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Prague Buzzing Over Obama Visit; Cost of Chinese Currency Policy; Former Fed Chairman Testifies on Housing Crisis; Mining Dangers

Aired April 7, 2010 - 17:00   ET

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


WOLF BLITZER, HOST: Don, thank you.

Happening now, a CNN exclusive -- recordings from that Michigan militia accused of plotting an armed revolt against the United States government. You'll hear a disturbing rant against what it calls a New World Order.

Also, the agonizing wait at the West Virginia mine where deadly gases at unheard levels are keeping rescuers at bay, as the families of four missing men wait and pray.

Plus, honoring the Confederacy and stirring up controversy -- one governor's decision opens up some old wounds and draws condemnation from some African-American leaders.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

They're self-proclaimed Christian warriors accused of planning to attack law enforcement officers here in the United States to incite the overthrow of the U.S. government -- chilling allegations against the alleged members of a Michigan militia. And now, ominous recordings revealing a deep-seated loathing of leaders they call "terrorists."

CNN's national correspondent, Susan Candiotti, is working the story for us -- Susan, tell our viewers what you have.

SUSAN CANDIOTTI, CNN CORRESPONDENT: Well, Wolf, CNN has obtained exclusively an audiotape played during a bond hearing for alleged members of the Hutaree militia last week. The government says you're about to hear the voice of the alleged leader.

(BEGIN AUDIO CLIP)

DAVID STONE, SR.: In this nation, we think we are free. But you need a certificate to be born, a license to drive or a permit to build, a number to get a job and even a paper after you die. These are permission slips from the terrorist organization called the New World Order.

People in this nation, as well as some around this world, are waiting for those individuals like you see sitting in this room to actually make the decision to go to war against this evil, greedy, New World Order. They need leaders who are not afraid to stand up and actually mean no more. We are free and should not be afraid or ashamed to admit we are the American militia. We outnumber them. As long as we let them terrorize any American through fear and intimidation, then they are winning this battle and we should step up to the fight -- the day has started -- and finish it.

(END AUDIO CLIP)

CANDIOTTI: FBI agents secretly recorded militia members after infiltrating the Hutaree. The tape was played as part of the government's argument that the defendants would be a danger to the community and a flight risk if they got bailed before trial. They didn't and are appealing. This is the group's training video posted on the Internet.

They're accused of conspiring to overthrow the government and planning to murder a law enforcement officer and then attack a funeral procession with homemade bombs to kick off a revolt.

On the audiotape, the group's alleged leader, David Brian Stone, is angry about what he calls "the New World Order" taking over the U.S. Prosecutors say the Hutaree's leader wanted to create his own country, carved out of four Michigan counties to defend itself against the so-called New World Order and the Brotherhood. That's what the militia called law enforcement officers.

(BEGIN AUDIO CLIP)

STONE: Everyday, we watch ever so close the most evil (INAUDIBLE) appear on our streets. But as long as their Interpol (ph), law enforcement mercenaries called the Brotherhood working for the New World Order are doing such a great job, then we don't need to watch for these foreign armies to come to our shores. They are already here.

(END AUDIO CLIP)

CANDIOTTI: Now, this kind of talk is something commonly heard in the mid-1990s, leading up to the Oklahoma City bombing, when militias appeared to increase. Experts say they're on the rise again -- Wolf.

BLITZER: Was this recorded during some sort of meeting?

Is -- is that what we know?

CANDIOTTI: Prosecutors are telling us it was recorded last winter, when the group was driving to Kentucky for a meeting with other militias, but had to turn back because of bad weather. So the group's leader decided to give the speech to others as they were driving in the van. Defense attorneys say that's all this is -- just talk -- free speech -- Wolf.

BLITZER: Susan Candiotti with that report for us.

Susan, thank you.

Other news, officials say the West Virginia mine where four men are missing is filled with explosive -- poisonous gases at levels thousands of times beyond the maximum safety level. And that's keeping rescuers side-lined, as more holes are being drilled to try to vent those gases.

CNN's Brian Todd is on the scene for us in West Virginia -- Brian, what's happening right now?

BRIAN TODD, CNN CORRESPONDENT: Wolf, the drill teams are furiously drilling holes in this mountain to vent out some of those dangerous gases. But right now, they are confronted with the problem of more than one dangerous gas that is keeping the rescue teams at bay.

We're going to get to that in a second. I'm going to show you where they're drilling.

Right now, here's the status of the drilling operation. Hole No. 1 has reached its destination. That seam has been reached on Hole No. 1, about 1,100 feet down. Hole No. 2 is going in about the same location down to that first chamber, around the area of Hole No. 1. That's where they believe these four miners that are unaccounted for -- they believe they are near this general area. They're going to try to get down there and possibly put some cameras down there to see if there's any activity -- any sign of life.

