 months, though.

EMANUEL: Wolf, it did take 13 months.

Do you unders -- do you remember how long it took Social Security from beginning to end?

BLITZER: I wasn't around.

EMANUEL: OK. Well, in the history books -- I'll -- I'll help you on this one. It was 24 months for that, about 20 or 18 months for Medicare. And so when you look at the frame in historical context, this is kind of...

BLITZER: But the...

EMANUEL: -- do or die. But the thing...

BLITZER: I know you don't want to talk about politics, but in these 13 months, the presidents job approval rating went from about 70 percent down to the 45, 46, 47 percent. He took a -- he took a personal...

EMANUEL: And he...

BLITZER: -- political toll on this.

EMANUEL: And, as he said repeatedly, which is a sign, he was willing to spend, quote, unquote, "the political capital" to get something done that was materially and politically -- policy-wise -- important for the American people. And if you asked him today even -- or a week ago, pre the bill -- was it worth the political capital spent, he would say yes. And -- and every time he has made that decision, he thought this was important for the United States.. It was key for our economic competitiveness. It was key for the benefits for the American people and putting our fiscal house in order. And given that, he would spend more political capital to get it done.

(BEGIN VIDEO CLIP)

OBAMA: One of the best speakers the House of Representatives has ever had, Speaker Nancy Pelosi.

Mr. Harry Reid.

Kathleen Sebelius.

And one of the unsung heroes of this effort, an extraordinary woman who led the reform effort from the White House, Nancy-Ann DeParle.

(APPLAUSE)

(END VIDEO CLIP)

BLITZER: I know you worked really hard over these 13 months. No one in the White House -- no one in the administration worked harder. That's why I was surprised when the president was thanking everyone the other day for what they did, he didn't -- he didn't give you a shout-out.

EMANUEL: So?

BLITZER: Do you care?

EMANUEL: No.

BLITZER: It doesn't mean anything?

EMANUEL: No.

BLITZER: Did he give you one of those 22 pens?

EMANUEL: No. No, I mean, because...

BLITZER: Because you worked really hard to get -- I mean you had the connections in the House and in the Senate.

EMANUEL: First of all, he didn't do it -- I didn't do this so I would get thanked at -- at the signing or anything else.

Let me say this, if that's the question, you should know the night that it passed -- or the day it passed, he and I -- he came by. He gave me a high five. I have no doubt of my role in this and I feel quite good about that sense of it.

(END VIDEO TAPE)

BLITZER: Amid the health care reform victory, a very serious foreign relations crisis, as ties between the United States and Israel suddenly turn sour. That and more -- my interview with Rahm Emanuel continues, right after this.

(COMMERCIAL BREAK)

BLITZER: More now of my interview with the White House chief of staff, Rahm Emanuel. While the administration is celebrating its health care reform victory, it also faces a very sudden and serious strain in relations with a critical U.S. ally.

(BEGIN VIDEOTAPE)

BLITZER: Let's go through some quick issues because I know your time is really limited.

Israel, right now. The president of the United States meets with the prime minister of Israel. He comes to the White House -- no photo opportunity, no news conference, no statements. Basically, he got in, got out.

What is going on in the U.S.-Israeli relationship right now?

EMANUEL: Wolf, first of all, they're solid relationships. This is two people, two countries that have a shared set of values. America is committed to Israel's security, as it has always been and will continue to be. And this was a working meeting in the sense of dealing with a -- a particular point and a particular -- a particular time where there's some differences here to work through. And good friends can have that.

BLITZER: You can't even get a picture with the president and the prime minister together?

EMANUEL: (INAUDIBLE).

BLITZER: I mean, I've covered this story, as you know, for a -- a long time. It's pretty shocking.

EMANUEL: Well, we're at a point, as you know, the prime minister -- we had -- it is not a hidden secret -- a disagreement as it related to the settlements in Jerusalem...

BLITZER: And you -- is that disagreement still there or was there any progress...

EMANUEL: Well. We're working through the (INAUDIBLE)...

BLITZER: -- in resolving it?

EMANUEL: There is progress. We're working through the issues. And the most important thing is not to work this through this issue, it is to work through so we can get the peace process back on track, because that's a key part of the security interests and making progress in the Mideast.

