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THE SITUATION ROOM

Is Secret Service Stretched Too Thin?; Striking Back at the Taliban; Alleged Balloon Hoax

Aired October 19, 2009 - 17:00   ET

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


JACK CAFFERTY, CNN ANCHOR: If you didn't see your e-mail here, you can check my blog at CNN.com/caffertyfile.

We got a lot of e-mail on this, Wolf. It's a -- it's a hot story.

WOLF BLITZER, CNN ANCHOR: Yes, there's a lot of buzz out there.

CAFFERTY: Yes.

BLITZER: All right. Thanks very much, Jack.

And to our viewers, you're in THE SITUATION ROOM.

Happening now, is the United States Secret Service stretched too thin?

Can it protect Americans from financial fraud and still manage to protect the president?

We're going to hear from one critic who says the agency is dangerously overloaded right now.

Hard-pressed U.S. troops may face another challenge in Afghanistan -- protecting voters from the Taliban. On the other side of the border, Pakistani troops are striking back at the Taliban on the militants' own turf.

And federal prosecutors are now told not to go after patients who use pot under state medical marijuana laws.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

New concerns that the U.S. Secret Service is becoming dangerously overburdened. It has a number of missions, from tracking cases of financial fraud to protecting your identity. But there are now suggestions that this could impact its main job, which would be protecting the president of the United States.

CNN's Brian Todd has been looking into this story -- Brian, what are you finding out?

BRIAN TODD, CNN CORRESPONDENT: Wolf, we found a Secret Service that is vigorously defending its track record, its staffing, its budget and its overall ability to handle its dual mission. But when you look at everything the Secret Service now does, it encompasses quite a lot. And serious questions are being raised as to whether any one agency should have to handle all of this.

(BEGIN VIDEOTAPE)

TODD: (voice-over): They shadow the president at every turn, protecting him, the vice president, their families, dignitaries. They move ahead of the president to handle security on his trips and investigate threats against him.

Could those crucial missions be compromised by so-called mission creep?

The U.S. Secret Service also investigates financial crimes, including fraud, identity theft and even counterfeiting. That was, in fact, the agency's first mission when it was committed in 1865. But now, it even helps track missing children and a recent Congressional reports suggests the service may be overstretched, "If there were an evaluation of the agency's two missions, it might be determined that it is ineffective for the USS to conduct its protection mission and investigate financial crimes."

The author of a recent book on the service has already determined that.

RON KESSLER, AUTHOR, "IN THE PRESIDENT'S SECRET SERVICE": The fact is that they're -- the Secret Service is totally overloaded. They have so many extra duties that they're performing and the number of agents has not really increased.

TODD: Contacted by CNN, a Secret Service spokesman strongly disputed those assessments, saying the agency is not overstretched and that its ranks have increased. The spokesman says last year, while agents protected several candidates during the longest and most expensive campaign in American history, the Secret Service also had its biggest haul ever of financial assets seized from criminals -- $141 million. A former Secret Service officer we spoke to says agents shouldn't be just bodyguards.

WILLIAM PICKLE, FORMER SECRET SERVICE AGENT IN CHARGE: After a number of years in protection, you need to send those agents back out to do criminal work, to stimulate them, because what we've found is good criminal investigators make very good protection agents.

TODD: But is the Secret Service dealing with increased threats to the president?

A report last spring by the Department of Homeland Security says right-wing extremists have capitalized on the election of the first African-American president and are focusing their efforts to recruit new members.

(END VIDEO TAPE)

TODD: But at the same time, this report also says those groups have not yet turned to attack planning. That is a quote from that report. And the Secret Service spokesman we dealt with says, contrary to recent media reports, President Obama is not receiving more threats than other presidents. The spokesman says Mr. Obama's threats spiked right after his inauguration, but now they're within the same range as his two immediate predecessors, George W. Bush and Bill Clinton -- Wolf.

BLITZER: The agency certainly has its hands full, no matter which way you slice it.

TODD: It does have its hands full. I mean, truth be told, you have to say that. It protects 32 people full-time, four people part- time. This is in addition to visiting dignitaries when they come to the United States.

For all of that plus the investigative task -- investigating financial crime -- they've got a total of just under 3,500 agents. But again, the agency says it's not overtaxed. And the one official I spoke with says, look, Congress wants to give us $40 million over the next two years just to combat mortgage fraud. That's another task. But he says that shows that Congress at least thinks they're up to the task.

BLITZER: It's interesting. When most people think of the Secret Service...

TODD: Right.

BLITZER: ...they think of the guys protecting the president.

TODD: Just protection.

BLITZER: Yes.

TODD: Mortgage fraud -- that's quite something different.

BLITZER: Yes.

Brian Todd, thanks very much.

And I spoke about a lot of this with Ron Kessler. He's the author of the best-selling new book entitled, "In the President's Secret Service: Behind the Scenes with Agents in the Line of Fire and the Presidents They Protect."

