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THE SITUATION ROOM

Gadhafi: 'It Will Be Aggression'; Rebel Wanted by Gadhafi Speaks Out; Talking to Gadhafi; Are Americans Too Dependent on Government Handouts?; Congressman Peter King Defends Muslim Witch Hunt; Peace or Waste?; Inside the Mind of a Dictator

Aired March 9, 2011 - 17:00   ET

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


WOLF BLITZER, HOST: Brooke, thanks very much.

Happening right now, Moammar Gadhafi warns a no fly zone over Libya would be an act of conspiracy and aggression -- his words. I'll talk to an influential advocate for U.S. military action in Libya, Republican Senator John McCain.

Also, new fuel for acquisitions that Congressman Peter Kring -- King is a hypocrite on this, the eve of investigations of radical Muslims in the United States. This hour, the New York Republican defends himself and describes how 9/11 changed his life.

And some Catholics in Philadelphia are getting a horrible surprise at church on this Ash Wednesday. They're finding out if their priest has been suspended in one of the biggest sexual abuse scandals yet.

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

Right now, Moammar Gadhafi and his loyal troops are trying to choke off Libyan rebels any way they can. Pro-Gadhafi fighters launching fresh attacks on opposition forces today. And the regime is offering a reward -- almost half a million U.S. dollars -- for the capture of a top opposition figure.

We have new CNN video coming in from Ras Lanuf, where rebels with fighting to hold their ground. Government troops are using planes and heavy artillery to try to retake the eastern oil city.

In the western city of Zawiya, Libyan television showed government supporters cheering in the streets today. But there are now unconfirmed reports that rebels have retaken the main square there.

After days of heavy fighting, it's almost impossible to get through to anyone in Zawiya for any independent confirmation of what's going on there.

Today, Gadhafi is also sending a new warning to the United States and its allies, as they consider imposing a no fly zone over Libya. He promises that all Libyans will fight back against what he calls an act of aggression and an attempt to control Libya's oil. (BEGIN VIDEO CLIP)

MOAMMAR GADHAFI, LIBYAN LEADER (through translator): It will be clear aggression. It will also be clear that the intentions are to control Libya's oil, choke Libya's liberty, land and people. All of the Libyans carry weapons, so they will fight back.

(END VIDEO CLIP)

BLITZER: Let's bring in our senior international correspondent, Nic Robertson.

He's in Tripoli for us -- I know -- I know that you had a ride, you were going out to Zawiya with some Libyan government officials.

What happened?

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Wolf, we got turned back about two miles down the road. Now, it seemed to me that the oil minister was going to speak to the journalists back at the hotel. And the news he had was that Libya's oil output has been cut by half. He wanted to address some of the issues about the explosions in Ras Lanuf at the oil facility there.

So it got turned around and got put back on again. But we've told officials that there is no point in us going there in the middle of the night. It will be too dark. We won't be able to see anything. And it's far better to go in the morning.

It's not clear if we will get to go with first daylight. But that's -- that's (INAUDIBLE) we told them if we're going to see and get a good analysis of what's actually happening there -- Wolf.

BLITZER: So as of right now, we don't know if the rebels have retaken Zawiya or if Gadhafi forces are in control of that important town?

ROBERTSON: Well, once again, the -- the Gadhafi state television here has had Gadhafi -- pro-Gadhafi demonstrators marching up and down, singing with their green flags. This time, they're right outside Zawiya. We've seen them on the highway that runs around the Eba (ph) city there, not actually in the center, where the rebels control it. Where the rebels control it, in the center of the city, the buildings there were sort of five, six, seven, eight floors high. The area where these demonstrators have been is -- is much lower level.

So it's not clear to us that (AUDIO GAP) although state television is trying to promote a message that the government is in control, it's not clear to us that they do have a presence in the center of the city or even what the rebels are doing there right now.

We just know from the most recent reports that the rebels were taking a very -- getting a very hard time. Two doctors killed yesterday. There was one report that two medical clinics -- their last medical clinics, the rebels shut down (INAUDIBLE) yesterday, as well -- Wolf.

BLITZER: How worried are Gadhafi allies in the government there that international -- international countries around the world, some of them, critical ones, are thinking of recognizing the opposition leaders in Benghazi, the second largest city in Libya, as the real, the official, the true government of the new Libya -- the new Libya?

ROBERTSON: Yes. The government here is getting really frustrated. The deputy foreign minister told me just last night that they're really frustrated. He told me again tonight, as well, that they're really frustrated. They still haven't had their nominated ambassador to the UN recognized. They've invited fact-finding missions from Britain, France, Germany and Holland to come here and take a look, see if there's been any aerial bombardments of civilians, find out if there's been any massacres, try and answer the allegations that have come against the regime here.

