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New Budget Battle; Libyan Rebels Reject Cease-Fire Agreement

Aired April 11, 2011 - 18:00   ET


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

Happening now, Libya's opposition says no deal. The rebels reject a roadmap to end the fighting. They see Moammar Gadhafi as a roadblock to an agreement.

A big step toward ending another bloody civil war, an ex- president who refused to leave office is finally forced to leave his bunker.

And that last-minute budget deal was just an opening skirmish in what promises to be a long, nasty fight over federal spending -- what President Obama is doing to get ready for the next round.

Breaking news, political headlines, and Jeanne Moos all straight ahead. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

They're barely able to hang on, but Libya's rebels are rejecting a so-called road map to end the bloodshed. The plan was proposed by the African Union, agreed to in principle supposedly by Moammar Gadhafi. But the opposition says any plan that leaves Gadhafi in place is simply a nonstarter.

Now bolstered by NATO allied airstrikes, the rebels are clinging to their hope of ousting the Libyan leader.

CNN senior international correspondent Ben Wedeman takes us to the front lines in Ajdabiya.


BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): A salvo of Katyusha rockets to send the enemy on its way. Gadhafi's troops entered Ajdabiya over the weekend. They didn't stay long, their objective perhaps to show that, despite the no-fly zone, they can keep the opposition on the defensive.

But NATO airstrikes, not these fighters, stopped them in their tracks. The curious have come to see the aftermath, around a dozen now charred and mangled pickup trucks and other cars that had carried Gadhafi forces to Ajdabiya. Others are here to scavenge for spare parts. Prematurely, the fighters insist the tide is turning.

"We wouldn't have come here if we weren't optimistic," says Ramzi (ph), who left his shop in Benghazi to join the fight. "Gadhafi is now weak," says Omar (ph), a resident of Ajdabiya. "He depends on gangs to stay in power."

Abdeh Salam (ph) fled his home in Brega, now in the hands of pro- Gadhafi forces. If NATO keeps up the strikes, he's hoping to go back soon. "Maybe today," he says. "We're hearing planes almost every hour."

But that's unlikely. Gadhafi's troops are still just a few minutes' drive outside the town. And without even more airstrikes, these men seem in no rush to move forward. After NATO planes mistakenly struck rebel convoys, they're taking measures to avoid a repeat, marking their vehicles with a big N. to alert NATO to their presence, though at the height the planes fly, it's doubtful such markings will be visible, while others daub their pickups with motor oil. Soon the sand and desert will cake the car in natural camouflage.

A delegation from the Red Cross came to Ajdabiya on Monday, handing out medical kits to the fighters and literature. Once again, planes from abroad, in this case, NATO, saved the day, driving Gadhafi's forces away from the city. But it only goes to underscore that these fighters are helpless without help from above.

Ben Wedeman, Ajdabiya, Eastern Libya.


BLITZER: Let's get more now on the effort to end the fighting.

A day after their so-called road map first got the OK from Moammar Gadhafi, would-be peacemakers from the African Union took the plan to the rebels.

Here's CNN's Reza Sayah in Benghazi.


REZA SAYAH, CNN CORRESPONDENT: A delegation of African leaders arriving on Monday morning in the opposition of Benghazi, and it didn't take long for opposition supporter to deliver their message.

And their message is, they don't want a political solution. They don't want dialogue with Gadhafi and his regime. They want him gone. The opposition's leadership meeting with the African delegation inside a Benghazi hotel. And after several hours, they announced what these demonstrators were hoping to hear, and that's a rejection of this so- called road map for peace put forth by the African Union.

The opposition's number-two man, the deputy chair of the council, Abdul Hafiz Ghoga, telling reporters in a news conference that the proposal did not include the key demand, the removal of Colonel Gadhafi from power, therefore, the proposal unacceptable.


BLITZER: We're going to check in with Reza Sayah. He's in Benghazi watching what's going on. It's interesting that the South African president, Jacob Zuma, who met with Gadhafi in Tripoli over the weekend, didn't bother to fly to Benghazi personally to meet with the opposition leaders.

Reza, I think, is joining us now from Benghazi.

Reza, a lot of people are wondering why Jacob Zuma did not bother to go meet with the opposition leaders. He is the president of South Africa. He had the time to go to Gadhafi's tent in Tripoli. Why not Benghazi?

SAYAH: Well, we can tell you that the opposition leadership was expecting South African President Jacob Zuma to show up to the rebel capital of Benghazi today with these meetings. There was a news conference scheduled today. There was a seat there for him.

It's not really clear why he didn't show up. Once again posed the question to an opposition official about 30 minutes ago, and he said he wasn't clear why. He said that there was a statement that he had a personal engagement, but certainly a surprise to many here in the opposition capital why Jacob Zuma did not show up today.

