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Ex-IMF Chief's Bail Problems; Bin Laden Raid Triggers Terror Alert; Syria Forces "Are Aiming to Kill"; U.S. Israel at Odds over Peace Process; Tensions Laid Bare in Oval Office Talks; Drama Before President Obama's Big Speech; GOP Hopeful Who Doesn't Bash President; Fallout From Osama bin Laden Raid; All Eyes on New York's 26th Congressional District; Homes Become Islands in Flooding

Aired May 20, 2011 - 17:00   ET


WOLF BLITZER, "THE SITUATION ROOM" HOST: T.J., thanks very much. Happening now, tensions between the United States and Israel laid bare. The prime minister Benjamin Netanyahu giving the president -- President Barack Obama an earful in rejecting his parameters for peace talks.

Also, former IMF chief Dominique Strauss-Kahn faces last minute problems with the conditions of his bail. We'll have the very latest on the sexual assault suspect. He's in or out of jail. We'll tell you what's going on.

And the raid on Osama bin Laden's compound triggering a new terror alert. This hour, concerns the Feds are potential targets at risk by cutting homeland security funds to dozens of cities.

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

But we begin with deadly new clashes today in Syria as security forces try to break up anti-government protests in a number of cities. A human rights activist says at least 34 people were killed. This, a day after President Obama warned Syria's president Bashar al-Assad to end the crackdown or simply get out of the way. Here's CNN's Arwa Damon.

ARWA DAMON, CNN CORRESPONDENT: Wolf, when we listen to what eyewitnesses and activists are saying when we see the images coming out of Syria, the path the regime continues to choose to take it seems pretty clear.


DAMON (voice-over): They're aiming to kill. They are firing straight at the people, a voice yelled off camera. This is video said to be from the city of Homs which has seen many protests in recent weeks. It was posted to You Tube. CNN cannot verify its authenticity or when it was shot. But one opposition activist in Homs told CNN Friday that security forces fired straight into crowds of demonstrators. And the Syrian human rights information link reported a mounting death poll throughout the day.

A similar scene in Hama where men wearing what appeared to be Syrian security forces uniforms are seen firing. Once again, (INAUDIBLE) became the rallying point for protests throughout the country. Some called for the toppling of the Assad (ph) regime. Others chanted that they would prefer death over humiliation.

The government insists the protests are being organized by terrorists and outside forces and has deployed the army to several cities.

After more than two months of protests and at least several hundred deaths, these people know that it can be fatal to take to the streets. Yet, they continue to do so, to demand freedom and change only to be met with lethal force.

The U.S. this week slapped financial sanctions on President Bashar al Assad and other senior members of the regime. And on Thursday, President Obama issued this warning to Syria.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: President Assad now has a choice. He can lead that transition or get out of the way. The Syrian government must stop shooting demonstrators and allow peaceful protests.


DAMON: It seems President Assad has already made his choice, to do neither.


(ON CAMERA): The U.S. effectively has very little leverage when it comes to Syria that still enjoys a fairly powerful position. That is, in part, because of its strategic alliance with Iran, its ability to potentially foment unrest in Lebanon or destabilize its border with Israel. In fact, the Syrian regime has already issued availed (ph) threats, that bringing it down would severely impact security in the region--Wolf.

BLITZER: Arwa Damon, reporting for us, thank you.

Arwa, they faced the camera and one other for about 15 rather uncomfortable minutes, the president of the United States and the prime minister of Israel. These fierce allies openly at odds over the terms for trying to restart Middle East peace talks.

Israel's Benjamin Netanyahu warning the president that peace built on illusions -- his word -- illusions will fail. Let's bring in our White House correspondent Brianna Keilar -- Brianna.

BRIANNA KEILAR, CNN WHITE HOUSE CORRESPONDENT: Wolf, they met for about 90 minutes, longer than we expected they would. The White House's take on this, not surprisingly, it's a sign that things were very productive, they say. Maybe a little bit because if Netanyahu went to the White House furious, he came out of the meeting at least a little less so. That's what an Israeli diplomat tells CNN's Elise Labott. But for two leaders that have had frosty relations at times, this is another tough spot.


UNIDENTIFIED MALE: Israeli Prime Minister Netanyahu was about to leave for the U.S. when President Obama made the announcement yesterday that infuriated him.


OBAMA: We believe the borders of Israel and Palestine should be based on the 1967 lines with mutually agreed swats.

KEILAR: Today at the White House, as he did yesterday, Netanyahu panned the proposal.


BENJAMIN NETANYAHU, ISRAEL PRIME MINISTER: These lines are indefensible because they don't take into account certain changes that have taken place on the ground -- demographic changes that have taken place over the last 44 years.


KEILAR: But if yesterday was the war of words, the White House hoped today was time to kiss and make up.