(BEGIN VIDEOTAPE)

BLITZER: Do you believe President Obama is safe and secure?

KESSLER: No. Unfortunately, since Homeland Security took over the Secret Service, it's been cutting corners to a dangerous degree. And the most clear-cut example is that in contrast to the past, they now will start magnetometer screening or metal detection. That's what you go through at the airport.

When an event is about to start and the staff starts pressuring them to -- to let stragglers in, or, in some cases, they don't do it at all. For example, when Joe Biden threw the first pitch at the Orioles game in April, they did not do any magnetometer screening. Both the Baltimore field office and the detail were outraged, because this, you know, absolutely takes a chance that a gunman or a terrorist can bring in weapons, can bring in grenades and assassinate the president or the vice president.

BLITZER: The other point that they're saying is they're spending more money now protecting this president in the United States than they've ever spent before. They say: "We currently dedicate more personnel, funding and technical assets to our protective mission than at any time in our history and our protective measures and methods continue to increase in scope and complexity, not diminish."

TODD: This is just more smoke and mirrors. The fact is that they're -- the Secret Service is totally overloaded. The agents just -- in fact, they don't even do physical training anymore. They don't do firearms re-qualification because they're so overloaded. They have so many extra duties that they're performing and the number of agents has not really increased. And it -- it's just common sense.

You know, why let the president speak at an event without having magnetometer screening?

BLITZER: Well, the -- they say the only time that would happen is if the president goes, for example, out to some unannounced lunch at Five Guys for a burger. They won't do it there. But if he goes to an event like the All Star game in St. Louis that he went to, all 50,000 or so fans were screened before they went in.

KESSLER: That's just not true. You know, they repeatedly have let people in without magnetometer screening and they even admitted that, in one case, that was publicized, in Denver, when Obama was a candidate and the staff started pressuring and they let them in. It was unbelievable.

I interviewed former agents up to the level of deputy director, on the record, who said they can't believe this, because until Homeland Security take -- took over, they would never, never allow that to happen on their watch.

BLITZER: Here's some of the statistics they put out. And I'll sort of just paraphrase, that over the past couple of years they -- they say they've safely and successfully protected the president, the vice president, other Secret Service protectees at -- at 10,000 sites, screened seven million people. All that happening without incident.

KESSLER: Well, you know, I have those same statistics in my book. And that's fine.

But if the president is killed, what are they going to say?

Well, it -- it was OK to let -- to let these gunman in without being screened?

You know, it's like saying, at the airport, well, we don't have time to do the magnetometer screening, metal detection. We'll just let everybody on the plane without any -- any screening. I mean it's -- you don't have to be an expert in security to understand how basic this is.

And if the president is assassinated, we'll have another Warren Commission and they'll be pointing fingers right at the Secret Service, because it's the Secret Service that's been cutting corners, not only when it comes to shutting down magnetometers, which, again, they never used to do, but also on the counterassault team.

BLITZER: You...

KESSLER: ...they've cut that to two instead of five. They keep the counterassault team frequently away from the candidates. The -- they -- they're covering up in a lot of areas. For example, they will have members of Congress go to the training center and they'll impress them with these supposedly unrehearsed scenarios where a threat takes place and the agents thwart it. Well, those scenarios hare actually rehearsed beforehand in the case of Congressmen.

So there's a lot of deceit going on in the Secret Service.

BLITZER: Here -- here's a charge you make, that the threat level against President Obama has increased, you say, by 400 percent, as opposed to his predecessors. But a law enforcement source tells me that's false, that the threat level -- the number of threats they're getting against President Obama right now, six months into his presidency, is about consistent with the threats that President Bush and President Clinton used to get.

KESSLER: No, that's not true. In fact, you know, I've been told reporter -- by reporters who've talked to Secret Service P.R. people after the book came out that the 400 percent figure is accurate. Of course, it fluctuates slightly. But it...

BLITZER: Did you get that...

KESSLER: ...(INAUDIBLE).

BLITZER: ...number from the Secret Service or from another agency?

KESSLER: I got it originally from another agency, but I went over it with the Secret Service and I be -- you know, I believe that it is true. You know, that...

BLITZER: Because what this law enforcement...

KESSLER: ...that's just absurd.

BLITZER: ...what this law enforcement said was that, yes, when he was a candidate, there was a higher degree of threats. But since taking office, it's basically stabilized to where it was under President Bush and President Clinton.

KESSLER: No, it's just the opposite. The -- the increases occurred since he became president. There were about 3,000 threats a year under President Bush and now there are about 12,000. Of course, most of them are not credible, but they all have to be checked out.

And -- and, I might add, that the agents themselves are really dedicated, are brave. They're people who pledge to take a bullet for the president, which is what happened with President Reagan when -- when he was shot.

