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The Situation Room

$20 Billion For Oil Disaster Victims; What Fiscal Austerity Looks Like; White House Announces New Iran Sanctions

Aired June 16, 2010 - 18:00   ET

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

WOLF BLITZER, CNN ANCHOR: You're in the SITUATION ROOM. Happening now --

An extraordinary meeting, top executives of BP summoned to the White House to face President Obama and finally yielding to demands for a multibillion dollar compensation fund.

Also, a grim tour of the once burden wetlands are now being called the ground zero area of the oil disaster where both wildlife and livelihoods are falling victim to the crude.

And a race against time to reach thousands of birds doom to an oil depth unless rescuers could find them. We go along on the search.

We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer and you're in the SITUATION ROOM.

It started with an apology from BP's chairman of the board, then four hours, he and top executives squared off with top members of the Obama administration, including the president, himself, to discuss the worst oil disaster in U.S. history. By the time it was over, BP had agreed to establish a $20 billion compensation fund for victims of the Gulf oil spill, plus an additional $120 billion fund for laid off oil workers. The president called it an important step.

(BEGIN VIDEOTAPE)

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT (voice-over): BP's most senior figure emerges from the White House and from the shadows, to offer an apology to the American people for this environmental nightmare, and some backhanded sounding sympathy.

CARL-HENRIC SVANBERG, BP BOARD CHAIRMAN: I hear comments sometimes that large oil companies are greedy companies or don't care, but that is not the case in BP. We care about the small people.

CHERNOFF: It was Carl-Henric Svanberg, the chairman of BP's board of directors who sat solemnly across from President Obama with his second in command, CEO, Tony Hayward next to him. BP officials said Svanberg was not available to be interviewed for this story. Who is this previously invisible exec who makes more than a million dollars a year? (INAUDIBLE) described him as a mild-mannered Swede, active behind the scenes, managing the company's worst crisis ever, but content to let Hayward be the public face of the company through moment's brilliant and borish. SVANBERG: I want like my life back.

CHERNOFF: One reason Svanberg's been so low key, corporate cultural differences. In Europe, the board chairman is often separate from the CEO, a bottom line finance oriented executive while the CEO masters the technical piece, but other crucial factors are at play in this situation. Carl-Henric Svanberg's only been BP's chairman since January, only joined the company last September, and prior to that, he had no experience in the oil industry, having served for six years as president and CEO of mobile phone giant Sony Ericsson, Dan Hays, a management consultant for the telephone industry says Svanberg got high marks for turning that company around.

Can you speak to his management style at all? What was he known for in that realm?

DANIEL HAYS, PRTM MANAGEMENT CONSULTING: He's known as really being a guy who gets hand's on in operations. He is able to come in and help make some of the difficult choices and help drive things into execution. He also has a very, very powerful reputation for being customer-focused. He gets out there and he meets with the stakeholders and the customers of the companies that he works with.

CHERNOFF: The chink in Svanberg's armor, according to Hays, he left Sony Ericsson before the turnaround was complete, and the company was still struggling. Will Svanberg replace Tony Hayward? A BP official tells CNN Hayward has the full backing of the board. An analyst at one executive recruiting firm says that may only be a matter of timing.

ROGER KENNY, CTPARTNERS: You can bet that there's somebody in the wings, but I would suspect they're not going take any action until this thing is complete.

(END VIDEOTAPE)

CHERNOFF (on-camera): And could Carl-Henric Svanberg be on the chopping block? Well, analysts say in Europe, there's more of a clamor for him to be fired than for Hayward to be fired, but he may get a temporary pass since he's been there such a short time. After awhile, one analyst told me, however, he too may fall victims of corporate bad channels maneuvers by other board members what this analysts called a a posse of men in suits. That's usually how it happens in the corporate world, Wolf.

BLITZER: Yes. Here's the question -- I have two questions. Why would BP hire someone without any really oil industry experience and the second question is why would he want this job if he didn't have any oil industry experience?

CHERNOFF: Wolf, the second part that's unclear. He didn't want to be interviewed by CNN. We didn't get the chance to ask him. That's a good question. It might have been the challenge that he could have face, maybe the money. Now, as far as why they would hire him, I asked that analyst, Dan Hays, about that, he said that Svanberg had a good reputation as a very strong corporate leader and expert of turning companies around, had a very solid European business background of leading countries through very challenging times.

That was very attractive to BP, and remember, they were on hard times when he joined them. Both he and Tony Hayward have must be said have turned that company around in three years that Hayward has been there leading up to the spill. Hayward had a pretty good reputation, himself, before this happened.

BLITZER: Until now.

CHERNOFF: Until now.

BLITZER: All right. Thanks very much, and his testimony tomorrow before Congress, we'll watch that closely.

