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THE SITUATION ROOM

Interview with Pervez Musharraf; Chasing Kagan's Paper Trail; Future of the Tea Party

Aired May 20, 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: You're in THE SITUATION ROOM.

Happening now: As stock markets take another frightening fall, the Senate is finally poised to pass a sweeping bill to reform Wall Street. We're waiting for the vote. Stand by with us.

After 10 months in an Iranian prison, accused of spying, three young Americans get an emotional reunion with their mothers and a chance to tell the world about their ordeal.

And he left under a cloud, his government accused of responsibility for the assassination of a rival. Now the former Pakistani President Pervez Musharraf tells me he will return to Pakistan soon for a possible political comeback -- my one-on-one interview coming up.

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

ANNOUNCER: This is CNN breaking news.

BLITZER: But we begin with breaking news.

The country's top intelligence official, the director of national intelligence, Admiral Dennis Blair, has suddenly, unexpectedly, resigned -- that word from two senior intelligence officials coming just days after sharp criticism from a U.S. Senate panel.

Joining us now, our homeland security correspondent, Jeanne Meserve, our CNN national security contributor, Fran Townsend, and our senior political analyst, Gloria Borger.

Fran, let me start with you, because you have been checking with sources in the intelligence community and elsewhere. Why?

FRANCES TOWNSEND, CNN NATIONAL SECURITY CONTRIBUTOR: OK. Well, the resignation came up on the margins at a 3:00 meeting in the Oval Office with President Obama.

President Obama was getting briefed on Director Panetta and National Security Adviser Jones' recent trip to Pakistan. They had arrived back. This was on the margins of that meeting where the resignation came up. This had been planned going back about two months ago. We believe, based on what the sources are telling us, that it came up now because, of course, this was a very important trip. And Director Blair was not asked to go on it by the president. The president instead sent who he believes is his subordinate, the CIA director. And so I think that Admiral Blair had been fed up with this now.

BLITZER: So, he just basically said enough is enough?

TOWNSEND: That's right.

BLITZER: Is that what you're hearing, Jeanne? What else are you hearing?

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: Well, there's been a lot of friction here and a lot of tension, especially since Christmas Day, the Abdulmutallab event, where they tried to bring down a plane on Christmas Day.

Several of the subsequent reports have been highly critical of the DNI and the NCTC, the National Counterterrorism Center, which is a subdivision of the DNI. I mean, let's face it, this was an office that was created after 9/11 with the intention of pulling together all the intelligence, breaking down all those stovepipes. And what Christmas Day showed us is that the system hadn't been fully corrected.

I will say that Dennis Blair was up front about acknowledging that. And even after a highly critical report this week from the Senate Intelligence Committee which laid out 14 points of failure in the intelligence community, he said, we have tried to make improvements since Christmas Day. We have formed these special chase teams to run down every terrorism lead.

But he said, even in a statement this week, there are still technological challenges, for instance, that make this an imperfect system.

BLITZER: As a naval officer, retired, though he is, this happens. He takes the -- he makes that decision it's time to leave. And the question is, what are you hearing, Gloria, from your sources about why now?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well, I think that it was a matter of frustration, essentially, that this is somebody who was losing some political fights inside the White House, that, for example, there was an argument over who gets to choose the station chiefs around the world.

And Blair thought he ought to, Leon Panetta thought he ought to, and Panetta won that argument. And don't forget, Wolf, that Blair testified before the Senate Homeland Security Committee this past winter -- I believe it was in January -- and specifically said that he was not consulted about the question of whether to Mirandize Abdulmutallab. And I'm told by one source that he had been given a pretty rough time for that by folks at the White House. And you will recall he had to put out a clarification of his testimony after that. And that was clearly inspired by people at the White House.

BLITZER: But had he been -- had he been consulted before they went ahead and read the suspect the Miranda rights?

BORGER: Well, it's a question of interpretation of the question. And in his clarification, he made it clear that there had been conversations. Was he specifically asked? We don't know the answer to that.

Go ahead, Jeanne.

MESERVE: Another criticism has been the fact that he hasn't been the face. He hasn't been the one out there on Christmas Day or after the Times Square bombing. It was always John Brennan, the White House's counterterrorism director who was the one who had become the face.

BLITZER: The homeland security adviser to the president.

MESERVE: That's right. He's the one who has been front and center, not Dennis Blair.