But it's the management -- it's the Secret Service management that has developed this culture of denial, where they -- they seem to think they're invincible. They can let the president go to an event without doing magnetometer screening. And they are risking an assassination.

(END VIDEO TAPE)

BLITZER: Ron Kessler's book is entitled "In the President's Secret Service: Behind the Scenes with Agents in the Line of Fire and the Presidents They Protect."

Let's go to Jack Cafferty right now for The Cafferty File -- Jack.

CAFFERTY: The Obama White House may have started another war it cannot win. On yesterday's Sunday talk shows, senior Obama adviser, David Axelrod, said about Fox News: "It's not really news, it's pushing a point view." And he asked that other news organizations not treat Fox like it's news.

The president's chief of staff, Rahm Emanuel, talking yesterday said of Fox: "It's not a news organization so much as it has a perspective."

This all started when the White House communications director, Anita Dunn, called Fox an arm of the Republican Party and said the Obama administration would treat the cable news network as they would an opponent. Dunn is now in a dustup with Fox News' Glenn Beck concerning a speech where she quoted communist leader Mao Zedong. Beck calls that insanity.

There's also a January video of Miss. Dunn where she talks about how the Obama campaign controlled the news media. She says they went around the filter of the news media and spoke directly to the American people.

Actually, she's right. A lot of the time they did just that.

Fox News says the White House continues to declare war on them instead of focusing on critical issues like jobs, health care and two wars.

And they have a point. It could be said that bickering with Fox News is a waste of valuable time and energy that could better be spent solving the nation's myriad problems.

Anyway, here's the question -- is it a good strategy for the White House to go after Fox News?

Go to CNN.com/caffertyfile and post a comment on my blog -- Wolf.

BLITZER: All right, Jack.

Thank you.

What led authorities to determine that the balloon boy case was a hoax?

(BEGIN VIDEO CLIP FROM OCTOBER 18, 2009, COURTESY KUSA)

SHERIFF JIM ALDERDEN, LARIMER COUNTY, COLORADO: It wasn't until the, "LARRY KING" show, where the family was interviewed by Wolf Blitzer, that we had the first aha moment, if you would.

(END VIDEO CLIP)

BLITZER: All right, so what charges might the parents now face?

We'll have the latest twists in the drama that's gripped the nation.

Also, U.S. troops may now face a dangerous new challenge in Afghanistan -- protecting polling places and voters in a runoff election.

And how reliable are all those Energy Star labels that are supposed to show you that your brand new appliance is energy- efficient?

A new report is raising questions.

(COMMERCIAL BREAK)

BLITZER: A United Nations commissions looking into fraud in Afghanistan's presidential election threw out ballots from hundreds of polling stations. And reviewing the data, an international group now says the incumbent president, Hamid Karzai, reportedly fell short of the votes needed to avoid a runoff. Karzai's main challenger, the ex- foreign minister, Dr. Abdullah-Abdullah, tells CNN's Christiane Amanpour he's prepared to take part in a runoff, but raises doubts about what he calls "realities on the ground." One reality is the security situation. That means a new challenge for U.S. and NATO troops.

CNN's Elaine Quijano has been looking into that part of the equation for us -- Elaine, what are you finding out?

ELAINE QUIJANO, CNN CORRESPONDENT: Well, Wolf, today a top Pentagon official told me that what the White House signaled over the weekend and again today doesn't really change the big picture for the U.S. military in Afghanistan. Clearly, though, the political crisis there could add yet another challenge to the military's already daunting to-do list.

(BEGIN VIDEOTAPE)

QUIJANO: (voice-over): Even before Afghanistan's disputed elections, that seem to have prompted President Obama to hold off on deciding troop levels, General Stanley McChrystal, the top commander in Afghanistan, made clear a long wait for word from Washington means gambling with the chances of success.

(BEGIN VIDEO CLIP FROM OCTOBER 11)

GEN. STANLEY MCCHRYSTAL, COMMANDER, U.S. FORCES AFGHANISTAN: And time does matter. Waiting does not prolong a favorable outcome. This effort will not remain winnable indefinitely.

(END VIDEO CLIP)

QUIJANO: That military effort, aimed at loosening the Taliban's grip, must happen in the next 12 months, according to General McChrystal's report on the Afghanistan war. But with the election results up in the air, U.S. troops could be facing another challenge -- helping Afghanis secure voting locations in the event of a runoff.

A senior Pentagon official insists a runoff wouldn't be a distraction to the overall mission, saying more U.S. troops and Afghan Army and police forces are in place now than during the August 20th vote. And Secretary of State Clinton said the top commander in Afghanistan thinks any runoff could happen before the Afghan winter months.

HILLARY RODHAM CLINTON, SECRETARY OF STATE: We have every assurance from General McChrystal and the ISAF command, as well as the Afghan security representatives, that it is absolutely possible to do.