OBAMA: Obviously, there are some differences between us in the precise formulations and language and that's going to happen between friends.

NETANYAHU: We have an enduring bond of friendship between our two countries.


KEILAR: But for all of the niceties, Netanyahu drew a line in the sand and not only on a return to pre-'67 borders. He said Israel will not house Palestinian refugees or negotiate with the Palestinian government supported by Hamas.


NETANYAHU: It's not going to happen. Everybody knows that it's not going to happen. And I think it's time to tell the Palestinians forthrightly it's not going to happen.


KEILAR: Despite tough words, the U.S. and Israel will remain allies even past this rough spot. But the tension between the two leaders was palpable. Robert Danin is with the Council on Foreign Relations.

(BEGIN VIDEO CLIP) ROBERT DANIN, COUNCIL ON FOREIGN RELATIONS: I think that there is not a great deal of mutual affection there. They have met a number of times, but nonetheless they have not succeeded in establishing a close bond -- a close working relationship they have, but there is not a great deal of deep trust it seems.


KEILAR: After the meeting, White House press secretary Jay Carney said the president made clear the pre-1967 border proposal is a starting point, that the mutual swaps that would create the eventual borders would be negotiated. The thing is, Wolf, as you know, what the White House considers a starting point, Israel still considers a non-starter even after this meeting today.

BLITZER: Brianna Keilar, our White House correspondent, thanks very much. Let's dig deeper a little bit right now and let's do a little reading between the lines of that appearance by the president and the prime minister in the Oval Office.

Our senior political analyst Gloria Borger is here. Gloria, I was struck by the body language during that 15-minuute photo opportunity. It did not seem very good.

GLORIA BORGER, CNN SENIOR POLIICAL ANALYST: Sort of frigid, would you say? I mean, look, these two men do not enjoy a really warm relationship. Don't forget this meeting today took place after the prime minister issued what amounted to a reprimand, right, of the president of the United States yesterday. And then today in this photo op, he started listing all of his non-negotiable demands.

I think from the White House point of view, they consider that Netanyahu has always been kind of intransigent, unwilling to give on things that would lead to a meaningful peace process. And from Netanyahu's point of view, this White House has blindsided them time and time again on the settlement issue and then on the speech again yesterday where they talked about going back to the 1967 boundaries as a starting point.

So not a warm relationship and, by the way, Wolf -- and you can answer this question better than I can -- I don't think that Netanyahu pays a political price at home at all for taking on Barack Obama, does he?

BLITZER: Well, to a certain degree there is a constituency in Israel -- an important constituency that wants to make sure this U.S.-Israeli relationship is strong and vibrant. Israel is dependent on the United States for billions of dollars and economic and military assistance every year. And strategically in that part of the world, it's important for the Israelis to know the United States is there to help the Israelis.

So he does pay a certain price if there's a rupture in the U.S.- Israeli relationship. But these are close allies. And it's intriguing to me that even before the president delivered the speech at the State Department yesterday, the Obama administration notified the Israeli government on these sensitive issues what he was going to say.

BORGER: Well, as you would expect having covered the White House, you know that these things go through diplomatic channels, particularly on a large speech like this. So you had the secretary of state hours before the speech giving Netanyahu a -- what amounts to a heads up. But it was a tense phone conversation, we're told, that Netanyahu clearly did not like what he heard, and that was why you saw his statement released before he got on an airplane to come on over here.

The question, of course, is what did the White House then do? Hillary Clinton has to notify the president of the United States that Israel is upset about this. But it seems to me that if you look at the language, the language in the speech was not changed. The White House press secretary said it did not delay the speech, that the president was putting his, quote, "finishing touches" on it dealing with other national security matters, but you have to assume that the secretary of state and the president were talking about Israel.

BLITZER: It was a tense -- he was supposed to speak at 11:40 a.m. He didn't speak until 12:15. It was 35 minutes delayed. The secretary of state heard what the prime minister told her in that phone conversation, reported it to the president. The president said he's not changing the language, he's keeping that pre-'67 language with mutually-agreed swaps as is, and that obviously irritated the prime minister.

BORGER: And the question is, did Netanyahu's irritation come as a surprise to the White House? I would have to think it wouldn't.

BLITZER: No, no, of course it didn't. Thanks.

This important note for our viewers. The Israeli ambassador to the United States Michael Oren will be a special guest tonight on "IN THE ARENA" 8:00 p.m. Eastern right here on CNN.

A potential Republican challenger to President Obama is defending his ties to the Democrat. We're taking a closer look at the reception John Huntsman is now receiving in New Hampshire. And a shirtless Congressman -- a political scandal. And now, a surprisingly close race to replace him.