BLITZER: Are they still confident they can hold on to Benghazi, Ajdabiya, or are they deeply worried that the Libyan military are going to make some serious inroads?

SAYAH: I think, over the past 24, 48 hours, they gained some confidence that they can hold on to Ajdabiya and the rebel capital of Benghazi.

And, Wolf, it has a lot to do with an increase in NATO airstrikes over the past three days. According to (INAUDIBLE) 25 regime tanks out (INAUDIBLE) Ajdabiya, Brega area. And they're heavily dependent on these airstrikes. Despite the success in Ajdabiya, it is still clear this is not an opposition force that can match up with a real professional military, like the Gadhafi regime's forces. Even though this force has been depleted with these airstrikes (INAUDIBLE) opposition right now no match for (INAUDIBLE)

BLITZER: Reza Sayah on the scene for us in Benghazi -- Reza, thanks very much. More on Libya coming up later.

Let's go to Jack Cafferty, though, right now. He's looking ahead to the 2012 election. Jack's got "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: The so-called birther movement is back in the news ever since Donald Trump has begun talking about running for president in 2012.

Trump says he's not convinced President Obama was born in this country and therefore is constitutionally ineligible to serve as commander in chief. Last week, Trump told "The Today Show" on NBC he's sending his own investigators to Hawaii to dig a little deeper into the Obama birth issue.

Trump wants more proof than what the administration and the state of Hawaii have already provided. On ABC's "This Week," a chief adviser to President Obama mocked Trump's birther focus and possible run for president in 2012, saying -- quote -- "That's not leadership. That's kind of sideshow behavior" -- unquote.

Trump fired back today saying, if he ran for president, he would be the Obama campaign's worst nightmare. Former Alaska Governor and 2008 candidate for vice president Sarah Palin defended Trump, not a good sign, for hiring investigators. She says she believes the president was born here, but that because his real birth certificate is not available, the president may be hiding something.

Trump's been climbing in the polls lately, second only now to former Massachusetts Governor Mitt Romney. And the birther issue certainly makes Trump stand out in the field of possible Republican presidential candidates. A field that includes Romney, former Arkansas Governor Mike Huckabee, former House Speaker Newt Gingrich, former Minnesota Governor Tim Pawlenty, Congresswoman and Tea Party leader Michele Bachmann.

Now, whether he ultimately decides to run for president or not, this whole thing is a great way for Trump to get a lot of free publicity for his television show, which may be what this has been about all along. But then that's not the question.

This is. Is President Obama's birth certificate still a legitimate issue? Go to and post a comment on my blog -- Wolf.

BLITZER: All right, Jack, thanks very much.

They bucked their own party leaders, voted against the budget compromise Friday night, one Democrat, one Republican. Now Congressman Anthony Weiner of New York, Jason Chaffetz of Utah, they are here to tell us why. Their debate and the next battle, that is coming up next.

Also, a U.S. drone and what may be a case of friendly fire. Two American servicemen are dead. We're learning more about the investigation.

And a dramatic end to a bloody standoff between rival leaders, with France playing a leading military role in Libya and Afghanistan as well. The reasons behind what many are calling the new French aggression, that's coming up next as well.


BLITZER: After a very nasty budget fight, the federal government is still in business. Congress and the president, though, are already gearing up for the next round.

Friday's last-minute deal to keep the government running was just a start. But even that compromise, cutting $38. 5 billion, was unacceptable to some lawmakers on both sides.

Joining us now, two congressmen who voted against the deal, Democrat Anthony Weiner of New York, Republican Jason Chaffetz of Utah.

Congressmen, thanks to both of you for coming in.

You were one of, what, 42 Democrats, Congressman Weiner, who voted against what the president of the United States wanted you to do, keep the government open, allow the workers to get their salaries. Why did you disagree with the president?

REP. ANTHONY WEINER (D), NEW YORK: Well, I certainly didn't disagree with the imperative of keeping government open. I think that we needed to do it, and I think it took too long because of some of the extraneous things that were put on the table by my Republican friends.

Look, I guess it's a disagreement over the idea bout where it is that we should try to get us back on the road and off of debt. It's not just non-defense discretionary spending. I don't think our problem is we have too much money going for job training. I don't think our problem is our country, there's too much money going for education, yet those were the things that were cut in the deal.

I think, fundamentally, our problem in this country is the growing sense of inequity that we have. When the top two percent are making more than the bottom 40 percent, then I don't think that it's fair that the only place that these cuts were coming from were some of the most vulnerable people in America.

BLITZER: Congressman Chaffetz, you were one of 28 Republicans who thought the Speaker, John Boehner, was wrong in accepting this deal. Why was he wrong?