And Blair's been criticized for that, but what's been unclear to me is whether that was Blair's decision or whether that was the White House decision. And Fran may have some...

(CROSSTALK)

BLITZER: But you're getting other information also some about additional threats that are potentially out there.

TOWNSEND: That's right. That's right, Wolf.

To understand why this may have pushed him over, not being invited on this trip, you have got to understand who and why this trip took place. We're told that there are multiple intelligence threat streams, including the debriefings of Faisal Shahzad, that indicate both near-term threats inside the United States at identified -- potentially identified locations.

And so that's what caused the president to decide he wasn't going to send John Brennan and Mike Morell, the number twos, the deputies, if you will. He was going to send Jim Jones and Leon Panetta, the director.

And so the importance of the trip in terms of potential attacks here inside the United States and the emphasis that the president was putting on that, the priority by sending the principals, you can understand it was one more battle, to Gloria's point, that Dennis Blair was losing with Leon Panetta.

BLITZER: And there's no doubt that if the president of the United States sends the CIA director and the national security adviser to Islamabad to make a point, the Pakistanis will listen a lot more attentively than if they send some deputy directors to Islamabad.

TOWNSEND: That's right, Wolf.

And remember now, Dennis Blair understands in the prior administrations when those very messages need to be sent in the prior administrations, it was the DNI who sent them, not the director of CIA.

BLITZER: All right, guys, we're going to continue to watch the breaking news.

Dennis Blair, the director of national intelligence, is leaving, resigning. We will get the official word, no doubt, soon from the White House.

On a day when stock markets took another harrowing plunge, the major indices down close to 4 percent on this day, the Senate could be just hours away from final passage of a landmark bill to reform Wall Street. The way was cleared today when the Senate voted 60-40 to cut off debate on a bill to overhaul the financial regulation system.

President Obama quickly welcomed the breakthrough.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Over the last year, the financial industry has repeatedly tried to end this reform with hordes of lobbyists and millions of dollars in ads. And, when they couldn't kill it, they tried to water it down with special interest loopholes and carve-outs aimed at undermining real change. Today, I think it is fair to say that these efforts have failed.

Today, Democrats and a handful of Republicans in the Senate have voted to break the filibuster and allow a final debate and vote on financial reform.

(END VIDEO CLIP)

BLITZER: Let's bring in our senior White House correspondent, Ed Henry, for more.

This is a dramatic development for the White House, Ed.

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: It is, Wolf. You mentioned those market gyrations. Part of the reason for all of that -- all the gyrations is the uncertainty over the European debt crisis, as well as, will there be new rules of the road on Wall Street?

The debt crisis is still out there, but now we have some certainty on these new rules of the road, the most stringent since the Great Depression, in fact. It basically helps put in some new measures to manage risk in the financial markets, number one. Number two, it also makes it easier to liquidate some of these big financial firms if they start failing, and finally, creates a big new consumer protection agency.

Now, some Republicans like Bob Corker say it's an overreach, this consumer protection agency is going to be too big. But the president insisted today this is the right balance.

(BEGIN VIDEO CLIP)

OBAMA: Our goal's not to punish the banks, but to protect the larger economy and the American people from the kind of upheavals that we have seen in the past few years. And today's action was a major step forward in achieving that goal. Because of Wall Street reform, we will soon have in place the strongest consumer protections in history.

(END VIDEO CLIP)

HENRY: Now, this still has to go through after final passage in the Senate a conference committee with the House, so it's not completely done yet, but it's all but done.

The president got three Senate Republicans on board -- that's pretty rare -- for his agenda, Scott Brown, the new senator from Massachusetts, as well as the two moderate Republicans from Maine, Olympia Snowe and Susan Collins. And you can they are feeling good here at the White House. So closely on that health care reform victory, this is another notch in their belt, Wolf.

BLITZER: Ed Henry working the story at the White House, thank you.

Jack Cafferty's coming up next.

Then, an emotional reunion from mothers and their children held in Iran.

We have also coming up some live pictures of that oil leak in the Gulf of Mexico, raising new questions among some lawmakers. Some are now asking if BP telling the truth, the whole truth, and nothing but the truth.

Also, my interview with the former Pakistani President Pervez Musharraf.

(COMMERCIAL BREAK)

BLITZER: Jack Cafferty IS here with "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: After more than a year of protests, rallies, speeches and a national convention, the Tea Party movement has taken its first big step toward political relevancy.

