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THE SITUATION ROOM

President Taps Bernanke for Second Term; Grilling Lawmakers on Health Reform; Interview With RNC Chairman Michael Steele

Aired August 25, 2009 - 16:00   ET

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


SUZANNE MALVEAUX, HOST, THE SITUATION ROOM: Thanks, Rick.

Happening now, vacation interrupted -- President Obama summoning reporters on Martha's Vineyard to announce a critical nomination, Federal Reserve chairman as disturbing new deficit numbers emerge.

Also, town hall Tuesday, from Arizona where John McCain defends the president to Virginia where the president's great uncle is among a group of seniors seeking answers. We talk to him exclusively.

Plus surveillance cameras capturing the seemingly endless wave of bombings in Iraq. We go inside the spy-cam headquarters where the horrors are caught on tape.

Wolf Blitzer is off today. I am Suzanne Malveaux in CNN's command center for breaking news, politics, and extraordinary reports from around the world.

You're in THE SITUATION ROOM.

Seldom has the role of Federal Reserve chairman been more crucial or more closely watched. So crucial in this financial crisis, that President Obama interrupted his own Martha's Vineyard vacation that he is nominating Republican Ben Bernanke to a second term at the helm of the nation's central bank. But casting a shadow over the president's move, an eye-popping new projection for the deficit.

CNN White House Correspondent Dan Lothian is with the president on Martha's Vineyard.

And Dan, what can you tell us about this latest news?

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, Suzanne, the White House Budget Office giving details of the deficit, which is expected to hit $9 trillion over the next decade. Now, Republicans pounced at the news. Senate Minority Leader Mitch McConnell saying, "The alarm bells on our nation's fiscal condition have now become a siren.

Even so, today, here on Martha's Vineyard, the president was touting economic progress and announcing that he would be keeping his Fed chair, Ben Bernanke, in place.

(BEGIN VIDEOTAPE)

LOTHIAN (voice-over): President Obama promised a news-free vacation, even urging the press to take a walk on the beach. But he threw on a blue blazer, brought Fed chief Ben Bernanke to a hot school gym, broke the rules and made news.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Ben approached a financial system on the verge of collapse with calm and wisdom, with bold action and out-of-the-box thinking that has helped put the brakes on our economic free-fall.

LOTHIAN: The White House says re-nominating Bernanke to another four-year term helps to maintain market stability, reduces any economic disruptions, and puts to rest speculation about who would get the job next. A vote of confidence for the Republican Fed chief, who, like the president, admitted big challenges remain.

BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: Our objective remains constant: to restore a more stable financial and economic environment in which opportunity can again flourish.

LOTHIAN: The announcement came just minutes before the release of negative economic news. From the White House and Congressional Budget Office, projections of exploding deficits and mounting debt and unemployment over the next decade, and the prediction that the budget deficit this year will jump to a record nearly $1.6 trillion, bigger than expected. It's ammunition for lawmakers who are concerned that this is not the climate to tackle health care reform.

SEN. JOSEPH LIEBERMAN (I), CONNECTICUT: I'm afraid we've got to think about putting a lot of that off until the economy is out of recession. There's no reason we have to do it all now.

LOTHIAN: In helping to right the economy, Bernanke must first be confirmed by the Senate. In a statement, Banking Committee Chairman Chris Dodd says he's "probably the right choice" and has "demonstrated leadership," but adds that Bernanke was "too slow to act during the early stages of the foreclosure crisis."

(END VIDEOTAPE)

LOTHIAN: Now, Senator Dodd says that he still has some concerns about the Fed's failure to protect consumers. He said the confirmation hearings would be thorough and comprehensive -- Suzanne.

MALVEAUX: All right. Breaking news out of Martha's Vineyard.

Dan, hope you get a break at some point. Thank you, Dan.

LOTHIAN: OK.

MALVEAUX: As this make-or-break month for health care reform winds down, there is no letup in the town hall meetings that are dominating the debate. Among today's events, forums in Fairfax and Reston, Virginia; Oklahoma City; Germantown, Maryland; and Sun City, Arizona. And that's where Senator John McCain heard concerns from seniors. Some in the crowd were hostile to the mere mention of President Obama's name, but McCain discouraged that.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: I am convinced the president is absolutely sincere in his beliefs. But he is...

(BOOING)

MCCAIN: Wait a minute. Wait a minute. He is sincere in his beliefs. We just -- we just happened to disagree. And he is the president of the United States, and let's be respectful.

(END VIDEO CLIP)

MALVEAUX: Let's bring in our senior congressional correspondent, Dana Bash, at a town hall. She's at a town hall in Fairfax County, Virginia. That's right outside of Washington.

Dana, what can you tell us about the town hall meeting where you are? What is the mood? Set the scene, if you will.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Sure. Well, this just wrapped up. And up until November, this is a Republican district, so the freshman Democratic congressman faced his constituents here, many of whom are conservative, with lots of questions about health care reform, especially the crowd here, because they are seniors.