They're struggling. And they're sending -- now sending out their own sort of fact-finding representative, a secretary of state (INAUDIBLE) for cooperation is going to go to Lisbon and Portugal. He's going to go to Greece. He's going to go to Malta. They want to send him to other countries, as well.

So you get the impression here that the government really recognizes the heat that's coming down on it. And, of course, their biggest worry, that there could be a no fly zone imposed, which really has accelerated the thinking on their efforts to try and retake the east. They need the air power there. They don't have to have it, but it's going to make things much easier much quicker. So it's accelerating their efforts there, as well -- Wolf.

BLITZER: All right, Nic. Stand by. We're going to be getting back to you.

Nic is in Tripoli for us.

Now an exclusive interview with the opposition figure who has a bounty on his head right now, a bounty ordered by Moammar Gadhafi.

Let's go to CNN's Arwa Damon.

She's joining us from Benghazi in Libya.

How did the meeting that you had with this opposition leader figure go -- Arwa?

ARWA DAMON, CNN CORRESPONDENT: Well, Wolf, it went fairly well. And as you mentioned there, Mr. Mustafa Abdel Jalil, who is the head of the newly formed National Council, also, incidentally, the former minister of justice under Gadhafi, does now have a bounty on his head that amounts to just over 400,000 in U.S. dollars for any information that would lead -- sorry, for his capture -- any information that would lead to his capture going for $164,000.

We spoke to a source close to the National Council who said that this was an unfortunate tactic that Gadhafi was resorting to, but it did, however, raise the risk factor.

Mr. Jalil himself very concerned about the lack of the international community stepping up, taking action.

And we asked him what would happen if the international community either didn't take action or took another one to two weeks to make up its mind.

(BEGIN VIDEO CLIP)

MUSTAFA ABDEL JALIL, NATIONAL COUNCIL OF LIBYA, FORMER LIBYAN JUSTICE MINISTER: It has to be immediate action. The longer the situation carries on, the more blood is shed. That's the message that we want to send to the international community. They have to live up to their responsibility with regards to this.

(END VIDEO CLIP)

DAMON: And those are responsibilities that people here say does lie in what kind of a choice the international community decides to make.

We asked Mr. Abdel Jalil how long his fighters could withstand the ongoing air bomb campaign against them, the fact that they are heavily under armed when it comes to what they are facing. He said that they had a lot of will and spirit, but realistically speaking, they do not have the ammunition or the means, without international help, to last forever, especially not against the arsenal that Gadhafi has at his knees.

Opposition leaders saying that the international community does, in fact, have a choice to make here and if they choose inaction, that would be tantamount to siding with Gadhafi himself -- Wolf.

BLITZER: I know they want the U.S., the Europeans, the Arab world to recognize the opposition as the official government of Libya right now.

But did this opposition leader, the former Libyan justice minister, make any direct appeal to the president of the United States?

DAMON: He most certainly has, Wolf. He told us that a week ago, they sent a letter directly to President Obama, that they received a response saying that the U.S. was trying to work on a resolution in the UN We do know that there is communication between the U.S. and some opposition leaders.

But the bottom line is, they want to see much more being done. And they do, in fact, feel as if the U.S. and the international community can do more. They firmly believe that they have the means at their disposal to bring about an end to what people here feel is a massacre -- one that is only going to get worse, so long as the international community drags its feet.

The first step of involvement they would want to see would be this no fly zone being put into place. They do feel that that would greatly help in terms of leveling the battlefield here. And they do feel as if the U.S. and the international community bear a very significant responsibility. Many people telling us that the longer the international community waits, the longer the attacks continue, the bloodshed continues, they say that that is blood that is also on world leaders' hands -- Wolf.

BLITZER: Arwa Damon in Benghazi for us.

Thanks.

They're going to be hearing -- we're going to be all hearing from John McCain shortly. I think the opposition is going to be very happy to hear what John McCain has to say about all these issues. Stand by for that interview.

We saw a chaotic scene in Tripoli around this time yesterday when Moammar Gadhafi showed up at the hotel in Tripoli where journalists are staying. Only a handful of reporters have gotten to interview the Libyan leader since the uprising began a few weeks ago.

Catherine Norris Trent is one of them.

She's from the international news channel, France 24.

She spoke with Gadhafi on Sunday.

Catherine, thanks very much for joining us.

Well, what -- how did he impress you?

Did he seem normal or crazy?

