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THE SITUATION ROOM

Fact Check on Anti-Terror Funding; Another Bid to Stop the Spill; White House Goes Head-to-Head with Leaders; Violence Explodes in Thailand

Aired May 13, 2010 - 17:00   ET

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


WOLF BLITZER, CNN ANCHOR: Thank you, Rick.

Happening now new raids and arrests in the investigation of the botched Times Square bombing. At this hour, where did the suspect get all that cash and are the Feds cutting New York's anti-terror funding? We have new information.

We also have new glimpses of a failed attempt to plug the gushing oil well in the Gulf of Mexico. Will the next fix-in plan work? We're following all the action at that leaking rig right now.

And the president gets a taste of my hometown, Buffalo, New York. We'll listen to his economic pitch, get a little flavor of his visit to my old stomping grounds.

I'm Wolf Blitzer, you're in THE SITUATION ROOM.

Up first this hour, federal agents on the money trail of the Times Square bombing suspect. They conducted a series of raids in at least three states today. Three men are now in custody on alleged immigration violations, all of them from Pakistan.

The source close to the investigation says there's no direct evidence that they're connected to the bomb attempt, but they may have played a role in providing money to the suspect, Faisal Shahzad.

The attorney general of the United States, Eric Holder, told reporters about the raids during testimony this morning.

(BEGIN VIDEO CLIP)

ERIC HOLDER, ATTORNEY GENERAL: These searches are the product of evidence that has been gathered in the investigation since the attempted Times Square bombing and do not relate to any known immediate threat to the public or active plot against the United States.

(END VIDEO CLIP)

BLITZER: Also today a new fight over money to prevent terrorism. New York lawmakers say the Feds are cutting funding to help keep the city safe, but the White House is pushing right back against those claims.

Let's go to New York. Mary Snow is checking all the facts for us.

Mary, what are you finding out?

MARY SNOW, CNN CORRESPONDENT: Wolf, here's the bottom line. New York City will be getting less money in Department of Homeland Security grants than it did last year, but it's receiving more money overall, and that's thanks to the 2009 stimulus package.

But some New York lawmakers say those DHS levels should not be lowered.

(BEGIN VIDEOTAPE)

SNOW (voice-over): It raised hackles. Less than two weeks after the failed Times Square bombing plot, New York Republican congressman Peter King called it a slap in the face and Democratic congressman Charles Schumer criticized the Obama administration saying funding meant to protect New York's transit system and ports has been cut.

Today Schumer said he wants to see an increase.

SEN. CHUCK SCHUMER (D), NEW YORK: But there is no question in my mind that given the level of terror threat that New York does not get our fair share on a percentage basis or the amount that we should get in terms of all of the things we have to do to protect our citizens.

SNOW: But is New York really getting less money? Here are the numbers from the Department of Homeland Security. New York City gets $42 million less in transit security grants than it did last year and $11 million less in port security grants.

But along with those DHS numbers is a footnote saying the differences are offset by stimulus money and the White House is firing back against talk of cuts. It says that if stimulus money is factored in, New York City actually received a $47 million increase.

The mayor of New York is staying out of the back and forth between lawmakers and the White House.

MAYOR MICHAEL BLOOMBERG (I), NEW YORK: The question is not did we get an increase, the question is did we get our fair share and is it adequate to keep this city safe?

(END VIDEOTAPE)

SNOW: And Wolf, just a correction that that was Senator Charles Schumer, not Congressman Charles Schumer.

Now while Mayor Bloomberg has not been openly critical of the administration today, he said he spoke earlier today with White House chief of staff Rahm Emanuel about the situation and he says he plans to speak personally with the president during the president's visit to New York.

The president has arrived in New York a short time ago and he'll be here for the next few hours -- Wolf. BLITZER: I have been told that he was going to meet with some of those law -- some of those officers, some of the heroes from the Times Square bombing incident. He's got a big Democratic Party fund-raiser later in the evening.

Do we know anything else about what he's doing in New York City right now, Mary?

SNOW: No, there had been a lot of anticipation about that meeting and that is what we're waiting to see if that does happen.

BLITZER: We'll watch together with you, but the president's in New York right now, presumably getting an earful on some of the funding issue that Mary's been reporting on.

In the Gulf of Mexico right now, crews are getting closer to trying another way to stop the oil from gushing into the water. So far all their efforts to stem the spill have failed in three weeks -- in the three weeks since the fiery rig explosion.

CNN's David Mattingly is following all the developments for us off the coast of Louisiana.

They got another way to try to stop it. Is it making any progress, David, whatsoever?