REP. JASON CHAFFETZ (R), UTAH: Well, look, I understand that nobody gets everything they want, but I signed a "Pledge to America." And that pledge said if we were going to bring spending levels back to 2008 levels, that we needed to cut at least $100 billion from our federal budget.

I have here in my hand this penny. We cut barely a penny. And we have a major debt problem in our country.

We're $1. 6 trillion in deficit this year. We went from an $8. 67 trillion debt to over $14 trillion in the last 48 months, a 60 percent rise in our debt. To me, that means you have to cut spending. And the $38 billion, $39 billion just wasn't enough.

BLITZER: But, Congressman Chaffetz, you understand what would have happened if your position would have prevailed, how many millions of Americans would be suffering right now, including family members of the U.S. military who wouldn't be getting their paychecks. So you were willing to let all those millions of people suffer in order to make a point?

CHAFFETZ: No. What I liked is what we actually had passed earlier in the week which fully funded the military and the Pentagon, and made sure that the military got their checks -- BLITZER: But that didn't go anywhere in the Senate. So you had a deal with something that was realistic. Millions of people would have suffered if your position and Congressman Weiner's position from a different point of view would have prevailed.

Is that that important, to make that point and, practically speaking, let all these people suffer?

CHAFFETZ: No, I don't think anybody wanted to see the government shut down. But I think there does come a point where you actually have to have the serious discussion. And there's nothing like a deadline to compel that discussion about the future of this country.

And I just think we're borrowing, taxing and spending too much money. And $38 billion was not what I signed up for. I said I was going to cut at least $100 billion in the first year.

BLITZER: Congressman Weiner, you know how many people would have been suffering right now if you would have prevailed on an ideological or a principled reason. You said you couldn't support this, but if your side would have prevailed on this, people would be in deep trouble right now.

WEINER: Well, that's presuming that this deal is the only deal available. There are other things that could have --

BLITZER: There was, what, an hour to go before the deadline?

WEINER: I understand that. But look, my position, I wish I was a person in the room that was there, one of the three people negotiating, and I wasn't. So I was asked, well, what do you feel about this? Is this good for America? Is this good for your constituents?

And all I had in front of me was an opportunity to vote yes or no. And I think the answer's no.

But let me just respond to something that Jason said.

There's no doubt about it that we've got enormous deficits and debts in this country, but the question becomes, so does that mean that we should be giving about an additional trillion dollars in tax cuts to millionaires and billionaires? That's what we're considering doing just this week.

We're going to come back into Congress and vote on the Republican plan to increase the national debt by giving tax cuts to people who have already done remarkably well. We're going to give oil and gas subsidies to companies that are racking up record profits.

I don't believe in the idea that these deals are static. And you say, oh, this crummy deal is the best you can possibly get. Part of my job is to try to push for an even better deal.

BLITZER: Because there's no doubt that what we saw last week is going to be small potatoes compared to raising the debt ceiling, the 2012 budget.

Congressman Chaffetz, are you definitely, absolutely going to vote against anything that would increase taxes in the United States?

CHAFFETZ: Well, I really do believe that we are borrowing, taxing and spending too much money. Unless we make some serious attempts to actually curb back the spending -- and I like the pathway to prosperity. What Chairman Paul Ryan has put forward is a very serious plan. It requires an adult conversation. It puts us on the right direction.

BLITZER: So will you vote on anything that increases taxes?

CHAFFETZ: I don't want to take anything off the table, but I don't believe in this time, where we need jobs, we need our economy thriving, we need people to get back to work, that raising taxes is actually going to be the solution.

BLITZER: What about a company like General Electric, Congressman Chaffetz? They make $14 billion last year in profit worldwide, $5 billion here in the United States -- profit. And you and me and Congressman Weiner, all of our viewers, we pay more in federal tax to the government than General Electric, which didn't pay a penny.

Should that be changed?

CHAFFETZ: Yes. And what the Republican plan --

BLITZER: So you would raise taxes on General Electric and other big companies?

CHAFFETZ: No, no. What we want to do and what the Republican plan says is we want to broaden the base and lower the rate and make sure that we get rid some of those loopholes that actually pay their taxes --

BLITZER: Under your plan, would General Electric pay $5 in income tax?

CHAFFETZ: Look, what we're trying to do is broaden the base and lower the rate, and get rid of the loopholes so you have more people paying into the system --


BLITZER: So you don't want to change any rules as far as General Electric is concerned?

CHAFFETZ: We have the world's largest and highest corporate income tax in the world.

BLITZER: But they don't pay a penny in corporate income tax.

CHAFFETZ: I know. And so if there are loopholes in place that allow them to -- and it doesn't matter what the rate is. You can say, oh, well, we want to increase the rate. But we've got to broaden that base and get rid of those loopholes so that we have more people paying into the system and paying their fair share.

