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THE SITUATION ROOM

Interview With Former President Bill Clinton

Aired June 30, 2011 - 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: And to our viewers, you're in THE SITUATION ROOM.

Happening now, Bill Clinton talks about the 2012 campaign, America's looming debt crisis, and the very dangerous crisis the country faces around the world. My one-on-one interview with the former president of the United States this hour.

Also, a CNN exclusive. As the United States prepares to start bringing troops home from Afghanistan, the war is heating up for some of them. We're going to a remote mountain outpost surrounded by the Taliban.

And the comedian Stephen Colbert sets up a political action committee. Is it just political satire, or is he serious?

We want to welcome our viewers in the United States and around the world.

Breaking news, political headlines and Jeanne Moos all straight ahead.

I'm Wolf Blitzer. You are in THE SITUATION ROOM.

And this is a special edition of THE SITUATION ROOM. We're live from Chicago at the site of the Clinton Global Initiative America Conference, where key figures from government, business, academia, they are gathered to try to tackle America's economic problems. And those problems are huge.

This event is the brainchild of course of the former President Bill Clinton.

And I sat down with him today here in Chicago for a candid interview on the country's debt crisis, the 2012 presidential race, and much more.

(BEGIN VIDEOTAPE)

BLITZER: Mr. President, thanks very much for joining us.

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: Thank you, Wolf.

BLITZER: Good to be here at the CGI America.

This is the first time you have done this as far as the U.S. economy is concerned.

CLINTON: Yes, it is. Yes.

BLITZER: Normally, it's global issues. And I want to get to that in a little while, but let's talk about some of the big issues right now, jobs, jobs, jobs.

One of the crisis -- it's a crisis, a game of chicken going on in Washington right now between the president, the Democrats on one side, the Republican leadership on the other side. How big of a deal is this August 2 deadline for raising the debt ceiling?

CLINTON: Well, because I haven't been in government in a long time, I don't know what options the Treasury Department will have if the debt ceiling is not lifted.

My guess is, they can pay the bills for a while, after which they won't be able to. So, if we let that deadline come and go, and we really raise questions about whether our political system is mature enough even to pay its bills, I think it's trouble.

I realize the idea of voting against raising the debt ceiling has always had great appeal to people. Even in good times, there's -- a bunch of people vote against raising it, because it looks like a free vote.

BLITZER: When he was senator, President Obama didn't vote to raise the debt ceiling.

CLINTON: Yes.

(CROSSTALK)

BLITZER: He regrets it now. He said that was a mistake.

CLINTON: Yes, but it -- but when you are not president, and you think the votes are there, it seems like a freebie and you can say, I did it to protest this.

But there is a reason that most governments in most countries don't even think about having a vote on this, because they know that the reason we have to raise the debt ceiling is because of decisions that have already been made, not because of decisions that are going to be made.

So we really can't afford to let anybody in the rest of the world who are willing to put -- people who are willing to put capital in this country think that we don't pay our debts. That's like saying we...

(CROSSTALK)

BLITZER: What would the consequences of the U.S. not paying its debts, going into default, if you will, or bankruptcy, whatever you want to call it, what would the consequence be for average people out there who are worried? CLINTON: The most likely consequence in a hurry is that all interest rates would go up.

And so for the government, that means that the deficit would increase more, that the debt would increase more, because we would have to pay more to borrow money to cover our debts. And you can't -- those things don't increase in a vacuum, which means that interest rates on your credit card, on your college loan, on your home mortgage, on your car could go up.

It could be a real problem.

BLITZER: This is a big deal.

CLINTON: Yes, in other words, it's a big deal.

(CROSSTALK)

BLITZER: And you think that August 2 deadline is a pretty hard deadline?

CLINTON: I do. Well, I think -- I know it's a hard deadline in the sense that just letting it happen will have at the very least a short-term adverse effect on our standing in the world, on our credit, on people thinking we are a grownup country who know what we are doing.

Now, how bad the long-term damage is will be determined by how quickly we remedy it. But it's -- since it's never happened before, it's impossible to be absolutely specific. But it's nutty. What you are really saying when you don't raise the debt limit is not you want to balance the budget in the future.

It is: I'm sorry. I'm so mad I can't get my way, I'm not going to pay our past debts.

And a grownup country wouldn't do that. We can't afford to do that.