A third hole is being drilled as we speak. Fourth and fifth holes are planned. That's just to vent out the gases so the rescue teams can go in here.

This is where the rescue teams are going to enter, this portal over here. And they've got about 8,000 feet to go once they do enter, to get to the area where they think these miners are trapped.

And the problem with the gases is this. They thought that methane was going to be their main problem.

They told us just a moment ago methane levels are not so bad right now, but now they're combined with carbon monoxide and hydrogen levels that are very dangerous -- so dangerous, they're even affecting the drill teams that are on the surface.

Kevin Strickland of the Mine Health and Safety Administration talked a moment ago about the risks that they are not yet willing to take.

(BEGIN VIDEO CLIP)

KEVIN STRICKLIN, U.S. MINE SAFETY & HEALTH ADMINISTRATION: We just can't take any chances of the rescue teams going into an area that could, in and of itself, cause a problem or an explosion or put them in by and the smoke concentration gets turned out without being in contact with other members of the team or with people in fresh air.

(END VIDEO CLIP)

TODD: Now, what they're trying to find is whether any of the missing members might have one of those rescue chambers. They've come across one of those rescue chambers. Several of them are down there. They have checked several rescue chambers. Of all the ones they have checked, none of them have been entered into. None of them have been used so far. So no sign of anyone using those.

But there are two rescue chambers that they say they have not seen yet. They're trying to see if they can find those, to see if by chance any of these four miners are inside -- Wolf.

BLITZER: You were on today with some of those mine rescue workers -- Brian, how did that go?

TODD: Well, the drilling is going very well. The mine rescue workers are being trained, as we speak, at an academy near here, where they train them how to go in, how to use their equipment, what to do, what to look for. And we spoke to a guy named Mack Wright, who has trained these rescuers for about 30 years now. He has a lot of experience. He told us all about what they go through to train to go onto these missions. And a crucial factor is what to do with a miner who they might come upon who has signs of life.

Here's what he says they've got to do.

(BEGIN VIDEO CLIP)

MACK WRIGHT, MINE RESCUE TRAINING INSTRUCTOR: If the person is alive, they will have a stretcher. They may have it with them. They may have it within 500 to 600 feet. A couple of the guys will run -- go back real -- as quick as they can and get the stretcher while a couple more are checking the vital signs and, as we talked earlier, looking for life-threatening injuries.

As soon as they get the oxygen support placed on the person and the life threat and see if they're already taken care of, they'll put them on the stretcher. And all five men or the rescuers or six or however many there are will get up and get the stretcher and start toward the outside.

(END VIDEO CLIP)

TODD: So he mentioned five or six rescuers on a team. That's about how many are on each team at a time. They're basically held together by a rope that they call a lifeline so that they don't lose communication with each other.

We are told up to 30 rescuers are going to be going into this mine at a given time -- Wolf.

BLITZER: And if there's a development any time -- any time at all, Brian, if it's soon or not so soon, you let us know immediately and we'll get right back to you.

TODD: Absolutely. BLITZER: A lot of anxious people waiting for word about those four missing miners.

Brian Todd on the scene in West Virginia.

It's a problem that has confounded U.S. presidents for more than half a century. But now, we're learning a dramatic development. The president of the United States may -- repeat may -- be on the verge of an American peace plan to finally try to put an end to the Israeli- Palestinian conflict. Stand by. We have information.

Also, Iranian president, Mahmoud Ahmadinejad, is ridiculing President Obama. Details of his amazing remarks going directly after the president. Stand by for that, as well.

Plus, deadly violence in a country critical to U.S. efforts in Afghanistan. And now there's fear that the government -- the entire government may have collapsed.

(COMMERCIAL BREAK)

BLITZER: Jack Cafferty is here with The Cafferty File -- Jack.

CAFFERTY: It's not exactly breaking news, this. Iran continues to thumb its nose at the United States, this time by ridiculing President Obama's new nuclear strategy.

In a speech to thousands of Iranians, the president, Mahmoud Ahmadinejad, said: "Mr. Obama, you are a newcomer to politics. Wait until your sweat dries and get some experience. American officials bigger than you, more bullying than you, couldn't do a damn thing, let alone you," unquote.

He was referring to President Obama's new nuclear policy, in which the U.S. pledges to stop developing new nuclear weapons and not to use existing weapons to attack non-nuclear states that follow non- proliferation agreements. The administration believes the greatest threat to security is no longer nuclear attacks between countries, but instead nuclear terrorism by extremists. And to that end, they're singling out states like Iran and North Carolina, saying if they don't play by the rules, quote, "all options are on the table," unquote -- which is probably the part the punk in Iran was whining to the crowds about.

