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THE SITUATION ROOM

Conservative Activist Attempts to Dupe CNN; Interview With Sen. Lindsey Graham; President Obama Campaigns in Iowa

Aired September 29, 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: Thanks very much, Jack, for that.

You're in the SITUATION ROOM. Happening now, a controversial conservative activist sets his sights right here on CNN. He tried to dupe one of our special investigations unit correspondents, but she was tipped off, and now, she has the goods on him.

Also, candidates whose resumes fail a fact check with apparently false claims about their backgrounds. Will it cost them on Election Day?

And Senator Lindsey Graham, a conservative, with a rebellious streak, a Republican, who's worked with Democrats and maintains a relationship with President Obama. What's the sense of the frustration in the oval office and on Capitol Hill? We'll talk about that, the Afghan war and much more. This hour, Lindsey Graham is here live.

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

With just 34 days until the midterm election, President Obama is stepping up efforts to stem likely Democratic losses with a campaign style economic road show. There were two stops today including one on formerly friendly turf, that would be Iowa, where Mr. Obama carried 54 percent of the vote back in 2008, but the limping economy has changed sentiments there. A Des Moines Register poll shows 59 percent of Iowans are dissatisfied with the president's handling of the economy.

That's up five points from February. From Iowa, it was on to Richmond, Virginia for day two of the president's events. Our White House Correspondent Dan Lothian is there. Dan, how did it go?

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, I'll tell you White House aides tell me that they like these kind of events because the president is able to have a deeper discussion. More than 30-second sound bites. More than just something that fits on a bumper sticker. Now, this event today had to be moved inside because of the rain. The president working a room of about 35 people trying to energize voters. Some of them not as enthusiastic as they were two years ago.

(BEGIN VIDEOTAPE) LOTHIAN (voice-over): In what looks like a political rewind, President Obama is retracing the steps that led him to the White House.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: It is wonderful to be back.

LOTHIAN: Starting the day in Iowa where he kicked off his campaign in 2007. Ending up in Virginia, where also on the eve of a historic election, then candidate Obama fired up tens of thousands of supporters. But for some voters, overwhelming optimism has given way to deep skepticism, and the president is hearing about coinsurance (ph) up close of the so-called backyard discussions.

MARY STEVENS, IOWA VOTER: I have a 24-year-old son who campaigned fiercely for you and was very inspired by your message of hope.

OBAMA: Yes.

STEVENS: He graduated from Simpson College about a year and a half ago with honors.

OBAMA: Congratulations.

STEVENS: And he's still struggling to find a full-time job.

OBAMA: Right.

STEVENS: And he and many of his friends are struggling. They are losing their hope.

LOTHIAN: The president acknowledged the economy is still pushing against strong head winds, but that his administration efforts will reap results.

OBAMA: We're doing everything we can to grow the economy so that if they got the skills, they're going to be able to find the job in this new economy.

LOTHIAN: Then, there was this woman --

UNIDENTIFIED FEMALE: I have great concerns over your health bill.

LOTHIAN: She cares for her sick mother and peppered the president on Medicare and about medical coverage if her husband loses his job. Six months after the health reform bill became law, there's still uncertainty, and the president tried to tackle each concern point by point.

OBAMA: Insurance companies can no longer drop your coverage when you get sick which was happening.

LOTHIAN: The president and his fellow Democrats realize many Americans are frustrated or downright angry. They're trying to reassure voters ahead of the midterm elections.

DAVID AXELROD, SENIOR ADVISER TO PRES. OBAMA: Obviously, this has been a jarring time for the country, and part of our job is to rally not just Democrats, but to rally the country to move forward. The thing we can't afford is to move back to the same policies that created that disaster, and that's what this election is about.

(END VIDEOTAPE)

LOTHIAN (on-camera): The president has been getting some very tough questions at these events. Many of them about the economy. The White House Deputy spokesman, Bill Burton, saying that the president gets a chance to explain what the administration is doing, and he said to expect additional events like this in the coming weeks -- Wolf.

BLITZER: Thanks very much, Dan Lothian.

The president has now done four of these backyard events in recent weeks which got us wondering how does the White House pick the location? We know (INAUDIBLE) first pick a scenic neighborhood. In the case of the Iowa event, they chose a suburb full of beautiful oak trees. Then, they look for people who have benefited from the administration's policies.

Eight families made the cut, but Jeff and Sandy Club, middle- class parents of two say they were ultimately selected because of their big backyard. They say it was like winning the lottery without even buying a ticket.

There is new controversy swirling around the tea party movement that backed Delaware Senate candidate, Christine O'Donnell, and claims on the resume. CNN's Brian Todd is looking into this story for us. Brian, she's certainly not the only candidate facing this kind of controversial issue.

BRIAN TODD, CNN CORRESPONDENT: She is not, Wolf. A few other prominent candidates this year have gotten caught making false statements about their past. It's raising questions about the vetting process inside campaigns themselves and among those who support them.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: Did you get one?