CATHERINE NORRIS TRENT, FRANCE 24: Well, the interesting thing was that Colonel Gadhafi actually, contrary to our expectations, seemed rather calm and collected. He was quite softly spoken, very polite and quite lucid during the interview. We had been prepared for some dramatic outbursts, as we had seen in the past. But he was in one of his calmer moods, it seemed, on this evening.

But the whole experience was very surreal, indeed. There was a knock on our door. We'd been planning to interview Colonel Gadhafi for several days, as you can imagine, contacting all the members of the -- the press team here for the Libyan government. And then suddenly one night, we just got a knock on our door. And they said you have to come straight away.

So we -- we got our things together. And within just a few minutes, we were rushed into this palace behind Tripoli's Green Square. And then, rather quickly, the -- the leader and all of his entourage came. And -- and it was all quite a surreal experience. But, yes, he was -- he was much calmer, actually, than you might have expected.

BLITZER: Did you get any sense, Catherine, that this is a guy who is ready to fight to the death or that maybe down the road, he might be willing to -- to leave Libya and save his life?

NORRIS TRENT: Well, the sense we got in the interview is that he is going to fight to the death. In fact, he told us so. I questioned him for a pretty long time, around 15 minutes myself. And I asked him whether he would leave Libya, as many people have been calling for him to do so.

And he laughed and he said absolutely not, he was going to stay in Libya.

And he said, well, where would he go?

He said Libya is his country. And then he repeated this line that he's not the president. He said he doesn't have a post to step down from, unlike Egyptian leader, Hosni Mubarak, or Tunisia's Ben Ali. He said he can't go anywhere, he can't resign. He said he'd stay in Libya to the death. And he said outright no mediation.

BLITZER: He also says that the opposition forces, the rebels, the people who have been demonstrating, taking control of Benghazi and some of the other cities in Libya, they're all on drugs, they've been given certain pills, they're -- they don't know what they're doing, they're -- they're are part of Al Qaeda, he says.

Did he repeat all of those allegations to you on Sunday?

NORRIS TRENT: Absolutely. That was very much the line that he was still coming out with. And, in fact, we got the impression that the message he wanted to pass across via our interview was that all the people rebelling against his rule are members of al Qaeda.

I think he must have said the term "Al Qaeda" 15 to 20 times to me in just a few minutes' time.

And he -- I said, look, there are many, many people in these uprisings across different towns throughout Libya.

And he -- he waved that away. And he said these are Al Qaeda. He said they were Al Qaeda sleeper cells operating in the country, which he hadn't been aware of until -- and he actually called for the West to show more support and solidarity with him, with Libya in fight is these purported Al Qaeda fighters. And that was a -- quite a surreal experience. But that was the line he was sticking to and he wasn't budging from that.

BLITZER: You know, Nick Kristof wrote about this last week in "The New York Times," when he invited some female journalists, back in the '80s and '90s. He was well-known for propositioning them after granting them interviews.

Was he flirting with you?

Did he invite you to join him in his BMW as he left the hotel?

I know it's an awkward question, but it was -- it's been raised since it's well known that he used to do that with a lot of female journalists.

NORRIS TRENT: I have to say, he did behave very properly toward me. He was gentlemanly at times. I didn't have any untoward propositions. He was very courteous and shook my hand. But, no, I didn't get any special treatment, as it were, as a female journalist.

But it was interesting how much proximity journalists can get to Colonel Gadhafi. A few weeks, he went out on the fortress overlooking Green Square and waved to the crowds and invited our cameras to go along with him. And we were, at all times, just a few centimeters away from him, climbing up on this -- this wall overlooking Green Square and then with him as he got into his car.

And the security levels were quite interesting, actually, not what you'd expect from a head of state and certainly not -- not from a leader in his position at the moment.

BLITZER: We're just getting this in from the BBC, Catherine. And let me know if you know anything about this.

The BBC is now reporting that three of their journalists in Libya were detained and held up by Gadhafi forces, held for 21 hours, beaten up pretty badly.

Do you know anything about this?

NORRIS TRENT: I have heard reports about this. As you probably know, Wolf, all the Western journalists who've been invited into Tripoli by the Libyan authorities are being holed up in this rather luxurious hotel in the center of Tripoli. And that's one way of controlling our movements.

So as you can imagine, we do speak between ourselves at various networks.

And I heard about a journalist being detained. And again, that was trying to get access, I believe, to the town of Zawiya. There's a lot of interest in that (INAUDIBLE) battle keeps on raging there and we journalists keep on pushing to go in there and trying and report in there, and it is a very hazardous thing to do. There were several teams with security problems. And yes, we've heard of journalists being detained by security forces, even having quite rough and brute (ph) treatment at times.