(END VIDEO TAPE)

QUIJANO: Well, Wolf, as you know, even if a runoff election happens before the winter, resolving those results could take some time -- Wolf.

BLITZER: Elaine Quijano with that part of the story.

After a series of devastating attacks suggesting that the Taliban can, in fact, strike Pakistani targets at will, Pakistan's military is now striking back. Almost 30,000 troops have moved into the rugged tribal areas along the border with Afghanistan to fight Taliban militants on their own turf.

CNN's Reza Sayah is in the capital, Islamabad -- Reza.

REZA SAYAH, CNN CORRESPONDENT: Wolf, who's winning the big showdown in Pakistan?

That depends on who you ask. This is day three of the military offensive targeting the Taliban and their leader, Hakimullah Mehsud in South Waziristan.

A spokesperson for the Taliban, Azam Tariq, tells CNN that the Taliban has the upper hand. He says over the past three days, they've killed more than 60 Pakistani soldiers. He also adds that other militant groups are moving into South Waziristan to join in on the fight.

The Pakistani military, at a news conference on Monday, rejected those claims. They say they continue to move deeper into Taliban territory in South Waziristan, capturing and destroying some of their hideouts and ammo dumps.

Three times since 2004 the Pakistani military has launched similar offensives in South Waziristan. Three times they've failed. At times, they've also struck peace deals. But this time, the Army says a peace deal is not an option.

(BEGIN VIDEO CLIP)

MAJ. GEN. ATHAR ABBAS, PAKISTANI MILITARY SPOKESMAN: No. There's no truce in option. And the government has declared, the military has declared that unless and until you lay down the arms, hand your -- hand yourself over to the state authorities, only then it will be accepted that, yes, you are not fighting.

(END VIDEO CLIP)

SAYAH: Washington, of course, keeping a close eye on this offensive. Keep in mind, U.S. officials have long maintained that the tribal region is a safe haven for Al Qaeda -- a safe haven where they launch attacks across the border in Afghanistan. But keep in mind the two militant groups who've caused the most problems for U.S. and NATO forces across the border -- the Hakani network and the Hekmatyar network, are not based in South Waziristan. So even if this offensive is successful in South Waziristan, those two militant groups will remain intact -- Wolf.

BLITZER: Reza Sayah, our man in Islamabad.

Thank you.

Where does diplomacy end and appeasement begin?

As the Obama administration works to develop closer relations with the government of Sudan, are they forgetting those who died in Darfur?

We'll have a full report.

And a justice of the peace says they couldn't get married because they were of different races. They got married anyway and now they want him fired.

Stay with us. We'll have the latest on that and more right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: There's a story just developing, just coming into THE SITUATION ROOM.

Let's check in with Betty Nguyen.

She's got the details.

What are we learning -- Betty?

NGUYEN: All right, Wolf, this just in to CNN. The Justice Department says a Maryland scientist has been arrested for attempted espionage. A complaint unsealed in Washington today says 52-year-old Stewart David Nozette turned over classified information relating to national defense to an Israeli intelligence officer.

Now, this complaint does not implicate the government of Israel.

Nozette once worked in varying capacities for the Energy Department, Defense Department and NASA, as well.

We'll continue to follow that story.

Also, Iran accusing the US, Pakistan and Britain of links with Sunni militants who carried out a deadly suicide bombing. The Sunday bombing killed five senior Revolutionary Guard commanders and injured dozens of other people. The Guard's chief says the Sunni rebel group, called Soldiers of God, operates under US, British and Pakistani support and orders. He vowed a crushing response.

And a newly married interracial couple is fighting to have the justice of the peace who denied them a marriage license dismissed. You've probably heard this story by now. Beth and Terence McKay told CNN's "AMERICAN MORNING" that they have hired an attorney to hope to see that Keith Bardwell is fired. The McKays got national attention when the incident went public. They eventually got a marriage license, but from another justice of the peace. Bardwell insists he did nothing wrong -- Wolf.

BLITZER: All right.

Thanks very much, Betty.

Stand by.

We're getting some more information on this Justice Department filing. I want to update our viewers on that. That's coming up.

Thanks very much.

Aluminum foil and duct tape -- we're going to give you an up close -- an inside look at that balloon that flew for so many miles in the skies over Colorado.

And legitimate users of medical marijuana say it's one less stressful thing you have to worry about -- a dramatic change in policy by the Justice Department.

And those government Energy Star labels are supposed to show you that your new appliance is extra efficient. But a new study is raising new doubts.

(COMMERCIAL BREAK)

BLITZER: To our viewers, you're in THE SITUATION ROOM.

Happening now, Afghanistan in turmoil -- and more Americans are starting to view it as another Vietnam. The White House wrestles with big decisions about U.S. involvement and says it was the Bush administration who put it between a rock and a hard place.