I conceptually agree with that. And I think the Democrats actually probably agree with that as well.

BLITZER: Well, let me ask Congressman Weiner.

Are you ready to start dealing with where the money is in the national debt, Medicare, Medicaid, Social Security? Are you ready to start dealing with some of those issues, where most of the federal spending really takes place?

WEINER: Well, there's zero national debt in or debts in Social Security. So don't lump that one in. That one is actually lending to making the deficit look smaller.

As far as Medicare is concerned, just last year, a year ago almost to the day, we passed a health care bill that saved $500 billion in waste and duplication in the Medicare act and extended 10 years to its life expectancy. In the Health Reform Act, we got $1. 2 trillion of savings, so much savings that my friend Paul Ryan is counting them against -- in savings in his bill.

Look, the fact of the matter is that Mr. Chaffetz is absolutely correct. We are borrowing money to give tax cuts to billionaires. Did that make sense to any of your viewers? I would like to see who they are. Borrowing money to give tax cuts to billionaires, that's impractical and it's wrong.

BLITZER: But let me just be precise. Are you ready to make any more changes? I will phrase it like that, Congressman Weiner, to Medicare and Medicaid in order to reduce the national debt?

WEINER: Of course.

BLITZER: All right. That's a fair --

WEINER: But I want to tell you something. That right now, the main problem that we have is the cost of health care in this country is rising so much. The health care reform act is hopefully going to deal with that.


BLITZER: Congressman Chaffetz, are you ready to cut a significant amount of defense spending inn order to reduce the national debt?

CHAFFETZ: Oh, absolutely. There's waste, fraud and abuse there. I happen to disagree with our presence in Afghanistan. I don't think the president should have taken us into Libya and incurred those types of expenses. I think Secretary Gates has put out a spending reduction plan that Republicans have embraced.

Absolutely. We've got to cut defense as well.

BLITZER: Two billion dollars a week it costs the United States to maintain 100,000 troops in Afghanistan.

Congressman Weiner, you want to stop that?


BLITZER: All right. So you at least both agree, bring home the troops from Afghanistan. It will save about $100 billion a year if all those troops come home.

WEINER: By the way, Wolf, I think if Jason and I were in a room making some of these decisions, we'd probably come up with something that a lot more Americans agree with than what we've been dealing on so far. The most important thing is we've got to leave the extreme voices out of it.

Someone that says, literally, I want to add more tax cuts to millionaires and billionaires, I think common sense tells us maybe we wait until after we've dealt with some of our structural imbalances. People that say we want to cut Medicaid and let the states pay more, which is what the Ryan plan does, this doesn't make that much sense to me. And I think that we've got to try to find some reasonable accommodations. And up to now, we've allowed kind of the far right Tea Party activist to dominate this debate.

BLITZER: Congressmen, we're out of time.

But a quick political question, Congressman Chaffetz, to you. Will you challenge Senator Orrin Hatch for the Republican senatorial nomination from your home state of Utah?

CHAFFETZ: Well, thanks for your question. At this point I'm a definite maybe. So I don't know. I haven't come to that conclusion yet.

BLITZER: When are you going to make up your mind?

CHAFFETZ: Probably sooner rather than later. It's an honor to be mentioned in the same breath as him. But I don't know yet. I haven't decided.

WEINER: I'm going to help out Jason in Utah by endorsing Hatch.

CHAFFETZ: Hey, go for it. Give him a donation. That would be good.

BLITZER: Hey, Congressmen, guys, thanks very much for coming in. A good debate. We'll have you both back.

CHAFFETZ: Thank you.

BLITZER: Two U.S. servicemen are dead. Now the U.S. military is investigating whether an unmanned American drone is to blame.

And one case against them involves an underaged prostitute, but that isn't what has this world leader in court this time.



BLITZER: He refused to leave office. Now an African strongman is forced to leave his bunker. We're taking a closer look at the growing role France is now playing in the world trouble spots.

Plus, could the top U.S. military commander in Afghanistan become the top U.S. spy? A game of musical chairs just beginning.


BLITZER: French aircraft were the first to strike Moammar Gadhafi's forces in Libya. French troops have also played a key role in a West African hot spot. Is the U.S. suddenly playing second fiddle to France as a global troubleshooter? What's going on?

We asked Brian Todd to take a closer look -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Wolf, France has not only taken the lead in these conflicts; it's been a very aggressive leader.

That, combined with America's reluctance to enter Libya, raises serious questions about role reversals on the world stage.


TODD (voice-over): The one-time president of Ivory Coast, who lost an election, but refused to leave, has now been captured and placed under arrest.