BLITZER: As the Republican presidential field begins to take shape, John Huntsman isn't an official member of the group, at least not yet. The former Utah governor and the U.S. ambassador to China is hardly a household name, but his biggest obstacle may be his connection to the Democrat he might run against. CNN's Jim Acosta is covering Huntsman's swing through New Hampshire right now. He's joining us live. What's the latest up there, Jim?

JIM ACOSTA, CNN CORRESPONDENT: Wolf, John Huntsman is just a few weeks off the job as U.S. ambassador to China, but he still sounded like a diplomat at some of his first few events up in this state. And there were very few, if any, jabs aimed at the man he'd like to replace, the man who also happens to be his ex-boss. (BEGIN VIDEOTAPE)

ACOSTA (voice-over): Taking his first steps in New Hampshire, John Huntsman initially had more members of his family, his staff and the media swirling around him than supporters. So it was no surprise that at his first event as a potential presidential candidate, Huntsman trying to turn down the temperature.

HUNTSMAN: We are the quintessential margin of error potential candidate.

ACOSTA: Still, this former Republican governor of Utah and Mormon showed off his conservative side, saying he would work to repeal the new national health care law, and look at entitlement reform to bring down the debt.

HUNTSMAN: It's $14 trillion with an exclamation mark.

ACOSTA: He told one crowd he would not have invaded Libya, mainly for budget reasons, despite the potential for humanitarian losses.

HUNTSMAN: We could be responding to corners of the world constantly if that were the motivating criterion.

ACOSTA: As for conservative complaints he is too moderate on issues like the environment, Huntsman told CNN he's ready to defend his record.

UNIDENTIFIED MALE: Do you think you will be able to overcome some of the concerns that some Republicans have about your record?

HUNTSMAN: Listen, everyone who has been elected to political office has a history. Some will like it, some won't.

ACOSTA: One thing conservatives don't like is Huntsman's time as U.S. ambassador to China, something his ex-boss won't soon forget.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I'm sure that him having worked so well with me will be a great asset in any Republican primary.


ACOSTA: Huntsman, who is fluent in Mandarin, says he would do it again, stressing he was answering a call to serve, an answer some Republicans may be willing to accept.

UNIDENTIFIED MALE: It doesn't bother me at all. He was working for the United States.

ACOSTA: And at every stop, the former ambassador sounded more diplomatic than dogmatic. He doesn't take swipes at the president. A creature of the tea party he is not. But Huntsman cautioned he's not into labels.

HUNTSMAN: We've got to get beyond this sort of tag mentality where everybody is described as being this, that, and the other. I think that's artificial, I think it's superficial, and I think it's misleading in politics.

ACOSTA: With some in the GOP shopping around for a fresh face, voters in this "first in the nation" primary state are taking a hard look at Huntsman, even if they are not ready to buy in just yet.

ACOSTA (on camera): Do you think he can beat President Obama?

UNIDENTIFIED FEMALE: Well, how can you say that when you don't really know the man?

ACOSTA: He's kind of an unknown at this point.

UNIDENTIFIED FEMALE: Yes. As a lot of them are.


ACOSTA: Now, Huntsman's top political adviser, an old campaign veteran, John Weaver, told me that he thinks the way to beat President Obama, Wolf, is to go bigger, not smaller. That is a sign that if Huntsman gets into this race, and he says he will have that decision in June, that this campaign will be about the issues, he will not go personal.

And just an aside, Wolf, Jon Huntsman will be delivering the commencement address at Southern New Hampshire University tomorrow. Also happens to be the spot where his former boss, President Obama, delivered a commencement address four years ago -- Wolf.

BLITZER: I guess at this time of the year, if you want to be president of the United States, it's a good thing to deliver a commencement address in New Hampshire. Can't hurt, as we say. Thanks very much, Jim Acosta, reporting.

By the way, CNN's "New Hampshire Presidential Debate" is only a few weeks away, please join us on Monday night, June 13th, as the Republican hopefuls square off on all of the issues only here on CNN. And Jon Huntsman, by the way, will be a guest on "JOHN KING USA" later tonight at as well, 7:00 p.m. Eastern.

Homemade levees are holding back the floodwaters of the Mississippi River. We're going to show you the length some people are going to try to save their homes.

And what is the most disturbing piece of information recovered from bin Laden's compound in Pakistan? I'll ask the chairman of the House Intelligence Committee, Mike Rogers, he's here in THE SITUATION ROOM.


BLITZER: This just coming into THE SITUATION ROOM. The former International Monetary Fund chief, Dominique Strauss-Kahn, is now out of the New York City jail. Just a little while ago a judge approved a new bail arrangement for Strauss-Kahn, who is awaiting trial on charges he sexually assaulted a hotel maid. Court officials say Strauss-Kahn will be moved to a temporary location in Lower Manhattan.