Dr. Rand Paul pulled off a stunning landslide victory this week in Kentucky's Republican Senate primary. Paul's an eye doctor with no political experience, but he whupped up on the more well-known candidate, Kentucky's secretary of state, who had the backing of Senate Minority Leader Mitch McConnell. What an embarrassment for McConnell.

Even before his victory, Paul was one of the leading voices of the Tea Party movement, known for its anti-big government, anti-tax, anti-establishment positions. Paul comes by his credentials honestly. His dad is Texas Congressman and onetime Republican presidential candidate Ron Paul.

And some of Rand Paul's ideas are pretty good. They include requiring Congress to balance the budget and limiting senators to 12 years in office. The Democrats were quick to react to Paul's victory, saying he represents the most extreme elements of the Republican Party.

Paul's response? He says to the Democrats, bring it on, and is promising that the Tea Party's here to -- quote -- "take our government back. "

But now that he's got everybody's attention, Rand Paul is under intense scrutiny, among other things, for some of the stuff he said, like having to explain his recent criticism of the 1964 Civil Rights Act.

But whatever questions there are, Rand Paul may one day be known as the person who put the Tea Party on the map. And with nearly one- third of Americans saying that they support the Tea Party ideas, they could become a political force to reckon with.

Here's the question, then: What does Rand Paul's victory in Kentucky mean for the future of the Tea Party? Go to CNN.com/caffertyfile and post a comment on my blog.

Just another sign, Wolf, that the public is sick to their eyebrows with the status quo.

BLITZER: Yes. There are a lot of those signs out there, Jack. Thanks very much.

They -- they have been held since last July in Iran's toughest prison, accused of spying. Now three young American hikers have had an emotional reunion with their mothers. And they have been able to share details of their ordeal.

Our Brian Todd is tracking the story for us.

Brian, what's going on?

BRIAN TODD, CNN CORRESPONDENT: Wolf, the hikers were being very closely watched by Iranian officials while they spoke, so it's not clear how candid they were being. But this haven't heard from them this then captured, was a very crucial glimpse.

(BEGIN VIDEOTAPE)

TODD (voice-over): The first time three American mothers have seen their children in 10 months, since the young hikers were captured in Iran. Until now, they had only spoken once by phone. Nora Shourd, Cindy Hickey, and Laura Fattal spent eight hours with their kids, sharing a meal, with Iranian government cameras rolling. The young Americans themselves were allowed to speak publicly for the first time.

SHANE BAUER, DETAINED AMERICAN HIKER: Our daily routine, we see each other twice a day. We exercise a lot, read a lot, study. At last these few months, we have been able to do that, have more material to do that, to try to be active as much as possible.

SARAH SHOURD, DETAINED AMERICAN HIKER: The hour a day that I have with Shane and Josh, I try to make the most of it. You know, we -- we sing together and tell each other stories about our lives. We know everything about each other. We try to just get a lot of love and support in the little time we have together. The rest of the time, I exercise and read.

(CROSSTALK)

TODD: Sarah Shourd, and Shane Bauer, and Josh Fattal were picked up in the wilderness of Northern Iran last July and accused of spying. Their families say they accidentally strayed across an unmarked border from Iraq while on a hiking trip.

They are being held in the notorious Evin prison, known as Iran's Bastille.

Sarah Shourd speaks of their conditions.

SHOURD: Our treatment is -- is decent. It's really difficult being alone. Shane and Josh are in the room together, but I'm alone. And that's the most difficult thing for me. But I see them twice a day.

TODD: Shourd says they get good food, access to TV and reading material.

Their attorney in Iran spoke with CNN over the phone. He says he hasn't yet met with the three, but he says Sarah Shourd has a health problem.

MASOUD SHAFII, ATTORNEY FOR DETAINED AMERICANS (through translator): It's a female condition that she has suffered from in the past, and I have requested a medical history of the ailment, and her mother has brought that information. But her mother has told me that she needs to see a doctor every two-and-a-half months. This has not happened, and I have told investigators about this.

TODD: Shourd's mother says she also suffers from depression. The mothers want a meeting with Iranian President Mahmoud Ahmadinejad. In an interview just before their trip, Wolf Blitzer asked Nora Shourd what she would say to him.

NORA SHOURD, MOTHER OF DETAINED AMERICAN: To thank him for the gift of allowing us to go and see them and to give us the bigger gift of their release. (END VIDEOTAPE)

TODD: Well, right now, there's no indication that it's even close. The hikers areas attorney tell us the investigation is not yet complete.

