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THE SITUATION ROOM

Interview With Twitter Co-Founder; Massive Child Prostitution Bust; Democrats' Leadership Fight

Aired November 9, 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: But we begin with a shocking report on a massive cross-country takedown of child prostitution rings. It involves hundreds of arrests in dozens of cities across the United States. Dozens of children have now been recovered from predators.

Brian Todd has been digging into the story for us.

Brian, what is going on?

BRIAN TODD, CNN CORRESPONDENT: Wolf, what is shocking is the sheer scope of all of this.

We tend to think of child prostitution as isolated, here and there, but the rings that just got busted speak to a horrifying scope. FBI, state and local officials have just rescued child prostitutes -- take a look at this -- in more than 20 American cities coast-to-coast, and to make this more jarring, they have hard, dispassionate statistics for categories like this, the cities with the highest concentration of pimps for child prostitutes.

Now, just in the latest operation, 10 pimps arrested in Detroit, nine in Portland, Oregon, seven each in L.A., San Francisco, and in Seattle. Even hardened FBI officials are taken aback by the sheer extent of this.

(BEGIN VIDEOTAPE)

TODD (voice-over): One FBI official says it is unconscionable that this is happening on American streets. Prostitution rings that have been busted in a recent three-day span have recovered about 70 children. Nearly 900 people have been arrested, including adult prostitutes and nearly 100 pimps.

As if the scope is not jarring enough, FBI officials tell us these rings are loosely affiliated moving from city to city. This is video of a previous round of FBI sting operations in a long-running law enforcement effort to rescue child prostitutes.

(on camera): Where do they prey on these kids?

KEVIN PERKINS, FBI ASSISTANT DIRECTOR: They find them. They're runaways, bus stations, places where kids congregate, where disaffected kids can go and try to be a part of group, and these people are predators. They look for the stragglers. They look for the ones at the edge of the pack who are looking for some type of need. They need to belong. They need fit in. And these predators find them.

TODD (voice-over): Then, experts say, comes the lure of phony stability. That is why runaways are a favored target.

COLETTE BERCU, ANTI-TRAFFICKING ACTIVIST: They are really easier to manipulate. It's like, yes, come to my house. I will give you some food. I will give you somewhere to stay. Next thing you know, that's not free.

TODD: Children saved in this operation are as young as 12. Some young prostitutes are immigrants preyed on by members of their own communities.

In a separate roundup, federal authorities arrested dozens of people from Somali gangs accused of trafficking underage Somali and African-American girls into a prostitution ring. They transported the girls from the large Somali community around Minneapolis, officials say, to Nashville, Tennessee, and they did this over a 10-year period.

(on camera): Part of the shock of this is to realize that there is a market for this kind of thing. How big is that market?

PERKINS: There is a significant market out there for it. As we see, as our intelligence tells us, over the course -- we have done five of these operations since 2008. There will be more.

(END VIDEOTAPE)

TODD: Some child prostitutes are murdered or just disappear, and in many cases, it goes unreported. Why? The FBI's Kevin Perkins says many of the victimized children come from dysfunctional backgrounds where no one knows they are missing to begin with -- Wolf.

BLITZER: What happens now, Brian, to these kids who have been rescued?

TODD: Most, if not all of them, are turned over to social agencies, those safety nets that are out there in each state, but FBI officials tell us that the resources there are scant, because many of those agencies just don't have the know-how to deal with the specific experience of being a child prostitute. It is kind of a relatively new phenomenon at least to deal with in a broad sense, so a lot of these social networks are not really that well equipped to deal with it. It is a real challenge out there.

BLITZER: It's a huge, huge series of arrests, 1,000 people.

(CROSSTALK)

TODD: That's right.

BLITZER: Brian, thanks very much for that report.

They lost dozens of seats in the midterm elections. Now after their devastating defeat, Democrats in the House of Representatives are battling among themselves for key leadership roles. Our senior congressional correspondent, Dana Bash, is here looking into this for us.

The House -- the outgoing House speaker, Nancy Pelosi, she is getting involved in what is increasingly becoming a rather bitter battle for number two among the Democrats in the House.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Yes, very interesting. Multiple Democratic sources tell us that Nancy Pelosi is now involved knee-deep in this and she's trying to broker some kind of compromise between those two, Steny Hoyer and James Clyburn, who are battling to be what will effectively be her number two.

Unclear exactly where these talks are going, but a source close to her says the speaker and everyone else thinks it is a good idea to settle this quickly. Wolf, I'm told that there are lots of options out there. One had been that maybe one, maybe the one who said that he has the most votes and can prove it, would be the number two. The other would take a number-three slot.