BLITZER: No -- no chief of staff has served more than one term.

What about you?

EMANUEL: Wolf, first of all, it's -- you know, I'm happy doing what I'm doing. We just got done with health care. I am going to make -- you know, this is a decision the president and I will make and he can make it any time. My intention is to continue to work...

BLITZER: You want to stay?

EMANUEL: -- and serve him.

BLITZER: You like this job?

EMANUEL: Yes, I do. Very much.

BLITZER: Ever miss being a member of the House?

EMANUEL: It's like, you know, it -- that's comparing -- look, here is the deal, Wolf. Congress was a great job and a very interesting job. This gives you a wider scope of things to work on, a -- a much more diverse kind of a part of your life. It is, at one level, you give up your independence.

On the other hand, you have a greater scope of things that you will work on. And it's also nice to have my family in the same city, where while Congress was also a little easier on the family, I was gone four days.

On balance, I am having a great life. And I will always look back at the time either in the Clinton White House, Congress or here that I've done something with my life where I can feel -- look back and say I made a contribution to the country.

BLITZER: Rahm Emanuel, thanks very much for joining us.

EMANUEL: Thanks, Wolf.

BLITZER: Good luck.

EMANUEL: Thank you. (END VIDEO TAPE)

BLITZER: At the same time, the secretary of State, Hillary Clinton, is now weighing in on the passage of health care reform. As first lady, she spearheaded a failed attempt at universal health care during her husband's first term in the White House.

At a women's history event today up on Capitol Hill, the secretary could not conceal her emotions.

Listen to this.

(BEGIN VIDEO CLIP)

HILLARY RODHAM CLINTON, SECRETARY OF STATE: I was so thrilled when that vote finally closed. I don't know, Nancy. I mean I kept thinking, oh, lord...

(LAUGHTER)

CLINTON: What -- what might happen next?

And I know what a challenge this was. I have the scars to prove it.

(LAUGHTER)

CLINTON: And they're fading fast now that I know I will have universal, quality, affordable health care.

(APPLAUSE)

CLINTON: But this bill, which will finally see its last action in the House after coming over from the Senate this afternoon, this bill means so much to our country. But it is particularly important to women.

(END VIDEO CLIP)

BLITZER: The secretary of State clearly very happy on this day.

A suspicious envelope is delivered to a New York Congressman. Inside, a white powder. We're following this developing and disturbing story. Representative Anthony Weiner tells us why he thinks his office was targeted.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: We're following a developing story -- a very disturbing story. A package containing a suspicious white powder and a threatening letter sent to a district office of the New York Democratic congressman, Anthony Weiner. He says it may be related to his vote for health care reform.

And he just spoke about that with CNN producer, Erich Segal.

Listen to this.

(BEGIN VIDEO CLIP)

REP. ANTHONY WEINER (D), NEW YORK: Sometime this morning, with the regular mail, there was a threatening letter with some white powder in it. My staff was alarmed, as they -- they should have been. The NYPD HAZMAT folks came over. They shut down the office and are going through the decontamination stuff. There's no reason to believe it's anything -- there's anything biologic in it. And hopefully we'll be able to open the office in the next couple of days.

ERICH SEGAL, CNN PRODUCER: And what is the situation with your staff?

Is anybody -- is everybody fine?

WEINER: They've all been -- look, we had a -- they were -- they had to surrender their clothes and get HAZMAT suits and go through some tests and some debriefing with the -- the NYPD. I don't -- you know, they're a little bit shaken up. I'm a little bit concerned about their well being. And, you know, we've -- they're -- they're on their way home at this hour. And we're going to see when we can reopen the office.

SEGAL: Was there anything that accompanied the powder, a letter?

WEINER: There was a kind of a threatening -- a threatening letter. It's not -- I don't think it had a return address on it. And, you know, it was it was something -- it has something about, you know -- you know, sniff this and you'll see or something like that, you know, like that.

SEGAL: Was it a dre -- a threatening letter because of the health care vote or...

WEINER: Yes. We have reason to believe it was based on the health care vote.