The hikers haven't been formally charged, but Iranian officials have said they will go to try for espionage -- Wolf.

BLITZER: The Iranians have suggested that there could be a swap, some sort of exchange, Brian, that there are Iranians being held in U.S. prisons and maybe that they could work some sort of deal out. What are you hearing?

(CROSSTALK)

TODD: That's been suggested. Now, we have spoken to Iranian officials and State Department officials about this. The problem is, there are two sets of Iranians. The Iranians say they are 11 total Iranians held by the U.S. There are two sets of them.

One is a group of arms traffickers who have been formally arrested. They're in jails. But there's a second set who Iran says have been -- quote -- "kidnapped and detained" by U.S. officials in other countries. The U.S. has never acknowledged that. The State Department has said the Iranians have never provided them a list of any of these people.

One of those Iranians -- one of that group is believed to have defected. Those are the people who Ahmadinejad is said to want back. But right now the State Department says no swaps for anybody.

BLITZER: Brian Todd, thanks very much. I'm sure those mothers are happy to see their three kids.

We're following the situation in Thailand right now. The capital has been rocked by weeks of deadly anti-government protests. But there's been a dramatic change. We're going to Bangkok.

And details about what's behind a dismal day on Wall Street.

(COMMERCIAL BREAK)

(NEWS BREAK)

BLITZER: He left his own country under a cloud, his regime accused of significant responsibility in the assassination of a rival. Now, is he ready to go back? I will speak with Pakistan's former President Pervez Musharraf.

And North Korea warns of all-out war if there's retaliation for the sinking of a South Korean ship. How is the United States reacting to this?

And her long-forgotten academic papers are getting closer scrutiny. We're on the paper trail of the Supreme Court nominee, Elena Kagan.

(COMMERCIAL BREAK)

BLITZER: A longtime leader and a controversial U.S. ally, he left his own country under a cloud, his government accused of significant responsibility in the assassination of a key rival. Now, in a stunning turn, he may be ready for a comeback.

(BEGIN VIDEOTAPE)

BLITZER: And joining us now, the former president of Pakistan Pervez Musharraf.

Mr. President, thanks very much for coming in.

PERVEZ MUSHARRAF, FORMER PAKISTANI PRESIDENT: Thank you.

BLITZER: All right, what are your plans personally? Because I have been hearing a lot of rumors about what you're planning on doing. Are you planning on going back to Pakistan to run for president?

MUSHARRAF: Well, I certainly am planning to go back to Pakistan and also join politics. The question of whether I'm running for president or prime minister will be seen later.

BLITZER: When -- when does that mean, later?

MUSHARRAF: Well, I have to -- I have to launch myself politically, formally, which I haven't done. So, I am interacting with a lot of politicians and with the people of Pakistan, with the Pakistani Diaspora here in the United States and in U.K.

And I have taken a decision in principle to join politics and go back to Pakistan, but I will...

BLITZER: When -- when will you go back? Is it the next few weeks, next few months?

MUSHARRAF: Well, it is related to the election in Pakistan. I am very sure of one thing, that, whether it's end-term elections or midterm elections, I will be there before those elections.

BLITZER: The midterm elections would be the next set of elections. When are these?

MUSHARRAF: If at all, midterm. There's no sign -- if at all, it's midterm election. It will be next year, maybe, 2011.

BLITZER: But you're saying that, right now, you're going to go back to Pakistan, get into politics, and run either for president or for prime minister?

MUSHARRAF: Well, it's -- basically, we run a parliamentary system there, so you have to your -- your party has to win in the election. Then only do you decide to run. Basically, you are heading a party. You are running for the prime ministership, because, in Pakistan, the chief executive is the prime minister, not the president.

BLITZER: You have been away from Pakistan for about a year. Are you worried about going back, your safety?

MUSHARRAF: Well, there are security issues. Maybe my wife and my family is more worried than I am.

But there are security issues, which one needs to take into consideration. And that is why I'm not laying down any dates for my return. I'm looking at issues there, but I do intend launching and declaring my intention formally sooner than later.

BLITZER: All right. I asked the question about your security, because a few weeks before Benazir Bhutto decided to go back to Pakistan and run for office, she was sitting in that same chair, right here in THE SITUATION ROOM, and I -- I spoke to her about it. And I asked her how concerned she was about her security. And she basically told me, it was in Allah's, in God's, hands.

