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The Situation: Friday, October 28

Editor's Note: The Situation Report is a running log of dispatches, quotes, links and behind-the-scenes notes filed by the correspondents and producers of CNN's Washington Bureau. Watch "The Situation Room" with Wolf Blitzer on CNN 3 p.m. ET to 6 p.m. ET weekdays.

Source: Fitzgerald plans to seek indictment against Libby

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Morning Grind
I. Lewis "Scooter" Libby
Karl Rove
Capitol Hill

Posted: 10:30 a.m. ET
From Molly Levinson, CNN Washington Bureau

CNN has learned that Patrick Fitzgerald, the special prosecutor in the CIA leak probe, plans to seek an indictment against I. Lewis "Scooter" Libby, Vice President Dick Cheney's chief of staff, a lawyer involved in the case told CNN Friday.

The attorney said that Fitzgerald believes Libby misled investigators. Earlier, a political source familiar with the situation told CNN that Libby had been informed he could face indictment, but added that Libby did not know for certain whether he would be indictment.

"We have believed he will be (in jeopardy of indictment) for a week or more," the source said, adding that Libby has entered into "conversations and consultations" about adding a new lawyer with more criminal defense experience to his team.

Libby's current lawyer is Joseph Tate, a partner at Dechert LLP.

The day unfolds: Latest 'leak' developments

Posted: 10:30 a.m. ET
From Molly Levinson, CNN Washington Bureau

CNN has learned that special prosecutor Patrick Fitzgerald will hold a press conference at 2pm regarding the status of the Special Counsel's criminal investigations.

Meanwhile, CNN has received the following statement from Robert Luskin, attorney to White House Deputy Chief of Staff Karl Rove: "The Special Counsel has advised Mr. Rove that he has made no decision about whether or not to bring charges and that Mr. Rove's status has not changed.

"Mr. Rove will continue to cooperate fully with the Special Counsel's efforts to complete the investigation. We are confident that when the Special Counsel finishes his work, he will conclude that Mr. Rove has done nothing wrong."

Miers: What happened and what's next?

Posted: 10:27 a.m. ET
From Dana Bash, CNN White House Unit

Looking back, Bush administration aides admit the first big miscalculation they made on the Harriet Miers nomination was what one called "taking the bait" from Democrats, and some Republicans. They say that there was an appetite for a nominee from outside the judicial monastery. In fact it appears there really wasn't a hunger for that. All the discomfort, especially among conservatives came from the fact that she wasn't a judge.

Despite some spin from the White House that they thought they'd have the votes in the Senate, a senior official conceded that, in the end, a lot of the decision to withdraw came down to where it counts: the Senate.

A senior Bush official said several Senators had "brutally honest" conversations with her about the fact that they could not support her, because she did not have enough of a record to make them comfortable with her.

Another top White House aide said that during preparation for the hearings with Miers, they realized she was going to get a lot of questions she could not, or would not answer, and considering the perception (which the White House dismisses, of course) that she is not qualified, it would have been an "intractable scenario on live TV."

What will we see next?

In the past, while defending the Miers pick, a senior official suggested they had ruled out several candidates on the short list and got to Miers in a kind of process of elimination.

That process was based on the premise that too much of a record is bad. That backfired.

A senior official says the next choice will be based on the "lessons learned" from the Miers nomination.

The president has already done a lot of homework, there is already a short list, according to the White House. And officials say Bush doesn't necessarily need to interview anyone, but yet he may.

The Morning Grind

Posted: 9:35 a.m. ET
From Mark Preston, CNN Political Unit

Libby's lonely day?

It appears Karl Rove has dodged a speeding bullet, but his White House colleague, I. Lewis "Scooter" Libby, believes he is still in jeopardy of being indicted for his alleged role in revealing the identity of CIA agent Valerie Plame.

Sources tell CNN's Kelli Arena and Kevin Bohn that Rove's legal team was notified last night that he was not going to be indicted today, but the matter is still under investigation. The sources say Rove, President Bush's top political adviser, was not told he was out of legal jeopardy.

"I am going to have a great Friday and a fantastic weekend, and hope you do too," Rove said as he left his home this morning.

But a political source familiar with the situation tells CNN's John King that Libby has been told he is in jeopardy of possible indictment. The source said he did not know if Libby knew for sure if he was being charged.

"We have believed he will be (in jeopardy) for a week or more," the source said.

Lewis Libby has entered into what is described as "conversations and consultations" about adding a new lawyer with more criminal defense experience to his team, the source added.

Fitzgerald has spent nearly two years investigating the Plame matter and charges against Libby could have a negative influence on Bush's final three years in office. Bush is already dealing with the fallout from the failed nomination of Harriet Miers to the U.S. Supreme Court and growing uncertainty about continued U.S. involvement in Iraq. An indictment against Libby, Vice President Cheney's chief of staff, would compound the political problems of an already embattled White House.

Fitzgerald is expected to make a public statement today about his investigation after meeting with the grand jury for a final time.

There is a chance that Bush will not be in town when, and if, Fitzgerald announces if indictments will be handed down. The president is scheduled to deliver a speech about the war on terrorism in Norfolk, Virginia this morning, before returning to the White House. Cheney, too, is scheduled to be on the road today attending three events in Georgia.

On a separate front, the White House is regrouping after Miers withdrew her nomination to the nation's highest court 12 days before the Senate Judiciary Committee was set to begin confirmation hearings. Her conservative critics applauded Miers decision to remove herself from consideration to the Court. But these influential activists said they expected Bush to replace Miers with a nominee that has solid conservative credentials. If not, they would oppose that candidate with the same fervor as they did Miers' nomination.