Plans for him to stay in a plush apartment fell through reportedly because of objections from residents. Here is how Strauss-Kahn's lawyer explained the change of plans. Listen to this.


WILLIAM TAYLOR, DEFENSE ATTORNEY: The reason that he had to move is because members of the press attempted to invade his private residence and interfered with his family's privacy. And I'm asking all of you, please, respect this family's privacy. I know you have to do your job. Report the news. But it's not as important as respecting the rights of Mrs. Sinclair, Mr. Strauss-Kahn, and their family to privacy and to some time together.


BLITZER: All right. We're also told, by the way, that the judge accepted the $1 million in cash Strauss-Kahn paid for his bail along with a $5 million insurance bond.

Dominique Strauss-Kahn is certainly used to the good life. CNN's Ivan Watson takes us to the Paris neighborhood where he lived.


IVAN WATSON, CNN CORRESPONDENT: This is one of the most elite, expensive neighborhoods in Paris, Place des Vosges, a centuries' old planned square in the heart of the city where the French author Victor Hugo once lived. It's also where Dominique Strauss-Kahn maintained a Paris residence, right here in Number 13 Place des Vosges.

Now this expensive neighborhood couldn't offer more of a stark contrast to the Bronx apartment building where the alleged victim of the assault in that New York hotel lives.

Dominique Strauss-Kahn had come under some criticism in the past. He is a leading member of the Socialist Party, but he was photographed getting into an expensive Porsche here in this neighborhood once, leading some to criticize him, calling him a "caviar Socialist."

The neighbors here, the owners of the boutiques and galleries around here are very camera shy. But some of them tell CNN they would periodically see Strauss-Kahn and his wife, Anne Sinclair, getting in and out of chauffeured vehicles here, but say they were always polite, always said, hi, how do you do?

A New York judge has released Strauss-Kahn on $1 million in bail. He will now live in a New York rented apartment under near constant surveillance, wearing an electronic tracking device.

It's likely to be many long months before he ever sees him home here in Paris ever again.

Ivan Watson, CNN, Paris.


BLITZER: President Obama is putting Osama bin Laden's followers on notice that the United States is ready, in his words, "to finish the job and destroy al Qaeda." But will a new cut in terror funding to dozens of U.S. cities get in the way?

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


BLITZER: The Taliban say a bomb attack on a convoy of U.S. consular vehicles in Pakistan is retaliation for the killing of Osama bin Laden. One person was killed in that attack, 11 others were wounded. There are no reports that any of them were Americans.

Also in Pakistan, a suspected U.S. drone strike killed four suspected militants in the country's northwest. There has been a surge in suspected U.S. drone strikes since the killing of bin Laden. Earlier I spoke to the chairman of the House Intelligence Committee, Republican Congressman Mike Rogers.


BLITZER: Let's talk about U.S.-Pakistani relations right now. The cooperation or lack of cooperation between the U.S. and Pakistani intelligence services, is it getting better three weeks after bin Laden is dead or getting worse?

REP. MIKE ROGERS (R-MI), CHAIRMAN, INTELLIGENCE COMMITTEE: Well, still lots of challenges. And I think to some degree the embarrassment has -- and the bravado has not allowed us to move forward. You know, they named a CIA case officer who happened to be the chief of station...

BLITZER: The station chief there.

ROGERS: He's the station chief there. Bad form, they knew it. They did it on purpose.

BLITZER: That's the second time they did it?

ROGERS: That's the second time they've done it. They held a U.S. diplomat for 42 days, not that long ago.

BLITZER: A CIA contractor.

ROGERS: U.S. diplomat, for 42 days, who had all of the rights of immunity. They also interrogated him. And so it's the most confusing relationship. They are fair weather friends at best.

But we're going to have to work through it. And I know there are lots of calls, Wolf, in Congress, we should cut the funding and let's be angry at the Pakistanis. And nobody is angry at them than I am, on most days.

But at the same time, they help us with logistics for the effort in the war in Afghanistan. They have sent troops into the tribal areas and taken thousands of casualties. They have helped us arrest al Qaeda operatives to one degree or another, and Taliban operatives in the settled areas of Pakistan.

So it is a real mixed bag. I would walk very slow down the path to cut them off.

BLITZER: I want to get more on that in a moment, but a quick question. What's the scariest thing that you've learned from that so- called treasurer trove of documents, information taken from bin Laden's compound?

ROGERS: Well, I think the good news, if there is good news in that information, is that there wasn't any -- there is no smoking gun there that says that this is going to happen, this horrible event well under way, can't stop it. None of that is true.

BLITZER: Have they finished reviewing everything?

ROGERS: No. And it's going to take a while. And that's part of the one thing people have to realize.