This is a senior center, so there were a lot of questions. They were polite, but pretty tough about the issue, mostly of Medicare benefits. They were very unsure whether or not health care reform mean that they would lose some of their Medicare benefits, and the congressman said flatly, he hasn't decided how he'll vote, but he promises he won't vote for anything that slashes their Medicare benefits -- Suzanne.

MALVEAUX: Dana, I understand that there was a very special guest that you were able to meet there at the town hall. Tell us about it.

BASH: That's right. One of the 2,000 residents here at this senior community is actually the president's great-uncle. His name is Ralph Dunham, and he is somebody who, just like many other people, has a lot of questions about what his nephew, his great nephew, is actually trying to do. He doesn't really know the details of what's in his proposal, so even he came here to try to get some answers, and we caught up with him right beforehand.

(BEGIN VIDEO CLIP)

BASH: Do you feel like you have a good grasp of what's in the plans for overhauling health care?

RALPH DUNHAM, PRESIDENT OBAMA'S GREAT-UNCLE: No, I don't, because the thing is over a 1,000 pages long, and the House and the Senate are going straighten out the two bills. And nobody knows what's going to be in it, I don't think.

BASH: Do you feel confused by it? DUNHAM: I don't really know very much about it. I don't know whether to be confused or not. I'm hoping we get some information just like everyone else.

(END VIDEO CLIP)

BASH: Now, Ralph Dunham says that he has a good relationship with his nephew, the president, but he also says that they haven't spoken since he's been in the White House even though we're just 11 miles from the White House.

And, you know, he doesn't have the concerns, he says, that some of his friends here have about losing his Medicare benefits. He says what he's concerned about is the fact that his 57-year-old son, Suzanne -- this is the president's second cousin -- he doesn't have health insurance.

And Dunham said the question for him now is whether or not, if something happened to him, he would let him die or go broke. So, it's very interesting that even someone that is so close in relation to the president doesn't know a lot about his plans. And I have to tell you, just moments ago this wrapped up, and we did ask Mr. Dunham whether or not he has more answers now, and he said he does, but he also said his nephew is going to probably have to do a better job communicating what's in this proposal.

MALVEAUX: Dana, that's a great get, and perhaps he will be able to pick up the phone and get the call through the White House to President Obama to answer some of those questions.

Thanks again, Dana. That was great.

Meanwhile, Democrats are gearing up to pressure Congress to act on health care reform. A spokesman at the DNC is planning to hold he says more than 1,000 events over the next two weeks with a goal of showing broad support for President Obama's reform agenda.

Well, to keep track of the town halls and the health care debate, and to learn what reform efforts might mean for you, go to our new "Health Care in America" Web site. You can check facts and the stats, read the blogs, see the videos. It's all at CNN.com/healthcare.

Jack Cafferty is in New York with "The Cafferty File."

Jack, good to see you again. I promised I would.

JACK CAFFERTY, CNN ANCHOR: Likewise, Suzanne. We'll keep getting together like this until they catch on to us.

Attorney General Eric Holder has named a federal prosecutor to investigate allegations of torture by the CIA. It coincides with the release of the 2004 inspector general's report of CIA interrogation tactics that included waterboarding, staging mock executions, and threatening suspects with guns, power drills, and the safety of their families. It also mentions moving detainees to prisons in countries where torture is allowed. A redacted version of this report was first released after the ACLU sued last year, but clearly the details were in the redacted sections.

This all is happening as President Obama announced a change in intelligence gathering, shifting responsibility for terrorism interrogations to the FBI and away from the CIA. Former vice president Dick Cheney has said all along this inspector general's report would prove that interrogation tactics were successful in obtaining useful information from detainees that prevented an additional attack or more on the United States. Cheney says we ought to be praising the people responsible for conducting these interrogations, and Cheney is also raising questions about the administration's ability to protect Americans.

Nine Republican lawmakers have sent a letter to the attorney general urging him not to launch a criminal investigation because it would jeopardize "security for all Americans, chill future intelligence activities, and could leave us more vulnerable to attack." The point of the investigation is to determine if laws were broken. For most people, when a law is broken there are consequences. The question remains whether the people who authorized all this stuff will ever be held accountable.

Here's the other question. Is naming a special prosecutor to investigate torture a good idea?

Go to CNN.com/caffertyfile. You can post a comment on my blog -- Suzanne.

MALVEAUX: OK. Thank you, Jack.

Well, the Democratic National Committee accusing Republicans of scaring seniors about health care reform. Standing by to respond, Republican Party Chairman Michael Steele. He'll join us live.

Also, charges now leveled in a shocking case. Was a U.S. soldier in Iraq driven to suicide by his peers? Details of the harassment and abuse he allegedly endured.

Plus, a litany of prescription drugs taken by Michael Jackson in the hours before he died. CNN Chief Medical Correspondent Dr. Sanjay Gupta has the list.

(COMMERCIAL BREAK)

MALVEAUX: Are Republicans scaring seniors about health care reform? Well, that is the charge by the Democratic National Committee.

Joining us to talk about that and much, much more, Republican Party Chairman Michael Steele.