BLITZER: How do you resolve? In other words, there is a compromise in the works, but it's going to be painful for both sides. The Republicans say they are not going to raise taxes in this current economic environment under any circumstances. Is there a deal if they hold firm?

CLINTON: Well, there may be a short-term deal. I don't think there is a long-term deal, because what they are really saying is that the tax rates which prevailed on people in our income group, upper- income people, when I was president, will never be allowed to...

(CROSSTALK)

BLITZER: Thirty-nine-point-six percent.

(CROSSTALK)

BLITZER: ... down to 35 percent.

CLINTON: Yes, will never be allowed to go back into effect, even though those were the best economic years the country ever had.

And the second four years was the only time since 1980 when the bottom 20 percent of earners' incomes, in percentage terms, went up as much as the top 20 percent. So, their economic theory doesn't work. It's about their politics.

BLITZER: They are not going to vote -- the House of Representatives, they're not going to vote for a tax rate hike.

CLINTON: They may not vote -- even Alan Greenspan, a conservative Republican, says we ought to go back to those rates.

So, what they call a compromise is they take 90 percent of what they want, instead of 100 percent, and that's a compromise, and then the Democrats get nothing.

And so I understand that. But I frankly don't think we should be raising taxes or cutting spending a lot right now. This economy is too shaky, which is why I believe what they should do is to try to make a 10-year agreement and set targets and work back from it, because -- and, by the way, I'm not alone in that.

The Bowles-Simpson commission report, which was very tough on the specifics, requiring significant compromises from both parties, but quite detailed, recommended that we don't start this until the economy is fully in recovery.

BLITZER: Senator Rand Paul told me this week he would vote to raise the debt ceiling. There are some certain conditions, including a commitment for a balanced budget amendment.

Is that a good idea?

CLINTON: I don't think so. And I hate these deficits.

(CROSSTALK)

BLITZER: Well, the governors have to deal with balanced budget amendments.

CLINTON: Well, yes, they do, but the governors don't have to deal with national emergencies either.

The balanced budget amendments are very good for the governors because they impose fiscal discipline and they keep them from borrowing money in a sense to cover current expenditures. It would be like a family borrowing money to eat dinner every night. That's what the -- and the federal government does that.

But on the other hand, the governors are able to take on long- term debt in the form of bond issues, for example, as long as there is a revenue stream to cover that. We mesh it all together. When I was president, I appointed Governor Corzine, who was then in the private sector, to a commission to look at whether we ought to have an investment budget in America. And I still would like to revisit that. I wouldn't have any problem with a balanced budget amendment to cover the current expenditures only and was suspended whenever there was a recession.

But if you -- but a national government has to be able to spend in a recession to overcome the collapse of private investment.

BLITZER: You said this week here at your CGI America Conference, that there -- what, there's $2 trillion sitting on the sidelines right now that banks, corporations, individuals have. They're just sitting on it because they are nervous about using that money, investing it to create jobs.

CLINTON: Well, corporations have $2 trillion in cash that they have not committed. They're American corporations with world operations. They have not committed to overseas operations or to give back either in the form of dividends to shareholders or compensation to management and employees.

They want to spend substantial amount of that money here, but they haven't yet. The banks have more than $2 trillion in cash not committed to loans, to support loans at conservative ratios of, let's say, 8-1 to 12-1.

So, now, in that $2 trillion is about $160 billion in potential direct exposure from bad mortgages. But the Bank of America settlement yesterday is a good indication of what I hope will happen throughout the market, because once they get that whole thing put into place, the really great things about that settlement were not in the news story.

BLITZER: Because if they use that money to stimulate the economy and get jobs going in the private sector, that would be wonderful.

CLINTON: Absolutely.

Well, see, this money they're giving...

BLITZER: But you can't blame them for being nervous.

CLINTON: No, but the money that they're giving -- let me just say what Bank of America is going to have happen. Bank of America will lose profits for lose months, yes.

But by giving this money to the bondholders and the other people holding these mortgages that they sold, they also will acquire the ability to write down or have someone for them write down all the mortgages to their present value of the homes for everybody that can afford to make that kind of mortgage payment.

And then for everybody else, it will be clear that foreclosure is the only option. We could clean up the bank books, keep a lot of people in their homes that are still worried about losing them. And if everybody would follow this lead, this could lift an enormous economic and psychological burden off the country.