The White House versus Wall Street -- the Obama administration fires up fresh outrage over executive bonuses and says the financial world is simply out of touch.

Will Washington back up its words with big reforms?

We'll ask the best political team on television.

I'm Wolf Blitzer.

And you're in THE SITUATION ROOM.

We all watched fascinated as the strange silver balloon drifted 50 miles across Colorado. And we all worried that a 6-year-old boy was in desperate danger.

As it turned out, Falcon Heene was fine, but many people had doubts about the Heene family's story and questions about the drama of the boy in the balloon. But that's all they were -- doubts and questions -- until Sunday morning's dramatic announcement by the county sheriff, Jim Alderden.

(BEGIN VIDEO CLIP FROM OCTOBER 18, 2009, COURTESY KUSA)

ALDERDEN: It has been determined that this is a hoax, that it was a publicity stunt. We believe that we have evidence at this point to indicate that it was a publicity stunt done with the hopes of marketing themselves or better marketing themselves for a reality television show at some point in the future. It wasn't until the Larry King show where the family was interviewed by Wolf Blitzer that we had the first a-ha moment, if you would.

(END VIDEO CLIP)

BLITZER: The sheriff's a-ha moment came on Thursday evening when I asked the family why 6-year-old Falcon Heene hadn't responded to their frantic calls searching for him.

(BEGIN VIDEO CLIP)

BLITZER: Did he hear anything? Did he hear you screaming out, Falcon, Falcon?

RICHARD HEENE: He's asking, Falcon, did you hear us calling your name at any time?

FALCON HEENE: Mm-hmm.

HEENE: You did?

UNIDENTIFIED FEMALE: You did?

HEENE: And why didn't you come out?

HEENE: Um, you had said that, um, we did this for a show.

HEENE: No?

HEENE: You didn't come out?

HEENE: No.

(BEGIN VIDEO CLIP)

BLITZER: Later I asked Falcon's father Richard Heene what his son meant by saying we did this for the show. At first he said he had no idea, but then became irritated with the questioning, almost angry at me saying that he was appalled that we could suggest something like this after the emotional ups and downs the family had been through. As it turned out, it was the rest of us who ended up appalled at what now appears to have been a hoax.

We're going to have a lot more on this story coming up, but let's begin with the balloon itself. It looked big. It looked well made, but when we first watched it from a far away helicopter we weren't sure what to make of it all. CNN all platform journalist Jim Spellman found the balloon to be a lot less impressive when he got up close.

(BEGIN VIDEOTAPE)

JIM SPELLMAN, CNN ALL PLATFORM JOURNALIST: We're at sheriff's department in Larimer County Ft. Collins, Colorado. This is the balloon that transfixed people for hours earlier this week. From a distance, from the president's cameras it looked like a kind of sophisticated weather balloon, but if you look up close here, it looks like aluminum foil. You can see scotch tape holding it together. Here's a little duct tape. It looks like it's a thin frame of thin wood here. If you come around on the inside here you can see some of these wires here, and inside you see three nine volt batteries taped together here, far from sophisticated. There's a little valve right here, and you can see right in here very clearly the wooden structure and the strings. Inside here is a big bucket. The sheriff deputies filled this with 37 pounds of sand. This is the amount that young Falcon weighed and they did this to test to see whether this would actually fly or not, so they did that. That's all the electronics that's in it, all this is that flew for so many miles and transfixed everybody.

Jim Spellman, CNN, Larimer County Colorado.

(END VIDEOTAPE)

BLITZER: The involvement of Richard Heene's children in this alleged stunt has people wondering about the welfare of the kids, but this isn't the first time there have been concerns about the safety of the children. Let's bring in our internet reporter Abbi Tatton.

There was some controversy, I take it on i-report.com, is that right?

ABBI TATTON, CNN INTERNET REPORTER: That's right, Wolf, a full year ago because of this video posted by the Heene family to I-report. Take a look at it.

HEENE: We're the storm chase family. This is my brother Falcon and we're in the middle of hurricane Gustav.

HEENE: Look at that. We're right in the middle of the eye right now. It's 10:44 a.m. This is the eye, and look how calm it is. We just went through some torrential rains, and now the rain is starting to pick back up just a little bit. What's that? A truck blew over. That's pretty cool.

HEENE: Yeah.

TATTON: The Heenes hurricane chasing in Louisiana last year brought many heated comments on I-report to that video. Take a look at some of them. "Totally irresponsible parents," said one person. Another, "Your sick need for fame/money/whatever is putting your family in danger." And it seems from I-report that the Heenes were reading this criticism. Take a look at this post on the same day purportedly from Bradford Heene, age 9 years old, that said, "My parents made history for being in the eye of Gustav and survived. You should spend more time with your parents and then you will be happy. Is your life crappy because mine isn't?" Now Wolf, we don't know if that was posted by one of the Heene sons or by one of the Heene parent. It was posted in the Heene account name, but what we do know is after last week's incident from the police there in Larimer County that the child protective services are now investigating to see if the children are in danger. Wolf?