French officials deny claims that French forces stormed Laurent Gbagbo's compound, but French and U.N. troops have pounded Gbagbo's fighters during this conflict. And France has been an aggressive player in other hot zones. It was the French who fired the first allied strikes on Muammar Gadhafi's forces.

NICOLAS SARKOZY, PRESIDENT OF FRANCE (through translator): France has decided to resume its role before history.

TODD: President Nicolas Sarkozy has led the charge, asserting himself as the swaggering "follow me" world leader, a status held not long ago by the likes of George W. Bush. It's a turnaround from the days when France defied America's push into war with Iraq.

(on camera) Does Sarkozy see a need for France to take a lead in these operations? Is that his vision?

JUSTIN VAISSE, BROOKINGS INSTITUTION: Yes, I think he has a certain idea of France, as the saying goes, getting back to the goal but also more simply the fact that France is a U.N. Security Council member and that it needs to do its share in terms of international responsibilities and contributing to stability whether in Libya, or in Cote D'Ivoire or in Afghanistan.

TODD (voice-over): Justin Vaisse is a former advisor in the French foreign ministry. Vaisse and other analysts say Sarkozy is doing this partially because he's in a tough re-election campaign and is trailing in the polls. They say that's one reason Sarkozy's been aggressive on the domestic front, too, pushing a ban on the public wearing of burkas in France.

As for Libya, France's leadership has, on one hand, come as a relief for the Obama administration. The U.S. doesn't have to commit the lion's share of the forces to the fight and can put forth the message that this is a true coalition effort.

(on camera) But there are risks for the U.S., as well. Put France's aggression and President Obama's reluctance to enter the fray in Libya render America less relevant.

(voice-over) Conservative analyst Peter Brooks doesn't see that but says America giving up some control in Libya could still backfire.

PETER BROOKS, HERITAGE FOUNDATION: If there's a perception that the United States is weak or is not willing to use military force, others could try to take advantage of that. I mean, you could see problems in the Korean Peninsula. You could see problems in the Persian Gulf involving Iran. We could have issues regarding China. So the big question is, how are others going to perceive American actions?


TODD: U.S. officials have been quick to point out that Libya does not play to America's national interests as strongly as it does to France's interests. The French do have to worry about getting a lot of their oil from Libya and about more waves of North American -- excuse me, North African immigrants hitting their shores. Sarkozy has got a political dog in that fight.

BLITZER: Are we looking at other situations out there where France could play the leading role and not necessarily the United States?

TODD: Well, a French official told me flat out, no. They've done these actions in Cote D'Ivoire and in Libya, under a U.N. auspices. That's their cover.

But analysts in France say, look, it's true that Sarkozy has this grand view of France's role in the world as a protector of human rights. And watch that election next year. If he continues to slide in the polls, he may use French military might in another place. Keep an eye out for Algeria. They've got troops in Afghanistan. They might increase their role there. He may try to pull something like that if he's losing more politically.

BLITZER: He's a tough guy, Sarkozy.

TODD: He is.

BLITZER: Thanks very much. You're a tough guy, too.

TODD: We try.

BLITZER: Thank you.

A game of musical chairs is beginning here in Washington as key national security posts are likely to open up. The first vacancy will probably be the top job over at the Pentagon. Let's go to our Pentagon correspondent, Barbara Starr.

It's interesting what's going on right now, Barbara. What are you learning?

BARBARA STARR, CNN CORRESPONDENT: Well, Wolf, think of it this way: in the middle of two wars, Iraq and Afghanistan, the operation in Libya, and an ongoing budget crisis, the administration looking for a whole new team to run things here at the Pentagon.


ROBERT GATES, DEFENSE SECRETARY: I did want to take this last opportunity...

STARR (voice-over): Defense Secretary Robert Gates is on his farewell tour.

GATES: I appreciate the opportunity to appear before you perhaps for the last time.

I don't know how many trips I've made to Iraq. This is maybe 14, something like that. And this will probably be my last one.

STARR: As world crises mount up, Gates, eyeing the exit door, has been at times less than diplomatic.

GATES: Frankly, loose talk about some of these military options -- and let's just call a spade a spade.

STARR: Gates has long said he will step down. Aides say it could be soon. Former defense secretary, William Cohen, says if Gates is going to go, he needs to get on with it.

WILLIAM COHEN, FORMER DEFENSE SECRETARY: I thought that Secretary Gates should stay through the remaining 18 months, but if he was going to leave, he should leave sooner rather than later. Because I think that's only fair to his successor.

STARR: His leaving triggers the start of a national security power shuffle. Who might replace Gates? CIA director Leon Panetta is being considered, according to an administration official. The CIA says so far Panetta hasn't been asked.