And Michael, thank you for being here.

MICHAEL STEELE, RNC CHAIRMAN: It's good to be with you again.

MALVEAUX: I want to start off -- you have been saying that your party, in particular, you want to protect seniors, their Medicare from President Obama and the Democrats. The DNC is responding in this way. They said, "It should be no surprise that the Republican Party, which whipped many Americans into a frenzy at town hall meetings on health care this month by spreading one lie about reform after another, has now taken to scaring seniors who have nothing to fear and much to gain from reform."

They go on to say that it was the Republican Party that was fighting Medicare.

STEELE: It's such a great taking point.

(CROSSTALK)

MALVEAUX: It was the Republican Party four years ago that was fighting Social Security reform.

STEELE: I know. It's amazing.

You know, the little party that, you know, had been set aside after the last two election cycles, and we have all this power and control.

You know, the reality of it is it's a great talking part. And I admire my friends in the party on the other side who spin that stuff.

But the reality of it is, you have an administration that's put on the table a massive reorganization of our health care system to deal with what are arguably pockets of problems here and there, number one.

Number two, when it comes to seniors and their health care, there is no accounting what is going to happen to the Medicare system, which is already on track for bankruptcy that everyone is projecting in the out years. That's not addressing any of the health care packages that we're dealing with right now.

And my concern and the concern of countless folks around the country -- I have two senior parents that I am concerned about and their health care -- is, what does this system look like if you are going to take $500 billion out of it? A system that is already on the road to bankruptcy -- everyone knows it's short of money -- to put into more government spending for another program that is just going grow the size of government?

MALVEAUX: How do you respond to...

STEELE: And so the impact on seniors is the driving force here.

MALVEAUX: But how do you respond to the critics who take a look at Medicare -- you've criticized -- you say it's in bad financial trouble. People do not disagree with that, but they say that the Republicans in 2003, they were the ones that went ahead and gave more funds, passed enormous funding for Medicare, and did not actually deal with the deficit, did not lower -- actually raise taxes or make those critical cuts in the budget.

STEELE: The reality of it is, it didn't happen in a vacuum. It wasn't Republicans by themselves. The Democrats...

MALVEAUX: But certainly Republicans were partly responsible.

STEELE: Because you have the White House and you don't have the Congress. There's a partnership here.

My point is now, you've got one party that's got control of the entire process here. So, this is an opportunity for us to have an honest discussion about how we're going to address what is fundamentally an important issue to a lot of seniors around the country. And all I wanted to do was place a marker.

I wanted to place a marker in the debate that, as we go into the fall and a lot of members come back, that we have an honest discussion that not only addresses the broader question of health care reform, but specifically accounts for and to our seniors about what this reform will mean to them. My prediction is this -- under a single payer system, under a public option system, that a lot of our seniors, the vast majority of them, will be pushed into a public health care system that is not necessarily in their best interest because the services will not be able to be afforded or provided under the current Medicare plan.

MALVEAUX: How honest to you think the debate has been, the discussion? In light of some of the town hall meetings, some of the rhetoric that we have seen from both sides, but specifically those who are from your own party who have talked about and compared President Obama to Hitler and to some of these other images that...

(CROSSTALK)

STEELE: Look, there is hot rhetoric on both sides. I mean, there was hot rhetoric during the Bush administration on the war. There's hot rhetoric now on this issue.

Why? Because people are passionate about it and they care. And so, you know, we were demonized because we complained about people talking about the president at a time of war. Now we're being demonized because we're criticizing this president.

The reality of it is, those hot tempers are one thing. Having an honest discussion is something different, which clearly this administration doesn't want.

MALVEAUX: Let's turn the corner real quick here. Attorney General Eric Holder, his decision to appoint a prosecutor to take a look at the CIA interrogations, whether or not there was any wrongdoing, Robert Gibbs put it this way -- he said that "The president has repeatedly said he wants to look forward, not back. Ultimately, determinations about whether someone broke the law are made independently by the attorney general."

Do you think it was a good idea, first?

STEELE: No, I don't. You know, I think it's astounding to me that the administration is moving in this direction. This is the same president who told us we want to look forward, we don't need to look backwards. And clearly, the attorney general didn't get that memo.

And I think it's bad form to, at this time, define yet another bogeyman, to rehash old stories, stuff that has already been covered, quite frankly, by the previous -- during the previous administration. We're now going to rehash again.

And the other part of this that I find fascinating is we're trying to federalize terrorism and put it in the FBI. Leave it at the CIA. Let them handle it, because they know best what to do with it.

MALVEAUX: Real quick here, the former attorney general, Alberto Gonzales, under President Bush, he was criticized for being too close, too cozy with the president, that he wasn't independent. Do you at least give Eric Holder some credit here for breaking away from President Obama?

STEELE: You call this a breakaway? You're telling me that this is a separation? I think this is a very close tie.

The president and everybody's on board with this -- with what the attorney general is doing. Don't be fooled by that.

MALVEAUX: OK. Michael Steele, RNC, thank you very much for joing us in THE SITUATION ROOM.