DAVID MATTINGLY, CNN CORRESPONDENT: Well, Wolf, right now BP is pursuing two paths. Hopefully one of them will succeed in stopping the flow of oil coming from that massive pipe down at the bottom of the Gulf of Mexico.

What we're seeing right now is that BP is using an insertion tube, putting a tube inside that large leaking pipe with a seal on it that they hope will close off that flow of oil and bring it up to the surface to a containment vessel.

If that doesn't work, then they have a smaller containment dome setting aside on the ocean floor ready to go to try and take care of this problem if that insertion tube does not work.

They are pursuing both paths. Today they decided to go with the tube over the dome. We're going to wait and see how this plays out -- Wolf.

BLITZER: That dome, that little dome, that's what we've been calling the top hat, right?

MATTINGLY: Right. That is the top hat. That's the small dome that they decided to use after that big 40-foot dome failed last week when they tried to lower it over there. It filled up with crystals and clogged up. They feel like this smaller dome has a better chance of succeeding where that large one didn't.

But, again, Wolf, today they decided to go with the tube inserting into that pipe and then using the dome as a backup if that doesn't work. BLITZER: When will we know if either of these methods work?

MATTINGLY: The last we heard from BP was that they plan to put the -- the tube into play tonight, so they should know pretty soon after that if they are successful and if not then they may go to the dome sometime tomorrow.

BLITZER: And what about other reports that I have been seeing about wildlife in the area? How bad is it getting?

MATTINGLY: Well, at this point, ever since this started, we have been seeing people very sensitive to dead wildlife showing up on the shores. This is the time of year when it's normal to see a lot more sea turtles beaching themselves and dying, a lot more dolphins showing up dead in the surf.

That's because they're in the shallow waters right now for mating season and for laying their eggs. So right now it's kind of hard to say if all of these animals are the result of this oil spill. Some of the preliminary testing shows that that's not the case, but as time goes on, who knows?

We might actually start to see mammals and turtles dying as a result of this spill. But as of this point, no hard evidence to show that.

BLITZER: We'll stay on top of this story with you. David Mattingly, our man on the scene for us. Thank you.

A somber moment as the Afghan President Hamid Karzai pauses to remember Americans who lost their lives fighting in his country. And Mr. Karzai is just one of several leaders the White House is going toe to toe with right now on the world stage. But is President Obama blinking during these talks?

Plus, deadly violence exploding in the streets of Thailand. We're going to show you the dramatic and disturbing video.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Jack Cafferty is in New York with "The Cafferty File." Jack.

JACK CAFFERTY, CNN ANCHOR: Wolf, November is shaping up to be a bloodbath for incumbents. House Minority Leader John Boehner describes it as a political rebellion that's brewing in this country.

Boehner says the public's awake, involved and irritated at the arrogance of Washington and he says the message from all of that is politician beware.

He's right. So far we have seen incumbents from both parties go down. Eighteen-year Utah Republicans Senator Bob Bennett lost. Twenty-eight-year Democratic congressman Allan Mollohan, West Virginia, lost.

And there are signs that these are only the first to fall. Many more to come. In Pennsylvania, Senator Arlen Specter may soon be on his way to the unemployment line. His primary challenger, Congressman Joe Sestak, is surging in the polls and appears to have the momentum headed in the next week's election.

Another Democrat, Senator Blanche Lincoln, seems to be on shaky ground in Arkansas' upcoming primary. Polls there suggest she might not win in the first round and she would be forced then to enter a runoff with her Democratic challenger.

Republicans have been predicting that they're going to make big gains in November, but that's not necessarily a safe bet either because you see the people are sick of pretty much all of the politicians in Washington. Republicans and Democrats.

Take it from somebody who's been there, former Idaho Democratic congressman Larry LaRocco says the 2010 will be worst than 1994 for incumbents. That's the year that he lost his seat in the big Republicans' sweep of Congress.

LaRocco believes the atmosphere is even more toxic now but that this time the anger is evenly divided between the two major parties, as it should be. One is just as lousy as the other.

Here's the question: Do you plan to join the political rebellion this year? Go to CNN.com/caffertyfile. Give us your thoughts. We'll read a few of them in about 40 minutes or so.

Wolf, it's going to be a pretty interesting midterm elections.

BLITZER: It will be. And we'll be all over it as we always are.

CAFFERTY: You bet.

BLITZER: Thanks, Jack. Don't go too far away.

A series of very public events for the Afghan President Hamid Karzai on this -- his last day here in Washington. First a somber visit to Arlington's National Cemetery section 60 there. That's the burial ground for those Americans killed in the wars in Iraq and Afghanistan.