BLITZER: Katherine Norris Trent (ph) of France, 24TV, thanks very much for joining us. We'd like to invite you back, if that's OK.

NORRIS TRENT: That would be great.

BLITZER: All right. Thanks very, very much. And be careful over there in Tripoli.

The U.S. can spend billions and billions of dollars on war, can the country afford to spend millions of dollars on a building dedicated to peace? Critics say no. Stand by. And find out how Congressman Peter King squares his investigation of Muslim radicals to his past support for a group the U.S. government labeled as a terrorist organization.

(COMMERCIAL BREAK)

BLITZER: As all of our viewers know, government spending is always a concern of Jack Cafferty. He's here. He's got "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN CONTRIBUTOR: Wolf, Americans have become alarmingly dependent on handouts from Uncle Sam, according to a new study. Government social welfare programs like Social Security, Medicare, Medicaid, unemployment insurance made up 35 percent of all public and private wages and salaries last year, more than one third of all the money Americans earn.

These findings are contained in a study of government data done by Trim Tabs (ph) Investment Research. In 2000, 21 percent of all wages and salaries in the United States came from social welfare programs. In 1960, 10 percent. One of the economists at Trim Tabs says that we are in for some difficult times ahead unless this country can get back to at least the 26 percent level it had before this big recession started. And she says there's only two ways to do that, either increase private sector wages and salaries by 35 percent, or cut social welfare benefits by nearly a quarter.

Well, neither one of those things is likely to happen. Social Security, Medicare, Medicaid, so-called entitlement programs, make up more than 60 percent of federal spending every year. And as the Baby Boomers get older now and begin to retire and begin to need more medical care, the costs for those programs will only go higher, sharply higher.

While the squabbling over budget cuts for this fiscal year continues in Washington, you can be sure that no one is touching these programs. That $60 billion package of spending cuts that passed the House last month did not touch one dime of any of these three programs. And as evidence continues to mount that this country is hurtling towards an economic disaster, our government refuses to respond in any meaningful way.

Here's the question. What does it mean if social welfare benefits make up more than one third of all wages and salaries paid in the United States? Go to CNN.com/caffertyfile and post a comment on my blog -- Wolf.

BLITZER: All right, Jack. Thank you.

An independent Republican group is launching a new TV ad that takes aim at unions and their support for President Obama and the Democratic Party. The spot bounces off the budget crisis in Wisconsin, accusing Democrats of shutting down state capitals to protect union workers. Crossroads GPS is spending $750,000 to air the ad on cable news channels, including right here on CNN. The group is part of American Crossroads, an organization that was a major player in electing Republicans in November.

A new poll finds Americans are most likely to favor cutting back on programs as a way to balance the budget in their state. The Gallup poll shows 65 percent of those surveyed support state cutbacks, 62 percent say it's OK to reduce the number of state workers. The survey shows Americans are divided on whether to limit union bargaining power. Cuts in state workers' pay and new taxes are far less popular options.

One day after an NPR executive was caught on tape calling the Tea Party movement racist, the network CEO now making a major announcement. You're going to hear it right after the break.

And look at this space shuttle landing because you'll never see it again. We're going to tell you why. Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Lisa Sylvester is monitoring some of the other top stories in THE SITUATION ROOM right now, including some new unrest in Egypt. What's going on?

LISA SYLVESTER, CNN CORRESPONDENT: Yes, Wolf.

It was a scary scene in Cairo. Demonstrators armed with machetes, knives, Molotov cocktails and horse whips reportedly attacked hundreds of pro-democracy protesters in Tahrir Square. Gunfire was also heard during the melee. Opposition activists identified the armed protesters as gangs loyal to remnants of Hosni Mubarak's regime. They say at least 44 people were hurt.

Here in Washington, the CEO of National Public Radio is stepping down. An NPR spokeswoman would not confirm reports that Vivian Schiller was forced out, but her resignation comes just one day after NPR fund-raiser Ron Schiller, no relation to Vivian Schiller, was seen in an undercover video calling the Tea Party racist and questioning whether NPR needs federal funding. He apologized and said his previously announced resignation would be effective immediately.

And the space shuttle Discovery has returned to earth permanently. Discovery wrapped up its final mission today with a picture-perfect landing at Kennedy Space Center in Florida. The shuttle logged more than 148 million miles in orbit during 39 flights -- Wolf.

BLITZER: Good for them.

SYLVESTER: Yes, two more -- looks like two more shuttle missions left.

BLITZER: These astronauts are not only brilliant and strong, but they're very courageous.

SYLVESTER: Yes, they are.

BLITZER: I admire them. Thank you.