STEELE: You got it.

MALVEAUX: Well, a former big city mayor and former Republican presidential candidate. Is Rudy Giuliani now eyeing New York's governor mansion, and could he win? We're talking to insiders.

Plus, an emergency landing you have to see to believe at a mall.

(COMMERCIAL BREAK)

(NEWSBREAK)

(COMMERCIAL BREAK)

MALVEAUX: You're in THE SITUATION ROOM.

Happening now, investigation notwithstanding, former vice president Dick Cheney says a just-released report on CIA interrogation tactics vindicates the Bush administration. CNN's Brian Todd explores Cheney's claim.

Lenders say they are getting President Obama's new Making Home Affordable program up and running, but homeowners say all they're getting is the runaround.

THE SITUATION ROOM investigates.

And Russia's president calls it a national disaster. With thousands dying of it every year, the Kremlin is cracking down on Russia's drinking problem.

Wolf Blitzer's off today. I'm Suzanne Malveaux.

And you're in THE SITUATION ROOM.

A need to sleep, a mixture of powerful drugs, and death. The Los Angeles County coroner has made his preliminary conclusion, and he says that singer Michael Jackson died of a drug overdose.

(BEGIN VIDEOTAPE)

MALVEAUX: Joining us, Chief Medical Correspondent Dr. Sanjay Gupta.

Sanjay, thanks for joining us here.

When you take a look at what was administered through the IV to Michael Jackson on that evening, what do you make of this kind of treatment and the timeline leading up to his death?

SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Well, it is pretty remarkable to look at. And it's not just what drugs were given, but over what period of time. A relatively short period of time.

And lots of these drugs are administered quite often, but take a look at how often. Look at the timeline -- 1:30 in the morning, 10 milligrams of Valium; just a half an hour later, two milligrams of Ativan. That's a medication often used for anxiety or as a sedative. Right after that, two milligrams of Versed, which is a very similar type of medication; two milligrams of Ativan again after that; and then two milligrams of Versed. And then, finally, this medication that we've been hearing so much about, 25 milligrams of Propofol.

These are medications that are used as sedatives often, except for that Propofol, which is often used as a general anesthetic. And as we've talked about, Suzanne, in the past, I have never heard of this being administered outside the hospital setting. So, that, in and of itself, is quite remarkable.

MALVEAUX: And Sanjay, would Propofol been as dangerous if he hadn't gotten this other cocktail of drugs that he had received before the Propofol?

GUPTA: Well, you know what's interesting? If you're taking these types of medications on a regular basis, you can start to develop some tolerance to the medication. So, what may be a dose that would absolutely knock one person out may not have the same effect on somebody else.

But the thing about Propofol, and the reason this is a medication typically only used in hospitals -- and I don't know if you can see some of this actual video of Propofol being used -- it is a medication that can cause almost instant respiratory depression, meaning it can make you -- your breathing just stop instantaneously. So, when you get it in a hospital, for example, you have to have a breathing tube just standing by, you have to have monitoring equipment. So, even if there had been no other medications given, Propofol alone can cause that sort of problem.

MALVEAUX: And Sanjay, seeing the list of medications that he received, there was one addiction expert who said that getting less than those drugs, it would have put an elephant out.

What do you make of Michael Jackson's tolerance? What do you make of his body's condition to receive so many drugs in such a short period of time?

DR. SANJAY GUPTA, CNN SENIOR MEDICAL CORRESPONDENT: Well, you know, what -- what we're hearing -- and, you know, obviously, this is still sort of -- some of the investigation is still ongoing -- that some of these medications were given for sleep, and they were not quite putting him to sleep, which was why the -- the amounts of medication was sort of ramped up over this short period of time.

But you are right. I think that there is a -- there is sort of this concept of tolerance. But, at some point, when you're talking about so many drugs over such a short period of time, you know, it -- it would be -- it seems like it would put just about anybody out, just without the propofol even.

So, it's -- it is a little bit hard to say. I -- I have heard of some -- some cases where people are taking escalating doses of Valium, for example, you know, 50, 60 milligrams, even, of Valium. But, again, all these drugs in combination, it's not so much the interaction as the compounding effect of all of them.

MALVEAUX: OK. Thank you very much, Dr. Sanjay Gupta. Thanks, Sanjay.

According to the Associated Press, the coroner's preliminary finding of a drug overdose means that Jackson's death will be classified a homicide. Now, a homicide finding, it does not necessarily mean a crime was committed, but it would help prosecutors if they do decide to take action taken against Jackson's personal physician, Dr. Conrad Murray.

(BEGIN VIDEO CLIP, "ANDERSON COOPER 360")

JEFFREY TOOBIN, CNN SENIOR ANALYST: It means, legally, taking the life of another. It means Michael Jackson did not die of natural causes. It means he was not a suicide. It means the government has concluded that someone else killed him.

There are a wide variety of charges within homicide. Intentional homicide, you can get the death penalty for. Negligent homicide is a much less serious crime. It's an unintentional negligent killing. Certainly, he seems to be in that end -- end of the spectrum.