And I'm hearing something similar to you. We know what happened to her once she started campaigning for political office in Pakistan.

MUSHARRAF: Well, I -- I hope I'm more lucky -- luckier than her.

BLITZER: Let's talk about her for a moment, because you know this United Nations report that came out on April 15. It said this, specifically referring to you.

"The federal government" -- meaning your federal government -- "The federal government, under General Musharraf, although fully aware of and tracking the serious threats to Miss Bhutto, were not proactive in neutralizing them or ensuring that the security provided was commensurate to the threats."

That's a pretty serious charge that you knew she was under a threat, and you didn't do enough to protect her.

MUSHARRAF: I really don't fully agree with this statement. In fact, it was me who warned her about the threat to her. It was I who stopped her from going to that venue once before. To which a lot of political aspersions were cast on me, that her movements are being restricted, but she decided to go again.

And then all the security were provided within the Pakistani environment. She did go to the -- to the venue. She was taken safely. She addressed the people for one hour safely. She got off. Got into the car safely. So I think this is rather unfair. This comment is rather unfair.

BLITZER: She had also sent me --

MUSHARRAF: But if you --

BLITZER: She had also sent an e-mail before she was assassinated, in which she said, if something happens to me, she was going to blame you and your people for not giving her the security that she was appealing for.

MUSHARRAF: Well, I think all the security was provided. I wouldn't like to comment on this. All the security, where ever possible, and by the police, was provided to her.

BLITZER: So, if you had to do it over, would you have done anything differently in terms of providing her protection?

MUSHARRAF: I think the same would have been done, whatever protection was provided, as I said. The vehicles and the police force with her, and at the venue, the checking of the public who's coming in thousands, at the venue. All that was done.

BLITZER: Let's talk about Faisal Shahzad, the Pakistani-American who's accused of plotting this Times Square bombing. The U.S. government says he was working with the Pakistani Taliban. What do you know about this?

MUSHARRAF: Well, I don't know about him at all. However, it's very sad that this person who is living here, being a Pakistani, but an American citizen, had to bring such a bad name to Pakistan.

BLITZER: Is the Pakistani government right now doing enough to deal with the Pakistani Taliban?

MUSHARRAF: Yes, I think so.

BLITZER: In North Waziristan they're doing nothing.

MUSHARRAF: Well, the force is being used. They have succeeded in Swat, then they went into Bajaur Agency, they succeeded. They have succeeded in South Waziristan agency. And now I believe they are acting in Orakzai Agency where this Taliban and al Qaeda have escaped.

BLITZER: What would you have done differently if you were president or prime minister of Pakistan?

MUSHARRAF: Well, I think they are following almost the same policy of dealing with the -- with al Qaeda and Taliban. The only thing --

BLITZER: Is the United States -- go ahead, finish your statement.

MUSHARRAF: -- I would like to say is that they must add more force in the form of frontier court.

BLITZER: The Pakistani military.

MUSHARRAF: Yes, the second-line forces because --

BLITZER: Is it time for the U.S. to go in there?

MUSHARRAF: No.

BLITZER: On the ground? MUSHARRAF: No, not at all.

BLITZER: Because they're sending in the drones, you know.

MUSHARRAF: Well, the drones -- because of their indiscriminate use of the drone is having a negative impact in the public because of the collateral damage, and I wonder whether this Faisal Shahzad incident, is he -- has he been affected by the indiscriminate bombing by the drones?

BLITZER: When you say indiscriminate bombing, these are targeted bombings by the U.S.

MUSHARRAF: No, no.

BLITZER: They are not indiscriminate.

MUSHARRAF: A lot of collateral damage. We must avoid collateral damage.

BLITZER: I want you to turn around because I'm going to show you a picture in the wall over there. Turn around. It's going to come up in a second. And that's you. You know what that is over there.

MUSHARRAF: Yes.

BLITZER: That is your Facebook page.

MUSHARRAF: Yes.

BLITZER: Pervez Musharraf is on Facebook. You're also on Twitter. Do you know, Mr. President, as we speak right now, that the Pakistani government has shut down Facebook in Pakistan?

MUSHARRAF: And first of all, if you look at that, it will show 210,000 names.

BLITZER: You have a lot of people, a lot of friends on Facebook. But right now, Pakistan, nobody is seeing Facebook. I think YouTube is in trouble because of these efforts to start drawing pictures of the Prophet Muhammad.