BLITZER: Abbi, thanks very much.

We just heard that the whole family left the house and went for a ride some place. We'll stay on top of this part of story.

If runaway balloon story proves to be a deliberate hoax on the part of the Heene family, what kind of legal troubles, possible criminal charges lie ahead? Let's go to our New York bureau and CNN legal analyst Lisa Bloom is standing by.

Lisa, thanks for coming in. The sheriff outlined various charges, conspiracy to commit a crime, contributing to the delinquency of a minor, attempting to influence a public servant, filing a false police report. The first three are felonies. The last one is a misdemeanor. If convicted on all those charges, potentially there could be jail time.

LISA BLOOM, CNN LEGAL ANALYST: That's right, potentially six years in prison, although the sheriff himself, Wolf, said that he didn't think jail time was really the right outcome here. Colorado prisons are overcrowded just like prisons across the country. My belief is that if they were convicted of some of these crimes they would probably get community service and restitution. Restitution seems to be what the sheriff is really after, getting paid back for all. Resources expended in this chase.

BLITZER: Does that normally happen in a hoax situation where they come to the family and say, you know what, the National Guard, the FAA, the police, everyone was deployed. These are tens of thousands of dollars of costs and they try to seek those kinds of funds?

BLOOM: Absolutely. We saw it in "The Runaway Bride" case, a case you might remember that was apparently an elaborate hoax and she was ordered to repay all of the expenses look are for her. This family though, the Heene family, doesn't appear to have any money so ultimately restitution might be fruitless, but he could have his wages garnished for the rest of his life trying to pay this money back.

BLITZER: Is it normal for a sheriff in a situation like this to tell the news media out there, you know, I don't think the family; the parents should really serve any time for these alleged crimes?

BLOOM: That's very unusual. You know what else is unusual is the sheriff talking about charges before they are filed. It seems to me that there's a little bit of a tit for tat here between the sheriff and the Heene family. It's gotten a little bit personal between those two groups, the sheriff after all said on Friday he thought that they were telling the truth. They thought their emotions were real and thought this was all genuine and now he's come out and said this is a hoax and that they have evidence to support it. They have e-mails showing that there were two weeks of planning in this hoax. There's a little boy statement to you, Wolf, of course saying that it was all done for the show and other evidence, so we'll see how it all pans out.

BLITZER: Because the sheriff did acknowledge yesterday that he came very close to the line in deliberately misleading the news media in the hopes of getting the family to cooperate to come in and talk to them. I'll play a little clip for you. Listen to this.

(BEGIN VIDEO CLIP)

ALDERDEN: We certainly were skeptical, and I know I pretty emphatically state that had we weren't. If there was any manipulation of the media it would be, that and for that I apologize. (END VIDEO CLIP)

BLITZER: What did you make of that?

BLOOM: Well, law enforcement does sometimes mislead the media intentionally. There's nothing wrong with them doing that. They are trying to get information from a suspect so they want to appear to be cooperative and supportive of the suspect. It's interesting that the sheriff comes out and says that openly though. That is unusual. A lot of things about that news conference were very unusual.

BLITZER: And could a good criminal defense attorney potentially use that kind of statement and say, well, we don't know when the sheriff is telling the truth?

BLOOM: Absolutely, and Heene's defense attorney has already come out swinging and pointed out the obvious that he's presumed innocent. That the sheriff has made inconsistent statements and that the sheriff has maligned Richard Heene and the media. Heene has not been arrested or charged with anything.

BLITZER: And we don't know what that will happen. Presumably they are working on the paperwork. Lisa, thanks very much.

BLOOM: Thank you.

BLITZER: A dramatic change in the federal government's drug policy. Why some users of medical marijuana are breathing a big sigh of relief and those appliances marked with an Energy Star label are supposed to save you money and help save the environment. We'll have a reality check. Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: In 14 states across the country, it's legal to possess and use marijuana for medical purposes. Now the federal government is making a major change in the way it treats the buyers and sellers of medical marijuana. Let's bring in our homeland security correspondent Jeanne Meserve. She's got the details.

It's a pretty significant change.

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: Well, depends how you look at it. The justice department is advising U.S. attorneys not to prosecute patients and care-givers who are following state medical marijuana laws, but will it make a difference? That depends on who you talk to.

(BEGIN VIDEOTAPE)

MESERVE: At North Hollywood Compassionate Care-Givers, a marijuana dispensary, relief that the federal government will no longer target legitimate users of medical marijuana.

RIGO MARTINEZ, MEDICAL MARIJUANA USER: It puts less stress on us and we don't have to worry about dealing with all of that. I've gotten pulled over before for it.