Then a meeting with the Secretary of State Hillary Clinton over at the U.S. Institute of Peace.

Mr. Karzai is just one of several leaders the Obama administration is engaging in right now in some very high level negotiations.

Let's talk about this and more with our senior political analyst, David Gergen.

I heard one person say -- an influential person -- and I want you to react to this, David, that in recent weeks, the president -- President Obama has gone eyeball to eyeball with Hamid Karzai. There's been some tension there. With the prime minister of Israel, Benjamin Netanyahu. There's been some tension there.

In recent months with Ahmadinejad of Iran, there was a threat that they had until the end of last year to come clean on their nuclear program. They didn't and still nothing much has happened.

And the notion is Obama is blinking and these guys are not blinking. Give me your sense of -- if you agree with that.

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Well, on two of those three cases I think I might agree. Certainly the president and his administration have completely changed tone on Karzai. As we've said, they went from tough love to kissy feely kind of stuff. I think it's way over the top in receiving him so warmly this week.

I think it -- sort of, I don't know. It was a very uncomfortable to watch while the pendulum's going. But we'll have to wait and see, Wolf, whether it works or not. You know still a lot of corruption, still got a corrupt brother, a lot of drugs, but we need it. So on that one, I think, yes. I think they -- you can say, yes, he blinked.

OK, on the second one, on Netanyahu, no. I think the president has gone toe to toe with him and is still slugging. They had a pretty tough -- you know there were a lot of interpretations of a big snub last visit. Some Israelis and some Jewish groups disagree with that interpretation. But their -- that's the overall interpretation.

Ahmadinejad. That's the big one. The president hasn't blinked, but he hasn't gotten what he wanted and Ahmadinejad just keeps going on this nuclear stuff.

So Wolf, on that one, that's the tough problem. And, you know, here comes Ahmadinejad to the U.N. in the last few days, gives a tirade against the United States, a few walk out, most of the delegations stay.

I mean he's -- he looks like he's commanding some respect at the U.N., you know, and we think the guy is sort of a totalitarian danger to the world.

BLITZER: Because if you make the threat to a leader like Ahmadinejad all of 2009, you have basically, Mr. Ahmadinejad, until the end of the year to come clean with the International Atomic Energy Agency and to let them come in and check everything out and if you don't, you're going to face a really, really angry reaction.

Well, you know, it's already May and I don't see any real serious moves in terms of sanctions or anything else, do you?

GERGEN: I -- we haven't seen anything yet, Wolf. You're actually right. Your interpretation is absolutely dead on. The president did promise sanctions by the end of the year, didn't get them. He's postponing it, said -- he most recently said this spring we will have sanctions. Well, here we are almost mid-May, no sign yet. So it looks like it could go into the summer and that of course only fuels Ahmadinejad's -- you know, objective, resistance and being so totally committed.

But I can't tell you, Wolf, in talking to top people in the administration, this is the toughest problem they face. They're very focused on it. They intend to have sanctions and possible additional steps to try to persuade him, do not go down this road of nuclear weapons, don't get to the destination of nuclear weapons because it's going to be -- it's going to be a very tough situation.

BLITZER: Because they don't have the Chinese on board and now there are some new questions about whether the Russians are even on board. I know the president spoke with Medvedev today on the phone and we've been getting some conflicting reports on how far the Russians are willing to go in terms of cooperation.

GERGEN: Definitely don't have the Chinese and what -- they thought they had a breakthrough with the Russians and I have to say think the president has had a much more productive relationship with Medvedev and the reset generally has worked by the Obama administration.

But if the Russians at the last minute balk at these sanctions, then we're going to have a completely and different interpretations, say all this courting of Medvedev has failed, too. We'll have to wait and see. I think it's too early to make the final call on that one.

BLITZER: I totally agree. All right, thanks very much for that, David.

GERGEN: OK, Wolf.

BLITZER: David Gergen, our senior political analyst.

Violate protests and a shocking turn in the anti-government unrest. A radical leader shot in the head. We're following new developments and the disturbing video.

And a major pharmacy decides not to sell controversial genetic test kits at least for now. We're going to tell you why.

And has President Obama done enough to bring diversity to the U.S. Supreme Court? Roland Martin and Alex Castellanos. They are both standing by live for our "Strategy Session."

(COMMERCIAL BREAK)

BLITZER: Just getting word President Obama is in New York right now. He's over at One Police Plaza meeting with some of those law enforcement officers who helped out dramatically in the botched Times Square bombing incident.

We're going to get some pictures. We're going to show you what's going on once they come in. We will share it with you. He's in New York right now after a visit to Buffalo, New York earlier in the day.