Your tax dollars at work. We're taking a closer look at a splashy new building here in Washington called the Institute of Peace and why some lawmakers don't want to pay for it.

And Congressman Peter King is refusing to be known as a modern- day Joe McCarthy. He's opening up to our own Dana Bash as he prepares for a hearing tomorrow that has enraged many Muslims.

(COMMERCIAL BREAK)

BLITZER: The outrage has been building for days, but now Congressman Peter King is less than 24 hours away from holding hearings on the radicalization of Muslims. And the New York Republican is defending himself against accusations that he's a hypocrite on a witch-hunt. He spoke with our senior congressional correspondent, Dana Bash.

(BEGIN VIDEOTAPE)

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT (voice-over): Visit Peter King in his office, and you are overwhelmed by how much the New York congressman is consumed by September 11. His office is filled with reminders of the attack.

REP. PETER KING (R), NEW YORK: Funeral after funeral after funeral, and that one, to me, it captured it all. If you ask me what I think about going to work every day, it's 9/11. I'm preventing another 9/11.

BASH: King says that requires cooperation from American-Muslim leaders, which he insists law enforcement is not getting.

Down the hall in his committee room, King tells us that's why he's holding a controversial hearing on the radicalization of Muslims in America.

KING: There are elements within that community who are being radicalized, and I believe that the leadership, too many of the leaders in the Muslim community, do not face up to that reality, and a number of -- too many cases are not cooperative.

BASH (on camera): This is the chairman's seat. This is chairman's gavel.

KING: Yes, it's the whole bit right here. That's where it's going to be.

BASH (voice-over): To some, King's focus on radical U.S. Muslim is akin to Joseph McCarthy's 1950s communist witch hunt.

(on camera): That Peter King is the modern-day Joseph McCarthy?

KING: I would say, first of all, there's no basis for it. And secondly, I would tell people to wait and watch and listen to the hearing. BASH (voice-over): King has not always been at odds with Muslim- Americans. In the 1990s, he backed U.S. action in the Balkans to defend Muslims there.

KING: I was not popular in my district, but I did it because it was the right thing to do. I thought the Muslim community in those countries was being victimized.

BASH: He had a close bond with leaders of this mosque and others in his New York district.

Then came 9/11.

KING: It switched when I saw the Muslim-American community not responding the way they should have. When they were trying to cover up for al Qaeda, when they were trying to blame it on Jews and the FBI and the CIA, I couldn't believe what I was hearing.

BASH: Like comments from now former friends like Ghazi Khankan.

GHAZI KHANKAN, FMR. MEMBER, ISLAMIC CENTER LONG ISLAND: And I said we should also investigate the possibility of Israel being involved, and that changed his opinion 100 percent.

BASH: But some call King's efforts against American-Muslim terrorism now hypocritical. King is Irish-American. In the 1980s, he was an active supporter of Gerry Adams and an Irish group the State Department then deemed terrorists, the Irish Republican Army.

(on camera): The IRA was responsible for hundreds of civilian deaths in effectively what are terrorist attacks.

KING: During the 1980s, I knew what Gerry Adams and Martin McGuinness were attempting to do within the IRA, and I was saying that continually, that there's a real opening here, if the United States would take advantage of it to be an honest broker. Bill Clinton did that.

BASH (voice-over): He insists engaging the IRA was instrumental to peace and says this --

KING: The IRA was a legitimate force. They've been there for 100 years, 60 years, 30 years, any way you want to look at it.

BASH: King says he knows his hearing on radicalization of U.S. Muslims is stirring anger against him, accusations of bigotry, but has no apologies.

KING: Hey, listen, I would love to be loved. You know, I'm not a masochist. But on the other hand, I have a job to do, and would I not want to wake up the day after an attack and say I should have done something differently.

(END VIDEOTAPE)

BASH: Now, again, what King says that's driving him, what concerns him the most, are reports that he gets from his friends in the law enforcement community who tell him that Muslim leaders in America are not cooperating with them to disrupt plots. Well, Eric Holder, the attorney general of the United States, just spoke to reporters today, Wolf, and he said that he disagrees, that he has personally seen evidence where Muslim leaders have come forward to help -- to give tips to help disrupt plots that they were successful at doing.

I talked to King by phone just a few minutes ago, Wolf, and he said that his personal experience is that in private, he is told that that is still not the case, they're not getting the help, certainly not to the degree that they should get. And interesting, he actually admitted that that's why he is not inviting Eric Holder and other top law enforcement officials to his hearing, because he says they will dispute what he says and what he believes because he's told that in private.

BLITZER: But doesn't he think it's important to hear from the top law enforcement officer of the United States?