SEGAL: Well, how does that -- it's been a rough week for Democrats, with all these threats.

What's been going through your mind?

WEINER: You know, look, there -- to some degree, I mean I've been kind of been -- I've been leading with my chin in this health care debate. And so, to some degree, I'm -- I'm probably a magnet for more letters around the country than other people are. Tens of thousands of letters and e-mails and calls and I've worked -- you know, and only a handful have crossed this line. That's bad and it's troubling. I'm more concerned about, you know, these people that work for me are not, you know, they're not political apparatchiks. They're people who are there to help my constituents. And so sending something like that to my community office, it -- it doesn't -- it's not -- it goes far beyond political speech. It's -- it's something akin to trying to terrorize the people in the office and that's -- that's my first concern.

(END VIDEO CLIP)

BLITZER: That's among the latest and most serious incidents involving the lawmakers from both parties who are receiving threats because of their votes for or against health care reform.

Jack Cafferty is next with your e-mail.

Then, did George W. Bush really wipe his hand on Bill Clinton's shirt?

Jeanne Moos will take a Moost Unusual look.

(COMMERCIAL BREAK)

BLITZER: It's time to check back with Jack for The Cafferty File -- Jack.

CAFFERTY: The question this hour is, in light of the pope's role in the Catholic Church sex abuse scandal, should he resign?

Christian writes: "Though perhaps unlikely, Pope Benedict XVI should, indeed, resign. It's clear, Benedict was, to some degree, while a cardinal, complicit in such cover-ups. Because the ultimate measure of an apology's sincerity is made manifest in the actions of the person apologizing, his resignation would send a clear message that he's not only sincere in wanting to heal both the wounds inflicted upon the church in general and the untold number of wounded souls in particular, but that he's willing to take personal responsibility for his actions. That's an essential element of contrition."

Janet writes from Fort Dodge, Iowa: "The pope should resign, yes. But the problem is anybody in line to follow him is going to just keep as committed to keeping the church's secrets. The good priests get stuck in little country churches and never move up the corporate ladder. Real reform is needed and I hope the people will make it happen. I'm a priest sexual assault survivor and I left the church long ago. But I hope for the sake of the people still in it that true reform occurs. But I'm not holding my breath."

John writes: "In my home country of Ireland, the church governed communities in an iron fist and with little love, compassion or a desire for service and understanding. It's disgusting to reflect on how scores of priests got on their moral high horse every weekend and lectured the people about how to live their lives, made sure they were confined to the narrowest of cultural and intellectual experiences and then raped the most innocent and vulnerable in society." Peter writes: "His resignation should be demanded. His actions are the most criminal offense. They're premeditated and carried out against children. Many more families and children became victims as priests were repeatedly shuffled about in these sick cover-ups. All this was done to protect the Vatican's image or wealth or both. Famous leaders have resigned for much less."

And Joe writes: "Why should he resign? He'd just be replaced by another priest who hides pedophiles. In 1966, a priest made a pass at me in the confessional in Vietnam. I've never had anything to do with the church since."

If you want to read more on this, you can go to my blog at CNN.com/caffertyfile.

BLITZER: It's shocking stuff.

All right, Jack.

See you tomorrow.

Thank you.

CAFFERTY: All right.

BLITZER: Former Presidents Bush and Clinton in a crowd and shaking lots of hands.

CNN's Jeanne Moos checks out whether the former president, George W. Bush, did what he did next. And you be the judge.

And later today, right at the top of the hour, in fact -- in a few moments, "JOHN KING USA," the former Bush White House adviser turned best-selling author, Karl Rove.

John King and Karl Rove coming up right at the top -- the top of the hour.

(COMMERCIAL BREAK)

BLITZER: Here's a look at today's Hot Shots -- pictures worth a thousand words.

In Russia, honor guards await the arrival of President Dmitry Medvedev at a World War II Memorial.

In Paraguay, people stage a protest in the capital to demand that the government keep its electoral promises.

In Jerusalem, an Ultra Orthodox Jew lowers cooking pots into boiling water to make them kosher for Passover.

And in Scotland, a woman blows smoke through a pipe once owned by Napoleon Bonaparte. It will be auctioned off March 31st.