Meanwhile around the world, deadly violence exploding the streets of Thailand right now in the wake of that massive anti-government protest that is heating up big-time in Bangkok.

One of the more radical leaders of the movement was shot in the head today. We want to warn you, some of the images you're about to see you might find very disturbing.

Dan Rivers is on the scene for us there.

(BEGIN VIDEOTAPE)

DAN RIVERS, CNN CORRESPONDENT (on camera): Well, this is the scene on the streets of Bangkok this evening. It's pretty anarchy as you can see. It's basically mob rule on this corner of Lumpini Park.

About a hundred or 200 meters down there, there have been some gunshots heard and at least one protester we know has been shot and killed, but that doesn't seem to be persuading this group of protesters to go home.

Here they've been searching cars. This is a main intersection carrying the Rama IV road going to the east of Bangkok and you can see the protesters have occupied this central traffic island, stopping and searching trucks primarily with the idea they want to look inside to see if there's anything in the back, presumably looking for soldiers.

But we understand the army's position is at the end of this expressway flyover here that they are down towards the western end of the park. And that is where the renegade army commander Seh Daeng was shot through the head while he was being interviewed by the media.

We've obtained some very dramatic footage just seconds after that shooting, showing him being carried away to hospital. But now shooting seems to have inflamed tensions here on the streets and now this crowd seems exceptionally defiant and the mood here is really one of anarchy and mob rule.

Dan Rivers, CNN, Bangkok.

(END VIDEOTAPE)

BLITZER: We'll stay on top of this story that the general was shot while being interviewed by a reporter from the International Herald Tribune.

Lisa Sylvester is monitoring some of the other top stories in THE SITUATION ROOM right now.

What do you have, Lisa.

LISA SYLVESTER, CNN CORRESPONDENT: Hi there, Wolf. Well, an Egyptian man is being investigated in connection with the arrest of a Pakistani national who allegedly showed up at the U.S. embassy in Chile with traces of explosives. Police raided the apartment of the Egyptian friend of the suspect. The suspect is being held under Chile's anti-terrorism laws. He was detained on Monday.

Very forthcoming. Those are the words Senator Arlen Specter is now using to describe Supreme Court justice nominee Elena Kagan. The Pennsylvania Republican-turned-Democrat met with Kagan and says he thinks she will respond openly in her upcoming confirmation hearings.

Specter opposed appointing Kagan to her current post of solicitor general, saying that she should have asked more questions about how she would approach cases. Specter faces a tough primary battle next week.

And a possible boost today for Elena Kagan's Supreme Court nomination but this influential Republican senator Scott Brown of Massachusetts. Brown says he is satisfied with the way Kagan answered his questions about her support for the armed forces.

When she was dean of the Harvard Law School, Kagan upheld a policy preventing the military from formally recruiting at the school because of its "Don't Ask, Don't Tell" policy.

Listen to what Brown said about his discussion with Kagan about that controversy.

(BEGIN VIDEO CLIP)

SEN. SCOTT BROWN (R), MASSACHUSETTS: She answered it I felt very honestly and it was very clear to me after we spoke about it at length that she is supportive of the men and women who were fighting to protect us and very supportive of the military as a whole and I do not feel her judicial philosophy will be hurting our men and women who are serving.

(END VIDEO CLIP)

SYLVESTER: And more positive comments about Kagan from another key Republican. Senator Suzanne Collins of Maine said today she's not concerned about Kagan's lack of experience on the bench or any potential for a conflict of interest in her current job as solicitor general.

And Walgreens says it will hold off on selling controversial genetic testing kits after warnings from the Food and Drug Administration. The Pathway Genomics kits claim to be able to assess a person's risk of getting more than 70 diseases. What the FDA says they are not been approved. Walgreens had originally planned to begin selling the kits tomorrow -- Wolf.

BLITZER: Not going to happen, at least for now. All right --

SYLVESTER: Now it's hold on for now -- Wolf.

BLITZER: Yes. Thanks, Lisa.

President Obama reached out to jobless Americans today in a place that's near and dear to my heart. We'll have a report on his visit to my hometown, Buffalo, New York.

And we'll also tell you about a vote that's going on right now in Buffalo. It's about soccer, not politics. I admit I have a little vested interest on who wins this contest.

And why auto dealers are spending big money to fight a provision in the financial reform bill.

(COMMERCIAL BREAK)

BLITZER: You're in THE SITUATION ROOM, happening now, the FBI launches major raids in connection with that thwarted terror attack in Times Square. We're going to go to the scene of one of those targets for the latest in this investigation.