Other Democrats are saying one other possibility is figuring out something maybe unorthodox, so that they could have equal footing somehow. It would be hard to do, but remember, this is actually occurring, this fight is occurring for the number-two slot because Pelosi surprised a lot of people and said that she was going to stay on as Democratic leader.

That is why we are having this battle, because one member of the Democratic leadership is being squeezed out because they're moving to the minority.

BLITZER: And if she had decided not to seek the minority leadership, Nancy Pelosi, was it just a foregone conclusion that Steny Hoyer would be the Democratic leader?

BASH: Steny Hoyer -- they were very careful not to say anything even close to on the record, but the answer is yes. That was a foregone conclusion that he would move up, and that James Clyburn, who is currently the Democratic whip, the guy in charge of counting the votes, would move up to that slot.

Very interesting though that Clyburn, a source close to him is telling me, look, if this involves squeezing anybody else out of the leadership, he doesn't want to have any part of it. And that is a possibility if they work out a number two and number three...

(CROSSTALK)

BLITZER: The Congressional Black Caucus has endorsed Clyburn, who is a member of the Congressional Black Caucus.

BASH: Absolutely.

And this is something that happened late today. And I will read you the statement that they put out. The Congressional Black Caucus said: "It is vitally important that we have leadership team in place that recognizes and reflects the strength and diversity of both the Democratic Caucus and our great nation."

Now, what is interesting about this, Wolf, is not only are they making the play to endorse James Clyburn. They are saying that this whole idea of brokering something before a vote is not OK with them. They want the caucus to have a vote.

Another interesting dynamic when it comes to this is that we have to remember that James Clyburn is the highest-ranking African-American in all of Congress. That has not really been a public issue in this battle between Clyburn and Hoyer until now. Now more and more Clyburn sources are reminding us of that and also saying remember in a lot of these marginal districts, it is the black vote that tends to matter and determines winning vs. losing, so keeping somebody like that in place is important for Democrats.

BLITZER: If you're a Democrat, does it really make a difference who the number-two leader in the House of Representatives is as a minority leader?

BASH: It's a good question.

If you are a Democratic who was very active and very upset about what happened in the House about your party getting trounced, perhaps it is important, because it says a lot potentially about the state and the fate of the party. You have Nancy Pelosi who is all but certain to be in the leadership.

And those who are backing Steny Hoyer say he is a mainstream Democrat, but he is somebody who has the ear of the moderates, the sensibility of the moderates, and that he could provide a more, you know, balance to Nancy Pelosi, if you will. But then of course you have the Clyburn issue, who says, look, I'm a Southern conservative, too.

And again it is becoming more and more of an issue today. They underscore he is African-American, the top one in the Congress. You don't want to lower...

(CROSSTALK)

BLITZER: A bitter battle for number two. I wonder if these two guys were sort of hoping Nancy Pelosi would retire gracefully, but that is not happening. She wants to be the leader.

BASH: I think that, privately, that might have been a hope.

BLITZER: Yes.

All right, thanks very much, Dana, for that.

Paying for unemployment benefits is on Jack Cafferty's mind right now. He's here with "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: California is borrowing $40 million a day from the federal government to pay unemployment benefits.

That means that California is borrowing $40 million a day from you and me to pay unemployment benefits in California.

"The Los Angeles Times" reports the state will have a $362 million bill for interest alone on a total debt of $10 billion by next fall.

Thanks to the recession and poor management, California is an economic disaster zone, with one in every eight workers unemployed. More than 1.2 million Californians have lost their jobs since the start of the recession, and they're staying out of work for longer periods of time. There aren't a lot of jobs around.

Plus, in 2001, state lawmakers nearly doubled the unemployment benefit levels, but didn't raise taxes. That was smart.

The result of all of that is that California keeps borrowing from the federal government, and eventually employers could face a steep hike in their unemployment taxes.

California is not alone here -- 32 states in total are borrowing from the federal government to pay unemployment benefits. The total is $41 billion. Some of these states are asking the feds for a deferral on repaying the loans until the economy improves.

The solution to this all of this is fairly fundamental: You have to either increase contributions or decrease benefits, or both. How would you like bet neither one happens?

Here's the question: Should California borrow $40 million a day from the federal government to pay unemployment benefits?

Go to CNN.com/caffertyfile. Post a comment on my blog.

BLITZER: All right, Jack, thank you.

It certainly has changed the face of politics and the way many of us connect. We're talking about Twitter. The co-founder of the Twitter, Biz Stone, he is here in THE SITUATION ROOM. We are going to talk about Twitter's impact, what is going on. Is he getting ready to become a billionaire himself?

Also, the mysterious launch that lit up the twilight sky over California. Was it a missile?

And a crippled cruise ship adrift and without power for a time, no toilets, no air conditioning, for the 4,000 people on board now a dramatic rescue effort.