After the meeting of four hours of talks over at the White House, the president emerged and said this.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Currently, under federal law, there is a $75 million cap of how much oil companies could under certain circumstances be required to pay for economic damages resulting from a spill such as this. That amount, obviously, would be insufficient. That's why I'm pleased to announce that BP has agreed to set aside $20 billion to pay claims for damages resulting from this spill.

This $20 billion will provide substantial assurance. The claims people and businesses have will be honored. It's also important to emphasize this is not a cap. People of the Gulf have my commitment that BP will meet its obligations to them.

(END VIDEO CLIP)

BLITZER: And only a few minutes after the president spoke, Svanberg emerged and told reporters that BP is suspending its quarterly dividend for the rest of the year. He says the company will revisit the issue next year when it has a better idea of how much the cleanup and the legal fees from the Gulf disaster will cost. The news boosted BP's stock, by the way, which had fallen 50 percent since the crisis erupted. It closed up 1.4 percent today.

Now, we want to take you to what's being called the ground zero of the Gulf, an area in the Louisiana Bay where the crude is taking a heavy toll, a very heavy toll on both fishermen and wildlife. CNN's Mary Snow is joining us from there. Mary, you were out in the water today. You had a chance to see it up close. Tell our viewers what you saw.

MARY SNOW, CNN CORRESPONDENT: Wolf, we really concentrated today on marshes several miles out of the coast, and they are damaged by oil, badly damaged. And Barataria Bay is becoming increasingly concern about it because some areas have seen some of the deepest reaches of the oil spill. We were out there today with scientists, and they're very concerned, because the bay is home to fragile wetlands and it's teeming with wildlife. (BEGIN VIDEOTAPE)

SNOW (voice-over): Pulling up to this marshland about ten miles from the coast of Grand Isle, a sign that the war against oil is being lost. Booms so saturated they've been rendered useless.

MIKE BLUM, TULANE UNIVERSITY: You need people out there maintaining it. People out there should changing this out, so obviously, this is spent. You're not going to see anything other than that.

SNOW: Tulane University ecologist, Mike Blum and the environmental group, Natural Resources Defense Council took us out on the boat to call attention to how badly damaged marshes are at Barataria Bay and the long-term implications. While there are stepped up efforts to clean up these marshes, there are hundreds of these islands, and on this one, the damage is done.

So, in order to do it effectively here, what was needed?

BLUM: Here's what I would say, it's too late.

LISA SUATONI, NATURAL RESOURCES DEFENSE COUNCIL: What we are seeing right now with these marshes oiled is the ring around the bathtub.

SNOW: Where waters are shallow, we were able to get a firsthand look at some of the damage.

BLUM: It's not something that you can tell until you actually get on the land and you start looking at the details, but, this is not a good indication at all. And you can see, this is the same, this is all across the shoreline.

SNOW: The big concern is what's to become of the habitat for shrimp, crab, and snails. As the marshes were choked off by oil, a whole way of life is endangered.

BLUM: Thinking about what these communities have suffered since hurricane Katrina, a lot of them are already at a threshold where they can't respond to additional events and so a one-year event or an event that's going to shut them down for a year, that may be enough where the communities decide to up and go, go somewhere else, because they can't maintain their livelihood here.

(END VIDEOTAPE)

SNOW (on-camera): Wolf, the scientists we were with today really want a long-term commitment on the scientific end. You know, BP has committed hundreds of millions dollars to researchers, but these scientists say they want to make sure that that research is going to be done independently, and they want a long-term commitment. One of the scientists said that we were with today plans to meet with the BP officials tomorrow to discuss just that, and while the pictures today was very discouraging, and the scientists we were with has been going out there for weeks and seeing the damage just really increase over those weeks.

He still says in the best case scenario, there is a chance of recovery in three to five years. He's trying to keep his fingers crossed, he told us, and remain optimistic, but obviously, the damage that you saw was pretty grim -- Wolf.

BLITZER: Very grim. All right. Mary is on Grand Isle, Louisiana, right now. Thank you. Jack Cafferty is coming up next.

Then, 60,000 barrels a day, that's the latest estimate of the Gulf oil spill. Why is the number going up and up? Should we believe this latest figure?

And a different kind of bird hunt. We go along with rescuers trying to save thousands of birds from an oily death.

And more than two dozen Americans killed in Afghanistan this month alone. Pointed questions of the U.S. military's central command, General David Petraeus.

BLITZER: Jack Cafferty is here with "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: This may be a sign of things to come right here in the United States, running out of money and drowning in debt, governments across Europe are cutting and cutting and then cutting some more. And the pain is palpable. CNNMoney.com reports what fiscal austerity looks like in countries including Greece, Italy, Spain, Hungry, Portugal, and Ireland are living through it right now. These governments are implementing a wide range of tough measures, and in the process, imposing a dramatic change in lifestyle on the residents.