TODD (voice-over): Delaware's dynamic Republican Senate hopeful again finds herself in battle mode, now brushing back against reports that she misrepresented her education. A LinkedIn profile with her name on it said she'd studied at the University of Oxford, but she never did. She took a course at the Phoenix Institute which has an affiliation with Oxford. An O'Donnell spokeswoman sent an e-mail to CNN on her behalf saying, "I never established a LinkedIn profile or authorized anyone to do so on my behalf."

"I have always been clear about my educational background." But there is another question about her education. Her campaign website from her run for the Senate four years ago said she graduated from New Jersey's Fairly Dickinson University. It turns out the university tells CNN she didn't receive her bachelor's degree until earlier this month, but O'Donnell is hardly alone.

RICHARD BLUMENTHAL, (D) CONNECTICUT SENATE CANDIDATE: On a few occasions, I have misspoken about my service, and I regret that.

TODD: Democratic Senate candidate, Richard Blumenthal from Connecticut repeatedly claimed he'd served in Vietnam when he didn't.

REP. MARK KIRK, (R) ILLINOIS SENATE CANDIDATE: I apologize for those mistakes.

TODD: Illinois Republican Senate hopeful, Mark Kirk, mischaracterized portions of his military records and awards he had won. He later said he simply didn't remember some events correctly and miscommunicated others. Jennifer Duffy of Cook Political Report says this about O'Donnell's problems.

JENNIFER DUFFY, COOK POLITICAL REPORT: The tea party came out of nowhere. There is no organization. There is no hierarchy, so they are backing candidates that they never vetted.

TODD: But what about any lasting damage? I asked CNN senior political editor, Mark Preston.

Do these problems hurt them at the polls right now?

MARK PRESTON, CNN SENIOR POLITICAL EDITOR: You have to look at each race separately. Look at Illinois, the fact that Mark Kirk acknowledged these flubs several months ago. It seems to show that he has gotten over it. That is a very tight race out there, and it's not hurting him right now. Move up to Connecticut, the reason why Linda McMahon is gaining on Blumenthal is not because Blumenthal misstated his Vietnam record.

It's because people are angry at Washington, and she is a very successful businesswoman. And then what can you say about Delaware, in fact, there's a lot of Republicans don't think Christine O'Donnell is a very good candidate whether or not she's misstated her history and her past.

(END VIDEOTAPE)

TODD (on-camera): Questions about backgrounds are not restricted to candidates themselves. In New York, Carl Paladino's GOP gubernatorial campaign is dealing with a report in "The New York Times" that four of these campaign aides were either accused of financial misconducts or had other brushes with the law. We tried to get a comment on that from the Paladino campaign. They said they were working on it but haven't gotten back to us yet -- Wolf.

BLITZER: Do these candidates simply think they can get away with a false -- with all the media scrutiny and other opposition scrutiny that's out there?

TODD: There's a lot of it, and you'd think that they would never go for that kind of thing, but veteran campaign observers say in some cases it's the campaign aides who put out talking points and put things up on websites that the candidates don't even know about. They're the ones who are exaggerating and the candidate sometimes doesn't find out until the damage is done.

But Jennifer Duffy says, look, it's the candidate's responsibility to check all this material because you better believe it's going to be checked by the media. It's going to be found out by somebody.

BLITZER: And certainly the other party is going to find out, too, down the road. That's what they do. Opposition research as called. All right. Brian, thanks very much.

Jack Cafferty is next with the "Cafferty File."

Then, some surprising new developments in some of the most closely watched races around in the United States. We're taking a much closer look at some eye-popping new poll numbers. Our sister publication "Time" magazine, we have this new poll numbers. The White House correspondent for "Time" magazine is standing by to join us.

Also, Republican senator, Lindsey Graham, is closely involved in the Afghan war. Does he support the start of the U.S. withdrawal from Afghanistan next July? What's his take on the emotional stability of President Hamid Karzai? We'll ask him that and a lot more.

Plus, details of the alleged plot by a controversial conservative activist targeting CNN.

(COMMERCIAL BREAK)

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

CAFFERTY: It's no wonder that the tea party is getting the traction that it does. House Democrats voted today to adjourn so they can go home Friday and campaign for the midterm elections. There's no budget. There's no decision on what to do about the Bush tax cuts that expired January 1st. There is no willingness to confront any of the pressing issues they're paid by us to deal with.

You see, our lawmakers are cowards. They don't want to have to vote right before an election. That could be bad for them. To hell with the American people. At the end of the day, it's really all about them, isn't it? They're getting ready to leave town again. They won't be back for five weeks. Before heading out, the House is expected to pass something called a continuing budget resolution to keep the federal government operating through December 3rd.