"I think (conservative groups) will swing into action again" if they disagree with his next pick, Phyllis Schlafly, president of the Eagle Forum, told the Morning Grind. "The judicial issue was a major issue in the 2004 elections, and it was a reason why many people voted for Bush even though they might have been unhappy (with him) for other reasons."

One candidate Schlafly said conservatives would oppose is U.S. Attorney General Alberto Gonzales, because there is a concern that he does not fit the mold of current Justices Antonin Scalia and Clarence Thomas. It is not clear when Bush will nominate a new candidate for the Court, but it is likely to push back confirmation hearings into December.

As the White House engages in damage control, a prominent Democrat is following a path north that he hopes will eventually lead him to 1600 Pennsylvania Avenue in January 2009. Sen. Evan Bayh (D-Indiana) will be the star attraction Saturday at the New Hampshire Democratic Party's Jefferson-Jackson Dinner. Bayh will criticize Bush for his stewardship of the country, and he will predict that historians will not look favorably on Bush's time in office.

"When the history of our time is written, I believe it will judge as one of this president's greatest failings that he sought our highest office pledging to be a uniter not a divider, but instead divided America more profoundly then anytime since the Vietnam war," Bayh is expected to say according to advance excerpts of his speech reviewed by the Morning Grind.

Bayh, a Democrat with centrist leanings, also will dispute the idea that Democrats can't win in the "red states."

"I reject the notion that as Democrats, we can only win in the so-called 'blue states,'" Bayh will declare. "We win when we stand up for American values, for the American promise that is the birthright of every child born in this nation and every person who comes here."

Political Hot Topics

Posted: 9:35 a.m. ET
From Stephen Bach, CNN Washington Bureau

INDICTMENT LIKELY COMING TODAY FOR LIBBY; ROVE CHARGES STILL PENDING: Lawyers in the C.I.A. leak case said Thursday that they expected I. Lewis Libby Jr., Vice President Dick Cheney's chief of staff, to be indicted on Friday, charged with making false statements to the grand jury. Karl Rove, President Bush's senior adviser and deputy chief of staff, will not be charged on Friday, but will remain under investigation, people briefed officially about the case said. As a result, they said, the special counsel in the case, Patrick J. Fitzgerald, was likely to extend the term of the federal grand jury beyond its scheduled expiration on Friday. New York Times: Cheney Aide Appears Likely to Be Indicted; Rove Under Scrutinyexternal link

SHOPPING FOR WHITE COLLAR LAWYER, PR TEAM: The White House, District Court officials and two potential targets of the CIA leak investigation were making preparations yesterday for the possible announcement of indictments by Special Counsel Patrick J. Fitzgerald today, according to several sources familiar with the investigation. Two sources said I. Lewis "Scooter" Libby, Vice President Cheney's chief of staff, was shopping for a white-collar criminal lawyer amid expectations of those close to the case that he might be indicted for providing false statements or other charges. At the same time, White House Deputy Chief of Staff Karl Rove began assembling a public relations team in the event that he is indicted. Washington Post: Rove, Libby Prepare for Possible Indictmentsexternal link

WH BLINKED FIRST: By taking a lead role in sinking the Supreme Court nomination of Harriet E. Miers, the conservative wing of the Republican Party declared its independence from the White House and asserted its claim to steer the party rightward even after the George W. Bush era. Miers' surrender Thursday followed a steady drumbeat of criticism from conservative activists and intellectuals who refused to take their president's word that the nominee was on their side. In the end, the Miers episode marked the most public display yet of the struggle within the GOP to define the party's image and ideology. It also became an early battle for control of the party once Bush leaves the White House. Los Angeles Times: Right Stares Down White House, and Winsexternal link

BUSH "IS A DRAG" IN VA: Jerry Kilgore, the Republican candidate for governor of Virginia, was happy to have President George W. Bush at his side at a fundraiser last July. Kilgore won't be there today when the president makes a speech in Norfolk. Kilgore, 44, is in a tight race with Democrat Tim Kaine in the Nov. 8 election, and Bush -- weighed down by the prolonged Iraq war, criticism of the government's response to hurricanes, high gasoline prices and the legal troubles of top Republican officials -- isn't an asset anymore. ``Bush is a drag, even in Virginia,'' said Larry Sabato, director of the University of Virginia Center for Politics in Charlottesville. The Virginia race may have other implications beyond deciding who will occupy the governor's mansion in Richmond: It might influence the presidential hopes of two other leading Virginians, Democratic Governor Mark Warner and Republican Senator George Allen, in 2008. Bloomberg News: Republican Kilgore Shuns Bush in Tight Virginia Governor's Raceexternal link

PARKS MAY LIE IN CAPITOL ROTUNDA: Lawmakers worked Thursday to clear the way for civil rights pioneer Rosa Parks to lie in honor in the Rotunda of the U.S. Capitol in Washington. That would make the former seamstress the first woman given such a tribute. The Senate passed a resolution Thursday. If the House follows suit Friday, the public will be able to file past Parks' casket Sunday evening and Monday, as it did most recently for Ronald Reagan last year. Parks would be the second black American so honored, after Jacob Chestnut, one of two Capitol Police officers fatally shot on duty in 1998. She also would be the second non-government figure so honored. The first was Pierre L'Enfant, the architect who designed Washington, D.C. He died in 1825; his body lay in honor when he was reinterred at Arlington National Cemetery in 1909. Only 26 named Americans, including 10 presidents, have lain in honor in the Rotunda since the tradition began in 1852. Unknown soldiers from four wars also were honored. USA Today: Lawmakers want Parks' remains to lie in honorexternal link

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