(COMMERCIAL BREAK)

BLITZER: A lot of volcanic ash apparently poses a threat to Air Force One and that is forcing President Obama to shorten his visit to Indonesia by a few hours, the country where he lived for four years as a child.

The president will leave two hours earlier than planned, but he will still speak at the University of Indonesia, before moving on to South Korea and the G20 summit.

While the president is cutting this trip short, last spring, he twice had to call off his visit to Indonesia entirely.

The first time, our White House correspondent Suzanne Malveaux was already on the ground and was able to dig into the president's background -- Suzanne.

(BEGIN VIDEOTAPE)

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Hey, Wolf, you may recall in March I was traveling ahead of the president to Indonesia before he canceled the trip. So I got a chance to visit his old neighborhood, talk with those who knew him. And I learned a lot what I didn't know about the president.

First of all, he loved to eat. He was a big kid in elementary school. He stood out and got teased a bit for it, but he also liked to tease back. And he adopted some of the local customs in Indonesia, like having small crocodiles for pets, spending hours flying kites. And the Indonesians really see him as a son, one of their own.

(voice-over): When Barack Obama lived in Jakarta, Indonesia, he was Barry Soetoro, the big kid with a big smile, always running around with the neighborhood boys.

INDRA MADEWA, CHILDHOOD FRIEND: Running and bicycle.

MALVEAUX: Indra Madewa was his friend who lived around the corner from Obama's first home.

MADEWA: Barry was a very energetic boy.

MALVEAUX (on camera): Energetic?

(voice-over): Obama's first house in Jakarta, where he lived for three years, is largely hidden behind concrete.

(on camera): And they're paving the street now?

UNIDENTIFIED MALE: Yes. I think --

MALVEAUX: His home.

UNIDENTIFIED MALE: The street is --

MALVEAUX: For his arrival, yes?

UNIDENTIFIED MALE: I think so.

MALVEAUX (voice-over): Yes. For the last 40 years, a dirt road leading to Obama's home. Now, a makeover, with friendly neighbors eager to see the 6-year-old who grew up to become the American president.

Just down the street is Obama's first elementary school, a Catholic school, St. Francis of Assisi. Obama's first grade teacher remembers a sweet kid who helped her erase the blackboard.

ISRAELLA PAREIRA DHARMAWAN, FORMER OBAMA SCHOOL TEACHER (through translator): His mother took him to school every day. She walked him to the front gate. Obama was a good listener.

MALVEAUX: She likes to think his success now has something to do with his Indonesian experience.

DHARMAWAN (through translator): His attitude, his leadership maybe comes from the neighborhood he used to live. Menteng Dalam was a small area, but full of diversity in every aspect. That might affect his personality as a president.

MALVEAUX: When his family moved into a more upscale neighborhood, 9-year-old Barry went to the Besuki school. It's a public school that during the U.S. presidential campaign, some news outlets incorrectly labeled as a madrassa or radical Muslim school. His classmates here recall Obama stood out in many ways.

They say he was a Boy Scout, couldn't stand kids who cheated in sports, and he could hold his own.

(on camera): I understand he was teased a little bit because he looked different?

CITRA DEWI, OBAMA CLASSMATE: Yes. Some of the kids tease him, but he liked to tease also.

MALVEAUX (voice-over): Four years living in Indonesia, and it seems everyone who knew Barry Soetoro has a story to tell.

For childhood friend Indra, it was a fight over a toy gun.

MADEWA: He take me very high and he lifted me and --

MALVEAUX (on camera): And dropped you?

MADEWA: Yes.

MALVEAUX: So, if you see him, are you going to remind him that he picked you up and dropped you like this?

MADEWA: Yes, of course. Still pain, you know?

(LAUGHTER)

MALVEAUX: Still hurting?

MADEWA: Yes.

MALVEAUX (on camera): Now, unfortunately, Indra and the others who had been hoping to see President Obama during his visit will not.

He was originally scheduled to be on the ground less than 24 hours. And now, with this erupting Indonesian volcano, the trip has been cut short. And many of Obama's friends that I talked with, they really also wanted to see the first lady, Michelle, as well as his daughters, Sasha and Malia, to welcome them back to the Obama family home, the neighborhood.

And White House officials say that might happen next year, when Obama attends the East Asian Summit in Indonesia -- Wolf.

(END VIDEOTAPE)

BLITZER: Thanks very much, Suzanne, for that.

Here is a question. When did Barry become Barack? The president told "Newsweek" magazine that when he transferred to Columbia University in New York City, he saw it as a chance to remake himself. In New York he began asking people to call him Barack.