Hot Shots -- pictures worth a thousand words.

Here's a question -- did former President George W. Bush rub former President Bill Clinton the wrong way, literally, by wiping his hands on him? You've probably seen the video. Now see the in-depth and Moost Unusual analysis by CNN's Jeanne Moos.

(BEGIN VIDEO TAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): Bill Clinton, human Handi Wipe?

With handiwork like this while shaking hands in Haiti, comedians didn't even have to write a joke. They just rolled the video.

(BEGIN VIDEO CLIP FROM "JIMMY KIMMEL LIVE," COURTESY ABC)

JIMMY KIMMEL, HOST: And -- (VIDEO CLIP)

KIMMEL: President Bush, the first time we've seen him in two months and this is what he does. He's the best.

(END VIDEO CLIP)

MOOS: The former president's office had no comment on Handwipegate, though some floated alternate theories.

(BEGIN VIDEO CLIP, COURTESY MSNBC)

UNIDENTIFIED MALE: Signaling to Clinton that he was ready to move on.

(BEGIN VIDEO CLIP FROM YOUTUBE.COM/MILDYRELEVANT)

UNIDENTIFIED MALE: Check out what some soft core porn music does to the video. And Bush thought marriage should be between a man and a woman.

(END VIDEO CLIP)

MOOS: Maybe the brouhaha over the back rub he gave Germany's chancellor led to a more subtle affectionate touch when it came to Bill Clinton. Former President Bush is said to be somewhat germophobic.

Who wouldn't be shaking all those hands?

GEORGE W. BUSH, FORMER PRESIDENT OF THE UNITED STATES: Shall we get on?

MOOS: Barack Obama writes in his book that when he shook President Bush's hand the first time they met, Bush turned to an aide nearby who squirted a big dollop of hand sanitizer in the president's hand. "Not wanting to seem unhygienic," Obama wrote: "I took a squirt."

(BEGIN VIDEO CLIP FROM "JIMMY KIMMEL LIVE," COURTESY ABC)

KIMMEL: And by the way, if you're germophobic, is Bill Clinton the best place to wipe your hands? (END VIDEO CLIP)

MOOS: Speaking of human hankies, remember, that's what they called the stranger whose shoulder Oprah cried on after Obama won the election.

(BEGIN VIDEO CLIP)

OBAMA: We saw a nation conquer fear itself.

(BEGIN VIDEO CLIP FROM "THE OPRAH WINFREY SHOW," COURTESY HARPO PRODUCTIONS)

OPRAH WINFREY, HOST: At one point, I was just sobbing on his shoulder, mascara everywhere. Anyway, thank you, Mr. Man, for letting me cry on your shoulder.

(END VIDEO CLIP)

MOOS: Impersonators already tend to portray former President Bush...

(BEGIN VIDEO CLIP, COURTESY FUNNYORDIE.COM)

UNIDENTIFIED MALE: And, Charles, may I put the Iraq War on my credit card?

I never dreamed I'd be paying 28 percent in interest rates.

(END VIDEO CLIP)

MOOS: -- as somewhat uncouth.

(on camera): If George Bush wiped his hand on Bill Clinton -- and it's only an if -- it wouldn't be the first time that he used someone as a human tissue.

(voice-over): Letterman loves to show...

(BEGIN VIDEO CLIP FROM "LATE NIGHT WITH DAVID LETTERMAN," COURTESY CBS/WORLDWIDE PANTS)

DAVID LETTERMAN, HOST: It's right there.

(END VIDEO CLIP)

MOOS: -- the time George Bush cleaned his glasses on a staff member during a commercial break. You've got to hand it to the former president, at least he's clean.

(MUSIC)

MOOS: Or at least wipe us.

Jeanne Moos, CNN...

(MUSIC)

MOOS: -- New York.

(END VIDEO TAPE)

BLITZER: Remember, you can always follow what's going on in THE SITUATION ROOM. I'm on Twitter. You can get my Tweets at Wolfblitzercnn -- all one word.

I'm Wolf Blitzer in THE SITUATION ROOM.

CNN's new show, "JOHN KING USA," starts right now.