It's necessary because they never bothered to pass a budget. Didn't even make an effort. Here is the problem, large majorities of Americans disapprove of Congress. Only 1 in 4 trust the federal government to do what's right always or most of the time, but then in the end of the voting booth, something weird happens. They re-elect the same people over and over again, the people who are taking this country right down the drain. This year, there are signs the midterm elections might be particularly brutal for the party in power, the Democrats. Experts think the Republicans have a pretty good chance of picking up the 39 seats needed to get control of the House, and they have an outside chance of getting 10 seats in controlling the Senate. Things are bad for the Democrats all over, but especially in the Midwest.

One Republican pollster says that part of the country will be, quote, "a killing field for the Democrats this year," unquote.

Here's the question, why would you vote for any incumbent? Go to CNN.com/caffertyfile. Post comment on my blog.

BLITZER: Jack, thank you.

Every Wednesday, together with our sister publication "Time" magazine, we release new poll numbers on some key battleground state Senate races, governor races. We got new ones just coming out right now. These are the CNN/Time/Opinion Research Corporation numbers. Joining us is Michael Scherer. He's the White House correspondent for "Time" magazine. Michael, thanks for coming in.

MICHAEL SCHERER, TIME WHITE HOUSE CORRESPONDENT: Thanks, Wolf.

BLITZER: Let's go through four key Senate races starting in Alaska. Right now, likely voters in this new poll, Joe Miller the Republican, 38 percent, Lisa Murkowski who's a write-in candidate the incumbent republican, 36 percent, Scott McAdams, the Democrat, 22 percent, and sampling errors 3 percent. This is basically a tie right now between Lisa Murkowski and Joe Miller.

SCHERER: And no one really expected this when Murkowski threw her hat into the write-in ring. We haven't had a senator elected with the write-in campaign since 1954's Strom Thurmond. This is a real long-shot. How do you spell Murkowski is sort of the question that people are asking themselves in Alaska.

BLITZER: And do they have to actually spell the name correctly or they just say Lisa M.?

SCHERER: There's going to be a liberal interpretation. But yes, I think, you know, they're going to have to figure out how to actually write in, which is very different in just checking a box. The key part if you look at the cross tabs of that poll is that Murkowski is pulling a significant amount of people who identify themselves as moderate, some liberals from the Democratic candidate.

And, you know, the other issue that we have in Alaska is that it's a state that is long used to significant federal aid. Lisa Murkowski is going to run as a candidate who will keep the earmarks and the pork and the federal support coming to Alaska. Joe Miller, he's campaigning on a no earmark, cut the federal government pledge, and so I think a lot of people are going to see their interests.

BLITZER: A real battle shaping up in Alaska. We're going to invite these candidates to join us here in the SITUATION ROOM. Let's go to California right now where all of a sudden the Democrats are looking a little bit better. Barbara Boxer, the long time incumbent 52 percent, Carly Fiorina, 43 percent. Can they rest easy now, the Democrats? Or is it way too early?

SCHERER: It's way too early. It's still wave year. You know, Fiorina still has -- she's outside of government. She's running in anti-government year and anti-incumbent year. I think if you look at the cross tabs of that poll, one of the things you'll see is that Barbara Boxer is far ahead with women. California traditionally is a pro-choice state. Carly Fiorina is a pro-life politician. It could be hurting her. You know, it comes down to election time, women who are used to voting for choice now going to pull (INAUDIBLE)

BLITZER: All right. Let's go to Florida where there is a three- man contest right now. Marco Rubio, the Republican, 42 percent, Charlie Christy, incumbent governor who's running as an independent, 31 percent, and Kendrick Meek, the congressman, 23 percent. That nine-point advantage for Marco Rubio is looking pretty good.

SCHERER: It is looking good. You know, to win this, Charlie Crist has to pull significant supporters from Kendrick Meek, significant supporters from Democratic voters. He's beginning to do that. He's not quite there today. Kendrick Meek has an ad out that's pretty devastating, pointing out -- just running clips of every time Charlie Crist said he was a die-hard conservative, a Republican. He supported Bush. He supported Palin.

BLITZER: And look what's happening in Barack Obama's home state of Illinois in the Senate contest. The Democratic candidate, Alexi Giannoulias 43 percent, Ron Kirk, the Republican, 42 percent, the green party candidate gets 8 percent. But that's a real battle in what normally is a pretty Democratic state.

SCHERER: Basically tied, and the thing I take away from that is the green party candidate is getting 8 percent. This is a candidate who's campaigning on breaking up banks and big corporations in America. He's not really a mainstream candidate by any measure, but both the Republican and the Democrat in that race are upside down when it comes to favorability. The voters in Illinois don't really like either one of them very much. It's not clear who's going to win this one, but it's a lesser of two evils choice right now.

BLITZER: Leslie Alan Jones (ph), he's the green party candidate in Illinois.

SCHERER: That's right.