Its four million residents are American citizens, is it now time for Puerto Rico to become the 51st state? There's new information. There are new developments.

I'm Wolf Blitzer, you're in THE SITUATION ROOM.

President Obama's in New York City right now meeting with police officers who were involved in the botched Times Square bombing operation. We're going to have details of that. Some pictures coming in. Stand by.

Meanwhile he says the recession may technically be over, but he says if you're looking for a job, it still feels like a recession.

The president visiting a small business in Buffalo, New York today and once again reaching out to Americans hard hit by all the economic downturn. He urged Congress to pass a new jobs bill saying the administration's earlier efforts to jump-start the economy are in fact working.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We can say beyond a shadow of a doubt, today we are headed in the right direction. We are headed in the right direction.

(APPLAUSE)

OBAMA: All those tough steps we took, they're working. Despite all the naysayers who are predicting failure a year ago, our economy is growing again.

(END VIDEO CLIP)

BLITZER: And joining us now from Buffalo, our White House correspondent Dan Lothian. What's it like there in my hometown, Dan, what's the mood there? DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: I was talking to someone from the mayor's office today and he described it this way, that a lot of the people here in Buffalo are cautiously optimistic about the economic situation here and that these are people who are very resilient. As you know, Wolf, being from here, that this is an area that has been hit hard long before the rest of the country saw and felt the economic downturn, a lot of the manufacturing companies left the area and with that a lot of jobs left. But people here are starting to see some signs and, again, kneeling cautiously optimistic that recovery is just around the corner.

BLITZER: Well that's encouraging but what is it specifically that they're hoping the president can do to help them?

LOTHIAN: That's a very good question, one person who was asked that question earlier today said that the administration has spent a lot of time talking with big businesses like GE and what they can do for them, how they can help spur jobs growth and this person pointed out that this administration should really focus on small businesses because they have a lot of good ideas and they can help create additional jobs and we know the administration has been talking about that, how small businesses really hold the key to creating additional jobs, that's one thing they hope that small businesses will continue to get the focus because they believe that is one area where the economy could really turn around, if those small businesses can create more jobs.

BLITZER: It's a wonderful place, it's a great place, Buffalo, New York, all of western New York, give my best all to my fellow Buffaloians there, I love that community. It's always been good to my family and to me and it will always have a soft spot in my heart.

LOTHIAN: That's right Wolf and you know what is interesting, you may not know this that right now there's this big race to name something after you. There is a minor league soccer team here, they have an official name which I'll tell you in just a little bit, or you probably already know, but they're looking for a nickname, and one of the top choices is the Wolf Blitzers and we had a chance to talk to some of the fans and here's what they had to say about that.

UNIDENTIFIED FEMALE: Who submitted the Wolf Blitzer name?

UNIDENTIFIED MALE: We only have first names so it's kind of hard to tell right now, with first names in e-mails, you can win a season ticket if you had your name chosen as an option. But if you won you got a season ticket and a t-shirt and a scarf and we'll probably blow a trumpet for you at our first game which is next week and actually we have a scarf here for Wolf because we're two Kenmore East guys and Wolf went to Kenmore West and we beat up on them in soccer so many times we thought that maybe you could get some good Buffalo out of it.

UNIDENTIFIED FEMALE: So are you excited? What are the chances of Wolf actually winning the contest?

UNIDENTIFIED MALE: Think of the mascot possibilities, a wolf in a beard and glasses running around terrorizing the other team? UNIDENTIFIED MALE: Definitely glasses on a wolf which you don't see everyday.

UNIDENTIFIED FEMALE: Any messages for Wolf?

UNIDENTIFIED MALE: I think he should come out for a game.

UNIDENTIFIED MALE: Hey, Wolf, if you win this contest, we would like to see you here at our inaugural game May 29, maybe blow the opening whistle, something like that, come home.

UNIDENTIFIED MALE: Anything would work, we just want to see Wolf Blitzer, or maybe you can just hold up our scarf on TV.

LOTHIAN: You're very popular in this town, and the owner of the team which is the F.C. Buffaloes gave me this scarf to give to you and they would like you to attend one of their games.

BLITZER: I'll be more than happy. I have been looking at that website where they have the voting going on, the Buffaloes, a minor team soccer team. But there's something that has a nice ring to it, the Buffalo Blitzers, I sort of like that ring and tell those guys I will be happy to go to a game. I will be in Buffalo later this month. I'm giving the commencement address at Niagara University and it will be on the campus of the University of Buffalo. So I'll look forward to seeing all my fellow Buffaloians. Dan Lothian on the scene for us, go enjoy some wings, some pizza, have a little fun there while you're in Buffalo. Thanks Dan.