BASH: I asked him that question so many times, and his answer was, effectively, in this particular hearing, he is going to have what he calls real Muslims. And we should note that most of them who are coming on his invitation are those who have had relatives who are radicalized or those who agree with his point of view. But again, he was pretty candid just now on the phone. He said Eric Holder will not say what he believes to be true, so he's not going to have him at his hearing.

BLITZER: We'll have live coverage here on CNN tomorrow, I think starting around 11:00 a.m. Eastern.

Dana, thanks very, very much for that.

A voice of experience says an attack on Moammar Gadhafi's forces is doable, but there could be a lot of problems. He knows. He's done it before.

And we'll find out where Gadhafi's fight to retake the oil town of Ras Lanuf stands right now.

(COMMERCIAL BREAK)

BLITZER: As the budget wars play out, one target of controversy is in Congress' back yard, a new building dedicated to peace. But critics say it's government waste.

Lisa Sylvester is back. She's looking into this story for us.

Tell us what's going on here, Lisa.

SYLVESTER: Well, Wolf, this is a group that many may not have heard of before. The Institute of Peace was set up by Congress in 1984 during the Reagan administration. It is not a think tank, and it is funded entirely by Congress. The organization is now moving into this splashy new building that was paid for mostly with taxpayer dollars, and that has the attention of some lawmakers who are questioning whether the group and its new headquarters are actually a waste of money.

(BEGIN VIDEOTAPE)

SYLVESTER (voice-over): Retired Marine General Anthony Zinni describes the Institute of Peace as the "special forces for foreign affairs and peacekeeping" in an op-ed. General David Petraeus has written letters underscoring the importance of the U.S. Institute of Peace to the missions of the United States.

The institute, nonpartisan and mandated by Congress, is positioned in the world's hot spots, including Iraq and Afghanistan. Its mission is to broker peace deals between warring tribes, help to bring together humanitarian groups overseas, and prevent conflicts before they happen. But some congressional lawmakers have a different view. They see the organization as a waste of money, an example of a bloated government.

REP. JASON CHAFFETZ (R), UTAH: The United States Institute of Peace is clearly one of those opportunities where we cite redundancy and we say we don't need somebody competing in essence with the State Department.

SYLVESTER: The House voted to defund the group eliminating $42 million as part of broader budget cuts, arguing it's basically a think tank that the private sector could operate.

(on camera): The U.S. Institute of Peace has been a target of fiscal hawks, especially over its new building, 150,000 square feet. It cost $180 million to build -- $100 million of that is taxpayer money.

(voice-over): But defenders of the Institute of Peace say this is more than a building. With a dove positioned at the top, they say it is a symbol of peace.

The institute's president defends the organization, arguing it is not redundant with the State Department, that its small size makes it more efficient, getting things done on the ground.

ROBIN WEST, CHAIRMAN, INSTITUTE OF PEACE: We can demonstrate that we have saved lives and saved money on the ground. For example, in Iraq, we were brought in by the 10th Mountain Division to help negotiate between various tribes. It was called the Triangle of Death.

And before we were there, there was frankly a wholesale slaughter. After we were there, when we facilitated these negotiations with the army, the fatality rate went to basically zero. No other organization could do what we did there.

SYLVESTER: The fight between the fiscal hawks in the House of Representatives and the doves in the Institute of Peace now heads to the Senate.

(END VIDEOTAPE)

SYLVESTER: Now, the group has a list of supporters -- former secretaries of state Madeleine Albright and George Shultz, and national security adviser Stephen Hadley among them. And Senator Inouye has introduced a bill to restore funding for this year, $39.5 million -- Wolf.

BLITZER: Interesting. Odd couple, Jason Chaffetz, the conservative Republican from Utah, and Anthony Weiner, liberal Democrat from New York. They both opposed this.

SYLVESTER: Exactly. They have teamed up on this, and it is a little unusual. Some people see Anthony Weiner, saying, you know, is actually on board with this? And yes, he is. He is a sponsor of the House bill to cut that funding.

BLITZER: OK. Thanks very much. We'll watch to see what happens. It's a magnificent building right near the State Department.

SYLVESTER: Yes. You can see the aerials, but that's part of the whole debate, Wolf, because some people say that's a lot nicer of a building --

BLITZER: It cost a lot of money.

SYLVESTER: -- for the Institute of Peace than it is for the State Department.

BLITZER: Thanks very much, Lisa.

Moammar Gadhafi's rants, accusations and conspiracy theories. So what's behind them? We're going inside the mind of the Libyan dictator.

And Senator John McCain pushes hard for a no-fly zone in Libya. We'll speak with him.