No one seems to suggest that Conrad Murray intentionally killed Michael Jackson. ANDERSON COOPER, HOST, "ANDERSON COOPER 360": But -- but by...

(END VIDEO CLIP)

MALVEAUX: So far, no charges have been filed.

Well, wash your hands and cover your mouth when you get a cough, because there is a trouble new report from the Obama administration on the outlook for the coming flu season. And the swine flu will be front and center.

CNN senior medical correspondent Elizabeth Cohen, she has the projections.

(BEGIN VIDEOTAPE)

ELIZABETH COHEN, CNN MEDICAL CORRESPONDENT: Suzanne, nobody has a crystal ball, but everybody is trying to figure out, how bad will swine flu be this flu season?

(voice-over): Just how many people will this tiny virus kill this flu season? The President's Council of Advisers on Science and Technology issued a forecast about swine flu, making its case with numbers that are frightening. One third to one-half of all Americans will get the H1N1 virus, according to its estimates. And 30,000 to 90,000 Americans could die from it.

That is on top of the 36,000 who usually die from regular season flu.

DR. THOMAS FRIEDEN, DIRECTOR, CENTERS FOR DISEASE CONTROL AND PREVENTION: Mitigating the response to H1N1 is a shared responsibility. It's more than any one single agency can do. It's more than what the federal government can do. And the next few weeks and months will be a very challenging time.

COHEN: The government is preparing for swine flu, giving people a vaccine experimentally to see if it works.

KATHLEEN SEBELIUS, U.S. HEALTH AND HUMAN SERVICES SECRETARY: The vaccines are currently in clinical trials so far. The trials look good. We won't be administering any vaccine that is not proven to be effective and to be safe.

COHEN: The government hopes to have some vaccine ready by mid- October and more by December. Meanwhile, the H1N1 virus is already taking its toll at some schools. At the University of Kansas, for example, at least 47 students have been stricken.

UNIDENTIFIED MALE: You're just bringing all these kids together, living in -- in group situations and going to class, that that's -- you know, that is the breeding ground for that.

COHEN: The Centers for Disease Control and Prevention is urging schools to set up isolation rooms for sick students and to make hand sanitizer widely available. With these measures, they can't stop the virus, but they can at least try to slow the spread.

(on camera): Suzanne, if you want to be fully vaccinated against the flu this season, you have to get three shots, one shot for the regular seasonal flu and then another two shots for swine flu. You get the first shot. Three weeks later, you get the second -- Suzanne.

(END VIDEOTAPE)

MALVEAUX: OK, thanks, Elizabeth.

Well, the big question, are we ready for the swine flu? And how can Washington prevent a panic? I will ask Health and Human Services Secretary Kathleen Sebelius when we go on -- one-on-one. That is at 6:00 p.m. Eastern right here in THE SITUATION ROOM.

Well, more than 100 surveillance cameras capturing the deadly violence sweeping across Baghdad. We go inside the spy-cam headquarters, where some of the worst attacks are caught on tape.

Also, was a U.S. serviceman harassed to death by his fellow soldiers? New developments in an Army suicide.

And why there is growing talk about another run for office by Rudy Giuliani, this time for governor.

(BEGIN VIDEO CLIP)

RUDOLPH GIULIANI (R), FORMER NEW YORK MAYOR: ... to spend with her children.

(END VIDEO CLIP)

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MALVEAUX: A top Baghdad official was the target of the latest car bombing in Iraq. The blast went off near his convoy in the capital today, injuring him, three guards, and a bystander.

Meanwhile, Iraq and Syria are now engaged in a diplomatic tit for tat. Each country has recalled its ambassador to the other, after Baghdad demanded Damascus hand over two suspects in the bombings last week that killed more than 100 people.

One of those attacks was recorded by a surveillance camera, one of just a very few that are trying to improve security in the capital, so far without much success.

CNN's Arwa Damon has that -- Arwa.

(BEGIN VIDEOTAPE)

ARWA DAMON, CNN CORRESPONDENT: Suzanne, while the Iraqi government is pointing all sorts of fingers of blame for Wednesday's devastating attacks, we went to take a look to try to figure out how such a security breach could have happened and what should have been done prevent it.

(voice-over): These are all attacks captured on security cameras, most set up around government buildings. Although overall attacks are down in Iraq, this is undeniable evidence of the ongoing violence that the Iraqi government is struggling to prevent.

(on camera): This is Baghdad's surveillance center. There are 113 cameras set up throughout the entire city, though not all of them are functioning at all times. They all feed into this hub.

The employees here have literally been watching Baghdad's violence -- or the bulk of it -- on screen since the center was set up a year-and-a-half ago.

(voice-over): The employees here want to remain anonymous. Working for the government can be a death sentence. Each workstation is responsible for monitoring the feeds off 10 cameras, on the lookout for anything suspicious.

Police officers are in a backroom and constantly monitor radio traffic. In this instance, an explosion is reported.

(on camera): What they are doing right now is trying to figure out exactly where the roadside bomb went off and to see if their cameras cover that area. It appears that they do not.