Some experts suggest that by targeting Iran and North Korea, the U.S. could unintentionally strengthen the hard-liners in those countries, who say nuclear weapons are the only way they can protect themselves.

Meanwhile, critics, including some Republicans, believe just the opposite -- that the president isn't applying -- applying enough pressure on these state supporters of terrorism. And the critics have a point.

Remember Obama's deadline for Iran's nuclear program that came and went last year? Iran ignored the deadline and we did nothing.

The announcement of this new strategy comes just days before President Obama is set to sign a new nuclear arms treaty with Russia that will reduce both countries' nuclear weapons stockpiles.

Here's the question, then -- is President Obama's new nuclear policy a good idea or does it reduce the deterrent value of our arsenal?

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

BLITZER: Good question, Jack. Excellent question.

Let's continue this -- this issue right now.

There's new word today that the White House -- could be on the brink of a major shift in a longstanding U.S. strategy -- U.S. policy toward the Middle East. "The Washington Post" is reporting that President Obama is seriously considering -- seriously considering proposing a U.S. peace plan to try to resolve the Israeli-Palestinian conflict.

Let's talk about this with our guests.

David Ignatius is a columnist for "The Washington Post." He wrote that story. He's also the author of the book, "Body of Lies." And our senior political analyst, David Gergen. They're both here -- David Gergen, let me start with you.

And just to set the stage, because it's -- the U.S. policy toward the Israeli-Palestinian conflict is always to try to facilitate negotiations, but let the parties themselves negotiate and come up with a -- a final resolution, not to come up with a U.S. peace plan that would be imposed on the -- on the -- on the parties themselves. That has been repeatedly rejected by U.S. officials. But right now, there may be a change.

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST, FORMER PRESIDENTIAL ADVISER: Well, you're absolutely right, Wolf. For president after president, the policy has been that the U.S. should play the role of a mediator -- of an even-handed mediator. And -- and that's because the Israelis, and, to some extent, the Palestinians -- but especially the Israelis -- have always said don't impose a peace upon us.

If you set conditions out there that you want to see met, here's what we want.

And the Palestinians can grasp a hold of those conditions and say, OK, that's the bottom line for the negotiations. We're not going to -- we're not going to retreat anywhere from those lines. And it puts enormous pressure on the Israelis.

But this president and his administration have met and, you know, have had high ambitions for the Middle East. They increasingly believe that the Palestinian/Israeli struggle is tied to the war on terrorism. The president is frustrated now. And so David Ignatius broke this important story that they are cer -- that they are now looking at that possibility. And "The New York Times" has now come along behind David and confirmed that -- his -- his story.

BLITZER: And David is here.

David, let's talk about this. But I want some context. And I'm going to play two clips for you -- the president of the United States last June and the Secretary of State, Hillary Clinton, more recently, in March.

(BEGIN VIDEO CLIP FROM JUNE 4, 2009)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We cannot impose peace, but privately, many Muslims recognize that Israel will not go away. Likewise, many Israelis recognize the need for a Palestinian state.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP FROM MARCH 22, 2010, COURTESY YOUTUBE)

HILLARY RODHAM CLINTON, SECRETARY OF STATE: The United States knows we cannot force a solution. We cannot ordain or command the outcome. The parties themselves must resolve their differences.

(END VIDEO CLIP)

BLITZER: But now, David, you reported in "The Washington Post" today there may be a significant change in that long time U.S. strategy of not trying to, quote, "impose a peace settlement on the Israelis and the Palestinians."

DAVID IGNATIUS, "WASHINGTON POST" COLUMNIST, AUTHOR: Well, in the end, you can't impose anything that the parties aren't prepared to accept. But I do think that the Obama administration has become frustrated with the incrementalism -- the step by step nature of its approach to the peace process, as adopted a year ago. Senator George Mitchell has been our emissary. Based on his experience in trying to -- and succeeding in negotiating peace in the Northern island, he argued, let's go carefully, talking to the two parties and only after that initial phase and getting some concessions, should we come in with bridging proposals of our own.

And a year later, I think the administration is -- is moving toward a decision that that approach just hasn't worked and it's time to be much more explicit about what the U.S. sees as the basic elements of a peace deal that will work.

BLITZER: Because I -- I've heard, David Ignatius, from my own sources in the administration -- and you're right, they are totally frustrated by all of this -- that, whereas in the past, they would want the Israelis and the Palestinians to get close, then they would finally come up with the bridging proposals and try to resolve it that way. What -- what I hear you saying and based on this extraordinary meeting that you reported that the president participated in recently at the White House, is that at this stage, they would come up with a U.S. blueprint and then try to shove it down?