These include freezing public sector wages, state spending, cutting jobs, cutting social welfare benefits, and cutting state and local budgets. Some governments are raising retirement ages, reducing pension payments. Others are increasing taxes from the value-added taxes to higher taxes on gasoline and cigarettes and income and profit taxes as well. It gets worse with the added concern that economic instability could lead to political unrest. Top European officials including the head of the European union are warning that democracy could collapse in Greece, Spain and Portugal, unless, they take urgent action to fix the debt crises.

They worry these countries could fall victim to military coups or popular uprisings. Meanwhile, on this side of the Atlantic Ocean as America's debt tops $13 trillion, there's absolutely no indication that our federal government is going to stop spending any time soon. Just this week, President Obama asked for another $50 billion in emergency aid to state and local governments. Not a single word on where the money is supposed to come from, who is going to pay for it, none of that, just let's print up another $50 billion.

At the same time, some statement governments which are actually required by law to balance their budgets are threatening to either cut services or shutdown state governments if lawmakers can't agree on spending cuts. It's getting ugly out there. Here's the question: What would fiscal austerity look like here in the United States? Go to CNN.com/caffertyfile. Post a comment on my blog.

BLITZER: Jack Cafferty, thank you. Hundreds of oil birds rescued, but there are untold thousands more that will die unless they can be found in time. Our national correspondent, Gary Tuchman, has more.

(BEGIN VIDEOTAPE)

GARY TUCHMAN (voice-over): Deep into the Louisiana marshland, searching for pelicans and gulls struggling to survive.

TUCHMAN (on-camera): There are thousands of birds just in this one location, one small barrier island in the Gulf of Mexico. At any time, every one of these birds could plunge into the water to get a fish and end up mired in oil.

TUCHMAN (voice-over): And that's what Michael Carlos with the Louisiana Department of Wildlife and Fisheries is looking for.

MICHAEL CARLOSS, LOUISIANA DEPARTMENT OF WILDLIFE AND FISHERIES: You see a little opening in that grass? I think he's sitting right in there.

TUCHMAN: We then see it, too, a baby seagull drenched in oil, barely moving. The gull is one of more than 600 visibly oiled birds that have now been rescued in Louisiana since this oil disaster occurred and brought for cleaning and care to a center that has been opened in Plaquemines Parish Louisiana. The bird we have spotted is being rescued by state wildlife workers. Others birds are rescued by federal wildlife workers.

However, there are many other bird experts and enthusiasts who want to participate in rescues but are being told at this time by the state and federal agencies they are not interested in help from outsiders. Drew Wheelen from the American Birding Association says there are hundreds people from other parts of the country experienced to dealing with birds covered with oil.

DREW WHEELEN, AMERICAN BIRDING ASSOCIATION: I cannot see any reason why they would not want as many people here as possible.

TUCHMAN: The Humane Society of the United States agrees and the president of the organization saying, we need more trained personnel and boats working in the Gulf, and we need more boats deployed to search in a more systematic way for the animals in distress.

UNIDENTIFIED MALE: Throw me some gloves!

TUCHMAN: But the Louisiana Department of Wildlife and Fisheries says, we have the resources to handle the job at hand at this time. The volunteers who have offered services simply need to be ready to respond when the call comes and when that time comes. CARLOSS: I think the misconception maybe that we're not doing our best, and you know, I would argue that our field staff is doing their absolute best.

TUCHMAN: State officials say even if they haven't dealt with oil spills, they know their birds and their birds' habitats. Plus, they say that almost all boats and housing resources are being used.

CARLOSS: It's a chick, too. You will see it.

TUCHMAN: As our baby seagull is handed over for cleaning, we don't know for sure if it will survive. What we do know for sure is that there is plenty of disagreement about the rescue operation, and that there are many more birds that need to be saved.

Gary Tuchman, CNN, Grand Isle, Louisiana.

(END VIDEOTAPE)

BLITZER: The Obama administration puts the financial squeeze on Iran today with new sanctions against the country's nuclear program, but the direct target isn't Iran. We're going to tell you who is.

And Apple's new iPhone and AT&T are no longer taking advance orders.

(COMMERCIAL BREAK)

BLITZER: Lisa Sylvester is monitoring some of the other top stories here in the SITUATION ROOM. What's going on, Lisa?

LISA SYLVESTER, CNN CORRESPONDENT: Hi, Wolf. The Obama administration is expanding U.S. sanctions on Iran. The Treasury Department announced today that it is targeting individuals and institutions believed to be aiding the country's suspected nuclear program. Today's announcement is the first step in implementing the Iran sanctions resolution passed by the U.N. Security Council last week.

Defiant words from Iran's leading nuclear official, Ali Akbar Salehi, says Tehran is starting to design a new nuclear reactor. He predicts the reactor will be used for research and should be up and running within five years.

Spirit Airlines may soon be flying again. The pilots union says it has reached a deal with the airline that will end their five-day- old strike. They walked out over a pay dispute. Details of the agreement aren't known yet. Union officials say pilots are still working out the fine print, but they do expect the flights to resume on Friday.