Some of it's coded, some of it's Dari and Pashto and Arabic. So there's a whole series of things that they'll have to go through to get -- to be able to interpret all of the information.

But from what I've seen, it clearly showed that he was conducting operational management of al Qaeda where he could. He was given guidance where there were disagreements among factions. He would try to mediate that. That was still happening, and that was a little different than analysts believed leading up to that.

BLITZER: So he wasn't just sitting there. He was working on a computer, sending out thumb drives, sending out instructions, and he was deeply involved in this al Qaeda operation?

ROGERS: Absolutely. And the one thing that struck me so far is how focused he was on telling the al Qaeda elements around the world, remember, target America first.

BLITZER: Here's what surprised me. He had no security. He had really no serious weapons there. Why?

ROGERS: Well, a higher profile would have been a lot more attention. Think about it.

He had a family around him that invited other family members' children in to play. They didn't see Osama bin Laden, they didn't see his family, didn't see his wife. But they tried to make it as normal as you possibly can, having a high-security compound in the middle of Abbottabad.

BLITZER: Is the U.S., with or without the help of Pakistan, any closer to getting Anwar al-Awlaki, who's the America-born cleric who's in Yemen right now, runs this Al Qaeda in the Arabian Peninsula? I know the U.S. tried to kill him with a drone strike a couple weeks ago, almost got him.

ROGERS: And I can't talk about the specific details, but when you look at his threat and why it's a unique threat when it comes to al Qaeda, he has complete understanding of American culture.

BLITZER: He was born in New Mexico.

ROGERS: Born in New Mexico, he spent some time here, lived in Virginia for a period of time, lived in the South for a period of time. He understands America and has used that to his advantage to try to recruit people who have those blue American passports.

BLITZER: So is the U.S. any closer to finding him, do you think?

ROGERS: Well, he's under a lot of pressure, I will say that.

BLITZER: And legally, the U.S. can kill him, from your perspective as chairman of the House -- he's an American citizen. Would it be OK to kill him just as it was OK to kill bin Laden?

ROGERS: He renounced his citizenship. He has declared war on the United States, his own words. I think we are in the full right of the United States to bring him to justice just the way we brought bin Laden to justice.

BLITZER: What about Ayman al-Zawahiri, the number two al Qaeda leader, the Egyptian who has obviously been in hiding, we believe, in Pakistan? Any closer to finding him?

ROGERS: You know, what happens when something like this -- and we know this through the history of how al Qaeda will respond when we get other senior leaders or logisticians or finance people, is that they change their security protocols. This was a major impact on them psychologically. He was an inspirational leader and an operational leader.

BLITZER: Bin Laden?

ROGERS: Bin Laden. And so when that happened, they are going to change. So, Zawahiri doesn't know if the last note that he was writing had his name and address on it or not.

BLITZER: Do you think the Pakistanis, or at least elements of the Pakistani intelligence service or military, know where he is?

ROGERS: Well, I would guess that somebody has information that is valuable to us to find Mr. Zawahari if he's in Pakistan, in Afghanistan, in Yemen, in --


BLITZER: Because if the Pakistanis help the U.S. find him, that would go a long way in improving that relationship.

ROGERS: It would be a -- I think a big healer in our relationship. And again, I hope that we take this opportunity to say, yes, it was embarrassing, it was bad. Now this is the time to step up. More transparency, more access, share more information, let's move forward and use this as an opportunity to strengthen our relationship, not weaken it.

BLITZER: The al Qaeda organization named another Egyptian like Ayman al-Zawahiri, Saif al-Adel, to be what they call their interim leader. What do we know about this guy?

ROGERS: Well, all of the folks that they have talked about -- and this particular gentlemen is one of them -- have some inspirational qualities. They have been out, they've been talking, they've been preaching the message, if you will, have some operational experience, completely trusted.

We're not convinced yet that they have solidified on any particular person that is going to assume that role. And we also would not be -- I would be at least suspect of anyone early on knowing that they are going to go through these changes and are they trying to divert people's attention or not.

The good news is, the intelligence services has been going after a whole slew of targets all over the world, all at the same time. So, the whole apparatus was not going after Osama bin Laden. It was going after all of the senior leaders as we know them, all at the same time. So we're close on some, not so close on others. This is an ongoing process.

BLITZER: Congressman Rogers, good luck in all of the work you're doing.

ROGERS: Hey, thanks, Wolf. Thanks for having me.


BLITZER: A new glitch in space after the crew of the shuttle Endeavour. Stand by for details.

And a dangerous arms race between China and the United States helps create a gaping hole between the countries.


BLITZER: A new law in Texas requires pregnant woman to view an embryo or fetus before getting an abortion.

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

What's going on over there, Lisa?

SYLVESTER: Hi there, Wolf.