MESERVE: Attorney General Eric Holder says it will no longer be a priority to use federal resources to prosecute patients with serious illnesses or their care-givers who are complying with state laws.

AARON HOUSTON, MARIJUANA POLICY PROJECT: This is a watershed moment and a major step forward in terms of federal medical marijuana policy.

MESERVE: But opponents of medical marijuana found something to cheer, too, a memo to federal prosecutors outlining the new guidelines says, "Prosecution of commercial enterprises that unlawfully market and sell marijuana for profit continues to be an enforcement priority."

CALVINA FAY, DRUG FREE AMERICA FOUNDATION: We see these guidelines as giving clarity, allowing law enforcement to move forward and enforce our federal laws and shut down these storefront operations that are nothing more than a free ticket for drug trafficking.

MESERVE: The Bush administration prosecuted marijuana dispensaries and their customers when a federal drug law was violated. The new memo leaves open that possibility, but suggests prosecutors defer to state laws in the 14 states which permit medical marijuana.

TOM RILEY, BUSH ADMIN. DRUG POLICY SPOKESMAN: People are still just as subject to prosecution, and I don't think that part of the message is going to get out. I think it's going to make an already confused situation more chaotic.

(END VIDEOTAPE)

MESERVE: The justice department took pains today to underline that drug enforcement is still a core priority noting that marijuana distribution in the United States remains the single largest source of revenue for the Mexican drug cartels. Wolf?

BLITZER: Jeanne Meserve, thanks very much for that.

The government suggests you spend some money in order to save more money by fixing up your home. It's part of a program called recovery through retrofit. Vice President Joe Biden says making American homes more energy efficient will create green jobs and help the consumer.

(BEGIN VIDEO CLIP)

JOE BIDEN, VICE PRESIDENT: The average homeowner in America spends between $1,500 and $3,000 depending on where oil prices are going to go or gas prices go. That's what we're talking about now per year. You'll be able to save. You'll be able to save a significant amount of that money by retrofitting and fixing leaks, upgrading windows and insulating crawl spaces, attics, that can amount to somewhere at a minimum between $300 and $1,200 a year. You get paid back real quick on these investments.

(END VIDEO CLIP)

BLITZER: That Energy Star label on your new appliance is supposed to save you some wear and tear on the environment and save you some money in the process, but is the logo all it's cracked up to be? We asked our Mary Snow to dig deeper and find out what's going on.

Mary, what are you learning?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, when a manufacturer puts that Energy Star label on an appliance, it's voluntary and it's a way, as you pointed out, for consumers to make a choice based on how energy-efficient the product is but a government report is raising some questions about those labels and so is "Consumer Reports," which is continuously testing appliances.

(BEGIN VIDEOTAPE)

SNOW: The Energy Star label is intended to guarantee consumers a product is energy efficient, but a "Consumer Reports Labs," Mark Connolly has found appliances like this freezer that should not have the Energy Star logo.

MARK CONNOLLY, CONSUMER REPORTS: In our labs, we found it used a lot more energy than indicated.

SNOW: Can a manufacturer just put on an Energy Star sticker?

CONNOLLY: They are supposed to have the products tested and they do but they themselves tested it.

SNOW: So if you had not run this test people would buy this thinking okay I'm saving on energy and I'm saving money.

CONNOLLY: Correct.

SNOW: But in reality?

CONNOLLY: In reality it's using twice as much energy that it claims.

SNOW: And in an appliance like this claiming an energy bill of $60 a year could actually be double. Of hundreds of products he tests every year he estimates 5% to 10% should not be labeled Energy Star.

CONNOLLY: For the most of the products we test are in fact telling the truth but, again, there are enough products out there that give us some concern.

SNOW: Those concerns are shared by the Department of Energy's inspector general who in an audit found that the department had not implemented planned improvements in the Energy Star program. The report concludes that those delays could reduce consumer confidence in the integrity of the Energy Star label. We asked the Department of Energy's Kathy Zoi about the discrepancies.

KATHY ZOI, DEPARTMENT OF ENERGY: The inspector general identified a number of improvements to the program and frankly we agree with those improvements and we put a plan in place to get all of those improvements implemented.

SNOW: But as the Department of Energy works on the improvements it's in the process of planning a rebate program for consumers buying Energy Star products, $300 million of stimulus money is being used. Can consumers be confident those products are as energy efficient as they claim to be?

ZOI: There have been examples that are very rare where a manufacturer has misused or misappropriated or misapplied the Energy Star logo and when the department of energy or EPA have found out about that they have taken steps and actions and those manufacturers have had to recompense people who have bought those appliances.

(END VIDEOTAPE)

SNOW: And we also asked her about the independent testing. She says the Department of Energy has started using a third party to test some products and it's looking to expand that testing. Wolf?

BLITZER: Sounds like a good idea to expand that testing. All right, Mary, thank you.