So, there's a -- the banks have a lot of money. We have got to figure out how to get it invested.

BLITZER: Easier said than done, obviously.

CLINTON: Yes, but I think green energy is one good way to do it.

I still think, if we retrofitted every public building in this country and all the major private buildings that you know are going to be here in five years, you can get all those savings guaranteed. All you have to do is let them be financed from utility bill reductions, which means there has to be a loan period that is greater than the two or three years banks are normally comfortable making them.

And the government can make one or two changes and make that happen, and nobody would lose any money. You could finance all the work.

BLITZER: And in the process, you would create a lot of jobs in the construction industry.

CLINTON: Yes. You would create 7,000 jobs for every $1 billion to invest. It's the highest return you can imagine. And in construction and manufacturing, you get more than two jobs in the rest of the economy for every one job you create.

(END VIDEOTAPE)

BLITZER: All right, there is much more of my interview with President Bill Clinton coming up.

Up next, he weighs in on the Republican presidential field.

(BEGIN VIDEO CLIP)

CLINTON: I like Governor Huntsman. I like Governor Romney. I think Governor Romney is doing a better job this time than he did last time.

(END VIDEO CLIP)

BLITZER: He also has an explanation for Michele Bachmann's soaring popularity. You're going to want to hear what he has to say.

Also, U.S. troops hemmed in by Taliban fighters. We have an exclusive report from the front lines in Afghanistan.

And Stephen Colbert dives into the world of campaign finance. But is it the Comedy Central -- is the Comedy Central star really serious?

(BEGIN VIDEO CLIP)

STEPHEN COLBERT, HOST, "THE COLBERT REPORT": Moments ago, the Federal Election Commission made their ruling. Ladies and gentlemen, I am sorry to say, we won!

(CHEERING AND APPLAUSE)

COLBERT: I am a SuperPAC! And so can you!

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: We're here in Chicago at the Clinton Global Initiative America Conference. It's a beautiful, gorgeous day here in Chicago. Love this city, always good to come back and see some old friends.

Let's get back to my interview now with the former President of the United States Bill Clinton.

We turned to politics and the race for the White House.

(BEGIN VIDEOTAPE)

BLITZER: How worried are you right now about President Obama getting reelected?

CLINTON: Well, on today's fact, I will be surprised if he is not reelected.

I think people understand this recession was more severe than the one I had. And if you just look at what's going on in Michigan, a terrible year for the Democrats in Michigan in 2010, but the United States on the day Barack Obama became president had 2 percent of the world's market for these high-percentage, high-powered batteries to make hybrid and all-electric vehicles.

Today, they have -- we have 20 percent of the world market because of incentives that he put in and pushed in and aggressively sought. We have over 30 new battery factories, 18 of them in Michigan, built or under construction.

I can give you other examples like that, where we are trying to build a competitive economy, where they're going forward. I think he has got a good story to tell. If you look at this auto investment, he didn't bail out the automobile industry. He said, I will help you if your restructure to be competitive.

There are now about 80,000 more Americans with auto jobs, not counting all the jobs that have been saved for the suppliers, for the sellers, you know, all of this. And I think that that's going to look good...

(CROSSTALK)

BLITZER: Do you talk to the president a lot about this stuff?

CLINTON: Not a lot, but some.

BLITZER: How often do you talk to him? CLINTON: I try -- I never -- he's got plenty to do. He has got -- had to deal with -- he's got this -- the Afghanistan problem, the Libya problem, a whole range of other issues.

If they want me to do something, they ask, and we talk.

BLITZER: So, you wait for a phone call or an invitation?

CLINTON: Absolutely. I never...

BLITZER: You never initiate that?

CLINTON: I don't think I should.

He knows that I support in general what he is trying to do and I'm out here trying to explain it to people. But he's got a good team. And I talk to Gene Sperling from time to time. I talk to other people. Secretary Geithner has come here.

BLITZER: Gene Sperling, head of his National Economic Council.

CLINTON: Yes.

BLITZER: He worked for you.

CLINTON: He did. And he's a good man.

But I talked to Joe Biden last week about some of these economic issues. But I think it's important not to get the politics confused with the action, because I believe if people understand the choices, then the only way he will lose is if a Republican is nominated who has a more credible plan for an even more rapid, more broadly-based recovery.