He told "Newsweek" it was not because of his African roots or a racial assertion, but a new comfort level with the fact that he was different and didn't need to fit in, in a certain way. That is why he is Barack Obama right now, not Barry Obama.

Just a few years ago, hardly anyone had ever even heard of Twitter. We are talking about two or three years ago. Now governments, businesses, celebrities, millions of people around the world have harnessed the power of the tweet.

The founder -- he is actually the co-founder -- Biz Stone, he is here to talk about this phenomenon that he helped create.

And how do you follow up a failed long-shot Senate bid? If you are this candidate, you might aim for something even higher. Details of what the Democratic Senate candidate in South Carolina, Alvin Greene, says he may be planning next.

(COMMERCIAL BREAK)

(NEWS BREAK)

BLITZER: Changing the world in 140 characters or less. I will speak with the co-founder of Twitter. He is here in THE SITUATION ROOM.

And a missile mystery. Even the Pentagon says it is stumped by these images captured off the coast of California. What is going on?

And Kanye West grabs another microphone, this time on a plane. Stand by.

(COMMERCIAL BREAK)

BLITZER: They connect presidents, pop stars and millions of just plain folks. They are the little messages that are changing the world in 140 characters or less.

(BEGIN VIDEOTAPE) BLITZER: And joining us now here in THE SITUATION ROOM, Biz Stone. He is the co-founder of Twitter.

Three years ago -- it has been a business for three years, right?

BIZ STONE, CO-FOUNDER, TWITTER: Yes.

BLITZER: How did you come up with this concept?

STONE: Well, actually, the concept was born from kind of a hack week or two that we had. We were supposed to be working on an entirely different project.

And my co-founder, Evan Williams, said, you know what? We are not emotionally invested in this project. Everyone pair up and create something cool. And so I had become friends with one of the engineers who was working at this other project with us named Jack Dorsey.

And we took those two weeks to built a prototype of Twitter. And we had a lot of fun doing it. Most people thought it was stupid, but we loved it. And that is how Twitter was born.

BLITZER: How did you get the name?

STONE: Well, there was only a couple of us at the time. So it was very mobile-centric in the beginning, as it is now. And the idea was something that would -- it would just vibrate in your pocket and it would -- had this sense of urgency.

So, we came up names like Jitter and Twitch. And near twitch in the thesaurus was twitter. And I just loved it, because I recognized it as a real word that references nature. Bird twitter in the trees. And I think most of technology really is just -- in many cases these large systems like Twitter are just mimicking natural systems.

So I was so passionate about it, the other guys just said, OK, Twitter just to shut you up.

BLITZER: You notice that my questions are 140 characters or less. Your answers are much longer.

(CROSSTALK)

STONE: Yes.

BLITZER: All right.

STONE: I prefer longer format in the talking world.

BLITZER: But when we tweet, it has got to be 140 characters or less.

(CROSSTALK)

STONE: Or less.

BLITZER: Here's another question, 140 characters or less.

What do you think Twitter's biggest impact has been?

STONE: Well, from my perspective, I think that Twitter's biggest impact has shown us that it really does not matter how sophisticated our algorithms get or how many machines we add to the network, that if Twitter is to be a triumph, it is not to be a triumph of technology, but a triumph of humanity.

What we have seen people using it for during times of crisis and to raise awareness and funds for charities, and to -- in journalism and in -- just in everyday life, has shown us that people are basically good and that, when you give them a tool to do good things, they will prove it to you on a daily basis. And that has been sort of a big inspiration for all of us working on Twitter.

BLITZER: Name a few politicians you follow.

STONE: I actually follow President Medvedev on Twitter, even though he tweets in Russian. I have a little -- our iPhone app has a little translate button, so it is kind of cool.

I follow the White House. I follow Obama. And I think that is about it, as far as I can recall. I think I might follow Claire McCaskill, too, because I met her last April, and she was a hoot.

BLITZER: What about me?

STONE: Of course, I will now be following you.

BLITZER: I'm going to check to see if you follow me. And I want to make sure you do. Do you?

STONE: I'm going to check, too.

BLITZER: You better check. Obviously, it has not made a big impact in your life, my tweets. Is that what you're saying?

(LAUGHTER)

STONE: Well, now that I have met you, I'm definitely going to follow you.

BLITZER: Social media in general, are we giving too much personal information out there, putting it out there, whether in tweets or on Facebook or other places?

STONE: I think we are still figuring that out.

I think a lot of people think we have got to figure it out. But, really, when you look back, the Web is still young. There are a bunch of physicists who got together and figured out a way to share documents. And that turned into everything from blogging to banking.

And people are still discovering blogging. And then they're discovering social networking, and now they're discovering Twitter. And I think we are still discovering what the lines are in terms of the benefit of putting information out there and meeting new people and getting a job, and the disadvantages in saying something that you regret and revealing too much information.