And AT&T is suspending all advanced sales of the new iPhone after the deluge of orders overwhelmed computer systems. The response was so great many customers received error messages and busy signals. AT&T says it has to suspend sales so isn't fill the orders if already have, and also warns that some customers out there, well, they, may not receive their phones next week as promised. Now, Wolf, do you have an iPhone?

BLITZER: No.

SYLVESTER: Yes, you've stayed away from it now?

BLITZER: I have a good old-fashioned Blackberry.

SYLVESTER: Yes, I think we're so on the Blackberry but eventually --

BLITZER: It works fine. It keeps me informed and I can inform others. Thanks, Lisa Sylvester.

Those relief wells, there are two of them that are being built right now. They're designed to stop the flow of oil once and for all into the Gulf. They're still about two months away, we're told, but what happens after they're finished? Will that really be the end of the spill? We have an expert standing by. Stay with us.

(COMMERCIAL BREAK)

BLITZER: President Obama is putting Ken Feinberg in charge of the new $20 billion fund for the victims of the Gulf oil disaster. He is the same man who oversaw the fund for 9/11 victims. Let's bring in our national security contributor Fran Townsend. I assume you know ken Feinberg. You have met him. He's been around Washington for a long time. I've known him for a long time. He's a highly respected attorney and got the real practical experience in dealing with compensation funds.

FRANCES FRAGOS TOWNSEND, FORMER BUSH HOMELAND SECURITY ADVISER: God bless Ken Feinberg for taking on yet another what seems to be just an impossible task. Ken did an unbelievable job, as you know, Wolf, with the compensation for the 9/11 victims' families. It was a heart wrenching, very difficult process that he brought organization, discipline, and real skill, not to mention, a decent heart too. He is going to have the same if not a more difficult task in this BP fund that he's going to have to administer.

It's -- the administration has tried to make clear that the $20 billion fund that's not a cap. That they may have to come back to BP for more, but Ken Feinberg is going to have a very difficult task about how you allocate funds in the early going understanding that there may be consequences and victims that you have to compensate further down the road.

BLITZER: Yes, he was a long time aide to the late Senator Kennedy and did the 9/11 victims compensation fund. He was the pay czar remember more recently helping to determine the bailed out banks, the executives, how much the CEOs could make there, and now he got this challenge. We wish him success. It sounds like a good plan, but there are plenty of pitfalls out there, aren't there?

TOWNSEND: That's right, Wolf. First of all, we have to figure out. The government is going to have to figure out where are you going to house, what's the agency home out of which Ken Feinberg will work to get administrative support? The case of the 9/11 compensation fund, he worked out of the justice department. Now, obviously, in this instance with the BP oil spill, there's an active criminal investigation. There's probably a civil investigation as well, and so maybe, the justice department isn't the right home.

We don't know yet, the executive branch hasn't said. The other possible place you could put it is the Department of Interior, but when you look at how the mineral service did in this case, maybe the interior hasn't performed so well here, and so maybe that's not the place you want to put it either.

BLITZER: We will see where they put it. All right. Fran, thanks very much.

Getting a handle on the amount of oil spewing into the Gulf that's been extremely difficult these weeks with estimates varying widely and changing almost constantly. The latest revision came yesterday when the government's scientists predicted as much as 60,000 barrels of oil still spewing out every single day. That's a lot higher than the previous estimate.

Let's talk about this with Steven Wereley. He's an associate engineering professor at Purdue University. He's a member of the government's flow rate technical group that came out with this 35 to 60,000 barrel a day estimate. Are you satisfied, professor with that estimate or could it be even more?

STEVEN WERELEY, ASSOC. PROF., MECHANICAL ENGINEERING: Well, first of all, I should say that I am very satisfied with that measurement. I think it's a result of a scientific process, and I got absolutely no sense that politics was involved in it. I think we came to a well reasoned and scientific conclusion.

BLITZER: Because some people went in thinking that it could be 100,000 barrels a day. You were among those, weren't you?

WERELEY: Well, what I said initially was 70,000 barrels a day, and then I looked at this kink point and added another 25,000, but the important thing to remember about that and what other independent experts said in the beginning was that this is oil plus gas, and so roughly 30 percent of the total volume the oil plus gas will actually turn into oil.

BLITZER: So --

WERELEY: Materializes oil.

BLITZER: I was going to say -- let's say it's 60,000 on the high end right now. If they're collecting 15 to 20,000 a day, what still 40,000 spill spewing out, is that right?

WERELEY: That's is correct. I think that math is 100 percent correct. And the reason that we can do this is that the -- the top hat, the cap that's on there now, doesn't exert a whole lot of back pressure on the well. And so we can assume that the -- the flow that's coming out of there today is the same as the flow that was coming out when we measured it on June 3rd.