Well, that law will require women to undergo a sonogram at least 24 hours prior to an abortion. A doctor is also required to give a verbal explanation of the sonogram, mentioning the size and physical characteristics of the embryo or fetus, and the presence of a heartbeat.

Now, there are some exceptions to the requirement, including in the cases of rape or incest. That law takes effect September 1st.

Two members of the crew of the space shuttle Endeavour cut short a spacewalk because of a broken carbon dioxide monitor, but NASA officials say most of the work was done. The two astronauts were in the process of installing an antenna when the malfunction was detected.

And the energy giant Shell is announcing plans to build the largest offshore natural gas facility in the world. The company says it will be bigger than four football fields and will sit more than 100 miles off Australia. The facility will have the ability to chill the gas it produces into liquid so it can be shipped to cities hundreds of miles away -- Wolf.

BLITZER: Lisa, thank you. Thanks very much.

In New York State, a special election in the 26th congressional district now seen as a potential testing ground for the 2012 campaign themes. You may remember the reason the seat is open. A Republican congressman stepped down after his compromising Craigslist exchange was revealed to the world.

Our congressional correspondent Kate Bolduan is here in THE SITUATION ROOM working this story, just came back from my hometown.

This is a district, including the suburbs of Buffalo. So what's going on over there?

KATE BOLDUAN, CNN CORRESPONDENT: You are big there. I first should say that, Wolf.

BLITZER: Yes, I'm sure.


BOLDUAN: But this race is very close, and it is very interesting.

As Wolf just said, even with a congressman resigning amid a shirtless scandal, little attention was paid to this special election. Well, fast forward a few months, and now all eyes are on New York's 26th congressional district.


BOLDUAN (voice-over): A seat vacated over scandal. Republican Congressman Chris Lee resigned in February after a shirtless photo he e-mailed to he a woman not his wife appeared on the Internet. Now this special election is offering Democrats a shot they haven't had in Upstate New York in years.

(on camera): Why is this race so competitive? Why is it so close?

KATHY HOCHUL (D), NEW YORK CONGRESSIONAL CANDIDATE: Because we've got the right message.

BOLDUAN (voice-over): And that message, Democrat local county clerk Kathy Hochul is hitting hard, slamming the House Republican plan to cut spending by dramatically changing Medicare and trying to tie her Republican opponent, state assembly member Jane Corwin, to it.

(on camera): Why do you think Medicare has taken such a front and center role in this campaign?

JANE CORWIN (R), NEW YORK CONGRESSIONAL CANDIDATE: To be honest, I think it boils down to scare tactics used on my opponent's part. She's putting out there the idea that I'm trying to end Medicare, and there's nothing further from the truth.

BOLDUAN: The fact that a Democrat is even competitive in this race is surprising. Republicans have long had an edge here. This district went to the Republican candidate in the last three presidential elections, and the last time this area elected a Democrat to this seat was more than four decades ago.

(voice-over): Look no further than the candidates' final debate and see the race has also turned into an early test of the national political playbook for 2012, Democrats attacking the GOP's Medicare proposal and its author, Congressman Paul Ryan --

HOCHUL: The Ryan budget --

The Ryan budget --

The Ryan budget --

BOLDUAN: With Republicans fighting back that Democrats are running from the big challenges.

CORWIN: Isn't that such the career politician thing to do? Kick the can down the road.

BOLDUAN (on camera): If you look at the debate last night, it may lead one to wonder, are you running against Paul Ryan or are you running against Jane Corwin at this point?

HOCHUL: Well, Jane Corwin has 100 percent embraced the Paul Ryan budget, even when Republicans in Washington are trying to run away from it. She's been asked again and again, and she continues to support it.

BOLDUAN (voice-over): Corwin doesn't disagree.

CORWIN: Medicare certainly is a very important issue to our seniors, and that's why I'm working so hard to support a plan that is going to protect Medicare for seniors and also ensure that the program is around for future generations.

BOLDUAN: A big factor making this a dead heat, third party candidate Jack Davis, who says he represents the Tea Party, is drawing support across party lines. JACK DAVIS, TEA PARTY, NEW YORK CONGRESSIONAL CANDIDATE: I want to make the jobs the issue and putting Americans back to work, and they want to talk Medicare.

BOLDUAN: And a sign of just how high the stakes are, outside money is pouring in, close to $2 million so far, almost nonstop ads cluttering the airwaves, and big-name national party leaders flying in to show their support.

REP. JOHN BOEHNER (R-OH), HOUSE SPEAKER: I think she's a great candidate.


BOLDUAN: Now, really, regardless of the outcome of this election, it will be significant as it previews the battle lines ahead that we're going to be seeing in the next round of congressional races next year. Very close race, and everyone is watching it, and the election is Tuesday.