So, I think we're -- we are still identifying what those correct boundaries are. And that's -- we are in the process of that now.

BLITZER: I asked some of my Twitter followers for suggested questions, and let's put a few up behind you, and we'll see. This one came in from @wisdominbloom: "I would ask him if he could sum up what the real point of Twitter, what it would be?"

STONE: I'd say the real point of Twitter is to help people discover and share what it is that's happening around them in their world. It really has become an information network that's very focused on real time.

BLITZER: Here's another question from @gailherrier. I'll put it up there if you want to take a look: "What's his next project?"

STONE: My next project is to continue working on Twitter. We're very much invested in putting all of our time on Twitter. I do advise a few companies on the side, but mostly I spend most of my time thinking and working on Twitter.

BLITZER: @yankeefan25: "Are you surprised at how much impact social media has on the daily news cycle and its use by people in suppressed nations?"

STONE: I'm surprised by the rate at which it's been adopted, but I'm not completely surprised, because my co-founder, Evan Williams, and I have been developing these large-scale systems that allow people to express -- express themselves and communicate for more than ten years now, having developed blogging platforms. So to see -- to see the media and journalism take to Twitter wasn't entirely surprising.

I thought, actually, very early on that we could be very complimentary to the service -- I mean, as a service to journalism, and that's proving, I think, to be true.

BLITZER: We have another one from @agentonote: "How do you make money on Twitter with the lack of advertising?"

STONE: Actually, we have a advertising on Twitter. One of the things we focused on very early was building value before profit. And we could have put traditional banner ads all over the site earlier and made money earlier, but we wanted to grow the network, make it relevant, make it useful to many people around the world in their everyday life before we introduced a relevant and meaningful way to monetize the system.

My co-founder and I used to work at Google. They did a really good job of creating Adwords, which are actually advertising that are also relevant to users so when you're searching for something like coffee, and the result happens to be from Starbucks, but it's what you were looking for, but it's also an ad, that's great. It's native to the system.

So we make our money right now using a suite of promoted products called promoted tweets, promoted trends, and promoted accounts. And all of these are just native aspects of Twitter. A tweet is in Twitter, but a company can pay to promote that tweet; in other words, have more people see it.

BLITZER: One final question, 140 characters, why?

STONE: Well, the international limit on text messaging is 160 characters, and from the very beginning we knew that we wanted Twitter to be sort of agnostic with regard to the device that you use to tweet from. We wanted tweets to able to be written and read in their entirety on all 5 billion phones that are active on the planet today, as well as the 2 million Web accounts that people are using today.

So since 160 is the limit on SMS, we reserved a little bit of room in front of the tweet for the author's name, so you'd know who wrote it. And we standardized on 140.

BLITZER: It still has some technical problems now and then. As a Twitter user myself, I can testify.

STONE: Yes, we still -- I mean, we had a lot of growing pains in 2008 and 2009 as we just skyrocketed. And we're still growing by 270,000 people sign up everyday to Twitter. We've gotten a much better handle on it, but we still -- we're still suffering some growing pains due to this amazing growth.

BLITZER: Well, you've done an amazing job. Biz Stone, congratulations.

STONE: Thank you so much.

BLITZER: Thanks for coming into THE SITUATION ROOM. Two years ago you probably never thought you'd be in THE SITUATION ROOM.

STONE: Right.

BLITZER: And don't forget you can read my tweets at Twitter.com/WolfBlitzerCNN, @WolfBlitzerCNN. That's all one word.

It's a mystery that's only getting deeper and deeper. What left this -- this contrail, should we say, in the sky over California? If the military knows, it's not telling.

And a fire leaves a cruise ship without power and leaves passengers facing wretched conditions. Details of the dramatic rescue mission under way right now.

(COMMERCIAL BREAK)

BLITZER: The U.S. Navy is coming to the rescue of a crippled cruise ship stranded off of the coast of Mexico with almost 4,500 people on board after a time without power. Let's walk over to CNN's Tom Foreman. He's got the latest on what happened to this cruise ship.

It's a pretty amazing story that's going on, Tom.

TOM FOREMAN, CNN CORRESPONDENT: Yes. This is not a vacation you want to take.

BLITZER: No.

FOREMAN: This is bad business. This is what was supposed to happen. They left from Long Beach, California. They were supposed to follow this route, which was going to take them down here, a seven-day cruise all along the Mexican Riviera. It didn't work out that way. The simple truth is, what they ended up doing is getting stuck here about 200 miles south of Long Beach. The ship, it was on the seven- day cruise; 3,300 passengers on board.

They lost power after a fire early Monday morning about dawn in the engine room. They had no hot food or air conditioning since then. Initially, they ordered some of the people to go upstairs, Wolf, and then they said move around over here. All sorts of things going on.