BLITZER: Wow! These races are shaping up to be fascinating. We'll be back next Wednesday with more results together with "Time" magazine.

SCHERER: Still deciding at the end.

BLITZER: Certainly is, Michael. Thank you.

A tropical storm could cause a lot of problems far away from the tropics. We're going to have an update for you. That's coming up.

And think World War I ended 92 years ago? Well, think again, because it's not over until this weekend. We're going to tell you why. Stay with us here in the SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Kate Bolduan is monitoring some of the other top stories in the SITUATION ROOM right now. Hi, Kate. What's going on?

KATE BOLDUAN, CNN CORRESPONDENT: Hey, Wolf. Military relations between the U.S. and China, well, they are quote "back on track." The Pentagon made that declaration today following U.S. and Chinese defense talks in Beijing. Military relations have been virtually on hold since last January when the Obama administration unveiled a multibillion dollar arms deal with Taiwan. U.S. and Chinese defense officials have scheduled two more meetings, and the Pentagon says it's possible Defense Secretary Robert Gates could eventually visit China.

Tropical storm Nicole, well, she's lost strength over the straits of Florida, but its remnant could bring as much as six inches of rain to parts of the northeast and mid-Atlantic states. Earlier today, the storm drenched South Florida, Jamaica, the Cayman Islands and Cuba. In Jamaica, one person was killed and five are missing after a house collapsed.

And as strange as this sounds, I'm not making it up, people, World War I officially ends in just four days. Yes, well, the military conflict between Germany and the allies ended 92 years ago, the financial penalties imposed on Germany for starting the war are still unsettled. The country still owes $95 million in reparations. The final payment is due Sunday. Most of the money will go to individual pension funds and companies holding debt bonds. So, break out the checkbook.

Now, take a look at this, two pee-wee football teams in Texas say they're being unfairly punished for this mayhem. Look at this video. Remember, this is pee-wee football, folks. Two weeks ago, coaches from opposing teams went at it trading punches on the field. Several people were suspended, two were banned from coaching for life. Both teams were also barred from the playoffs. Just take a look at that video.

But players and parents, well, they say this isn't fair, because the players are now being punished for the behavior of the coaches. League officials will be asked tonight to let the teams into the playoffs. Wolf, they were 11 and 12 years old, and that's the kind of mayhem that broke out.

BLITZER: The great example of these adults are showing for the kids. Oh, my God. Terrible.

BOLDUAN: Oh my gosh.

BLITZER: All right. Thanks very much, Kate, for that. An alleged plot by a conservative activist to lure a CNN investigative correspondent on to this boat and embarrass her and the network. We have details of what he had planned.

Plus, Republican Senator Lindsey Graham is here in the SITUATION ROOM. He's walking in. We're going to talk about the frustration in Washington, on Capitol Hill. Senator Graham and me, we're next.

SEN. LINDSEY GRAHAM, (R) SOUTH CAROLINA: Absolutely. Stay tune.

(COMMERCIAL BREAK)

BLITZER: We're back here in the SITUATION ROOM with Senator Lindsey Graham, Republican of South Carolina. Here are five things you should know about our guest.

(BEGIN VIDEOTAPE)

BLITZER (voice-over): He's a conservative with a rebellious streak. Graham is a critic of President Obama's health care reform plan, but he was the only Republican on the Senate Judiciary Committee to support Obama's Supreme Court nominee, Elena Kagan. Graham as a reputation as a Republican willing to buck the party line.

He's been in a gang. In 2005, Graham joined an influential and bipartisan group of senators, the so-called Gang of 14 brokered a compromise that ended a bitter stalemate over President Bush's judicial nominees. He got connections. Graham has teamed up with some of the biggest names in the Senate on major legislation, including Democrats. He's especially close with fellow Republican John McCain.

GRAHAM: John McCain has lived the American dream.

BLITZER: And backed both his presidential bids. He's worn the uniform.

GRAHAM: I was stationed in Baghdad.

BLITZER: Graham is an air force reservist. And in recent years, he did brief stints in Iraq and in Afghanistan. He played a role in Obama's wars. The new Bob Woodward book portrays Graham as a central figure in creating and carrying out President Obama's Afghanistan policy.

(END VIDEOTAPE)

BLITZER (on-camera): And Republican Senator Lindsey Graham is here in the SITUATION ROOM. Senator, welcome.

GRAHAM: Well, that's pretty impressive.

BLITZER: If you say so yourself.

GRAHAM: I've aged.

BLITZER: All right. Let's talk a little bit about some of these issues, this poisonous atmosphere in Washington right now.

GRAHAM: Yes.

BLITZER: You've been in Washington a long time. Have you ever experienced this level of, I want to use the word hatred?

GRAHAM: Well, impeachment was close, but this is good that we leave. It's good that we get out --

BLITZER: Impeachment effort against Bill Clinton.