BLITZER: Here's what the president said today.

Listen to this.

(BEGIN AUDIO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: In the coming days and weeks, these efforts should capture up to 90 percent of the oil that is leaking out of the well.

(END AUDIO CLIP)

BLITZER: Is he -- does he have a solid ground to say that, that 90 percent of the oil that's coming out, in the next few days and weeks, will be capped?

WERELEY: Well, I believe that he or one of the secretaries issued a -- a memorandum to BP saying that they produce a plan to capture 90 percent of the flow by middle of July, I think. Whether that plan is practical or not, I haven't seen the plan, so I can't say. We are talking about capturing a lot of oil. You know, 90 percent of 60,000 is 54,000 barrels a day.

BLITZER: He says that, also, that by later this summer -- Thad Allen says by the first two weeks in August -- one or both of those relief wells will be completed and that will completely the stop the oil from gushing into the Gulf of Mexico.

Is that a -- is that for sure?

Or are there potential problems between now and then in building those two relief wells?

WERELEY: Well, I think -- I mean the -- the petroleum industry has been concentrated on drilling wells, not so concentrated on -- on, you know, capturing -- dealing with the wells that have blown out.

But they have -- the thing that I think they can well is drill wells and hit small targets that are far away. So directional drilling and acoustic imaging. I think that they can do this.

They were initially planning to drill one well and then, at the government's insistence, plan to drill two relief wells. So I think between those two, that they'll hit the target.

BLITZER: And the target -- just to be precise -- is about the size of a dinner plate, is that right?

WERELEY: Yes, yes. That's correct.

BLITZER: So it's not that easy. I mean if you're looking for a needle in a haystack, if you think of the Gulf of Mexico, you're going down thousands and thousands of feet looking for a dinner plate.

WERELEY: Yes. I think the thing to remember about these drilling processes is it's not like your home drill. The drill -- the drill head is -- is a really smart piece of equipment that has different sorts of directional sensors. They can have magnetic sensors on them. They certainly have temperature sensors -- various kinds of sensors.

So I think that they will be able to hit the target.

BLITZER: One -- one expert said to me -- and I don't know if this is overblown or not -- that they're still really concerned about the structural base of this whole operation, if the rocks get moved, this thing could really explode and they're sitting, what, on -- on a billion potential barrels of oil at the bottom of the Gulf of Mexico.

Is that a real concern or is that just out of the question, unrealistic?

WERELEY: Well, I've heard concerns about the structural integrity of the well. In particularly, with the "top kill" -- the attempted "top kill," lots of cement and drilling mud was pumped into the well. And it didn't come shooting back out of the well and yet it didn't stop things.

So there is some conjecture that the -- the casing of the well is -- is faulty at some point. And what that suggests is that a "top kill" in which they -- you try to stop the flow from the top -- isn't going to work and a bottom kill is the way to go, which is what the -- the relief well would be classified as.

BLITZER: So how -- how fearful should we be about the structural integrity of that entire well?

WERELEY: Well, I think -- I doubt that it's degrading at this point. But that if, let's say if we put a big valve on top of the -- the blowout preventer and just turned it shut, that would put a tremendous amount of back pressure onto that casing -- the well casing. And that might be a bad idea at this point.

BLITZER: I suspect it would be.

All right, Steven Wereley, thanks for your expertise.

Thanks for the work you're doing in this operation, as well.

WERELEY: Thank you.

BLITZER:

Republican Congresswoman Michelle Bachmann thinks BP should stand up to President Obama. She'll explain why when she joins CNN's John King right at the top of the hour.

And the head of the U.S. military's Central Command faces a barrage of questions on Afghanistan just one day after fainting while testifying.

(BEGIN AUDIO CLIP) GEN. DAVID PETRAEUS, COMMANDER, U.S. CENTRAL COMMAND: -- in Iraq. Secretary Rumsfeld asked me to...

(END AUDIO CLIP)

(COMMERCIAL BREAK)

BLITZER: As the scope of the oil disaster grew, so did the Obama administration's efforts to try to get out in front. The president himself saw it the first time back on May 2nd with a trip to Louisiana almost two weeks after the Deepwater Horizon rig explosion.

But almost an entire month passed without another presidential appearance and Mr. Obama was criticized for what they said was a lack of leadership on the disaster. What followed was a blitz, shall we say, with Mr. Obama returning to Louisiana on May 28th and then on June 4th. Ten days later, he was back once again, this time touring Mississippi, Alabama and Florida, culminating last night with his first Oval Office address to the nation.

The president has also been criticized for what some see as a lack of emotion.

In his remarks today, he emphasized the human impact.

(BEGIN AUDIO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: During a private conversation with Chairman Svanberg, I emphasized to him that for the families that I met with down in the Gulf, for the small business owners, for the fishermen, for the shrimpers, this is not just a matter of dollars and cents, that a lot of these folks don't have equipment. They were coming off Rita and Katrina, coming off of the worst economy this country has seen since the Great Depression. And this season was going to be the season where they were going to be bouncing back.