And this is one of the main problems that this unit faces. There are not enough cameras to cover all of Baghdad.

(voice-over): The director says they still have a long way to go. The center is not open around the clock and it is understaffed.

After Wednesday's bombings that killed nearly 100 Iraqis, the managers here held intense meetings with Iraqi security forces to increase the number of surveillance cameras in Baghdad.

Existing cameras only cover about 5 percent of the entire capital. This is footage from Wednesday's suicide truck bombing in front of the Iraqi Foreign Ministry. The truck only came into their view about 20 seconds before the explosion took place. They did find it suspicious, but there wasn't enough time to prevent the attack.

"We should all admit responsibility for this major breach of security," the director says, "and we have to fix the system."

(on camera): The employees we spoke to all said that they felt guilty every single time they saw an explosion on their screens, because they felt they should have been able to prevent it.

The only thing they can do now is hope that the government will give them the tools to keep violence like this from happening again -- Suzanne.

(END VIDEOTAPE)

MALVEAUX: Thank you, Arwa. Well, Senator John McCain is campaigning again -- how his straight talk on health care played at the town hall meeting today. They are calling it a lovefest.

And, yesterday, the interrogation investigation -- today, a Federal Reserve appointment. The White House and a vacationing President Obama dish out the daily news. Is it a deliberate diversion from the public debate on health care reform? James Carville and Bill Bennett face off ahead -- in our "Strategy Session."

(COMMERCIAL BREAK)

MALVEAUX: President Obama on vacation, but staying in the public eye. Is there a strategy of diversion here?

Well, joining me for today's "Strategy Session" are two longtime political contributors, Democratic strategist James Carville from New Orleans, and his Republican counterpart, William Bennett, here in THE SITUATION ROOM.

Thanks for joining us, both.

BILL BENNETT, CNN CONTRIBUTOR: Thank you.

MALVEAUX: You know, the president, he is on vacation. He is at Martha's Vineyard. But, clearly, the White House does seem to be controlling the message. Yesterday, it was Eric Holder saying he's going ahead -- to go ahead and appoint this prosecutor for CIA interrogations. Today, it is Ben Bernanke getting a second term.

I want to start with you, James.

Do you think that this distraction from the health care debate, is it intentional, and is it a good thing?

JAMES CARVILLE, CNN POLITICAL ANALYST: Well, I don't know if it's a good thing.

I -- I -- I thought that, politically, that what Eric Holder announced is not very popular.

(LAUGHTER)

CARVILLE: It might be what he has to do.

The Bernanke thing, it had to be done. I -- you know, I generally don't believe in coincidences. But, having said that, the -- the -- you know, the business thing -- things happen in government. And the White House can't control every one of them.

So, I -- I -- I don't know. I mean, some of it is probably intentional. Some of it is -- probably just crops up.

MALVEAUX: Bill, there's -- it's been a pretty busy vacation for him already, but do you think this helps him, just to take a break a little bit, a couple of days, and -- and not focus on health care reform?

BENNETT: Well, yes. But I have been around here for a while.

I have to tell you, when I -- we read late Friday afternoon, Suzanne, that the deficit is not going to be $7 trillion, but $9 trillion, and then the -- the health care debate, which is losing public support pretty quickly, disappears from the headlines, and then we have this announcement by Eric Holder, yes, I think it is an attempt to control what people talk about.

But I think it is dull-witted. I think it was not a good idea. I think this Holder thing is a huge mistake. I think it's -- it's -- it's wrong politically, and it's just plain wrong. And I think they are going live to -- live to regret it.

We have had this investigation. If you ask the American people to choose between some tough-talking interrogators and terrorists who they are interrogating, it is not a winner, but it's not a winner on principle either, on any kind of defensible principle.

MALVEAUX: We have actually heard -- we have seen a lot of (AUDIO GAP) today across the country. And one of them was really interesting. And that was Senator John McCain's town hall. It -- it almost turned into somewhat of a -- of a lovefest, if you will, back to the days of the campaign.

I want you guys to -- to take a listen to what happened here.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: No compromises!

(APPLAUSE)

UNIDENTIFIED FEMALE: No compromises! No compromises! Senator, nuke it now. Thank you.

(LAUGHTER)

(APPLAUSE)

SEN. JOHN MCCAIN (R), ARIZONA: I am glad I called on you, ma'am.

(LAUGHTER)

MCCAIN: Thank you very much.

(APPLAUSE)

MCCAIN: Could I just say, look, on this issue -- and, really, let's have some straight talk here, my friends. Let's have some real straight talk. The system is broken.

(END VIDEO CLIP)

MALVEAUX: Some straight talk there and a lot of passion that we have seen here, obviously.

But if independents, if it's folks who come out to these rallies, and it's the independents that are driving this debate when it comes to health care reform, does that help Senator John McCain, politically, to be the one who is actually on the receiving end, getting some of those independent criticizing the president, James?

CARVILLE: Well, I sincerely doubt that that woman was an independent, to be frank with you.