LOTHIAN: OK.

BLITZER: Right now the Senate is moving closer to a vote on a controversial piece of the financial reform bill. It would create a new consumer agency to oversee banks and other lenders for everything from mortgages to auto loans. Dealers say the measure could devastate them and they are waging a massive lobbying campaign to get a special exemption from any new regulation. Our senior Congressional correspondent Dana Bash is here. She's been watching this debate going on and the president, everybody else is being lobbied on this right now, but tell me what's going on specifically.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: That's right. Well, it's not only the president taking on auto dealers, it's the pentagon too, and you know the pentagon doesn't get involved in consumer issues very much. But the defense department says that military families are often trapped in expensive car loans and that auto dealers must be included in this new consumer oversight board that Congress is considering but Republican Senator Sam Brownback has an amendment that I was just told moments ago could come up for a vote very soon, tonight, to exempt those auto dealers. That's why we went to talk to them.

(BEGIN VIDEOTAPE)

BASH: Why do you think it's so important for auto dealers like yourself to be exempted from these new consumer protections that this bill would put in place?

VINCE SHEEHY, SHEEHY AUTO STORES: I think it reflects a basic misunderstanding as to what we do, we facilitate financing for our customers. Dealers are not banks, all we do is assist with the financing, the president got it dead wrong, the worst thing we can do is be distracted from the real problem which is Wall Street, instead of focusing on Main Street car dealers.

BASH: We're just a few miles from the pentagon and members of the military are some of your best customers, right?

SHEEHY: Absolutely.

BASH: The department of defense is so adamant that this is necessary, because what they say is that men and women in the military are pressured, and they have high pressure tactics that are used against them from dealerships like yourselves who are trying to give them loans that they may be the middle man for but are really high when it comes to the interest rates.

SHEEHY: That's very disappointing to hear. I've we have got deal after deal inside our Honda dealership that shows where we were able to put together a customer into a car, with reasonable financing, many soldiers, who would not otherwise been able to get the financing.

BASH: Dealers say they're just many middle man when it comes to car loans, and if the government imposes new regulation the person who will suffer is you the consumer because they'll have to raise prices in order to deal with the burden of the new regulations. Consumer advocates and even the president of the United States says that's a false argument that dealerships are responsible for giving people 80 percent of the car loans in this country and if that's the case, there needs to be more oversight in order to protect consumers.

ROBERT WEISSMAN, PUBLIC CITIZEN, PRESIDENT: Auto dealers have been ripping off consumers with high priced loans, tricks and traps, they should not escape from the exact kind of legislation that Congress is now about to put in place.

BASH: Now what auto dealers say is that's just a misunderstanding of that business, they sell cars, they're not banks, they help people get money to buy their cars.

WEISSMAN: If they're not engaged in ripping off consumers, they have nothing to worry about.

(END VIDEOTAPE)

BASH: Now consumer advocates dismiss auto dealers warnings that they'll have to raise prices for cars in order to pay for extra work to comply with any new regulations. That's one of the car dealers biggest arguments as they lobby senators to exempt them from what they call unnecessary red tape. Wolf I just got off the phone before coming on with you with Senator Brownback's office and they said that they may be altering this amendment to better protect military families. Senate sources that I talked to say that the vote count on this is very, very close. You and I both know we bought cars, car dealers can be pretty persuasive.

BLITZER: We'll see what happens on this one. All right. Thanks very much Dana, good explanation.

U.S. troops are preparing for a major new offensive in Afghanistan. We're getting new word right now from the top U.S. military commander about what to expect and why this won't be d-day in the war. We have an update on the boy who was the only survivor of that deadly plane crash in Libya.

(COMMERCIAL BREAK)

BLITZER: Let's go back to Lisa; she's monitoring some of the other stories incoming THE SITUATION ROOM right now. Lisa, what do you have?

SYLVESTER: Hi again Wolf. Well the CEO of Ford is predicting the auto maker will be solidly profitable this year and will keep improving its earning in 2011, that report to the company's shareholders today. Ford has rebounded better than most of its rivals from the sharp downturn in the auto industry raking in profits now for four consecutive quarters.

This update to a story we first brought you yesterday, that giant whale freed after getting tangled in the ropes off the coast of Dana Point, California, is now back in the same area where it first got caught. A marine biologist says the whale is exhibiting a resting type of behavior and is concerned that it could be sick.