And so I emphasized to the chairman that when he's talking to shareholders, when he is in meetings in his boardroom, to keep in mind those individuals, that they are desperate, that some of them, if they don't get relief quickly, may lose businesses that have been in their families for two or three generations.

(END AUDIO CLIP)

BLITZER: All right.

Let's bring in John King.

He's the host of "JOHN KING USA," that's coming up right at the top of the hour, and our CNN senior political analyst, Gloria Borger -- Gloria, did the president make a mistake?

Should he have done the Oval Office address tonight, as opposed to last night, given all the important developments today? GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: We call that Monday morning quarterbacking. If it had been a terrific speech, very well received and all the rest, maybe you'd say no. I think you can play that round or flat.

Look, he said last night that he was going to hold BP accountable and today, he held BP accountable. So if the American public was listening to him last night, they saw today he got the $20 billion escrow fund without a cap, got somebody to administer it. You know, I think, from the White House's point of view, it worked out find.

BLITZER: It was pretty impressive what happened today -- John.

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: You know, today is a sign of progress. For all the skeptics and all the cynics out there, no, they did not solve the biggest problem. The oil is still coming out at a rate that is alarming to all of us. We still don't know how long it will come out. We still don't know about what toxins are in the water.

But today, they did get BP to commit to that $20 billion escrow fund -- another $100 million for the workers who don't work for BP, but who work on those deepwater rigs affected by the president's moratorium. BP will pay that.

BP also said, quieting a political storm here in the United States, perhaps causing them some grief overseas with big investors...

BORGER: Yes.

KING: -- that they also wouldn't pay those dividends.

So from an -- from an accountability and making sure the money is there to help people, today is a big day.

BLITZER: And...

BORGER: Yes...

BLITZER: And the chairman of BP apologized rather robustly.

BORGER: Right. He -- he did. And -- and the president really struggled today to put a human face on this tragedy, that he sat down with the folks at BP and said, look, I'm thinking about the people who earn their livings over the next three months and they are no longer earning a living. And my standard is going to be whether they're happy and whether they're getting reimbursed.

And so, you know, the president said this isn't about me, it isn't about the bureaucracy, it's about the people in the Gulf getting their lives back.

KING: And Mr. Svanberg had a bit of a lost in translation moment, we might call it...

BLITZER: Yes. BORGER: Right.

KING: -- where he talked about the small people. Now, we call them the little people.

BORGER: He sure did.

KING: And we call them the blue collar workers...

BLITZER: Available Americans.

KING: Available Americans, the hard-working people...

BORGER: Yes.

BLITZER: Grassroots America.

KING: -- who work those shrimp boats...

BORGER: Right.

BLITZER: Yes.

KING: You know, who work those oil rigs. A lost in translation moment. There's a lot of buzz about that out there.

BLITZER: I suspect in Swedish, it's small people...

KING: Yes, it's...

BLITZER: -- or whatever.

(CROSSTALK)

BLITZER: It didn't -- it didn't translate as well.

BORGER: And can I say, another thing that's important about what they set up today is that there is an appeals process.

KING: Right.

BORGER: If -- if the czar turns you down, if you lose and you say, you know, I want to get reimbursed and they say -- Ken Feinberg says no, then there's a panel that will adjudicate your claim. So the president was making sure today that people can be heard.

KING: That's right.

BLITZER: Did you see that Jamie Gorelick, the former deputy attorney general during the Clinton administration and 9/11 commissioner, a Washington lawyer, she was there. I think we have some video. She was representing BP in the -- in these meetings over at the White House.

KING: Right. It's a striking photo, because back in our days covering the Clinton White House together, you would see Jamie coming to White House -- to big meetings on big Justice Department issues, big law and order issues you

BLITZER: There she is.

KING: There she is right there.

And now she, of course, is representing a company that is held in very low regard by the people of the United States right now. You know, and so we could make fun of this picture, number one, as she's walking into a meeting among friends; Eric Holder on the other side of the table, a former colleague at the Clinton Justice Department.

Every company, including BP, has the right to good legal counsel. Jamie Gorelick is a good legal counsel. But politically, she's going to get a little grief for that from all her friends in town, you can bet.

BLITZER: Yes. There she is. She's got a good client, BP. And I assume they'll pay her some hefty fees.

BORGER: No dividends. No dividends.

BLITZER: Yes.

All right, guys.

Thanks very much.

John will have a lot more on this story coming up at the top of the hour on "JOHN KING USA".

US casualties in Afghanistan are soaring just a year before withdrawal is scheduled to begin.

So what's going on with the war?

Some tough questions for the head of the U.S. military's Central Command, General David Petraeus.