MUSHARRAF: Yes.

BLITZER: Is this -- is this the right thing for the government of Pakistan to do, to shut down Facebook because of this?

MUSHARRAF: Well, frankly, I'm a great supporter of the Facebook. And that is why my Facebook is on, and it's going on very, very successfully. And I have been -- at CNN I was interviewed as the connector of the day some days back by Becky Anderson.

Having said that, I feel in Pakistan, and in -- especially in the Muslim world generally -- there is extreme sensitivity, religious sensitivities, of any negative aspersions on the Prophet, not only our prophet, but even on Jesus Christ for that matter. So, therefore, because he's considered a prophet in the Koran and the Muslims, so these sensitivities must be -- must be realized by everyone.

BLITZER: So is it --

MUSHARRAF: And even if I --

BLITZER: Is it the right thing to shut down Facebook in Pakistan?

MUSHARRAF: I think -- well, one has to look into the -- obviously take some measures because people were agitating. Leave aside -- you can't even print photographs. You cannot have photographs of the prophet, leave aside going for cartoons of the prophet.

It's most unfortunate. We must understand, these are sensitive issues, and for the sake of independence of media, liberty of speech, we cannot hurt sensitivities of millions of people. We must not do that. I'm against that.

BLITZER: So, basically, if you were president or prime minister of Pakistan, you would be doing exactly the same thing, shutting down Facebook because of this campaign to draw the Prophet Muhammad?

MUSHARRAF: Well, because the people of Pakistan are on the streets agitating. So, therefore, the government has to show and they do believe in the -- this aspect that a sensitivity -- religious sensitivity is involved.

BLITZER: President Musharraf, when you go back to Pakistan, we want you to be very careful over there, and I know you're going to get into politics, which is, of course, your right, but just be careful.

MUSHARRAF: Thank you.

BLITZER: Disturbing new tension with North Korea over the sinking of a South Korean ship. Details of the threat of all-out war. Stand by.

And Lance Armstrong, bloodied and bruised, hours after a former teammate accuses him of doping.

(COMMERCIAL BREAK)

ANNOUNCER: This is CNN Breaking News.

BLITZER: All right. It's official. Dennis Blair, the director of National Intelligence, has just announced he is, in fact, resigning as we've been reporting now for more than an hour.

Let me read a part of his statement just released by the Office of the Director of National Intelligence.

"It is with deep regret that I informed the president today that I will step down as director of National Intelligence, effective Friday, May 28th. I have had no greater honor or pleasure than to lead the remarkably talented and patriotic men and women of the intelligence community."

He goes on to thank them. He does not give in his statement any reason for his decision -- suddenly and unexpectedly -- to resign. We're working that story. We'll get some more information. But there have been numerous reports in recent weeks of friction between him and others in the Obama administration.

A crisis may be unfolding in a very dangerous corner of the world where some 28,000 U.S. troops helped to hold the line against a million-strong North Korean military.

Now that investigators have officially blamed North Korea for the March sinking of a South Korean warship torn apart by a torpedo, the United States is weighing in against the communist north.

Listen to the White House press secretary, Robert Gibbs.

(BEGIN VIDEO CLIP)

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: We strongly condemn this act of aggression against the Republic of Korea. I think these -- this act of aggression, this clear violation of the Armistice Agreement further sets them back and further isolates them.

(END VIDEO CLIP)

BLITZER: The U.S. is consulting with South Korea on how to respond.

North Korea denies sinking the ship and warns that retaliation would mean, in their words, all-out war. The Defense Secretary Robert Gates warns that potential adversaries should not assume that Iraq and Afghanistan have the U.S. military stretched too thin to deal with this subject.

(BEGIN VIDEO CLIP)

ROBERT GATES, DEFENSE SECRETARY: The truth of the matter is, we've said for a long time, that if there were a problem in Korea, our main arms would be the Navy and the Air Force. And so we -- those are not stretched in the same way that the -- that the ground forces are, but again, the key to remember -- the key thing to remember here is that this was an attack on a South Korean ship, and the South Koreans need to be in the lead in terms of, you know, proposing ways forward.

(END VIDEO CLIP)

BLITZER: The Defense secretary would not say specifically if the ship's sinking was an act of war. He says the Pentagon says U.S. troops are not -- at least right now -- on a heightened state of alert.