IGNATIUS: I think the idea, Wolf, is to -- is to do two things. First, to summarize the basic elements of agreement that have been merged since the 2000 Camp David talks between the Israelis and the Palestinians that came very close to producing a deal and subsequent discussions that have -- that have further narrowed the differences.

As one senior administration official said to me when I was working on this -- on this story, everybody knows the basic outlines of the peace agreement that will work. I mean at this point, there are really no mysteries. It involves a very limited right of return for Palestinian refugees. It involves exchange of territory to get borders that work. It involves some kind of understanding about Jerusalem. And that's -- that's probably the toughest issue of all.

But everybody knows what the parameters of the agreement are. It's just a question of getting to that point.

I think the administration has concluded that you've got to push that harder. The second piece of this that I reported this morning was the administration wants to tie this to Israel's biggest security concern, which is Iran. As a senior official said to me, in a sense, these are really two halves of the same problem, that the Iranians use the Palestinian issue -- this sort of open wound in Arab and Muslim world -- as a -- as a rallying point. They don't deserve to have that. But the administration's idea is let's push together on both. Let's -- let's...

BLITZER: But...

IGNATIUS: -- let's be very tough with Iran and also try to -- to deal with the peace process.

BLITZER: But, David Gergen, as you know, there are political -- enormous political risks if the Obama administration wanted to go forward with what one senior official has told me privately, called some tough love, on the Israelis right now.

GERGEN: Absolutely, Wolf. And it will -- it will stir up the U.S. Congress, where there is a great deal of support for Israel. And after all, even though people may agree theoretically on what the parameters might be of an ultimate peace, there's been such a breakdown in Confederate History Month both sides that if you talk to Israelis, they will -- as you well know and David knows -- the Israeli will tell you, look, twice we've given up land for peace. We've -- we've sort of listened to this consensus and we tried to do it. And we withdrew -- and from Lebanon and we withdrew from Gaza.

And what happened in both cases?

They started shelling us and we put our citizens at risk. Until there's more confidence building, the Israelis will definitely see this as an important sign. Until they have more faith in the Palestinian leader.

And that's why I think a couple of officials are saying, David Ignatius, they do want to go through with the proximity talks first to see if they can get somewhere. But if those then fail, this would be down the road, then they're thinking they have to put something more on the table.

BLITZER: It's going to be a delicate dance, to be sure. The stakes here are enormous.

Guys, thanks very much, David Ignatius and David Gergen.

At least 40 people are killed and concerns that a government critical to the U.S. interests may be -- may be on the brink of a major change with major implications for the war in Afghanistan and beyond.

Plus, Sarah Palin lending her political star power to a fellow female conservative. We're going to show you who she's teaming up with

(COMMERCIAL BREAK)

BLITZER: Lisa Sylvester is monitoring some of the other top stories here in THE SITUATION ROOM right now -- Lisa, what's going on?

SYLVESTER: Hi there, Wolf.

Well, opposition leaders have claiming control of the area in Kyrgyzstan. It comes as violent protests are erupting across the country over alleged corruption and spiraling utility bills. At least 40 people have been killed and hundreds wounded in violence that's leaving sweeping several major cities. The former Soviet republic is a key link in the supply line for U.S. forces in nearby Afghanistan.

Sarah Palin just wrapped up a campaign event for a fellow conservative in Minnesota. She fired up the crowd in support of Representative Michelle Bachmann. Palin criticized the president and Democratic leaders in Congress and told those at the rally to, quote, "do the rest of the nation a favor and re-elect Bachmann to a third term."

Glacier National Park is losing two more of its namesaked moving ice fields. Warming temperatures are reducing the number of named glaciers in the Montana park to 25. The U.S. Geological Survey warns they may all disappear by the end of the decade. The glaciers have been slowly melting since the mid-19th century. The melting shows the climate is changing, but doesn't show exactly what's causing the temperatures to rise -- Wolf.

BLITZER: Very worrisome. We'll see if we get answers eventually on that one. Lisa, thank you. President Obama is about to sign a major new nuclear arms treaty with Russia. We're going to tell you how it fits into his new broad policy on nuclear weapons. Stand by for that.

And how much would you pay to be the president's neighbor?

The house next door to the Obamas in Chicago has just sold. We're going to tell you for how much.

And there are new signs that the U.S. and China may be moving toward a resolution on Beijing's currency controls. For the United States, it could be significant, especially for job creation. We're going to tell you what it means for U.S. businesses.

(COMMERCIAL BREAK)

BLITZER: You're in THE SITUATION ROOM. Happening now, he's a U.S.-born Muslim cleric -- an American citizen believed to be tie odd tied to the Fort Hood shootings and the Christmas Day plot. Now the federal government is targeting him to be killed or captured.