GRAHAM: Yes. That was very contentious obviously, but it's good that we're getting out of town and have an election and come back and say if we can move forward.

BLITZER: Do you think you can?

GRAHAM: Well, we need to. The alternative of keep doing nothing is devastating to the country. Yes, I'm an optimist. I think the new people come in to Congress on the Republican side, they're doing well mainly because the Democrats are doing poorly. Half of the people voting for Republican say they want to check the Democrats, and I think that's why we're doing well. Checks and the balances are missing, but once we get back into power or close to power, I hope we'll be constructive.

BLITZER: Bob Woodward in this new book, there's a lot written about you and the role that you've played, really, as an informal adviser to the president, to his chief of staff, Rahm Emanuel, to General Petraeus, the U.S. military commander there, in the book, you're quoted by Biden as saying Lindsey Graham has the best instincts in the Senate. Joe Biden and Obama agreed by Bob Woodward said.

GRAHAM: Well, that's like being the tallest short person. I don't know what you get for. That's very nice. This is not Obama's war. It's America's war. And I told the president that right before he got sworn in that I would do everything I could to help him and our troops succeed in a war that we can't afford to lose. I said that then. I mean it now.

We have differences, but when it comes to national security, I would like to be seen as someone who can help the president, vice president and General Petraeus, because these young men and women deserve politicians working together for their common interests.

BLITZER: Because even from day one of the Obama administration and even before day one of the Obama administration when Biden went over there before he became vice president, he asked you to go along. Here's the question on what's going on in Afghanistan right now. Do you support the president's decision to at least begin the withdrawal process next July?

GRAHAM: I share the goal of transitioning as soon as possible, but the way he's done it, I think, has created an impediment. Announcing we're going to leave next July no matter what probably emboldens the enemy. BLITZER: He didn't say completely leave --

GRAHAM: We're going to start to leave, but that's a signal to the enemy that we're not going to stay. But here's what I think could be achieved. By next summer, I think we can transition to Afghan control in certain parts of Afghanistan and maybe bring some troops home. I think that's possible, given the progress I've seen. I wish he would back off of the idea that we're leaving in July no matter what.

But having said that, I think it's possible to transition in some areas.

BLITZER: You say it's getting better, but a lot of people think it's getting worse.

GRAHAM: There's parts. It is getting worse in some areas, but I've seen progress I've never seen before. We've got a chance to break through on corruption. We've got three cases that are pending. If they could go to trial, it would be a cultural change.

We've been clear. Holding and building requires better governance, and that means the Afghanis have to do their part, and the Pakistani government has got to help us with safe havens. It's frustrating to go to Afghanistan and know 30 kilometers across the border the Taliban are roaming around in a Pakistan village with impunity. That's got to change.

BLITZER: Woodward in the book portrays Hamid Karzai, the president, as erratic, unstable, on medication. You've met him how many times?

GRAHAM: Dozens of times.

BLITZER: When you're in meetings with Hamid Karzai does he come across as erratic to you?

GRAHAM: No. I mean, if you're not worried about what's going on in Afghanistan as president, there's something wrong with you. But I do believe he is our partner. He was elected by his people in an imperfect election, and he and General Petraeus seem to have a good bond going here, and I see progress with President Karzai in my last meeting I hadn't seen before.

So time will tell. He's got to step it up, Wolf. I mean, we've got to take the fight to the enemy. There's no ability to detain an insurgent as a national security threat in Afghanistan. We had that ability in Iraq. He's got to get all in on corruption. And he's right about Pakistan, and quite frankly, our contracting practices have undermined the Afghan government. So there are things on our side we can do to help him.

BLITZER: When you say Pakistan, is the Pakistani military intelligence service part of the solution or part of the problem?

GRAHAM: Both. They're taking casualties. They've taken the fight to the enemy in the frontier regions, but the ISI is double dealing. And part of it is they don't know if we're going to leave or stay. I think it will serve the president well to let everyone in the region know that our goal is to get it right in Afghanistan. History will judge him not by the he left, but by what he left behind.

BLITZER: Are you still talking to the president and Rahm Emanuel?

GRAHAM: Yes. Yes, I mean, why not? I mean, we've got young men and women who literally get shot at as we speak. It is inconceivable for me that the partisan politics that exist in Washington continue to affect world policy. I don't want to do in Afghanistan what we did in Iraq.

BLITZER: Well, let me switch gears briefly. Your colleague in South Carolina, Jim DeMint, he's threatening to hold up almost everything unless he clears it right now. He's getting some grief not just from Democrats, but even from some Republicans. Are you with Jim -- Jim DeMint on this?

GRAHAM: Well, he's getting a lot of support from the people out there who are tired of the status quo. Jim has brought a new energy, and he's recruited some candidates who I think will change the status quo, and all in all, I think Jim is doing a good job of getting our party back to its fiscal conservatism.