And leaping lizard, you know that lively redhead we know as little orphan Annie? Well she is leaving the comic pages. Tribune Media Services will end syndication of the Annie comic strip in June after 85 years in publication. The company says it's pursuing new audiences for Annie in digital media. Annie has also been featured on Broadway and in film. That song "tomorrow, tomorrow." Annie's not going to have too many more tomorrows Wolf.

BLITZER: You've got a nice little voice there Lisa. Can you do a little bit more for us? Get some background music.

SYLVESTER: No Broadway for me Wolf.

BLITZER: Lisa Sylvester, good voice.

Did the White House do enough to try to fill the U.S. Supreme Court vacancy with a minority? It's a question we're asking in our strategy session. And a new poll suggests the enthusiasm is there for Republicans when it comes to voters with a high interest in the midterm elections, what does that mean for Democrats?

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BLITZER: Let's get to our strategy session right now, joining us our CNN political contributors Roland Martin and Republican consultant Alex Castellanos. Guys, thanks very much for coming in. You both have seen this new Wall Street Journal NBC News poll on enthusiasm right now. It shows that Republicans are much more enthusiastic, at least at this stage looking toward the midterm elections than the Democrats are. 56 percent of the Republicans they're excited. Only 36 percent of Democrats.

ROLAND MARTIN, CNN CONTRIBUTOR: Huge problem for Democrats and also part of the problem here, the only major accomplishment, and they will try to say they have done many different things really has been healthcare. If you look at the populist issue of Wall Street reform, they have been dancing back and forth, haven't really moved on that, this is going to be a serious problem. We saw the president coming out a few weeks ago saying they want to drive Latinos, African Americans, young voters, women, but they have not really gotten them energized since he came into office. They are going to have a major problem come November.

BLITZER: The best person to energize those Democrats would be the president?

ALEX CASTELLANOS, REPUBLICAN CONSULTANT: That's one way to look at it. But the interesting thing to me in this survey is how Barack Obama has become George Bush, the man he ran against politically. The Democrats were energized last election by their hatred I think of George Bush, I don't think that's too strong a word. George Bush is gone now. That intensity has gone away, and the Democrats are divided and the president doesn't seem to be able to hold them together. Instead it's Republicans who are energized by their fear of Obama's policies. That's what's uniting Republicans, so the intensity has flipped from last election, it's the same picture reversed.

MARTIN: And if you listen the narrative of the Democrats, in fact when the president was in Buffalo today when he talked about in terms of we had to do what we had to do, the economy is going to turn around, but it's not a strong narrative. When you're in a leadership position, you have to make the argument, this is how we have led, this is how we have made the country better. So when they say Republicans all they have said is no, but the reality is, no has been effective. So their narrative has to change to say I need to trust you for two more years.

BLITZER: Here's what Karl Rove wrote in the "Wall Street Journal" today. "Look for the Obama White House to try raising Democratic intensity in the months ahead, especially among blacks, Latinos and liberals. The president's harsh attacks on the Arizona immigration law are part of this strategy." Do you agree with Karl Rove on that?

CASTELLANOS: I think that's what the administration seems to be doing. They seem to be finding a villain under every bush and that's how they're going to try to motivate their base. It's the wrong way to do it because the cost of that is that you scare the rest of the electorate. You divide America, there are good Americans, bad Americans, those evil people who make profits, what's changed in America is that we're all connected now. Used to be there was a linear America, the good guys, you know rich people here, poor people here, you could screw one without hurting the other. But now we're all connected. Look what happened, Wall Street melts down and who gets hurt? Everyone.

MARTIN: The Democrats don't move as quickly as possible in trying to have tough reform against Wall Street to then go make the case against Main Street, that we had your back, that we did what was right, we're not going to go down this road again. That's the problem because the populist theme has been so strong. What have they done about it?

CASTELLANOS: The wrong way to do the populist theme. The best way for Obama to do the populist theme, there's not a good America or a bad America, we're all Americans. Let's all move forward together. The least and greatest among us. No villains here. In the long-term, you lose.

MARTIN: But the short-term, you got to win in November and trust me, we have seen the Republicans and Democrats cannot stand Wall Street.

CASTELLANOS: Obama got elected because he was a visionary leader, he's throwing that away.

BLITZER: Let me make the turn to Elena Kagan, the Supreme Court nominee. You were quoted, you wrote an online column Roland saying that Kagan's record on diversity, you criticized that basically as one for which a white Republican U.S. president would have been criticized if he would have named someone who had a record on diversity like Elena Kagan. What did you mean by that?