(COMMERCIAL BREAK)

BLITZER: General David Petraeus was back on Capitol Hill today answering pointed questions about the escalating violence in Afghanistan. The head of the U.S. military's Central Command had to cut his testimony short yesterday, as you will recall, after fainting.

CNN's Lisa Sylvester is joining us now with more on what happened today -- Lisa.

SYLVESTER: Yes, that's right, Wolf.

You know, General David Petraeus, a day after fainting on Capitol Hill, as you mentioned, Wolf, today he was back on his feet. And he said he had just become a little dehydrated. And today, he testified in not one hearing, but two hearings where lawmakers questioned if the U.S. plan for Afghanistan is working.

(BEGIN VIDEOTAPE)

SYLVESTER (voice-over): June, one of the deadliest months for U.S. troops in Afghanistan. Halfway through the month and already 27 U.S. service members killed in Operation Enduring Freedom.

Some Congressional lawmakers worry nine years after the war started, is the U.S. strategy failing?

Senator John McCain questioned the time line laid out by President Obama at a speech at West Point, in which he said July 2011 is when U.S. troops would begin to withdraw from Afghanistan at a rate to be determined then.

SEN. JOHN MCCAIN (R), ARIZONA: I continue to worry a great deal about the message we are sending in the region, about whether we're actually going to stay or not and whether we're going to do what's necessary to succeed rather than set an arbitrary time line.

SYLVESTER: General David Petraeus, commander of U.S. Central Command, backed the president's date, but added if conditions on the ground worsen, the U.S. could adapt. And Petraeus emphasized that's only when the process begins, not an end point.

PETRAEUS: The message that President Obama was conveying at West Point was one of urgency, not that July 2011 is when we race for the exits, reach for the light switch and flip it off.

SYLVESTER: There are 93,000 U.S. troops in Afghanistan and more are scheduled to arrive by the end of August as part of a new surge. But coalition operations have been challenging. There are signs the Taliban is reasserting itself in Marjah and a NATO offensive in Kandahar has been slowed down. The top U.S. commander in Afghanistan, General Stanley McChrystal, wanted to meet with the local leaders first to secure their support.

GEN. STANLEY MCCHRYSTAL, U.S. COMMANDER, AFGHANISTAN: The most important lesson we learned was, as we engage with the population there before, during and after the operation, that's really a critical part of this. It's getting their acceptance before the operation, but then staying with it.

(END VIDEO TAPE)

SYLVESTER: General Petraeus described Afghanistan as a roller coaster, successes and setbacks. But he says the trajectory is generally upward.

The Obama administration has scheduled to do a major review of the war in December -- Wolf.

BLITZER: Let's hope that trajectory is upward.

Thanks very much, Lisa, for that.

Jack Cafferty is next with your e-mail.

Then, a 911 to call reporting Big Foot.

CNN's Jeanne Moos takes a Moost Unusual look.

(COMMERCIAL BREAK)

BLITZER: Let's check back with Jack for The Cafferty File -- Jack.

CAFFERTY: The question this hour is, what would fiscal austerity look like in these here United States?

Gary writes from Arizona: "Water seeks its own level. And those who have not prepared for the worst will suffer the most. It would come down to a simple matter of survival of the fittest. And it would be brutal, since the government has made a habit of propping up the poor with programs that would have to be curtailed. America would clearly become a nation of haves and have-nots. And as a result, there would be chaos and riots unlike anything America has ever seen."

Mark in Houston: "What do I think it would look like? Complete chaos.

Can you imagine people not having the money to buy all those self-serving electronic gadgets used to fill their days? They would be lost. We would have graveyards filled with ex-Tweeters, texters, wi-fiers, etc."

Ron in Seafoam (ph), Washington: "It looks like simply living within one's means. Make it harder for people to get credit. Only purchase what one can afford. No money, no buy. It's not fiscal austerity, it's fiscal responsibility. It's a philosophy that never fails to avoid debt. If we keep on the course we're on, then freezing public sector wages and state spending, cutting jobs, cutting social welfare benefits and cutting state and local budgets just seems like common sense."

R. writes: "I don't know what it would look like to others. I already, though, have been living it for quite some time now. It sounds like we're going down the toilet behind all the other countries."

Frank in Colorado Springs: "Austerity are us. Here in Colorado Springs, we see the ugly face of austerity big time -- streetlights turned off, swimming pools closed, senior citizen centers closed, no maintenance at city parks, no water for the park landscape, everything brown and ugly. We have potholes that require visas to travel through. It is bad here, my friend."

And Roger writes from Pennsylvania: "It's like telling someone who's been blind their whole life what color is like. It's been so long since we've had any fiscal discipline here, we can't comprehend the concept."

If you want to read more on this, go to my blog at CNN.com/caffertyfile.

BLITZER: Excellent idea, Jack.

Thanks very much.

Will do.

Republican Congresswoman Michelle Bachmann tells BP to stand up to the president. She'll explain why when she joins John King right at the top of the hour.