But if we do get power up here, if we do make gains, what are we going to do with it? The American people are wanting checks and balances that are missing, but our party is in poor standing with the American people. We have to improve our image, and that to me is something we haven't addressed yet.

BLITZER: Are you ready to work with the Democrats on immigration reform?

GRAHAM: Yes, I'm ready to solve the problem -- the immigration problem once and for all. Start with securing the border, and if I'm not willing to work on immigration reform? Why am I up here? Because it's a huge problem for the country. Start with border security. I'm willing to do anything that makes America stronger as long as I get something for it.

BLITZER: Lindsey Graham is the Republican senator from South Carolina, one of two Republican senators from South Carolina. Senator, thanks for coming in.

GRAHAM: Thank you, Wolf.

BLITZER: Good luck to you.

GRAHAM: God bless.

BLITZER: We're getting new information about a deadly bus crash. It's a story still unfolding right now. Stand by. New details coming in. And this notorious undercover sting thrust him into the headlines, but wait until you hear what this conservative activist tried to pull over on CNN's Abbie Boudreau.

(COMMERCIAL BREAK)

BLITZER: Kate Bolduan is monitoring some of the other top stories in THE SITUATION ROOM right now.

Hi, Kate.

KATE BOLDUAN, CNN CORRESPONDENT: Hey, Wolf.

Getting an update on that story we were following earlier today, a deadly bus crash today in Montgomery County, Maryland. The bus reportedly drove off a ramp and careened down a steep embankment. One person is dead, and eight people are seriously injured. Crews had to bring out the Jaws of Life to get victims off the bus. We'll keep you updated with more information as it becomes available.

Treasury Secretary Tim Geithner and Secretary of State Hillary Clinton have announced new sanctions against top Iranian officials. The sanctions are spelled out in an executive order signed by President Obama, and they single out eight officials the administration claims are responsible for severe human rights abuses against Iranian citizens, including torture, rape and murder. Today's order will block their assets and bar U.S. citizens from doing business with them.

The Pakistani-American man accused of trying to plant a bomb in Times Square allegedly planned a second bombing in New York two weeks after the failed attack. That's according to documents filed today in federal court today. Prosecutors also claimed Faisal Shahzad told investigators he studied pedestrian volume in Times Square on live webcams before the botched bombing to maximize casualties.

And check this out. Imagine that happening in the middle of New York City? FBI video right there just released today shows just how devastating that attack could have been. This summer, authorities conducted a controlled detonation of a car bomb just like the one they said Shahzad tried to set of. They set off the explosion in Pennsylvania to calculate the impact of the botched attack.

And Adam Gadahn, the American turned al Qaeda spokesman is speaking out against Afghanistan and Pakistan in a new videotape. He says both governments are serving only U.S. interests, not the interests of the local Muslim population. CNN has not independently verified the authenticity of the seven-minute video that was posted on Web sites known to carry similar messages in the past -- Wolf.

BLITZER: Thanks very much, Kate, for that.

He's famous for his undercover stings targeting liberals and Democrats. Now this conservative activist has set his sights on CNN's Abbie Boudreau. Details of what he tries to pull over on our special investigations unit. That's coming up. Plus, a follow-up to this notorious tennis brawl. One of these people has now been arrested. CNN's Jeanne Moos takes a "Most Unusual Look."

(COMMERCIAL BREAK)

BLITZER: He's most widely known for pretending to be a pimp in an undercover sting video. Now conservative activist James O'Keefe is back in the headlines, this time for trying to embarrass CNN.

But before we tell you about that, here's a brief reminder of O'Keefe's previous antics. Last year, he and a fellow activist posed as a pimp and prostitute while secretly taping employees of the community organizing group ACORN. The tape appeared to show ACORN workers giving O'Keefe advice on setting up brothels and evading taxes.

Prosecutors eventually found no wrongdoing on the part of ACORN, but the scandal essentially destroyed the organization.

O'Keefe's next target was Democratic Senator Mary Landrieu of Louisiana. His crew gained access to her office by posing as telephone repairmen. O'Keefe pleaded guilty to a misdemeanor charge and is now on probation.

Which brings us to his latest botched project: trying to punk CNN special investigations unit Abbie Boudreau. Abbie is joining us in THE SITUATION ROOM with more. How did all this unfold, Abbie?

ABBIE BOUDREAU, CNN CORRESPONDENT: Well, Wolf, it all started when I got a phone call from James O'Keefe. He was actually part of an upcoming shoot that we were covering for a documentary we are working on right now. And he had concerns about CNN being there, so he asked me to meet him and his colleague, Izzy Santa, at his office in Maryland. And he wanted me to come alone.

That's when this project took a very strange turn, but luckily, I had a flip cam with me, so when I left the so-called meeting, I turned the camera on and explained everything that had just happened.

(BEGIN VIDEOTAPE)

BOUDREAU (voice-over): When I pulled up to the property, Izzy was waiting for me.