MARTIN: By that, the House has been pushing back by saying, well it was the faculty that actually made the recommendations of who got hired, but the administration also has been saying that she also brought in conservative voices to sort of expand the view there, so which is it? Did she actually lead in one area but not in another? The problem here is that you have a growing schism positioning right now between civil rites organizations and this president,. You got a column on CNN.com laying it out here. That's a major problem here because there's been lukewarm support. You have not seen the national urban league, NAACP, the independent stabilization fund so you're not seeing the natural allies saying we're going to back this nomination. Also folks are angry that this president with two nominations has not had a face-to-face interview with an African-American, they are saying, wait a minute, how did you not even have a conversation with someone --

BLITZER: Sonya Sotomayor is Hispanic.

MARTIN: But, again, though, the most intensive group that votes in a higher percentage than anybody else is black women. If you don't pay attention to black women, you'll have a problem come November. And they're simply saying wait a minute, how you do not at least interview one? That's what you're hearing, and trust me, it's getting wider and wider the schism in this group.

CASTELLANOS: The terrible divisions in the Democratic Party, I guess it's not only the Republican Party that's divided. One of the things that happens though that America looks at this and says our economy is hurting and our country is in big trouble and these people in Washington are arguing about the color of your skin. No, we want people who are the best qualified to do the job. That's the argument the White House should be making and responding to on the Supreme Court nomination.

MARTIN: The point is also you still speak to your base as well and that is you have a more inclusive body of folks to actually pick from with two nominations and that's what you hear.

CASTELLANOS: Why did you turn the nomination to the Supreme Court down?

MARTIN: No, no, that's what you're saying, trust me. If they think they can see the different blogs about it, no, it's a greater problem here that they must pay attention to.

BLITZER: But you like her, Elena Kagan.

MARTIN: I've never met her. I've never met her. And, again, I have a lot of questions when I have an issue when you really have nothing to judge someone on because they've never taken a position. You're a lifetime appointment; I want to hear what you have to say.

BLITZER: We'll see what she says during the confirmation.

MARTIN: I'll be watching.

BLITZER: All right guys. We'll all be watching. Thank you.

Jack Cafferty is asking, do you plan to join the political rebellion this year? He'll be back in a moment with your e-mail.

Also, raid after raid in the investigation in the failed Times Square bombing. We have a team of correspondents standing by covering this story and today's arrests from every angle.

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BLITZER: Jack's back with "The Cafferty File" -- Jack?

CAFFERTY: Wolf, the question this hour is: Do you plan to join the political rebellion this year? There's one shaping up out there.

Jason writes from Hawaii: "Let me be clear, if you replace a Republican with a Democrat or a Democrat with a Republican, you're not part of a rebellion. If you are scrapping our current political system and replacing the puppet politician enablers who allow the mega wealthy to oppress the masses by a corporation's media propaganda and elimination of the middle-class, then -- then -- you might be a rebel."

Barbara writes: "I'm from Arizona. Our rebellion's already started. Since most of the countries decided we aren't part of the country anymore, we'll just have to wait until we're officially thrown out. That will free us from dealing with the idiocy of all those fools in Washington." Emily in New Jersey: "No, reactionary voting almost always backfires."

Gene in Texas: "I live in Texas. I always, always, vote against the incumbent. Incumbents in Texas are only interested in the people who pay them. Big banks, big oil, utilities."

Henry in Georgia: "They all must go. You see it beginning and you'll see it grow. The stage will be set for a new president two years later. Enough is enough."

Kevin in California: "Not exactly. After having voted in every election in the last 40 years, I may just drop out. The complete futility of the whole political process is overwhelmingly apparent, red or blue, they're both owned, lock, stock, and barrel by big business and the one percenters, the other parties tend to be single- issue organizations with their fair share of wackos."

And Brian writes: "I absolutely will participate in any movement that's anti-incumbent. We say Congress has a 17 percent approval rating, but 90 percent of them get back in again and again and again. It has got to stop."

If you want to read more on this, got a lot of mail, go to my blog, CNN.com/Caffertyfile -- Wolf?

BLITZER: As we always do, Jack. Thanks very much. Enjoy the president of the United States, by the way. He's in New York right now/ I'm sure traffic in Manhattan is going to be --

CAFFERTY: Screwing up my ride home.

BLITZER: -- lovely. Get ready. He'll be there for a few hours. Thank you.

The FBI is conducting major raids in connection with that thwarted terror plot in New York's Times Square. We're going to the scene of one of those raids. Stand by for that.

And why hasn't Faisal Shahzad gone before a judge since the Times Square incident?

And what about Puerto Rico? Could it become the 51st state? We're going to tell you why some say it should.

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BLITZER: You're in THE SITUATION ROOM.

Happening now, FBI raids in the Times Square bomb plot.