(COMMERCIAL BREAK)

BLITZER: Gadhafi has given the world good reason to believe he's unstable, that he's brutal, possibly delusional. We asked our own Brian Todd to take a closer look into his mind.

I know you're speaking with experts. What are you learning?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, Moammar Gadhafi gave a speech that was aired today in Libya where he again tried to rally supporters and get those who have defected to come back into the fold. He played into their fears, stirred up familiar conspiracies, and made threats.

One expert believes Gadhafi's rants reflect a man who's already unstable and is now under immense pressure.

(BEGIN VIDEOTAPE)

TODD (voice-over): Moammar Gadhafi stays in character. On Libyan state TV, he tells followers their country is being targeted by al Qaeda, that during this conflict, operatives from places like Algeria, Pakistan and Egypt have swooped in and carried out a diabolical plot on Libya's youth

MOAMMAR GADHAFI, LIBYAN LEADER (through translator): By offering them pills, sometimes money, guns, machineguns, and making them destroy everything. They have recruited young sons and are telling them they are going to heaven.

TODD (on camera): What is he trying to say?

PROF. JERROLD POST, GEORGE WASHINGTON UNIVERSITY: It is really inconceivable to Gadhafi that "they don't all love me," that "my people love me." And therefore, anyone against him must have been sent in by outside agents.

TODD: (voice-over): Dr. Jerrold Post thinks Gadhafi really believes that. Post founded the CIA's Psychological Profiling Unit and now directs the political psychology program at George Washington University. He's profiled Gadhafi before and helped take us inside the dictator's mind, dissecting statements like this --

GADHAFI (through translator): They want to take your petrol. This is what America, this is what the French, those colonialists, want.

TODD (on camera): He's playing the oil card. Why is he doing that?

POST: One of his more remarkable statements was that the West wants to recolonize Libya in order to gain control of your petrol. Well, this was, after all, how he came to power, that the West had dominated Libya, were taken vital essence in its petrol. So he's now appealing to his followers for the freedom he brought to them from Western domination.

TODD (voice-over): Based on his research, Dr. Post believes Gadhafi's on the border of insanity. He's previously done profiles of Kim Jong-il, Saddam Hussein, Iran's Mahmoud Ahmadinejad, and Venezuela's Hugo Chavez.

(on camera): You've done profiles on some of the most notorious people who ever lived. How do you compare this guy?

POST: This is one of the more emotionally disturbed leaders that I have profiled, and part of what is confusing about him is that borderline aspect where often, he can behave in rational ways, but he can get carried away. Two circumstances he gets carried away under. A, when he's succeeding. B, when he's failing. That wouldn't seem to leave too much territory, but right now he's under massive, massive pressure.

(END VIDEOTAPE) TODD: Post says Gadhafi is also getting more isolated, and in those circumstances, he says Gadhafi's visceral response is to strike out against superior force and show his bravery. That's why he's now saying America and the European powers are interfering in Libya.

And Wolf, we can probably expect more of this in the coming days.

BLITZER: I assume you're right, Brian. Thanks very much.

Pentagon chiefs are warning allied forces would have to attack Libya to impose a no-fly zone. We're going to hear about it from someone who has been there.

And a new way to steel your home against powerful storms.

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TOM FOREMAN, CNN CORRESPONDENT: Would you have any doubts about being up in this attic during a tornado?

UNIDENTIFIED MALE: No, none whatsoever.

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BLITZER: Lisa is back. She's monitoring some of the other top stories in THE SITUATION ROOM right now, starting with a significant development in presidential politics.

SYLVESTER: That's right, Wolf.

Well, former House Speaker Newt Gingrich told supporters today he hopes to formally announce a presidential bid in late May in front of Philadelphia's Independence Hall. He asked the group to help him build momentum for that event on the Internet and through local media.

And President Obama is poking fun at persisting questions about where he was born. He joked about the so-called birther debate at a Democratic fund-raiser in Boston last night.

The president said, "There's no weakness in us trying to reach out and find common ground, but there are times when we can't. I was born in Hawaii," he said, "and what can I say? I can't change those facts."

And move over, Tina Fey. HBO has announced Julianne Moore will play Sarah Palin in an upcoming film about the 2008 presidential election. It's based on the best-selling book "Game Change," detailing the inner works of the historic campaign.

HBO and CNN are both owned by Time Warner.

And that should be a fascinating movie, Wolf.

BLITZER: It was an excellent book, "Game Change." I hope it will be a good movie. HBO does really good work, so I assume it will be. Thanks very much.

Severe weather is battering the southern United States for the fourth time in less than two weeks. Heavy rain, thunderstorms, flash flood warnings, and at least one confirmed tornado in Mississippi. Another apparent tornado in Alabama is being described as 30 seconds of pure hell.