We're watching this story very, very closely. Lots at stake. Lisa Sylvester is monitoring some of the other top stories in THE SITUATION ROOM right now.

What else is going on?

LISA SYLVESTER, CNN CORRESPONDENT: Hi there, Wolf.

Well, we're learning new information about last week's arrest of two men in connection with the Times Square bomb plot. The spokesman for Immigration and Customs Enforcement tells CNN that one of the men had an envelope with the name and cell phone number of suspect Faisal Shahzad on it. That man and his uncle are suspected of funneling money to Shahzad.

And what a difficult day for cycling champion Lance Armstrong. He had to drop out of a California race after what's described as a huge crash and was taken to a hospital for x-rays.

That happened hours after former teammate Floyd Landis confessed to using performance-enhancing drugs and said that Armstrong had also used them. Armstrong denied it, saying Landis has no credibility.

Rap mogul Suge Knight is facing new trouble with the law. He's been arrested, accused of pointing a gun at a man in the Los Angeles area. Police say he's charged with assault with a deadly weapon and driving with a suspended license.

Knight was previously convicted on weapons charges and served several years in prison for violating parole -- Wolf.

BLITZER: Lisa, thanks very much. Lisa will be back.

The papers she wrote as a student suddenly coming in for very close scrutiny. What can they tell us about the U.S. Supreme Court nominee, Elena Kagan?

Stay with us, you're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Some long-forgotten academic writings are suddenly considered must read, papers written by the Supreme Court nominee Elena Kagan when she was a college student.

CNN's Lisa Sylvester is looking into it for us.

I assume you read those papers. What did you find?

SYLVESTER: We have. And, you know, the things to keep in mind -- a little bit of perspective here -- is that Elena Kagan, she isn't a judge so you can't look to previous rulings or opinions. And the document trail on where she stands on these issues has been relatively thin, so both liberals and conservatives are going back some 30 years to try to get a sense of her true views.

(BEGIN VIDEOTAPE) SYLVESTER (voice-over): No road bumps, no obvious obstacles for Elena Kagan as she makes the rounds on Capitol Hill.

ELENA KAGAN, SUPREME COURT NOMINEE: Everybody's been very kind.

SYLVESTER: But her writings dating back to her college days are being analyzed to answer the question, what kind of justice will she be? Her Princeton University senior thesis on what led to the demise of the socialist party in the United States has been analyzed and parsed.

One line that's caused the most controversy is in her conclusion. She wrote, quote, "The story is sad but also a chastening one for those who more than a half century after socialism's decline still wish to change America."

Her critics say it's a sign of an ultraliberal socialist agenda. We asked three political science experts to read her thesis. They say it's hard to conclude she herself is a socialist, more of a historian, documenting a political movement.

Sean Wilentz was her Princeton thesis adviser.

SEAN WILENTZ, PRINCETON UNIVERSITY: You have to be pretty narrow in your view of life not to see the collapse of a whole political movement is something that's just sort of sad. It's sad for the people involved. That doesn't mean that you're going home and crying about it. It means that it's -- you know, it's pathetic. It's sad. It's -- it's too bad.

SYLVESTER: While tried-and-true conservatives accused Kagan of being too liberal, those on the left worry that she's not liberal enough. In a thesis written at Oxford University two years later, she criticizes an activist Supreme Court writing, "No court should make or justify its decision solely by reference to the demands of social justice. There must also be a legal rationale."

Kagan's early writings are not a great predictor of future legal opinions says Northwestern University political theorist and law professor Andrew Koppelman.

ANDREW KOPPELMAN, NORTHWESTERN UNIVERSITY LAW SCHOOL: The idea that you can make any inferences about what she's going to do now on the basis of what she thought when she was a college student seems to me to be strange.

SYLVESTER: A better indicator may be the thousand of pages of policy documents, e-mails and files from 1995 to 1999 when she served as associate counsel and deputy director of the Domestic Policy Council in the Clinton White House. But those papers have so far not been made public.

If you really want to try to get a sense of what kind of justice Elena Kagan may be, then it might be worth looking at something else.

University of Chicago law professor, William Landes, has done extensive research on judicial behavior. He's analyzed the 43 justices from 1937 to 2006. He says the justices most likely to be in tune with the presidents who appointed them had one thing in common.