Other contenders? Former Deputy Defense Secretary John Hamry, well liked on Capitol Hill and Navy secretary Ray Nabis, former Democratic governor of Mississippi.

But that's just the first move. Admiral Mike Mullen's term as chairman of the joint chiefs ends in September. One front-runner for his job, his deputy, General James Cartwright. Other contenders: Admiral James Staritas, the top U.S. military officer at NATO, and General Norton Schwartz, the Air Force chief.

But what will President Obama do with General David Petraeus, expected to leave as commander of the war in Afghanistan? Military officials say Petraeus might replace Mullen, but would his rock-star status in Washington make the White House uneasy?

One administration official says if Panetta replaces Gates, Petraeus might become CIA director.


STARR: And in a very unusual public admission, Petraeus told reporters in Afghanistan this weekend that he has had conversations with the administration about his next job. He just won't say what job that is.

Everyone we mentioned in this piece has refused to publicly comment on what their move -- next moves may be and, of course, dark horse candidates can always emerge in these kinds of situations, Wolf.

BLITZER: A little inside Washington politics going on. The national security issues are huge, though, right now. Thanks, Barbara, good report. Thanks very much.

By the way, the FBI director, Robert Mueller, is also scheduled to leave in September. So the president has lots of personnel decisions that he has to make in the coming months.

President Obama's poised to make a major announcement on Wednesday. We have details today of his plan to try to reduce the deficit.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: ... see the Washington monument. This is...



BLITZER: Not every day you see a mayor of a major city arrested. Lisa Sylvester is working the story for us. What do we know about the D.C. mayor?

LISA SYLVESTER, CNN CORRESPONDENT: Well, Wolf, in the last hour we reported how the mayor -- and there were other city residents who were protesting outside the U.S. Capitol, the Hart Building on the Capitol grounds. Well, now the mayor, you see a picture there, he has been arrested -- this is Mayor Vincent Gray -- along with four council members. They have been arrested.

In fact, the mayor's office, his staff tweeted -- they've been tweeting throughout this. The first one was getting arrested on the Hill for D.C. Autonomy. A second tweet that they went out -- that went out just a few seconds ago, Mayor Gray is being processed at 67 K Street Southwest Capitol Police facility and will be released about 7:30. Come thank him. Council members arrested.

What this is all about, what the issue is all about is the budget bill had apparently a rider in there that prohibits the D.C. government from spending any of its own funds on abortion.

Obviously, you have local leaders who are quite upset about this. They're making a stand. They're calling for more people to come out to protest. So we'll have to see how this all unfolds, Wolf.

BLITZER: Yes, I know. It's a sensitive issue in the District of Columbia and a lot of people were surprised that President Obama allowed it to stay in the final deal. I know the mayor is very upset, and he proved that today. Thanks very much.

The budget battle that we saw played out may turn out to be child's play compared to the fight that may be taking place over the debt ceiling. There are dire forecasts about what may happen if -- if the U.S. does not extend the limit it can legally borrow. Listen to this.


JAY CARNEY, WHITE HOUSE PRESS SECRETARY: The consequences of not -- of failing to raise the debt ceiling would be Armageddon-like in terms of the economy.


BLITZER: Let's bring in our senior White House correspondent, Ed Henry. A lot of folks are saying child's play compared to what we can expect in the coming few weeks when it comes to raising the debt limit.

ED HENRY, CNN CORRESPONDENT: That's right, Wolf. They were really cranking up the rhetoric, as you heard there, saying it would be Armageddon, that this would have a devastating impact on interest rates, on the broader economy, and the president wants a straight up or down vote on lifting the debt ceiling. But so far Speaker John Boehner is not budging.

Sources familiar with their budget talks from last week say that the president in private directly asked the speaker for what they call a clean vote, basically, just an up or down vote on lifting the nation's debt ceiling without any spending -- specific spending cuts attached. And Speaker Boehner said no way.

The reason being very clear politically: Boehner's been getting a lot of momentum in recent days. Every time, practically, he has a meeting here at the White House, he gets more spending cuts out of the president. And so why stop now? He wants to make this a package deal and say, "If you want me, Mr. President, to lift the debt ceiling and let the U.S. borrow more money, I want some specific spending cuts." The other complication for the president is that, as a senator in 2006, he voted against lifting the debt ceiling. Jay Carney had to explain that vote today and made a rare admission that it was a mistake. Take a listen.


CARNEY: The president, as David Plouffe said yesterday, regrets that vote and thinks it was a mistake. He realizes now that raising the debt ceiling is so important to the health of this economy and the global economy that it is not a vote that, even when you are protesting an administration's policies, you can play around with.


HENRY: And Jay Carney's fighting fire by noting that earlier this year Speaker Boehner himself suggested it would be irresponsible to not lift the nation's debt ceiling, suggesting maybe there was hypocrisy on the Republicans' part.