BLITZER: Thirty-three hundred passengers but about 1,000 crew members, too.

FOREMAN: Yes, exactly. So a lot of people on board. This is a little city floating out -- a little town floating out there. In any event, as the problem became known, the military got involved. The Coast Guard and the Navy started loading up supplies on shore, going to the aid of this ship, sort of moving out that way. They spotted it, moved in. One of these pictures just released by the Navy.

Here's the ship, a picture of it at sea, the Carnival Splendor. And then they went through -- they brought in the USS Ronald Reagan aircraft carrier, where they sent a helicopter out, loaded up these supplies, and they're taking them out to the ship out there, trying to take care of all the people out there, Wolf. I don't know if you've ever been on a cruise.

BLITZER: I've never been on a cruise, but I've been on the USS Ronald Reagan.

FOREMAN: Well, there you go. That's a different kind of cruise, one that has a lot of insurance on it. But you know, these people out here just trying to have a good time. Carnival Cruiseline said, look, they apologize a lot for the inconvenience. They're going to give them their money back. They're also going to give them a cruise in the future, and they're going to try to get them back home as soon as they possibly can.

BLITZER: So the Splendor was not such a splendor?

FOREMAN: No, not so much. Not so much. And where they're stuck out here right now, they've got help going out to them. If everything works properly as they plan, they're going to take them in here to Encinitas and then get everybody home. They've got tugs heading out here that are going to be pulling this ship. BLITZER: What are they going to do with the ship?

FOREMAN: Well, I assume they're going to go and fix the engine. I don't know the future of the ship, but I would assume. Obviously, the ship is still seaworthy. It's in perfectly good shape. There's no question about that. There's never a sense that...

BLITZER: The ship was never in danger?

FOREMAN: No, it's more a matter of discomfort and then potentially, you know, health problems if it went on too long, but it hasn't gone on that long. Nonetheless, one of those sort of things that obviously a cruise line doesn't want to have happen and, if you paid for your vacation, you really don't want to have happen.

BLITZER: I don't blame them.

FOREMAN: A lot of people will be happy to get home.

BLITZER: Tom, thanks very much.

And it looks like a missile launch, but even the Pentagon can't explain this mysterious image off the coast of California. What is going on? Stand by.

(COMMERCIAL BREAK)

BLITZER: The Pentagon and various federal agencies are stumped by these stunning images. They seem -- seem -- to show some sort of rocket launch over the Pacific near Los Angeles.

Let's go to CNN's Casey Wian, who's been looking into this story for us. What are we learning, Casey?

CASEY WIAN, CNN CORRESPONDENT: Well, Wolf, it really is a mystery. Nearly 24 hours after what appeared to some to be a missile launch off the southern California coast, the government still can't say what it really was.

(BEGIN VIDEOTAPE)

WIAN (voice-over): An ordinary Southern California sunset, punctured by something not only out of the ordinary, but still a mystery. A large plume shoots into the sky. It looks like a missile launch, but no U.S. military or civilian aviation authorities are able to explain it.

These incredible pictures were captured Monday evening by a local news helicopter. The plume appears to have originated about 35 miles off the Los Angeles coastline, heading northwest over the Pacific. Experts speculated on a wide range of possibilities.

ROBERT ELLSWORTH, FORMER DEPUTY DEFENSE SECRETARY: It could be a test firing of an intercontinental ballistic missile.

JOHN PIKE, GLOBALSECURITY.ORG: It is clearly an airplane contrail. It's an optical illusion that it looks like it's going up, whereas in reality it's going towards the camera.

WIAN: Vandenberg Air Force Base, which often launches missile tests and satellites, said it wasn't theirs. The Federal Aviation Administration says it, quote, "ran radar replays of a large area of West Los Angeles at approximately 5 p.m. Pacific Time on Monday. The radar replays did not reveal any fast-moving, unidentified targets in that area."

We called the Coast Guard, the Navy, the Air Force, the Pentagon and local members of Congress. No one knew anything.

PIKE: Why the government is so badly organized that they're not able to get somebody out there to explain it and make this story goes -- go away, I think that's the real story. I mean, it's absolutely insane that, for all of the money we're spending, for all of these technically competent people, that they can't get somebody out there to explain what's incredibly obvious.

WIAN: NORAD released a statement saying it is "aware of the unexplained contrail reported off the coast of Southern California yesterday evening, but at this time we are unable to provide specific details, but we are working to determine the exact nature of this event. We can confirm there is no indication of any threat to our nation, and we will provide more information as it becomes available."