Our own Tom Foreman went to Arkansas to check out a new line of defense against twisters and powerful storms -- steel homes.

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FOREMAN: So up here we can really see the difference.

JOHN HOUSE, PRESIDENT & CEO, KODIAK STEEL HOMES: Right, because you have bolt together structural steel.

FOREMAN (voice-over): The frame is not made of wood, but of steel.

HOUSE: This is an I-Beam.

FOREMAN: John is the president of Kodiak Steel Homes, and he says despite the economic downturn, despite the fact that these houses can cost up to five percent more than usual, folks like Charlie Trackett are snapping them up.

CHARLIE TRACKETT, HOMEOWNER: You might be spending a little bit more now, but it's going to pay for it in the end. This home is not going nowhere.

FOREMAN: Other companies make steel homes, but not many. John is proud to say his can withstand 140-mile-an-hour winds for four hours.

(END VIDEOTAPE)

BLITZER: And Tom is joining us now from Oklahoma City.

Steel homes. It's going to be pretty sturdy. I suspect a lot of folks will need those.

FOREMAN: There's a lot of excitement about this out here, Wolf. A lot of people you talk to about this idea.

They cost about five percent more than a normal home would cost generally. It sort of depends on the model you pick out.

And, of course, no building is absolutely tornado-proof, but because of that ability to withstand so much wind at that level, a lot of people are excited about the idea out here, saying look, year after year after year, we have so much property damage, we have loss of lives. This is something that some people believe really could be a solution for some people. As we looked around at people trying to find ways to build up their communities, it's good for the construction industry because of the different type of homes. So there's new demand for it. Good for the people who buy it, who believe in it, because there's a new level of safety out of it -- Wolf.

BLITZER: And that's good for everyone. Thanks very much. More expensive, but you get what you pay for. Thanks, Tom.

What does it mean if social welfare benefits make up more than one-third of all wages and salaries paid in the United States? Jack, coming up with your e-mail.

And pro-Gadhafi forces hammering rebels right now, struggling to hold onto an eastern oil city. Now those rebels are making an urgent plea to the rest of the world.

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BLITZER: Here's a look at some of the stunning pictures coming out of Libya today.

In Ras Lanuf, rebel fighters clashed with forces loyal to Gadhafi. Across the city, anti-regime fighters take cover while battling on the front line.

On the Tunisian border, guest workers, fleeing violence, tote their belongings through a displacement camp.

And in eastern Libya, look at this. Rebel fighters gaze at the smoke rising from an oil pipe.

"Hot Shots," pictures worth a thousand words.

Let's go to Jack. He's got "The Cafferty File" -- Jack.

CAFFERTY: That last picture reminds me of those shots. Remember when they drove Saddam Hussein out of Kuwait in the first Gulf War and they lit all those oil wells on fire?

BLITZER: He did incredible damage to the Gulf when he did that, Saddam Hussein.

CAFFERTY: It took months to put all those out.

All right. The question this hour is: What does it mean if social welfare benefits make up more than one-third of all the wages and salaries paid in the United States?

Mike in Brooklyn writes, "It means we're in a bad recession. One so bad, it's really a depression. What's shocking to me about how you phrased the question, Jack, is that you failed to include all the handouts to businesses, especially the large corporations, trade associations, and development commissions, among other entities, that all get subsidies." Sylvia in San Diego writes, "It means we're a welfare nation. And in order to recover from this economic disaster, it will be very painful for many people."

Larry in Ohio, "It means that those jobs that Americans refuse to do need to be done now by Americans that refuse to do them if they're able. Otherwise, we need to stop paying people not to work."

A. writes, "Welcome to reality. The middle class used to make money and pay taxes. Now the rich make money, they don't pay any taxes. The poor don't make money. They get poverty credits to keep them from attacking the system with pitchforks."

Patsy writes, "I'm certainly no authority, but how can Social Security be classified as a handout when people who draw on it are the same people who use some of their salary to pay into it? It's money earned but saved. The government should never have borrowed on it in the first place. Technically, they weren't supposed to. If left alone to earn interest, most likely there would be more money there now."

Nancy in Tennessee, "The answer lies in increasing wages and salaries in the private sector by 35 percent. It boils down to jobs. This country needs more jobs that provide a living wage. Americans are hurting individually. That translate to an American economy that's hurting as well."

Rick writes, "It means that we're a socialist nation whether we like it or not. And while people might not like that label, just try taking away all that income."

And Bob says, "It means I'm in the wrong job."

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

BLITZER: All right, Jack. Thank you.