BLITZER: Who is the strongest Republican candidate out there?

CLINTON: I can't tell yet.

BLITZER: Who do you fear the most?

CLINTON: Oh, I'm not afraid. I will be surprised if the president doesn't win. I think he will.

But, as you might imagine, as a Democrat who's -- I have always thought of myself as a pro-growth, pro-business, pro-labor Democrat. I like Governor Huntsman. I like Governor Romney. I think Governor Romney is doing a better job this time than he did last time. He's more comfortable in the -- and he seems to be willing to take some of the heat you get if you stand up to people in your own party that you think are in his case too far to the right.

But I don't know who is going to win. I think -- I am not surprised that Congresswoman Bachmann is off to a good start, because I think she's a compelling public figure and she comes -- I don't agree with her on a lot of things, but I think she comes across as real, you know (INAUDIBLE). So -- and they got some other candidates that are quite good. I just -- I don't think we can tell yet. We just got to let it play out.

But the main thing I want to do -- look, I had two Republican governors, Mitch Daniels and Haley Barbour, here.

BLITZER: Here at this conference?

CLINTON: Yes. Terry McAuliffe, the former chairman of the Democratic Party, bought a car plant in China and moved it to America, and he bought two of them. And he put the first one in Mississippi with Haley Barbour, the former chairman of the Republican Party.

If we would do more of this in Washington, we would get further. And that's -- we just -- I am just trying to solve practical problems. Just one last thing on the substance here. There -- we have to create about 15 million jobs in the next few years to have real normal growth.

And we have got probably 13 million just to get back where we were on the day the economy collapsed. There are three million job openings today in America, and they are only being filled half as fast as they have been filled in every previous recovery period.

Why is that? We had a whole session on that yesterday. And one of the best things that is going to come out of this is what Michael Thurmond, the former labor commissioner of Georgia, said about what he did in giving training money directly to employers and saying, don't hire them until you see how they do. But here's the training money. You train them to suit yourself.

Don't say they don't have the skills. You train them to suit yourself. They won't be treated as employees.

We need the ideas like that. How -- just think about it. If those three million people were going to work at a regular basis, by now, America would have two million more jobs. The world psychologically would be very different.

(END VIDEOTAPE)

BLITZER: All right, Syria, Libya, Afghanistan and more.

Up next, Bill Clinton weighs in on U.S. foreign policy. Does he back everything President Obama is doing? Part three of the interview coming up.

And the former president also has an emotional moment when I asked him about his wife, the secretary of state. You're going to want to hear what he says about learning from her.

(COMMERCIAL BREAK)

BLITZER: Now to part three of my interview with the former president of the United States, Bill Clinton, and his thoughts on some of the crisis situations the United States faces around the world.

(BEGIN VIDEOTAPE)

BLITZER: I remember going with you to Rwanda in 1998.

When President Obama announced he was going to support Tomahawk cruise missile strikes against Gadhafi's forces to back up the U.N. resolution, fearing genocide, a slaughter of Libyans, he referred to Rwanda. He didn't want another Rwanda.

Was the president correct in launching U.S. missile strikes against targets in Libya based on what happened in part because he didn't want another Rwanda?

CLINTON: Yes. I -- first of all, I strongly support what he did.

And, as you know, the secretary of state did, too. Hillary did, too. I think it is unlikely that Gadhafi would -- because he was in power already, would have gone out to kill 10 percent of the country, the way they did in Rwanda in 90 days, because he was in power.

But he -- we know that he was prepared to kill a whole lot of people who were innocent civilians who weren't basically in lockstep with him. And, so, yes, I think any time we can prevent that, particularly in the case of Libya...

(CROSSTALK)

BLITZER: He did the right thing in Libya?

CLINTON: Yes. Our NATO allies...

BLITZER: And you still support what is going on in Libya?

CLINTON: Absolutely.

BLITZER: What about Syria? Bashar al-Assad -- I remember covering Hafez al-Assad when you went and met with the father.

Is the son like the father? And should the U.S. be more assertive in saying Bashar al-Assad, like Gadhafi, must go?

CLINTON: Yes, the son is like the father. And the father, long before I became president, as you know, wiped out a whole village.

BLITZER: In Hama.

CLINTON: Yes.