(END VIDEOTAPE)

WIAN: Now, an official at U.S. Northern Command tells CNN's Chris Lawrence that the contrail could have come from a plane, but the last official word from the Pentagon, Wolf, is we have so far have come up empty -- Wolf.

BLITZER: All right. We'll see what they find out. Thanks very much.

Sarah Palin is taking on the "Wall Street Journal." This is a food fight over the price of food. But who is actually right? We asked CNN's Brian Todd to take a closer look.

What are you finding out?

BRIAN TODD, CNN CORRESPONDENT: Wolf, look at this as a tussle between a Tea Party favorite, Sarah Palin, and the more mainstream conservative establishment that that movement has been taking on.

This, a direct confrontation she has with the "Wall Street Journal" over who knows more about the economy.

Palin first says to a business convention in Phoenix the Fed's policy of quantitative easing, creating new money to buy bonds, is dangerous, could cause inflation. She said it's already happened. Quote, "Anyone who ever goes out shopping for groceries knows that prices have risen significantly over the last year or so."

Well, a "Wall Street Journal" writer dismissed that, citing government statistics which show inflation on grocery prices so far this year is the slowest -- excuse me -- on record.

Now, Palin has fired back on her Facebook page -- excuse me...

BLITZER: Hold on.

TODD: It's OK.

BLITZER: I have water for you. Take a little water.

TODD: Thank you.

BLITZER: Stuff happens. Take a breath. Catch your breath. Start again.

TODD: It happens.

BLITZER: Take a little more water.

TODD: I'm OK.

She's written back on the Facebook page, writing that the "Wall Street Journal," it said in an article that an inflationary tide is beginning to ripple through America's supermarkets. She added this quote: "Even humble folks like me can read the newspaper. I'm surprised that a prestigious reporter for 'The Wall Street Journal' doesn't."

The blogger fired back that the same article also says this year so far has been the tamest year of food pricing in nearly two decades, Wolf. So a real tussle. I've got enough water. Thank you.

BLITZER: I have a question I want to ask you.

TODD: I'm good.

BLITZER: I insist that you have a little water.

TODD: I insist. Go ahead. Fire back.

BLITZER: Some are already reading more into this, politically speaking?

TODD: There could be a broader political calculation here for Sarah Palin, and I asked "Washington Post" columnist Dana Milbank how does focusing on the economy kind of figure into the broader political picture for Sarah Palin. Take a listen.

(BEGIN VIDEO CLIP)

DANA MILBANK, COLUMNIST, "WASHINGTON POST": That is her weakness that she's perceived as being popular and charismatic, but kind of weak on the policy fundamentals. So yes, this builds up her bone fides as a policy wonk, if you will.

(END VIDEO CLIP) TODD: And we could see more back and forth. Tonight Palin is scheduled to give another speech, and she has already tweeted that she's going to focus on this topic again. She is determined to prove that the economy is not a weak spot. And we'll see. And this is going to be a good test. It's tough to take on the "Wall Street Journal" on some of this stuff, but she's determined to do it. She -- you know, whether this is -- whether she's won this round or not, I think we have to just kind of call it a draw.

BLITZER: We'll continue to watch and see what the political fallout is, as well.

Should California borrow $40 million a day from the federal government to pay for unemployment benefits? That's Jack Cafferty's question. He's standing by with your e-mail.

Plus, passengers on one flight near a most -- hear a "Most Unusual" in-flight announcement, a rap from Kanye West, himself.

(COMMERCIAL BREAK)

BLITZER: Time now to check back with Jack Cafferty -- Jack.

JACK CAFFERTY, CNN ANCHOR: Question this hour is: "Should California borrow $40 million a day from the federal government in order to pay for their unemployment benefits?"

Joey in San Diego: "Are you really shocked, Jack? We are broke, and yet the California politicians continue to spend like drunken sailors. Don't worry, though, the voters decided to keep Barbara Boxer and give tax-and-spend career politician Jerry Brown another shot at it. Taxes will be going up for those of us that actually pay them, and the businesses that have an option to leave will."

Paul writes, "While I support unemployment benefits and other social programs, there comes a time when you've got to cut it off. Otherwise you're merely sustaining a fantasy or an illusion of prosperity. The program should give people enough time to find other work or make preparation for lifestyle changes. But keeping it going in perpetuity merely delays the inevitable and puts an unneeded financial burden on everyone."

Rich in Texas: "I was born and raised in California. People need to realize they have a real sense of entitlement out there. Kids are raised to think everything should be perfectly equal, even if some are not willing to put in the work. They keep electing the same folks into office, expecting things to magically take care of themselves. Until we stop bailing them out, they will continue to operate this way."

Paul in Austin, Texas: "Why not give millions to California? Instead we give millions in foreign aid to countries on the other side of the world who hate us anyway. I say help at home first."