And I think -- but I do think she pretty summed up what the -- the Republican argument here is. And, look, it makes sense, I guess, for -- for Senator McCain. He has got run for reelection at some point, and so he goes out there.

But I really don't -- something -- I can't prove it, but I really doubt if this woman was an independent.

MALVEAUX: But we do know that the independents are going from supporting Obama's plan to very much being critical of his plan, that they are part of the group. She is probably not -- not -- she's probably more partisan than some of the others, obviously.

(LAUGHTER)

CARVILLE: I think so.

(LAUGHTER)

MALVEAUX: Bill, what do you think?

BENNETT: Yes. Well, I agree with James. I watched -- CNN did a great job, ran about a hour of the -- of the meeting. And there was a range of opinion, but it was mostly, I would say, conservative Republican folks there in -- in Sun City.

But I remember an old rock 'n' roll song by the Grass Roots, "Where Were You When I Needed You." You know, those cheers for McCain today...

(LAUGHTER)

BENNETT: ... he could have used those about nine or 10 months ago.

He actually had some very interesting ideas which have found their way into the debate on health care. But they were not put forward in the kind of -- in the way they should have been back -- back -- back then.

But you are right. What you are saying is right. A lot of the independents, particularly the elderly, are having serious questions about this health care plan.

MALVEAUX: And one of the things that they are talking about, medical mal -- medical malpractice, those lawsuits that are -- are actually coming up, and -- and they cost a lot of money in the system in general.

Is that one of the compromises, you think, that Democrats and Republicans can see eye to eye on?

BENNETT: Well, I...

(CROSSTALK)

CARVILLE: It might...

(CROSSTALK)

BENNETT: Excuse me.

CARVILLE: Go ahead. Go ahead. That's all right.

BENNETT: Well, I think it would be a good thing for the president or some Democrat bill to have some tort reform in it, so one can say something when one is accused of being in the -- in the pockets of the trial lawyers, which I think is probably a pretty good charge, a fairly true charge.

And without tort reform, I don't think you are going to save a whole lot of money. There is a reason that Texas probably has the best medical care in the country now. And that is because of the changes in state law.

CARVILLE: Right.

BENNETT: Any -- any reform of health care has got to have some tort reform.

MALVEAUX: James, do you want to back that up?

CARVILLE: Right. I think it -- yes, that will address, according to most economists, maybe a percent or 1.5 percent of the problem. I don't know how many hospital deaths there are as a result of infection. I was reading an article. It's an astronomical amount.

So, maybe we shouldn't hold doctors accountable, but we will hold -- hold fourth-graders accountable. That's not a Democrat idea, as -- as the secretary refers to my political party.

(LAUGHTER)

MALVEAUX: I want to...

BENNETT: Well, tort reform doesn't mean you give up the right to sue.

But everybody -- I think most fair-minded people think it has gotten way out of hand.

(CROSSTALK)

MALVEAUX: I want to -- want to wrap this real quickly with Afghanistan. Obviously, the president is going to be looking forward in the weeks ahead to the possibility -- the possibility of calling for more troops to be sent over there.

Things have not gone as well as they had hoped with the elections.

Bill, how -- politically, how -- how -- how damaging is this, potentially, for the next couple of weeks?

BENNETT: Well, you know, it could be.

But let me say the thing that I think is most interesting here. And that is, sometimes, we are accused of -- we conservative Republicans of just having a knee-jerk reaction against the president. I don't. We don't here. I admire the president's position on Afghanistan.

In fact, you will see conservative Republicans are much more supportive of President Obama on this than his own party. We believe politics does stop at the water's edge. And we will praise the president when he does something right. I think he's heading in the right direction. I wish his party understood that he was heading in the right direction.

Good for him. I hope he perseveres.

MALVEAUX: We are going to have to leave this there.

Bill Bennett and James Carville, thank you so much for joining us.

Jack joining us again with "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Suzanne, the question this hour, is naming a special prosecutor to investigator torture on the behalf of the -- or on the part of the CIA a good idea?

If torture provides the necessary information to save lives, then do it. I thank God we have brave men and women in the CIA who have kept us safe. To put their methods on trial is criminal and insane.

If you didn't see your e-mail here, send me another one.

Sylvia writes from California: "As a former New Yorker, I will never forget what happened on 9/11. If torture provides the necessary information to save lives, then do it. I thank God we have brave men and women in the CIA who have kept us safe for the last nine years. To put their methods on trial is criminal and insane."

JWC in Atlanta, Georgia: "The big dogs of this travesty, those with rank and privilege, who called these regrettable instances of torture have to be chased down and prosecuted. The generals, defense secretaries, vice presidents, and presidents under whose watch this outrage occurred should be harshly dealt with, up to and including punishment, and notice thus given to the world that America still holds the high moral ground." Kirk writes from Minnesota: "I suppose it depends whether you wish to crawl in the mud with the same people you're fighting or whether you wish to adhere to the aspirations of what the United States is supposed to inspire. Personally, I will give up some security if it means I don't have to crawl under the rock, where the likes of George W. Bush, Dick Cheney and Osama bin Laden live."