And he has been very, very ruthless. And I think it surprised some of the people who have been supporting him all these years.

BLITZER: Have you ever met him, Bashar al-Assad?

CLINTON: To the best of my knowledge, I have not. But we have something we never had when I was president. We have had this wonderful Arab spring, the people in the streets. And Syria has a lot of secular non-radical forces, as well as the potential, as all these countries do, including Egypt, of going under control of nondemocratic extremists.

But President Assad has had lots of opportunities here to make a peace, for example, with the Israelis, who really would like to have made a peace with him. They had this feeling, based on their experience with his father, that if he gave his word, he could keep it and he would keep it.

And he declined. He has continued to work with the Iranians and with other elements to let terrorists pass through Syria on the way to training elsewhere. And now he is oppressing his own people and he's killed some innocent civilians. So, I think, unless he can have a genuine broad-based reform effort, which he could do there...

(CROSSTALK)

BLITZER: It's not too late, after 1,100, 1,200, 1,300 people have been killed?

CLINTON: Yes, I think it is too late for him.

But if I were in his position and I wanted to save my skin, I would be -- my advice would be -- for me, it's too late. I want him to go.

But I would say, maybe I can survive this, because all the people that really want me out of here, they are up to their ears in Iraq and Afghanistan and in Libya. And they are worried about instability in Bahrain and other places. So, maybe I can survive this, but I have got to quit killing people and bring everybody in.

Now, my guess is, it's too late for him.

BLITZER: Quick question on Afghanistan. You and I lived through Vietnam, the Vietnam War. Are you concerned that Afghanistan is becoming another Vietnam War?

CLINTON: No, because we have already -- for two reasons.

One is, we never got above 100,000 troops. Two is, we had more real support from the rest of the world, the United Nations and NATO in Afghanistan than we ever had in Vietnam. We did have some allies, Australia and South Korea and others, but never -- and the third is, the president has already announced that he will begin to draw down our troop levels.

On the other hand, I think it's a mind-bendingly tough problem. And we never wanted to dominate them. So, we never were trying to do what Britain and Russia failed to do. We didn't want to do that. We did want to nation-build. And it was an honorable thing to do.

And we may or may not succeed. And I think what the president said, we are going to try to keep those folks as safe as possible and get this thing over with as quick as we can.

BLITZER: Wrapping it up, I recently went with the secretary of state, Hillary Clinton, to Paris, Cairo, and Tunis, and watched her closely, just as I used to watch you closely when you were president of the United States.

And watching her in those meetings, watching her in those sessions, I saw a lot of Bill Clinton when he was president of the United States.

And here's the question. Did she learn from you, or did you learn from her?

CLINTON: Well, I would hope a little bit of both.

But I -- I have learned a great deal from her. When I fell in love with her and asked her to marry me, I said almost in the same breath, you probably shouldn't do this, because I have to go home to Arkansas and live my life. And I think you are the most gifted person I ever met in public service.

I still feel that way. I am very, very proud of her.

BLITZER: She's doing an amazing job.

CLINTON: Yes, I'm you're proud of her. She's done a good job.

BLITZER: How do you feel?

CLINTON: As far as I know, I'm fine. Feeling great.

BLITZER: How is that diet?

CLINTON: It's good. It's good. I gained a little weight in the wintertime because I -- because it was the wintertime, and because Haiti has taken over a lot of my life, and I don't quite exercise as much as I should.

But I'm getting back in shape. I'm -- my goal is to try to get down to what -- where I weighed at Chelsea's wedding, which is what I weighed the day I graduated from high school, and to stay there.

BLITZER: You lost 24 pounds.

CLINTON: Yes. I hope I can stay there for the rest of my life.

BLITZER: A year ago, we were in South Africa in Cape Town...

CLINTON: Yes.

BLITZER: ... as you remember, watching the USA lose to Ghana.

CLINTON: At the World Cup. That was a great match.

(CROSSTALK)

BLITZER: It was a great match. And we had a lot of fun.

CLINTON: We sure did.

BLITZER: If you remember when Mick Jagger walked into that suite at midfield, that was pretty exciting.

CLINTON: Yes. It was a great night.

BLITZER: Mr. President, thanks very much.

CLINTON: Thanks, Wolf. Bye.

