[Chad Myers, Cnn Meteorologist:] And Bermuda is going to be on the wrong side of this storm. They've got to realize that they're going to get some really big waves from the south smashing right on their shore. And so that could get a little ugly later on tonight. And you heard the reporter talking about like a 4:00 hour for an arrival of the storm. It's still going to be a category two tonight. It may turn back into a three because of that warmer water, but it is still not going to hit the U.S. East Coast. And now the Hurricane Center is saying that there may not even be tropical storm force winds on the Cape Cod area. Look at this. North Myrtle Beach, people are still enjoying it. I don't think it's going to look anything like that tomorrow because of the rip currents. The rip currents are the big problem here, Wolf. And let me tell you how this happens. There are sandbars out here in the middle of the ocean. Those sandbars allow water to come over and then the water piles up right here on the land, in this little area here where the beach ends and the water starts. And then, all of a sudden, that sandbar erodes in just one spot. And that one spot is where all that water runs out. And that's where the rip currents happen. You have to swim along the shore to get away from those currents. Do not try to swim back toward the current toward the shore. You just won't make it. That water is way too powerful. Look at these waves. They're going to be 10 to 15 feet. Some of these beaches may be over washed with the size of those waves Wolf.
[Blitzer:] It looks, Chad, like the whole Eastern coast is going to at least feel some effect from this hurricane.
[Myers:] No question about it, the entire East Coast. I think Florida because the storm is far away from Florida, those waves will lose a little energy. But as you get closer to North Carolina and on up into Cape Cod and look it, those waves could be 15, 20 feet.
[Blitzer:] It's going to be intense. All right, thanks very much, Chad. We're also getting new video sent in from an iReporter in Bermuda showing some of the waves that are already hitting that island. Let's go to our Internet reporter Abbi Tatton Abbi, what's it like over there?
[Abbi Tatton, Cnn Internet Reporter:] Wolf, we just had Chad talking about the south shore of Bermuda, that could get hit quite hard. We've just got video in just from the last hour exactly of what that looks like right now. This is the South shore of Bermuda, sent in by 15-year-old iReporter Cheresa Lemair, who's been really updating us as the day goes on about how things are happening. She she makes the point that this is the south shore. And it's a very different picture on the north shore, away from the water, where things are not so rough. But when you get close to the beaches here, she says, the tides are really rough, the wind is picking up and the camera and windshield are getting covered with salt spray. In town, she says, people are taking precautions and stocking up. She took photos of people in the hardware store, stocking up on batteries, flashlights. We heard from a report just a little bit earlier. We've still got about 10 hours before the storm gets its closest point to Bermuda Wolf.
[Blitzer:] And we, as I like to say, good luck to everyone in Bermuda. Be careful over there. Thanks to those iReporters, as well.
[Announcer:] This is CNN breaking news.
[Blitzer:] All right. This just coming into THE SITUATION ROOM. The Obama administration about to hike its estimate for the nation's budget deficit over the next decade. Our senior White House correspondent, Ed Henry, is here Ed, these numbers are pretty staggering.
[Ed Henry, Cnn Congressional Correspondent:] Awful, Wolf. Next week, the Obama administration will be putting out this new budget projection. We have the numbers today, though. They're just coming in from administration officials. They're basically going to say that the deficit over the next 10 years will be $9 trillion from $7 trillion. It had been projected at the beginning of the year to be $7 trillion. So it's gotten $2 trillion worse in the last few months alone. Republicans are going to jump on this right away. You can guarantee they're going to say that, in part, this shows why the president can't get a vast health reform plan, because he's just been spending too much money in the first few months of his administration and he can't afford to spend more. But already, administration officials are saying this is making the opposite case that we're so much in debt that if you do not reform the health care system and you do not bend that cost curve, as the president says all the time, we're just going to be consumed by debt over the next 10, 20 years.
[Blitzer:] Basically, what I hear you saying with this projection is that the national debt, which has been accumulated all of these hundreds of years of the U.S. is going to nearly double over the next decade alone.
[Henry:] Absolutely. And as far as budget deficits as far as the eye can see. Now, what Obama officials are saying is it's mostly because of the bleak economic picture. The government is just not taking as much tax revenue in, while it's spending all of this money. But the spending side is what Republicans will focus on. It's going to make this health care debate even more robust than it is right now.
[Blitzer:] Yes, because if the national debt we're not talking about the deficit the national debt is around $10 trillion, if they increase it by another $9 trillion over the next decade, that that's almost doubling of the national debt.