(on camera) She said, "I need to talk to you. Can I get in the car?"

And I was like, "OK." So I noticed that she had like a little bit of dirt on her face. Her lip was shaking. She seemed really uncomfortable. And I asked her if she was OK.

And the first thing that she basically said to me was, "I'm not recording you. I'm not recording you. Are you recording me?"

And I was, "No." And she says, "I need to tell you something."

So I said, "OK, is everything OK? You're making me nervous."

She said, "No. No, not everything. Everything is not OK. I -- I'm a moral person. I need to tell you something."

Well, what is about to happen? "Tell me what is going on."

And she said, "You're about to be punked."

(voice-over) Izzy told me the plan was to bring me close to the dock and then ask me if I would consent to having my meeting with James recorded on an audio recorder. If I said yes, she would get me on the boat, where James was waiting and where hidden video cameras were rolling.

(on camera) "Why is the goal to get me on the boat?"

She said, "Because on the boat, he's going to be there, dressed up, and he's going to have strawberries and champagne waiting for you. And he was going the hit on you the whole time."

(voice-over) She said the sole purpose of the punk was to embarrass me and CNN. I went to the back yard to see the boat for myself and to try to meet James. But he didn't get off of the boat, so I walked back to my car.

Then right before I left, James walked up to me and explained that it would make him feel more comfortable if the so-called interview were recorded.

(on camera) "That's not something I'm comfortable with, is to have this conversation recorded, plus, it's not an interview. I mean, we're -- I'm just here to try to address your concerns about this upcoming shoot, but you ended up wanting me to come all the way out here. You told me you were going to be at your office and instead, you want me to come on some boat with you, and -- and you want it to be recorded. Those are ground rules you should have said over the phone, and you didn't."

And he said, "Well, what are you ashamed of?"

And that's when I said, "All right. This is where the conversation ends." And I said to him, "It was a pleasure."

(END VIDEOTAPE)

BOUDREAU: We soon found out that there was an elaborate 13-page document that outlines the plan to punk CNN. It's called the "CNN Caper Document." And it's split up into two parts. The first section is about how to trick CNN into reporting a false story, either about Sarah Palin or the Tea Party.

Then the plan was to give FOX News a heads up that we were about to report a fake story so FOX could then undercut -- and that's a quote -- undercut CNN's credibility.

And the second part of the plan was how to punk me by seducing me on his boat. The document says that the boat would be staged with sexual props, a blindfold, fuzzy handcuffs, pornographic magazines and much, much more.

And Wolf, just to be clear, James' mentor and fellow activist is listed as the writer of the "CNN Caper Document." James is listed as the activist. He's the one who would have acted out the punk.

And James did e-mail us a statement to CNN about the "Caper Document." He says, quote, "That is not my work product. When it was sent to me, I immediately found certain elements highly objectionable and inappropriate and did not consider them for one minute following it," but we would learn that does not appear to be true. We have a series of e-mails, audio recordings and other documentation we're told show his true intentions, and all of that will be revealed in the documentary that airs on Saturday.

BLITZER: Did he ever say anything to you, directly, Abbie, about wanting to go with you on this boat?

BOUDREAU: No, he said nothing about a boat. I thought we were meeting at -- like, at his office or maybe out for lunch. If he would have told me anything about a meeting that was supposed to be scheduled on a boat, I would not -- I would not have felt comfortable going. The only reason I went in the first place was to ease his concerns about an upcoming shoot -- Wolf.

BLITZER: How does all of this impact your documentary?

BOUDREAU: Well, this is a very small part of the documentary. I mean, the documentary as a whole is about a growing movement of young conservatives, people with an idea and a video camera. And they say that they're frustrated with the mainstream media, so they're using social media to get their message out. And we are committed to staying true to the original premise of the documentary.

And Wolf, whether you agree or disagree with their viewpoints, you have to respect their passion. These are passionate young people, and that will shine through in the documentary.

BLITZER: This must have shaken you up a little bit. I'm sure it did.

BOUDREAU: Yes. I mean, obviously, as a reporter, you don't -- you're not quite prepared for something like this, and it has been difficult to kind of understand exactly what was this about and why was I the target of something like this? But we have been able to make sense out of this over the past several weeks, and we'll reveal all of that in the documentary.

BLITZER: Looking forward to it. Abbie, thanks for your excellent, excellent work. Very, very good work from Abbie Boudreau and her team. They always do it for us.

Why would you vote for any incumbent? Jack Cafferty has your e- mails.

And a huge brawl at a sporting event known for its reserved crowd. That "Most Unusual" moment at the U.S. Open, just ahead.

(COMMERCIAL BREAK)

BLITZER: Just getting a statement in from the Jimmy Carter Center, Metro Health Hospital, in Cleveland. Former President Carter's continuing to recover from the stomach distress that was reported earlier. His medical team at Metro Health Medical Center has determined that the likely cause was a viral infection that is now clearing up. We wish the former president only the best of a speedy recovery.