BLITZER: This Tuesday. That $2 million they're pumping in, good for the local economy. They could use some of that economic stimulus.

BOLDUAN: That's just from the outside groups. A couple of these candidates have put a lot of their own money in as well.

BLITZER: I hope you had some chicken wings while you were there.

BOLDUAN: I had some Buffalo wings and they were delicious.

BLITZER: Excellent. Good work. Thanks, Kate.

Amazing efforts to save homes near the Mississippi River. We're going to take you there.

And behind the scenes at Hillary Clinton's crisis center.

Stand by.


BLITZER: Check out some of the most amazing images we've seen from along the Mississippi River. Homes are virtual islands right now because their owners built their own protective fortresses.

CNN's Martin Savidge is there.


MARTIN SAVIDGE, CNN CORRESPONDENT: Wolf, this is a perfect example of what you can do with a lot of determination and some heavy earth- moving equipment, and a little bit of time and advanced warning.

Take a look at this. We are in Yazoo County, and we are on the Hart family farm. This farm has been -- or the Harts have been in this county, I should say, for almost 200 years, which is why it was so important that they defend their land from the flood and not just give up on the land.

This is where the water situates itself right now. Now, you would think you're looking out at a manmade lake. It is not. It is a field that normally would have about a thousand acres of cotton in it. It does, but it's under water right now.

That house in the distance, that is their son's home. That's Todd Hart's house right there. You can just see the roofline peaking above another earthen levee that they created out there, and that is also working to hold the water back. It's quite dramatic when you see that one from the air, because that's the little island.

But we are standing here on the big island, and this big island was constructed -- it's about 2,200 feet that goes around three acres, sort of a soft-sided square, maybe. And it ranges in height from about eight feet to maybe 11 feet. And this is what is keeping essentially the floodwater coming from the Yazoo and the Mississippi, the backwater, at bay. And it has been doing that ever since Tuesday.

Last Sunday if you were here it would have been bone dry. Tuesday, you've got a ton of water.

And now I want you to meet the man whose land we are standing on.

Irman (ph), take a step up here.

Irman Hart (ph), why did you go to all this trouble?

IRMAN HART (ph), BUILT LEVEE: Well, Martin, like you said, we have been in Yazoo County a long time. And this is my home. This is my boyhood home, and I just had to do all I could do to save it. And we got it to the point it is and we worked hard, but I give all the glory to God. I mean, it's all in his hands, whether this levee holds or not.

SAVIDGE: When you were building this -- two weeks it took -- there was no water here. Did people think you were crazy?

HART: I would think that some thought I was crazy. But we've lived here for a long time, and we don't take these predictions on the river carelessly. I mean, we know when they say it's coming from Cairo, Illinois, it's coming to Vicksburg, Mississippi. And we a took it all serious and we started building this levee.

SAVIDGE: I've got to ask, because I know a lot of people are wondering this same thing, how much did this cost?

HART: Well, Martin, my son said a while ago an arm and a leg. I really don't know yet. And I'm just going to have to leave you with that, because I don't know what it's going to cost.

SAVIDGE: The bill actually hasn't come in, but I would say it's worth it so far.

HART: It's worth it.

SAVIDGE: Thank you, Irman (ph). Thank you so much.

Right now they say that the floodwaters are likely to be hanging around this neck of the woods for some time, maybe into the middle of June, which means for the Hart family there won't be a lot to do except enjoy their new lake house home -- Wolf.


BLITZER: What a story. All right. I wish all those folks the best of luck.

Martin Savidge reporting.

China is developing a weapon that could do serious damage to U.S. Navy carriers. How America's military is now fighting back.

And why a former supporter of President Obama is now calling him -- and I'm quoting now -- a black puppet.


BLITZER: "The New York Times" is reporting that China will provide 50 new fighter jets equipped with advanced avionics to Pakistan. This comes as Pakistan's prime minister is visiting Beijing.

Also in China right now, the high-level North Korean delegation, and according to some reports, the North Korean leader, Kim Jong-il, may be leading it. We are watching this story for you.

Meanwhile, China is pushing developed new high-tech weapons. What if these weapons are developed as part of a growing arms race between the U.S. and China?

Let's bring in our Pentagon correspondent Chris Lawrence. He's working this part of the story for us -- Chris.

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Well, Wolf, 20 years ago a lot of people would be surprised if you told them today our primary war would be against these terrorists, not against an actual nation. So, it's the job of people to look ahead 20 or 30 years from now to see what our next conflict could be.

Some of the brightest minds in the U.S. and China are already doing this for a conflict that may never happen.


LAWRENCE (voice-over): Chinese technology could push U.S. Navy fighter jets farther back from the battlefield. China is developing a missile with enough distance and accuracy to hit a moving carrier. In order for the American ship to launch planes against China, it would have to sail in range in the DF-21D missile.