Doesn't have the legal authority to do So we are investigating.

Almost three days after the deadly West Virginia mine explosion. Dangerous gases are hindering the search for the missing.

Brian Todd is getting ready to show us how the rescue teams train for the daunting task.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

President Obama is in the midst of rolling out several key pieces in his new nuclear strategy. In a new Pentagon report, the administration is announcing two major policy changes.

The United States will halt development of new generations of nuclear weapons and is pledging not to use nuclear weapons against non-nuclear states that have abided by international non-proliferation agreements.

Tomorrow, the president will be in Prague to sign a nuclear arms reduction treaty with his Russian counterpart. Next week, the president, here in Washington, will host 44 heads of state in -- for a major nuclear security summit. They're expected to pledge to secure nuclear weapons materials worldwide within four years.

The president leaves for the Czech Republic later tonight.

Our senior White House correspondent Ed Henry is already in Prague where the city is buzzing about the president's visit.

Let's go live to Prague right now. Ed, what are you seeing? What are you hearing?

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: The newsstand, all the front pages is talking about Barack Obama starts a nuclear week. This front page is talking about how President Obama and President Medvedev will be guarded by some 5,000 local police officers when they sign this new strategic arms reduction agreement.

You can see on this front page, the other big American story, Tiger Woods at the Masters Golf Tournament.

But here, the really -- the main point, Obama's shocking new idea. All about this new U.S. approach to the use of nuclear weapons.

So we're at Charles University. One of the oldest universities in the world. To get an idea, what do the people think about all this.

(BEGIN VIDEOTAPE)

HENRY (voice-over): At this law school, the students have vivid memories of the president's speech in Prague one year ago this week.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We, too, must ignore the voices who tell us that the world cannot change. We have to insist, yes, we can.

HENRY: Where he first revealed his vision of a nuclear-free world to some 20,000 people.

UNIDENTIFIED FEMALE: Many people and I was -- I don't know, maybe the last one so.

HENRY (on camera): What did you think of the speech then?

UNIDENTIFIED FEMALE: It was good. It was like -- I don't know. It was so many people. It was like -- I don't know the right word.

HENRY: Was it exciting? Did you --

UNIDENTIFIED FEMALE: Yes. Yes, that's the right word. Exciting, really.

HENRY (voice-over): One year later the students are proud Prague Castle will be the backdrop for the treaty signing, but they're split on how much it will impact their generation.

UNIDENTIFIED MALE: It makes better relationship in the world, and it is a big corner for our country that the signing will be here.

UNIDENTIFIED FEMALE: It is great success that they will sign the contract, but still it's not enough, you know, because there are too many nuclear weapons to destroy this world. So I'm afraid all these contracts is just -- it is still not enough.

HENRY (on camera): It was here on Wenceslas Square in 1989 that thousands and thousands of Czechs gathered until finally they broke the Soviets back. But even though it's been more than 20 years since the Velvet Revolution, young people here say they still don't trust the Russians.

As somebody who grew up in the Czech Republic, do you trust the Russians or are you skeptical that they're going to follow this treaty?

UNIDENTIFIED MALE: No, no. We don't trust them. We don't trust the Russians. Just like that.

HENRY: Is it just because of the Soviet occupation?

UNIDENTIFIED MALE: Yes, exactly. That's right.

HENRY: Even though so many years have passed? It's been more than 20 years since the Velvet Revolution.

UNIDENTIFIED MALE: I think that's -- they didn't change so much. So I don't know believe in the democrats in Russia so.

(END VIDEOTAPE)

HENRY: Now after hearing critics trash the president's foreign policy record, top White House aides are very eager to hail this new START treaty as a major victory. One of the president's top aides telling me that this never would have come to conclusion without the president personally getting involved and driving it to conclusion.

Nevertheless, it still has to be ratified with 67 votes in the Senate. That means getting a lot of Republican votes, something the president hasn't been able to do so far on any big issues.

And I can tell you that one of his top advisers leveled with me that they feel pretty good about getting the votes, but they realize they don't have them yet, Wolf.

BLITZER: Ed Henry is going to be covering this trip for us. Ed, thanks very much. He's already in Prague.

The Treasury Secretary Tim Geithner is adding a stop in Beijing on his way home from India this week. Fueling speculation the United States and China may - repeat -- may be moving towards settling a huge dispute over China's currency controls.

Geithner will meet with the Chinese vice premier for economic affairs tomorrow. Washington is pressing Beijing to ease exchange rate controls that are said to keep its currency under valued that benefits Chinese exporters.