Jeff in Minnesota writes, "You're damned if you do, damned if you don't. For most of the unemployed, it's not their fault, so we ought to just kick them to the curb and hope for the best? It may not be the best solution, but people have got to be able to live."

Ian writes, "Yes, the cost of the federal government's failure to enforce illegal immigration laws and protect our borders alone ought to be enough to justify protecting our unemployed citizens here in California. California should be suing the federal government, but it wouldn't be P.C. California's legislature is filled with monkeys wearing clown makeup."

And Dave writes, "California is going down the pot. If they had legalized it, they could have made enough in taxes last week to cover those bills."

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

BLITZER: I was going to say, Jack, that was one of the main arguments, that if you legalize marijuana in California, you take in millions and millions of dollars in tax revenue, just like for cigarettes or alcohol or whatever, and that's a good source of income, potentially.

CAFFERTY: Well, you know, so is heroin. I don't know. When do you -- where do you draw the line, what you legalize?

BLITZER: Well, they legalized alcohol and they legalized cigarettes.

CAFFERTY: Somebody did a study. I was reading it a week or so ago. Alcohol is responsible for many more problems than all of those other drugs: methamphetamine, heroin, marijuana, cocaine, you name it. Alcohol is -- is a real poison in this society and in this country, and yet they tried prohibition, and that didn't work.

BLITZER: And cigarettes, we know -- we know what that does, too. All right, Jack, thanks very much.

So what does the new political agenda in Washington mean for your wallet? The personal finance expert, Suze Orman ,is among the guests on "JOHN KING USA." That's coming up at the top of the hour.

But up next, here in THE SITUATION ROOM, Kanye West, he commandeers another microphone, this time on a Delta flight. Jeanne -- Jeanne Moos will take a "Most Unusual" look.

(COMMERCIAL BREAK)

BLITZER: Fasten your seat belts and get ready for rap. Kanye West is on board. CNN's Jeanne Moos takes a "Most Unusual" look.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): Normally, Kanye West is a down-to-earth rapper.

KANYE WEST, RAPPER (rapping): I ain't saying she's a gold digger. MOOS: But the other day that same rap was the in-flight entertainment.

WEST (rapping): I ain't saying she's a gold digger.

MOOS: As first-class passenger Kanye West unexpectedly got on the P.A. system of a Delta flight from Minneapolis to New York.

WEST: ... a best friend, you should mess with Usher. I don't care what none of you all say, I still love her

MOOS: The Web site Hollywood Life first reported the story. A passenger captured the last few seconds of the rap with a cell phone.

WEST: But she ain't messing with no broke -- no. OK, that's it. Thank you

MOOS: Kanye's known for commandeering microphones. Remember when he interrupted Taylor Swift's awards speech? And he has taken over a plane's P.A. system before...

WEST: I actually took flying lessons a week ago, and even though it's totally illegal, I'm going to fly us out of here.

MOOS: ... on the show "Entourage."

WEST: No, I'm just (EXPLETIVE DELETED) with you. I'm just (EXPLETIVE DELETED) with you.

MOOS: But the rap was on a real Delta flight.

(on camera) Your attention, please.

(voice-over) We wanted to ask Delta Airlines how Kanye West got on the plane's intercom, but Delta had no comment.

(on camera) I repeat, no comment.

(voice-over) We've heard of candidates taking over the P.A. on campaign planes.

HILLARY CLINTON, SECRETARY OF STATE: Once we've reached cruising altitude.

GEORGE W. BUSH, FORMER PRESIDENT OF THE UNITED STATES: Please secure your expectations securely.

MOOS: And a Southwest flight attendant became famous, rapping the safety instructions.

UNIDENTIFIED MALE: Thank you for the fact that I wasn't ignored. This is Southwest Airlines, welcome aboard.

MOOS (on camera): From rapping in midair, to rapping on the air, allow us to introduce you to a rapper of small stature whose reputation is growing. (voice-over) Up until now, 15-year-old Keenan Cahill has been a Web sensation for lip-syncing songs from Lady Gaga to Michael Jackson.

(MUSIC: "Thriller")

MOOS: Talk about a thrill: on Tuesday he made the leap to cable, appearing on Chelsea Handler's show.

CHELSEA HANDLER, HOST, E!'S "CHELSEA LATELY": Get yourself comfortable.

MOOS: That's where they premiered Keenan's latest lip sync, during a 50 Cent rap, when who should appear in his bedroom? 50 Cent himself. The rapper even gave Keenan his cross. A new sidekick for 50 Cent. Keep the change.

Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

BLITZER: Very cool indeed.

That's it for me. Thanks very much for watching. I'm Wolf Blitzer in THE SITUATION ROOM.

"JOHN KING USA" starts right now.