When does the policy of engagement cross the line into giving support to a state that sponsored genocide? Our State Department correspondent Jill Dougherty on the administration's new policy on Sudan.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: The horrors of Darfur are still all too real but the Obama administration is reaching out to the African leader blamed for the genocidal nightmare. Let's go to our foreign affairs correspondent, Jill Dougherty. She's working this story for us.

Pretty significant shift in U.S. foreign policy, Jill.

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: It is Wolf and you know the state department is still calling the situation in Darfur genocide. But it says that it's no longer that organized violence against civilians that it was a year ago. That opens the way for a new policy. Secretary Clinton says she is realistic about the hurdles ahead but that it's vital, it's urgent to act now.

(BEGIN VIDEOTAPE)

DOUGHERTY: President Barack Obama stretches out his hand again, this time, engagement with the government of Sudan's president, Omar Al Bashir, indicted by the international criminal court for genocide and crimes against humanity. It's a softer approach from what candidate Obama was pushing.

PRES. BARACK OBAMA (D), UNITED STATES: We'll lead on ending the genocide in Darfur. That should be part of our leadership.

DOUGHERTY: The new strategy unveiled by Secretary of State Hillary Clinton, pressure and incentives.

HILLARY CLINTON, SECRETARY OF STATE: Words alone are not enough. Assessment of progress and decisions regarding incentives and disincentives will be based on verifiable changes in conditions on the ground.

DOUGHERTY: But with more than 2.5 million refugees still in camps, one campaigner for Darfur urges caution.

JERRY FOWLER, SAVEDARFUR: One thing we'll need to be careful about is that there's not a frontloading of incentives, that this balance of incentives and pressures means that incentives are only provided after concrete and lasting progress.

DOUGHERTY: So far, the scorecard for Mr. Obama's overall engagement strategy is mixed. With Iran, tensions continue. But Tehran is promising U.N. inspectors can visit its recently revealed secret enrichment facility and it will ship out uranium for enrichment in Russia. North Korea says it's willing to resume negotiations but it also test fired five more short-range missiles. The U.S. and Russia are resetting their relationship. But last week in Moscow, Hillary Clinton failed to get a firm commitment to tougher sanctions against Iran over its nuclear program. Engagement isn't working, says one conservative observer.

JAMES CARAFANO, HERITAGE FOUNDATION: Is the missile threats gone down, no. Is Russia's foreign policy less aggressive? No. Is North Korea more predictable? No. Has the Sudan done anything to actually improve the human rights situation on the ground? No. Show me a success here.

(END VIDEOTAPE)

DOUGHERTY: But here at the state department, they say, give us some time. There's no guarantee of any success, but if it ends up in sanctions, they claim that engagement has won them a lot more allies who will support the sanctions. Wolf?

BLITZER: Jill Dougherty at the state department for us, thank you.

Is it a good strategy for the white house to go after Fox News? Jack Cafferty will read your e-mail on that.

And the white house says it's at square one in Afghanistan. It blames the Bush administration for putting it there.

(COMMERCIAL BREAK)

BLITZER: Back to Jack Cafferty for "the Cafferty File." Jack?

JACK CAFFERTY, CNN CORRESPONDENT: The question this hour, is it a good strategy for the white house to go after Fox News? John writes, "No. This bickering with the likes of Beck and O'Reilly just makes the Obama White House look petty and weak, and only helps the ratings for Fox News. Horrible job of time management for team Obama. Spend your time wrestling with senators over a public option."

Pete in Florida writes, "A politician cannot win a fight with the press and god help us all if this ever becomes the case, regardless of party affiliation. This is not going to play out well for the president. Since no American, regardless of party affiliation, will tolerate a loser."

T.J. writes, "Enough already. Stop reporting anything about Glenn Beck. He is an insane nut job. His opinion is of no value to anyone, except other nut jobs. Stop enabling this psychotic fraud by constantly reporting what he has to say about, well, anything."

Debbie in Virginia says, "Going after Fox News indicates to me the White House is worried. Finally, someone with backbone is exposing the corruption and background of advisers in the administration."

Carmen in Florida says, "It's censorship, pure and simple. Every media outlet should read between the lines of Axelrod's statement that other news networks not go the way of Fox. This means if they report something the white house doesn't like, they could get censored as well."

J.R. in Idaho writes, "When you report on the stories you have created, you have become illegitimate. Fox is balloon boy."

Eleanor writes, "Cafferty is being Fox News. Instead of attempting to present the question in an impartial, journalistic manner, Cafferty clearly loads his question against the Obama administration. Sounds very Fox-like to me."

And Catty writes, "Well, Fox's ratings have increased about 20 percent this year alone. Meanwhile, Obama's approval ratings have decreased. You tell me if it's a good idea."

If you didn't see your e-mail here, check my blog, CNN.com/CaffertyFile. Wolf?

BLITZER: Will do, Jack. Thank you.

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