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

JACK CAFFERTY, CNN ANCHOR: The question this hour is "Why would you vote for any incumbent in the upcoming midterms?"

Wilhelm writes, "Because in some cases, the challenger is completely unacceptable. Out here in the Nevada Senate race, the alternative to Harry Reid," which is the Tea Party Republican Sharron Angle, "is just plain nuts and wants to take away Social Security and Medicare that I paid into my whole working life. For a senior like me, that would be like a chicken voting for Colonel Sanders."

Don in Wisconsin writes, "Because they voted the way I wanted them to on the majority of issues. Democrats got health care passed (not a perfect bill, but a great start, long overdue), financial reform, et cetera."

Bob in Kansas City, "Because the incumbent would be the lesser of two evils, given some of the nut cases who are managing to get on the ballots in various parts of the country."

Loren writes, "I don't think there are any incumbents running in Illinois. They've either all been indicted or are in prison. And if they're not, they should be."

Jon writes, "Vote for someone new, and next election that person will be an incumbent. It's a stupid way to focus on this stuff. Vote for the best candidate, period. If the person running is a lunatic, should I vote for her just because the alternative is an incumbent?"

Bill writes, "Better to vote for a career politician or a wannabe career politician? Is there a difference? None of the above needs to be among the ballot choices. I sense the right type of individual for these jobs is either too smart to want it, unelectable or both."

Dave in Orlando writes, "OK, I give up, why would you?"

And Keith in Ohio, "Is this a trick question? There needs to be another lever for the voters to use in the election. That would be 'flush'."

If you want to read more on this, you'll find it on my blog, CNN.com/CaffertyFile.

BLITZER: See you tomorrow, Jack, thank you.

A new development on the fierce battle over at the U.S. Open, and Jeanne Moos is next.

(COMMERCIAL BREAK)

BLITZER: An new arrest coming from a "Most Unusual" fight you may have seen earlier this month at the U.S. Open. Here's CNN's Jeanne Moos.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): There are tennis balls, and there are tennis brawls.

UNIDENTIFIED MALE: Oh, my God!

MOOS: And this tennis brawl a few weeks ago at the U.S. Open, captured from every angle, set off a chain of events that finally resulted in this guy's arrest. The fight started after a woman and her 75-year-old dad got mad at New Yorker Joey Pedevill for apparently cursing and talking loudly during the match.

They argued. She slapped him. Joey managed to restrain himself physically. But not verbally.

UNIDENTIFIED FEMALE: Shut up!

JOEY PEDEVILL, SPECTATOR: I don't give a (EXPLETIVE DELETED) what anyone wants! I got a lot of money on the game. I'm going to (EXPLETIVE DELETED) pay my ticket.

UNIDENTIFIED FEMALE: Then go watch in a bar.

MOOS (on camera): This at a sporting event where the most commonly-heard "F" word is usually "fault."

(voice-over) The argument escalated. Then the dad went after Joey.

UNIDENTIFIED MALE: Hey, security!

MOOS: The fight ended when security finally arrived. Joey was escorted out. The crowd cheered. Joey returned the favor with his fingers. The cell phone videos became YouTube hits.

UNIDENTIFIED MALE: It's great. You got to see this video.

MOOS: End of story? Not quite.

(on camera) Well, now Joey Pedevill has been arrested for allegedly threatening to kill a neighbor who called him a nut.

(voice-over) To be more exact, "This guy's an insane nut" was the quote the neighbor gave to "The New York Post" after the tennis brawl. We tried to talk to Joey but couldn't find him.

(on camera) The neighbor already had a restraining order out against Joey. The two had been feuding for months.

(voice-over) The "insane nut" quote got Joey so mad, the complaint alleges, he called the neighbor a blanking so-and-so and said, "You are going to get it. I'm going to kill you."

But what won't die is the video of the brawl. One YouTuber synchronized three different angles. He even added a fourth view when the match halted as even the players watched the fight. For a genteel sport, this was quite the volley.

UNIDENTIFIED MALE: What the hell is wrong with people? But you know, I actually enjoyed it. That's the first time I've ever enjoyed the U.S. Open and tennis.

MOOS: Jeanne Moos...

UNIDENTIFIED FEMALE: Security!

MOOS: ... CNN...

UNIDENTIFIED MALE: They've got to start this on golf now.

MOOS: ... New York.

(END VIDEOTAPE)

BLITZER: Remember, you can always follow what's going on in THE SITUATION ROOM. I'm on Twitter. You can get my tweets at Twitter.com/WolfBlitzerCNN, @WolfBlitzerCNN, all one word.

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That's it for me. I'm Wolf Blitzer in THE SITUATION ROOM.

"JOHN KING USA" starts right now.