Some economists say China's currency is undervalued by as much as 40 percent and that effectively acts as a tax on U.S. exports competing with Chinese goods.

CNN's Mary Snow has been taking a closer look at how all of this impacts American businesses, American jobs. It sort of -- eyes glaze over when you hear about currency controls and interference, but this has real, real impact on the creation and the maintenance of jobs in the United States.

MARY SNOW, CNN CORRESPONDENT: It absolutely does, Wolf. You know China's low exchange rate combined with its cheap labor costs have particularly hurt U.S. manufacturers. We visited one manufacture in New Jersey that's among a dying breed. And to explain its demise, the owners point east.

(BEGIN VIDEOTAPE)

SNOW (voice-over): With one eye Ed Parseghian careful watch on the embroidery done at his factory, with the other, he pays attention to what's going on in China.

(On camera): So on a daily basis, do you keep tabs on China's currency?

ED PARSEGHIAN, FOUNDER DEERBROOK FABRICS: We try to, yes.

SNOW (voice-over): For Parseghian, it's personal. He says the type of work done at his New Jersey business costs about 30 percent less in China. He's run Deerbrook Fabrics for four decades. Most of that time with his son Steve, but the business is now a shell of its former self with staff cut and clash closed. Recently, they had to sell two skill machines for scrap metal.

UNIDENTIFIED MALE: It hurt not just in our pockets, but it also hurt emotionally. Especially my father. Watching him suffer through that, it was like him watching a cancer patient die. It was awful.

SNOW: Robert Scott is with the liberal think tank, the Economic Policy Institute. It estimates that 2.4 million American jobs were lost in the seven years to 2008 to Chinese competition and not just because of its lower labor costs.

ROBERT SCOTT, ECONOMIC POLICY INSTITUTE: And this is happening because China is manipulating the value of its currency. That makes Chinese goods artificially cheap here. About 40 percent cheaper than they should be.

SNOW: The charge China is manipulating its currency is a place where the U.S. hasn't gone.

CANDY CROWLEY, CNN ANCHOR: Right now is China manipulating its currency at the detriment to U.S. jobs?

LARRY SUMMERS, DIR., NATIONAL ECONOMIC COUNCIL: There are clearly crucial issues with respect to commercial practices in a number of countries, including China. Our trade deficit has come down substantially, but no one can be satisfied with where we are. This is going to be a continued focus for us going forward.

CROWLEY: So it's not a good thing to say out loud is what I take from you. SUMMERS: It's not a good -- we're focusing on increasing our exports.

SNOW: China has kept its currency at roughly 6.82 yuan to one U.S. dollar for nearly two years, a level many economists say it's undervalued by anywhere between 20 and 40 percent.

Chinese officials insist the U.S. is using Beijing as a scapegoat for the economic troubles. U.S. lawmakers are trying to pressure the administration to get tougher with China, but currency analysts Mark Chandler doesn't see adjusting the yuan as the answer to the problem.

MARC CHANDLER, BROWN BROTHERS HARRIMAN: If we would put a (INAUDIBLE), slap a tax on Chinese imports to the U.S. to compensate us for the unfair currency, who are we punishing? We are punishing GM, we are punishing Apple, we're punishing Dell.

SNOW: Because?

CHANDLER: Because they produce goods in China and export them.

(END VIDEOTAPE)

SNOW: And, Wolf, because U.S. companies take advantage of cheaper labor in China to make goods that are cheaper, a tariff would also mean that U.S. consumers would pay more. Wolf?

BLITZER: Good explanation. As I say, the stakes really are very significant for all of us. Mary Snow reporting.

The former Federal Reserve chairman Alan Greenspan testifying on the subprime housing crisis. Wait until you hear how often he says he made the wrong move during his 21-year tenure.

And in an extremely unusual admission the government acknowledges it's trying to kill an American citizen. Kill an American citizen who is seen as a terror suspect. We're going to tell you who and why. Stay with us.

(COMMERCIAL BREAK)

BLITZER: Let's go back to Lisa, she's monitoring some of the other top stories in THE SITUATION ROOM.

What else is going on, Lisa?

LISA SYLVESTER, CNN CORRESPONDENT: Hi, Wolf.

A pregnant Colorado woman is pleading not guilty to charges she aided terrorist. A lawyer for Jamie Paulin-Ramirez says the government seized evidence that may contain voice recordings. And he wanted her to keep silent so prosecutors wouldn't have a sample of her voice.

She's one of two American women accused of traveling to Europe to support and participate in a violent jihad. Convicted swindler Bernard Madoff's New York City's penthouse is off the market. A businessman who made his fortune from Cabbage Patch dolls -- remember those - and Pokeman, he says that while he and his wife were worried about the apartment's karma, they fell in love anyway with its view of the Manhattan skyline.