[Henry:] It's a pretty bleak picture.
[Blitzer:] Very bleak. All right. Thanks very much. Worrying numbers, indeed. Meanwhile, home sales are jumping a bit. Stock indices hit some new highs for the year. And the Federal Reserve chairman, Ben Bernanke, says a recovery is right around the corner. Let's turn to CNN's Susan Lisovicz. She's over at the New York Stock Exchange working with story for us all right, so there are some things, Susan, going right for the economy right now.
[Susan Lisovicz, Cnn Correspondent:] No question about it, Wolf. And in terms of the housing market, prices are cheap. Sales of pre- owned homes the broadest part of the housing market jumped more than 7 percent last month. That's the biggest monthly gain in 10 years. Prices, Wolf, are down 15 percent year over year and down more than 30 percent from the peak of the housing bubble. What's also helping the housing market, that $8,000 credit for first time homebuyers. The National Association of Realtors said about a third of all the purchases last month were from first timers. Ben Bernanke, of course, is looking very closely at the housing market. And today, the chairman of the Federal Reserve finally told us what we want to hear that the U.S. economy is on the verge of recovery. That's an improvement from just a week ago, when Bernanke said the economy was leveling out. He also said recovery will be slow because unemployment will decline gradually from its high levels. Bernanke made these comments in a speech today titled "Reflections on A Year in Crisis". And all this, of course, music to the ears of investors. Stocks opened modestly higher, took off on the release of the housing numbers and Bernanke's comments for a fourth straight day of gains. The Dow closed at 9506. That's its high for the year. And the Nasdaq and the S&P; 500 also closed at their highs for the year Wolf.
[Blitzer:] Yes. The Dow up 155 points today. All right. Susan, thanks very much for that.
[Lisovicz:] You're welcome.
[Blitzer:] Let's go to Jack Cafferty right now. He's got The Cafferty File Jack.
[Cafferty:] You ready to pay higher taxes, Wolf?
[Blitzer:] I I'm ready. Yes. I am.
[Cafferty:] Yes. Well, I don't we're not going to have any choice. Those deficit numbers that they tried to slip under the radar at 5:05 on a Friday afternoon, I mean they're going to have to raise taxes. They're not going to be able to sell foreign debt. The dollar is going to continue to erode with those kinds of deficits. The cost of of paying interest on that kind of national debt is in the hundreds of billions of dollars a year. It's getting ugly out there, Wolf.
[Blitzer:] I...
[Cafferty:] Former secretary...
[Blitzer:] I believe you.
[Cafferty:] Yes. Former secretary of Homeland Security, Tom Ridge, is taking his turn talking about his time in the George Bush White House. That would be Bush 43. In his new book, "The Test of Our Times," Ridge says he successfully quashed a plan to raise the nation's terror alert level to orange or high on the eve of the 2004 election. He says the push from Secretary of Defense Donald Rumsfeld and Attorney General John Ashcroft was based on a pre-election message on tape from Osama bin Laden. Remember that tape? It conveniently came out a couple days before the election. Ridge writes that he felt the message alone didn't warrant an increased threat level. He said there was no additional intelligence information indicating an increased likelihood of a terrorist attack. He also says that increased security measures were already in place for the election. He writes, according to the book now: "I wondered, is this about security or politics?" During the 2004 election, one in five American voters said that terrorism was the most important issue to them, according to the exit polls. Ridge was able to help convince a group of other officials that there was no reason to cause what he called "undue public alarm" and, in the end, the threat level was not raised. But he said the incident was one of the major reasons that he eventually decided to step down from public service. The question is tongue in cheek do you think the government would try to manipulate the public's fear of terrorism for political gain? Go to CNN.comcaffertyfile and post a comment on my blog Wolf.
[Blitzer:] Let me know, Jack, if anybody says no.
[Cafferty:] Yes, right.
[Blitzer:] Please.
[Cafferty:] We'll get them for treatment right away.
[Blitzer:] Yes. All right. Thanks very much. A U.S. soldier is charged with cruelty against their own subordinates in Iraq. Our Pentagon correspondent, Chris Lawrence, has the story. And does forensic science make or break criminal cases like on the popular TV show "CSI?" We're going to take you inside a real life crime lab. And can you help someone who may be choking to death why the Homeland Security secretary, Janet Napolitano, is now starting a new campaign to get you ready to perform the Heimlich Maneuver and other emergency measures.