But the speaker's staff pushes back by saying, "Look, you know, the speaker has always said he wants to lift the debt ceiling, but the political reality is the votes are just not there on Capitol Hill to lift that ceiling without some real spending cuts."

BLITZER: Last week the Republicans, Paul Ryan, the chairman of the House Budget Committee, unveiled a long-term budget reduction, deficit reduction plan over ten years to cut more than $6 trillion. Wednesday the president's going to lay out his plan. Is he going to go into specifics?

HENRY: That's the big question. I have to tell you, they are hedging here at the White House. Jay Carney basically said, "We'll see as to whether this will be specifics or whether it will just be broad principles from the president. The reason being that the political back story here is that the president is trying to reserve his bargaining position and give a little bit of specifics but not too much. Because if he gives too many spending cuts, he's going to have the liberals very angry at him, saying you're not investing all this money you promised in the State of the Union for education, infrastructure, other big issues to grow jobs in this economy.

On the other hand, if the president gives too much specifics about raising taxes, something his adviser David Plouffe raised yesterday, Republicans are going to say that's a nonstarter. He's going to walk this balance, trying to give a little bit of specifics but not too much, Wolf.

BLITZER: We'll watch it on Wednesday, together with everybody else. Thanks very much, Ed. Ed is over at the White House.

They helped elect President Obama, but now small campaign donors will be put to the test once again in 2012. Can they still make a difference?

And Jack Cafferty is asking is President Obama's birth certificate still a legitimate issue? Stick around. You're in THE SITUATION ROOM.


BLITZER: The coming presidential campaign is on track to shatter all records for spending, possibly as much as $3 billion when you add in all the candidates, how much they'll spend, all the independent expenditures.

Back in 2000, small donors certainly helped put Barack Obama over the top. Will 2012 be a different story, though? CNN's Mary Snow is in New York. She's working this part of the story for us.

What are you learning, Mary?

MARY SNOW, CNN CORRESPONDENT: Wolf, first there's the question of enthusiasm. Will donors be as eager to support an incumbent president rather than the outsider they backed in 2008?

And then there's the question of small donors competing against big money.


SNOW (voice-over): In 2008 Barack Obama's victory came with a boost from the little guy. Small donors paid off big, helping Obama shatter fundraising records by raising nearly $750 million.

Twenty-eight-year-old Aidah Mohammed was among them, contributing, she says, $400 to the Obama campaign. For the 2012 election, the stakes are higher.

AIDAH MOHAMMED, OBAMA SUPPORTER: We're not leaving it up to chance.

SNOW: the president's 2012 campaign has set a goal of raising $1 billion, but Aida Mohammed (ph) is thinking twice about whether she'll donate this time around.

MOHAMMED: I may be having second thoughts about contributing this time around.

SNOW (on camera): Because?

MOHAMMED: Because nine times out of ten, my dollar may not be necessary if there's a million dollars coming from other entities. I don't have to do it.

SNOW: Another factor is the Citizens United decision by the Supreme Court. It paves the way for third-party groups to dole out unprecedented amounts on messages to either support or denounce candidates. So much big money involved is prompting 40-year-old Sashy Bagdonovich to consider giving more than the $400 she says she and her husband gave the Obama campaign in 2008.

SASHY BAGDONOVICH, OBAMA SUPPORTER: You've got to compete. It's more important than ever that we try to have our voices heard. And I feel like if corporations are going to be treated as individuals, you know, us individuals who are real individuals, in my opinion, need to step up.

SNOW: In 2008 it's estimated that 24 percent of all of Obama's money in the primary and general election came from donors giving $200 or less. This time he may need to rely more on bigger donors.

RICHARD BRIFFAULT, COLUMBIA LAW SCHOOL: Obama also raised a lot of money in big donations. And that's not always -- people don't always focus on that, but he did. He's likely to do even better than that because he's now the president.

SNOW: But already the Obama campaign is stressing the importance of small donors. It's touting that, in 24 hours after Obama launched his re-election bid, 23,000 donations were made. Nearly all were $200 or less.

A Democratic fundraiser, Robert Zimmerman, says they'll be just as important in 2012. He says Democrats can't match outside money from the right.

ROBERT ZIMMERMAN, DEMOCRATIC FUNDRAISER: We make up for it in terms of energy. We make up for it in terms of organization. We make up for it in terms of small donors. In many ways, they're the front line in terms of taking on the special interest money.


SNOW: And Wolf, then there's the economy, too. Some Obama supporters told us, while they still are enthusiastic about Obama, money is tight. With an 8.8 percent unemployment rate, the question is how much will the economy have of an impact on small donors?