The couple reportedly paid $8 million for the place. And most of that money will go to Madoff's victims.

The Obama family has new neighbors to meet when they travel home to Chicago after seven months on the market. The house next to the Obamas and their South Side neighborhood has sold for $1.4 million.

The listing agent says the new owners weren't attracted to the house because of the president. And that Secret Service has been in touch.

So new neighbors for the Obamas back home in Chicago. I'm sure they'll have a chance to meet. Maybe they will bring a casserole or something, Wolf.

BLITZER: Yes. They don't spend a lot of time there since coming to Washington, but I'm sure at some point they'll probably go back to Chicago.

Thanks very much, Lisa, for that.

It was a U.S.-led attack in Iraq that led to the death of two journalists. Were the proper rules of engagement followed? We have new information.

And the governor of Virginia is declaring April Confederate History Month. Why the controversial decision to honor the confederacy is dredging up raw emotions over race.

(COMMERCIAL BREAK)

BLITZER: The special commission looking into the U.S. financial crisis has now started three days of meetings on the subprime lending that resulted in the collapse of the housing market. Among those testifying, the former Federal Reserve chairman, Alan Greenspan.

Critics have faulted him for failing to raise interest rates as the market overheated and Greenspan concedes that in hindsight he did make mistakes.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Would you put this all under the category of oops, we should have done it?

ALAN GREENSPAN, FORMER FEDERAL RESERVE CHAIRMAN: You know, I -- when you've been in government for 21 years as I have been, the issue of retrospect of figuring out what you should have done differently is a really futile activity because you can't, in fact, in the real world do it. I think -- I mean, my experience has been in the business I was in, I was right 70 percent of the time, but I was wrong 30 percent of the time. And there are an awful lot of mistakes in 21 years.

(END VIDEO CLIP)

BLITZER: Wow. Thirty percent of the time wrong. Let's bring in our national political correspondent, Jessica Yellin.

Hey, he was very blunt. He was candid that 30 percent of the time he was wrong. Alan Greenspan, everybody thought he was always right.

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: That's right, but right now critics, Wolf, are saying that 30 percent is what matters most. And some of them blame Greenspan more than anyone else -- any one individual -- for not stopping the excesses in the housing market that fueled the meltdown.

Today in his testimony, he was really on the defensive. He blamed investors and even the banks for basically being greedy and causing the meltdown. He suggested that his own power to slow down the housing market was limited as head of the Fed.

His critics say he could have taken steps he didn't take. He also maintained that his policies and actions prevented the meltdown from being worse, so on balance, Wolf, he said the good things he did outweighed the bad.

BLITZER: But since the collapse and the recovery over this past year and the recovery that's been around, there really hasn't been any major changes in the regulations. I know you were over at the White House today participating in a briefing.

What's going on because they need to make some changes if this isn't going to happen again?

YELLIN: And the top officials at the White House that I spoke to agree. They are going to make financial reform, fixing Wall Street, changing it, the big issue on Capitol Hill when the Senate is back.

Now the administration officials today were confident that this bill will get done this year. They call it urgent. And they even dismissed the Republicans' claims that this issue is being rushed.

Now these White House officials believe -- administration officials believe that some Republicans really want to sign on to Wall Street reform, but so far as a reporter, I haven't seen signs that any individual Republican is yet ready to actually do it.

The problem, the White House will have to find compromises that can win them Republicans without losing Democrats. And right now, even some Democrats are unhappy with the bill, so the math on this one is rough.

And complicating things even more, Wolf, is the fact that it's not just Democrats and Republicans really negotiating, there's so much Wall Street lobbying and ad spending and just influence right now that it's like three are dancing at this party.

BLITZER: Yes, well, if they don't fix it, there could be another collapse. There's deep concern among some economists that they've got to get their act together and do it quickly. And not just talking about the executive branch, but the legislative branch in the government as well.

YELLIN: They'll take it up when the Senate is back. We'll see.

BLITZER: We'll see what they do. If anything. Thank you.

Jack Cafferty wants to know, is President Obama's new nuclear policy a good idea? Jack and your e-mail when we come back.

(COMMERCIAL BREAK)

BLITZER: Let get right back to Jack for "The Cafferty File." Jack?

JACK CAFFERTY, CNN ANCHOR: The question this hour is, is President Obama's new nuclear policy a good idea, or does it reduce the deterrent value of our nuclear arsenal?

Click in Atlanta writes, "What good is it to have an arsenal of any kind if your opponents know the decision tree that must be followed in order to use it?"

A. in Oregon writes, "No nuclear response unless it's a first strike or massive biological weapons attack on America. Yes, it's a good idea and it's long overdue."