DEAN CHENG, HERITAGE FOUNDATION: This is not an easy thing to do with a mobile platform, but the Chinese are putting together the satellites, other ground-based sensors, plus the missile itself, to try and do this.

LAWRENCE: Dean Cheng studied China's military for the U.S. government.

CHENG: Neither side wants to take on the other, but each side has to be worried about that possibility.

LAWRENCE: Military relations between the U.S. and China have been rocky. On Wednesday, China's top military officers said there is still "a gaping hole between us."

A flight deck is full of armed, fueled aircraft. Hit it with a missile, that might not sink the carrier, but it could certainly cripple its mission.

ADM. GARY ROUGHEAD, CHIEF OF NAVAL OPERATIONS: I know that there's a great deal of interest in the carrier vis-a-vis the DF-21. I mean, that's the big question. And the -- and how that carrier now becomes vulnerable.

LAWRENCE: America's answer is a version of the unmanned vehicle that can launch and land at sea. The U class would fly farther and longer than a fighter pilot. And a prototype took its first test flight in February.

ROUGHEAD: We remain committed to getting a squadron of U class aboard an aircraft carrier by 2018.

LAWRENCE: The U.S. has been flying land-based drones for years. But the bad guys in Afghanistan don't fly jets. The same with the tribal areas of Pakistan.

CHENG: Off of China you are not going to automatically enjoy that kind of supremacy.

LAWRENCE: There are questions how much damage any drone could do against actual air defense.

CHENG: How well would a drone do if it was being intercepted by enemy fighter airplanes? How well would it do if it had to fight its way through enemy surface-to-air missiles?


LAWRENCE: And that's hard to answer, especially at this point. We are talking about experimental drones that have barely been tested to fight an experimental Chinese weapon that hasn't been tested at all -- Wolf.

BLITZER: Chris Lawrence at the Pentagon.

Thank you.

You may not know that the State Department has its own version of the Situation Room. And it's now half a century old, just like the White House Situation Room. Our foreign affairs correspondent Jill Dougherty got an exclusive look at this secretive spot inside the headquarters of U.S. diplomacy.


JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT (voice-over): The Operations Center, Ops, for short, the State Department's 24/7 nerve center.

(on camera): Would they wake up Secretary Clinton at that hour?

RENA BITTER, DIRECTOR, STATE DEPT. OPERATIONS CENTER: They would wake up anyone that they needed to wake up essentially. So that is their job.

UNIDENTIFIED MALE: Got Merrill's (ph) voicemail.

DOUGHERTY (voice-over): Tracking hot spots around the globe and how to get American citizens out of them.

Director Rena Bitter says she's never seen it so busy.

BITTER: We had a taskforce on Egypt, then that went down. We had a week, and then a taskforce on Libya. And then we had Japan. And then before Japan went down we had Libya again. So we had two going at the same time.


(voice-over): Sixty staff coordinate all communications for the State Department around the world, giving Secretary of State Hillary Clinton sometimes minute-by-minute updates, putting her in touch with anyone, anywhere.

HILLARY CLINTON, SECRETARY OF STATE: Now, one evening I wanted to speak with an ambassador who was visiting Washington. So, of course I asked Ops to find him for me.

DOUGHERTY: Ops quickly patched her through.

CLINTON: Only later I learned that the ambassador did not have his cell phone with him.

DOUGHERTY: His staff told Ops he was out to dinner, but they didn't know where.

CLINTON: Ops called the ambassador's hotel and learned that the concierge had recommended three restaurants, but they didn't know which one he chose.

DOUGHERTY: Ops called them all, e-mailed a picture of the ambassador, and asked them to scan the dining rooms until they found him.

CLINTON: That is perseverance.

DOUGHERTY: The Ops Center was created 50 years ago, reportedly when President John Kennedy couldn't reach anyone at the State Department during the Cuban Missile Crisis. Back then, it used cables like this one from 1979. "Embassy Tehran was taken by demonstrators at 11:00 a.m. today."

Former secretary Madeleine Albright says she will never forget one call from Ops.

MADELEINE ALBRIGHT, FMR. SECRETARY OF STATE: And I was in Italy, and they found me, and they said, "The embassies have just been blown up." I said, "What are you talking about?"

DOUGHERTY: Ops even helped save one of those U.S. pilots shot down over Libya this past March when a Libyan man who once received an education grant from the State Department found him.

CLINTON: So what did he do? He called Ops.


CLINTON: And what did Ops do? Well, Ops called the Defense Department and said, oh, by the way, we have your pilot. Why don't you come pick him up?

DOUGHERTY: Jill Dougherty, CNN the State Department.