WILLIAM LANDES, UNIVERSITY OF CHICAGO LAW SCHOOL: The very important factor is whether the justice has been working in D.C. or the beltway prior to the justice's appointment, so that the justices that are in the beltway -- presumably they are more connected to the president -- are much less likely to drift from the president's ideology.

SYLVESTER: Justices Roberts, Scalia, Thomas and Ginsberg were Washington insiders who fit that pattern, while Justices Stevens, Kennedy and O'Connor were not part of the Washington establishment and didn't reliably adhere to the ideology of the presidents who appointed them.

Where does Kagan fall? She was solicitor general living in D.C. at the time of her nomination.

(END VIDEOTAPE)

SYLVESTER: And those documents from the Clinton years, they are a treasure trove for those trying to piece together where Kagan stands on the issues. Senate Judiciary Committee members have requested the Clinton Library turn over the papers and that is likely to happen, Wolf.

But the question is how soon. With e-mails, we're talking some 160,000 pages that first have to be officially reviewed before being made public -- Wolf.

BLITZER: A hearing scheduled to start June 28th, I believe --

SYLVESTER: Yes.

BLITZER: -- before the Senate Judiciary Committee. Thanks very much for that.

Jack Cafferty is coming up next.

And then more on the breaking news we're following at this hour. The surprise resignation of the director of National Intelligence, Dennis Blair. The vice chairman of the Senate Intelligence Committee will be on "JOHN KING, USA." Stand by for more on that.

(COMMERCIAL BREAK)

BLITZER: Check in with Jack. He has "The Cafferty File." Jack?

CAFFERTY: The question this hour is: What does Rand Paul's victory in Kentucky mean for the future of the Tea Party?

Steve writes: "Given the fact that the lord of Kentucky politics, Mitch McConnell, endorsed his opponent, maybe McConnell should start looking over his shoulder also. The outside edge of the Republican Party is flexing his muscle." Nevin writes: "Unless he beats the Democratic nominee in the general election, the only thing it means is the Republican Party is in a state of disarray."

B. writes from Hamilton, Ohio: "I like Rand. I don't like the Tea Party Movement. Not that I'm not in favor of limited government, certainly I am. I just don't think the Tea Party Movement was in favor of limited government until Barack Obama took office."

Stephanie writes: "Now that the Tea Party has a candidate, they are going to have to answer specific questions about their vague apple pie rhetoric and thus far, Rand isn't doing so well."

Chris writes from Sparks, Nevada: "Rand Paul comes from good roots. He is the type of leadership the Tea Party is looking for. Paul's win shows Congress the Tea Party is being heard and agreed with among the voters."

R. writes: "Jack, I'm really not sure what it -- if it means anything other than the incumbents are being bounced out finally. We the people are fed up of it all. In a few weeks, Iowa will do the same thing, but it doesn't mean it's going to be Tea Party takeover. Some of these Tea Party members are postal. Only time will tell what their future will be."

Melanie writes: "We desperately need 99 more Rand Pauls in the Senate, especially after seeing our so-called representatives give Felipe Calderon one standing ovation after another. It's time to rescue our country from those idiots in Washington."

And Jim writes from El Paso, Texas: "Rand Paul is a Palin in pants. He's goofier than his dad."

You want to read more on this, go to my blog, CNN.com/caffertyfile.

I like his dad, actually. Ron Paul is a pretty good guy.

BLITZER: Both of them well liked by a lot of folks out there.

CAFFERTY: Yes.

BLITZER: OK, Jack. Thanks very much.

Breaking news, the sudden resignation of President Obama's National Intelligence director. John King is standing by with Kip Bond. He's the vice chairman of the Senate Intelligence Committee. Stand by for that.

(COMMERCIAL BREAK)

BLITZER: Here is a look at some "Hot Shots" coming in from our friends at the Associated Press.

In Kenya, a villager waits for assistance from the top of his roof after a river bank burst, flooding the town and leaving 150 people homeless.

In Bangladesh, women remove rain covers meant to keep rice dry during the rainy season.

In southeastern India, a boy sprints through shallow water on the beach n China.

And in China, check it out. Visitors cheer while watching dancers perform a Malaysian dance at the World Expo.

"Hot Shots," pictures worth a thousand words.

Remember, you can always follow what's going on here in THE SITUATION ROOM. I'm on Twitter, WolfblitzerCNN, all one word.

Thanks very much for watching. I'm Wolf Blitzer in THE SITUATION ROOM. "JOHN KING, USA" starts right now.