Greg in Ontario writes, "I don't know why you give any time or attention to as you so perfectly describe him this punk. Just tell Iran, go ahead, do what you want, but know this, if you cause the death of a single American, you'll be obliterated from the face of the earth. President Obama should make that statement at the United Nations."

Mo in Atlanta writes, "I believe it's a good idea to start decreasing our nuclear weapons arsenal. We need to be leaders on this and show that we're not arrogant, that is, demand that other nations do something that we don't want to do ourselves. Besides, will giving up a few thousand nuclear weapons actually mean anything when we still have thousands more?"

S. in Georgia writes, "Obama's all talk and no action. Iran and North Korea are going to continue to do whatever they want. They could care less about the sanctions the U.S. wants to impose. Ahmadinejad knows Obama's not going to do anything, and he's been laughing at him the whole time."

David in Las Vegas, "Blah blah blah, yada yada yada. And if that doesn't work, we'll threaten everyone with sanctions. Question, what do you call a country below paper tiger? Good luck, Mr. President." And Kenny in California writes, "President Obama's new nuclear policy will become the old policy when another hawk is elected president, atom bashing will once again become atom smashing. The White House comes with a revolving door."

You want to read more on the subject, you'll find it on my blog at CNN.com/caffertyfile. Wolf?

BLITZER: Love your blog, Jack. Thank you very, very much.

So what are the rescuers charged with finding those four missing West Virginia miners actually facing? Our Brian Todd is about to take us inside a rescue training mine shaft to show us what they're up against.

And it was a deadly U.S.-led assault in Iraq that left nine people dead including two journalists. Were the proper rules of engagement followed? We're getting new details, stand by.

(COMMERCIAL BREAK)

BLITZER: The massive explosion at that mine in West Virginia's a dramatic highlight of the danger miners face on the job every single day. It's hardly the only danger, though.

Our chief medical correspondent, Dr. Sanjay Gupta, is looking at some of the other risks.

(BEGIN VIDEOTAPE)

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT (voice-over): Lorelei Scarbro is still waiting for any word from inside the mine. Friends and people she loves are not yet accounted for, but you know it took me just minutes to realize that while we all wait with her today, in fact, Lorelei has been waiting and worrying for decades.

LORELEI SCARBRO, COAL MINER'S WIDOW: You're always concerned every time they walk out the door about a fall, about an explosion, about the danger, you know, that exists there. There are so many things that can go wrong.

GUPTA: So many dangers, some intense and unpredictable, and others that seem to creep into miners' lives over time. Lorelei's husband went to work at the mines for 30 years.

SCARBRO: Going a couple of miles under ground in a very, very dark hole where it's dark and damp, and like I said before, if the mountain starts falling in on you there is nowhere to go, and when the lights go out, you don't have any idea where to go or what to do.

GUPTA: That's in the case of an explosion, but Lorelei is also talking about something else -- slower deaths, black lung, coal dust killing off your lungs and literally turning them black.

Over the past decade, 10,000 miners have died of black lung disease. Kidney disease affects about 20 percent of miners, and there's neurological complaints as well.

SCARBRO: My daughter called me very early this morning and she was very, very upset because she said one of the hardest things that she had to do was to send her husband to work today.

GUPTA: Today.

SCARBRO: Today. He's terrified. We all are. We all are. Because, I mean, this could happen again today. We're disposable commodities here and, you know, the -- this is the only game in town. We live in a model economy.

GUPTA: The waiting did end for Lorelei a few years ago.

(On camera): This is your husband's gravestone.

SCARBRO: Yes, it is.

GUPTA: What happened to him?

SCARBRO: My husband was diagnosed with black lung. Totally disabled with black lung. By the time he was 51 years old.

GUPTA: What does that -- I mean, what was he experiencing?

SCARBRO: Extreme shortness of breath. I was really surprised the first time that I saw the x-ray of his lungs. Kenny was -- he was a little guy. But his lungs were -- were -- when I saw the x-rays, they filled up his whole chest cavity. They were -- it looked like these balloons that had been blown up with black lung. He really, really suffered.

GUPTA: This was definitely due to coal mining?

SCARBRO: Absolutely.

GUPTA: There's something else that Lorelei wanted to show me as well. This is her family cemetery. And I just see gravestones everywhere. Just about everyone here has died of a mining-related cause.

(END VIDEOTAPE)

BLITZER: Dr. Sanjay Gupta reporting for us from the scene in West Virginia.

And to our viewers, you're in THE SITUATION ROOM. Happening now.

Gripping and violent video of an attack of U.S. helicopters that left nine people dead in Iraq. And it's right now raising serious new questions about the rules of engagement for U.S. troops and whether they were followed.