Joe writes: "No. Our president has already stated we need to look forward on these issues. So, is he going to pull a flip-flop? It's a diversion. The president's and Congress' poll numbers are down. They're taking a beating, so they return to a tired old theme of bashing the Bush administration. The American people can see through it. We need our president to step up and be a leader."

Dave writes: "Jack, of course there should be a special prosecutor. Was there one for sex in the White House? Was that OK? So, which is the lessor evil? Did we accept the torture and vile undertakings of the Nazis after World War II, or were the Nuremberg trails a sham? Did we accept then the notion that, if I'm told to do wrong, I must obey? I think not."

And Hop in Tehachapi, California: "Seriously, Jackson none of this rises to the level of stain on a blue dress. Now, that's immoral behavior. Get with the program and adjust your priorities. What kind of publican are you?"

If you didn't see your e-mail here, you can go to my blog, CNN.com/caffertyfile. Look for yours there, among hundreds of others -- Ms. Malveaux.

MALVEAUX: All right. Jack Cafferty, thank you.

Rudy Giuliani's next political stop, could it be New York's governor's mansion? We talk to insiders about a possible run for the former mayor and presidential candidate.

Also, a hero's welcome in Libya for the Pan Am 103 bomber is now creating new tension ahead of a U.S. visit by Moammar Gadhafi, putting President Obama in a tight spot.

Plus, a bank robber so brazen and bold, he doesn't even wear a mask -- how you can help the FBI find him.

(COMMERCIAL BREAK)

MALVEAUX: On our "Political Ticker": After two terms in Gracie Mansion and a failed bid at the White House, there is now growing talk former New York Mayor and presidential candidate Rudy Giuliani is eying New York's governor's mansion.

CNN's Mary Snow is working that story for us.

And, well, Mary, what are you hearing?

MARY SNOW, CNN CORRESPONDENT: Well, Suzanne, you know, Rudy Giuliani in recent weeks has left the door open to a potential run for New York governor. And now at least one Republican in New York sees chances increasing that he will actually do it.

(BEGIN VIDEOTAPE)

SNOW (voice-over): He has been out of the running since his bruising White House bid that failed in early 2008. But allies say Rudy Giuliani is seriously thinking about running for New York governor.

Congressman Peter King says he discussed the possibility with Giuliani in recent weeks.

REP. PETER KING (R-NY), HOMELAND SECURITY COMMITTEE RANKING MEMBER: If you had asked me two months ago, I would say there was a less than a 20 percent chance he's going to run. Now I say 60-40 that he will, maybe 2-1 that he will.

SNOW: A spokesperson for Giuliani says he is on vacation and out of pocket. But here is what the former New York City mayor had to say in late July at a Crain's New York event when asked about the possibility.

(BEGIN VIDEO CLIP)

RUDOLPH GIULIANI (R), FORMER NEW YORK MAYOR: I got elected mayor, I believe, on the theory of, it can't get worse.

(LAUGHTER)

GIULIANI: So, if it gets to that point, maybe I will decide to run. We will see.

(END VIDEO CLIP)

SNOW: Republicans say a backlash against state Democrats is among the conversations. A coup in the Democratically-controlled state senate deadlocked Albany for a month.

KING: It was the failure of leadership in Albany. And that is what is motivating him right now.

SNOW: Democratic Governor David Paterson's popularity has soured, but he says he plans to run next year.

And Democratic strategist Hank Sheinkopf says, Democrats are feeling uneasy.

HANK SHEINKOPF, DEMOCRATIC STRATEGIST: Does Rudy Giuliani have a shot against David Paterson? Absolutely. And could the Democrats lose everything? You bet.

SNOW: Sheinkopf says recent comments by Paterson didn't help. The governor made headlines by mentioning race when discussing criticism of him and President Obama. The White House distanced itself from Paterson's remarks. Paterson now says he was misunderstood. But before the governor sets his sights on a potential Giuliani candidacy, he has got to look over his shoulder to see if the state's attorney general, Andrew Cuomo, a fellow Democrat, decides to challenge Paterson in a primary.

(END VIDEOTAPE)

SNOW: And in a hypothetical matchup between Giuliani and Andrew Cuomo, polls show Giuliani would have a tougher challenge.

Now, as for a decision from Giuliani, Republicans we spoke with today say they don't expect that to happen until November, at the earliest -- Suzanne.

MALVEAUX: All eyes will with be on that decision.

Thank you so much, Mary.

And, remember, for the latest political news any time, check out CNNPolitics.com.

You are in THE SITUATION ROOM.

Happening now: Dick Cheney says that he was right all along, claiming the release of secret files proves that harsh interrogations helped the war on terror.

Health officials say swine flu could infect half the population, and kill tens of thousands -- our Dr. Sanjay Gupta on what you need to know and what you need to do.

And a bank robber who is so bold, he doesn't even wear a mask -- now the FBI wants you to help find him.

Wolf Blitzer is off. I'm Suzanne Malveaux. And you're in THE SITUATION ROOM.

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