BLITZER: Good question. All right, thanks, Mary. Thanks very much.

President Obama's birth certificate, is it still a legitimate issue? Jack Cafferty and your e-mail, that's next.

Plus, the founder of the congressional Tea Party Caucus, Congresswoman Michele Bachmann, she's among the guests on "JOHN KING USA" right at the top of the hour.


BLITZER: Back with "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: The question this hour: "Is President Obama's birth certificate still a legitimate issue?" Donald Trump seems to think it is.

Leo writes -- pardon me -- "It's never been a legitimate issue. It's an issue brought up to pander to a specific crowd that wishes they could reverse the 2008 election by any means possible. But legitimate? Not a chance." Sylvia in San Diego: "Absolutely. Obama can put this question to rest if he wanted to by simply showing his birth certificate. Why he hasn't makes no sense."

Donald in California: "Only to the media and the right-wing haters. Donald Trump got a lot of free air time lowering himself to this non-debate, but the media couldn't wait to jump on it."

Eric writes, "Still? When was it ever a legitimate issue? The economy is terrible. We have no budget. War is raging in three countries. Skyrocketing health-care costs, crumbling schools and infrastructure and an all-around general malaise about the country. And yet a crackpot theory regarding the president's birth certificate from 1961 is all some of the candidates in 2012 want to talk about."

Sean writes, "It is only in so much as the president refuses to release his actual birth certificate. Many do feel that if you don't have nothing to hide, then you don't hide it. Obama must know this, so you have to wonder if he wants the birther debate to continue or if he truly does have something to hide."

Kimberly writes, "The only legitimate point to be made about the birther issue is that these people have a problem with a legitimately- elected president because he is other; he is not one of them. In short this is racially coded language, and it's disgusting."

And Paul in Ontario writes, "If it was ever a legitimate issue, Hillary Clinton's researchers would have uncovered it in 2008. Donald Trump and others are flogging a horse that is so far beyond dead it's glue."

If you want to read more about this, go to the blog:

Where were you born?

BLITZER: John McCain's opposition research would have certainly found it, as well. So there's...

CAFFERTY: Where were you born?

BLITZER: I was not born in the United States. Asperg, Germany.

CAFFERTY: I didn't realize that.

BLITZER: I was a little, little baby, though, when the family moved to Buffalo, New York.

CAFFERTY: OK. All right.

BLITZER: I can't be president of the United States. But Jack, you can be.

CAFFERTY: Well, no, I can't. But I would vote for you if you ran.

BLITZER: Thank you.

A squirrel, a police officer and a can of mace. It's a story made for CNN's Jeanne Moos.


BLITZER: The case of the cop versus squirrel. Here's CNN's Jeanne Moos.


JEANNE MOOS, CNN CORRESPONDENT (voice-over): What happened to this baby squirrel may drive animal lovers nuts. No, it wasn't an oncoming car but a backpedaling cop.


MOOS: Don't spray him with your pepper spray, officer.


MOOS: But spray him he did. The screaming girls attend Kimbrough Middle School in Mesquite, Texas. Kids and school officials differ on how the squirrel was acting.

UNIDENTIFIED FEMALE: It wasn't doing anything to us.

UNIDENTIFIED FEMALE: It was behaving in kind of a strange manner and kept advancing towards the students.

MOOS: The police department says the officer...


MOOS: ... was worried the squirrel might be diseased, rabid, and was protecting the kids. But for Kelsey Frey (ph), who shot the cop- squirrel confrontation with her cell phone...

UNIDENTIFIED FEMALE: To me it was not a very good role model.

MOOS: She thought he should have dropped a box over the squirrel.

"A threat to students?" posted someone. "It's a squirrel, not a tiger."

But a squirrel, as we've seen in other YouTube videos, can get very attached.

The baby squirrel that got pepper sprayed was picked up by animal control and cleaned up and then released back into the woods apparently OK.

(on camera) And in case you ever find yourself under attack by a squirrel, remember the CDC says... (voice-over) ... small mammals such as squirrels are almost never found to be infected with rabies. OK. It has happened. For instance a woman in Pittsburgh got bitten by a rabid squirrel after her dog attacked it first. But it's extremely rare.

The case of the pepper-sprayed squirrel is still under review, but the department believes the officer wasn't acting maliciously. As one person posted, "At least they didn't shoot it!"

Or tase it.

ANDREW MEYER, TASED BY POLICE: Don't tase me, bro. Don't tase me.

MOOS: Don't spray me, bro.

Jeanne Moos, CNN, New York.


BLITZER: Leave it to Jeanne. Thanks very much.

That's all the time I have. Thanks very much for watching. I'm Wolf Blitzer in THE SITUATION ROOM.

"JOHN KING USA" starts right now.