But first, a new chapter in the legend of Big Foot. And it leads to a most unusual 911 call.

Stick around.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: A North Carolina man says he saw Big Foot. And that shocking discovery led to a most unusual 911 tape. Here's CNN's Jeanne Moos.

(BEGIN VIDEO TAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): When self-described mountain man, Tim Peeler (ph), dialed 911, he didn't report a mugger or a burglar.

(BEGIN AUDIO CLIP, COURTESY WCNC)

TIM PEELER: I don't know what it was. He was walking upright like a man.

(END AUDIO CLIP)

MOOS: In his backyard, messing with his dogs.

(BEGIN AUDIO CLIP, COURTESY WCNC)

UNIDENTIFIED FEMALE: OK, what did it look like?

PEELER: It looked like a giant ape with a man's face.

(END AUDIO CLIP)

MOOS: Now we've heard a lot of weird 911 calls, from complaints about fast food...

(BEGIN AUDIO CLIP)

UNIDENTIFIED FEMALE: I asked them four different times to make me a Western barbecue burger.

UNIDENTIFIED FEMALE: Ma'am, we're not going do go down there and enforce your Western bacon cheeseburger.

(END AUDIO CLIP)

MOOS: To a lady looking for a husband.

(BEGIN AUDIO CLIP, COURTESY WCNC)

UNIDENTIFIED FEMALE: I need to get a husband.

UNIDENTIFIED FEMALE: You need to get a husband?

UNIDENTIFIED FEMALE: Yes.

UNIDENTIFIED FEMALE: You're calling 911 to get a husband?

(END AUDIO CLIP)

MOOS: Yes, well, maybe Tim Peeler has got someone for her -- someone tall, dark and awesome.

(BEGIN AUDIO CLIP, COURTESY WCNC)

PEELER: This thing was 10 foot. And he had beautiful hair.

(END AUDIO CLIP)

MOOS: This being rural North Carolina, Mr. Peeler had a gun. But PETA would be proud.

(BEGIN AUDIO CLIP, COURTESY WCNC)

PEELER: I did not shoot...

UNIDENTIFIED FEMALE: OK.

PEELER: -- the thing.

(END AUDIO CLIP)

MOOS (on camera): Tim Peeler called 911 not once, but twice that night. And both times police said it sounded like maybe he had had a few.

(voice-over): It reminds us of the plot from "Harry and The Hendersons."

(BEGIN AUDIO CLIP FROM "HARRY AND THE HENDERSONS," COURTESY AMBLIN ENTERTAINMENT)

UNIDENTIFIED MALE: I want to report a something in my house. It's Big Foot.

Of course, yes. They -- they -- they can be a nuisance.

(END AUDIO CLIP)

MOOS: Actually, the Cleveland County dispatcher refrained from sarcasm. (BEGIN AUDIO CLIP, COURTESY WCNC)

UNIDENTIFIED FEMALE: Was there more than one or just the one?

PEELER: Just the one.

(END AUDIO CLIP)

MOOS: Hey, one is enough.

(BEGIN AUDIO CLIP FROM "HARRY AND THE HENDERSONS," COURTESY AMBLIN ENTERTAINMENT)

UNIDENTIFIED MALE: And I said get away from here.

UNIDENTIFIED MALE: And where is it now, Mr. Henderson?

UNIDENTIFIED MALE: It's in the bathroom.

(END AUDIO CLIP)

MOOS: At least Mr. Peeler's Big Foot never made it that far. Twice he says he scared it back into the woods. This, by the way, is a cheesy simulation.

(on camera): Now, there is one way we would have known for sure whether this guy actually saw Big Foot.

(BEGIN AUDIO CLIP, COURTESY WCNC)

PEELER: Would I get in any trouble if I shot and killed this beast?

UNIDENTIFIED FEMALE: I can't answer that question.

(END AUDIO CLIP)

MOOS (voice-over): We recommend against calling 911 if you're just going to put your foot in your mouth -- your big foot.

(BEGIN AUDIO CLIP, COURTESY WCNC)

PEELER: Get.

(END AUDIO CLIP)

MOOS: Jeanne Moos...

(BEGIN AUDIO CLIP, COURTESY WCNC)

PEELER: Get.

(END AUDIO CLIP)

CNN...

(BEGIN AUDIO CLIP, COURTESY WCNC)

PEELER: And he went right by a patch of that path again.

(END AUDIO CLIP)

MOOS: New York.

(END VIDEO TAPE)

BLITZER: Remember, you can always follow what's going on behind- the-scenes here in THE SITUATION ROOM. I'm on Twitter. You can get my Tweets at Twitter.com/wolfblitzercnn -- wolfblitzercnn all one word.

Thanks very much for watching.

I'm Wolf Blitzer in THE SITUATION ROOM.

"JOHN KING USA" starts right now.