(END VIDEOTAPE)

BLITZER: And we have got more of the interview, by the way, tomorrow. You are going to hear what the president has to say about the class warfare so-called argument that the Republicans are launching against the Democrats, an important part of the interview. We will save that for tomorrow.

This additional programming note: Bill Clinton's health figures very prominently into an upcoming CNN special report. Dr. Sanjay Gupta reports "The Last Heart Attack," which focuses in on whether diet and modern medicine are enough to prevent every attack. It includes a very important conversation with former President Clinton and his cardiologist.

Sanjay Gupta's special report airs August 21, 8:00 p.m. Eastern, only here on CNN. Get ready. You're going to want to see this report, as well.

In the meantime, let's bring in our chief political analyst, Gloria Borger. She was watching and listening to the interview with President Clinton.

Gloria, we heard the president express some compliments for Mitt Romney...

GLORIA BORGER, CNN POLITICAL ANALYST: I know.

BLITZER: ... saying he's navigating this run for the White House a lot better than he did four years ago. Were you surprised to hear this?

BORGER: It was interesting because the thing that he complimented him on, Wolf, was the fact that Mitt Romney seems to be a little less afraid this time of taking on people within his own party, particularly those people who are to the right of him.

And of course, Bill Clinton himself, as you well know, Wolf, was not afraid to take on people in his own party. Remember welfare reform? You covered that. He took on liberal Democrats in his own party on that.

So he gave some kudos here to Mitt Romney, because last time around when Mitt Romney ran, he was known as a flip flopper. And this time he has -- he has struggled to stick with a set of beliefs.

For example, on health-care reform, Mitt Romney was governor of the state of Massachusetts when Massachusetts passed health-care reform with mandates. And he has stuck with the idea of mandates at the state level, not at the federal level. So he hasn't backtracked on that.

And one other thing, Wolf: there is a pro-life document going around that Republican presidential candidates have signed, saying, for example, a pledge that would only put pro-life people in their cabinet. And Mitt Romney has refused to sign that, as well. So I think Bill Clinton was giving him some compliments for being a little braver the second time around and a little more experienced.

BLITZER: It's interesting. On this day, Romney was campaigning in Pennsylvania not very far away...

BORGER: Right.

BLITZER: ... from where President Obama is campaigning. He's attending two fund-raisers, the president, in Philadelphia. Is Romney embracing the so-called front-runner position...

BORGER: Oh, yes.

BLITZER: ... for the Republican nomination?

BORGER: And this is another way he's been able to be smart this time. Because obviously, he is the front-runner. Here he is in Allentown, Pennsylvania, at a steel plant that closed that President Obama visited in 2009 to tout his stimulus package. So it's a perfect backdrop for Mitt Romney to talk about the economy, and listen to what he had to say today.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: And as you look around and see the weeds growing and the windows boarded up, you can recognize that it's more a symbol of the failure of Obama economic policies. The plant has been open 100 years. It survived the Great Depression; it couldn't survive Obama economy.

(END VIDEO CLIP)

BORGER: So Wolf, you know, he's skipping over the Republican field, making this a race between Obama and Romney. And of course, talking about the issue on which the president is the most vulnerable, which is the economy in, I might add, Pennsylvania which was a blue state, but will clearly be a battleground state in 2012, Wolf.

BLITZER: It certainly will be. Thanks so very, very much. American troops right now in the middle of Taliban territory. Our cameras are there as a U.S. outpost is attacked in the rugged mountains of Afghanistan. We have a CNN exclusive report, coming up.

Plus, caught on camera, a shocking moment as the French president is grabbed and nearly dragged to the ground. President Sarkozy.

And the comedian Stephen Colbert launches a political action committee. Is it political satire?

(BEGIN VIDEO CLIP)

STEPHEN COLBERT, HOST, COMEDY CENTRAL'S "THE COLBERT REPORT": Thank you for standing with me for freedom. It has been said that freedom is not free. Today we have placed a sizable down payment. We put liberty on layaway.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: As the U.S. gets ready to start bringing home the troops from Afghanistan, there are new developments. We're following the war, by all accounts, heating up for many of those U.S. troops.

Yesterday we took you to a remote military outpost in the mountains near Pakistan where American troops came under heavy fire from the Taliban. Today CNN's Nick Paton Walsh follows up with another look at the aftermath of that attack.

(BEGIN VIDEOTAPE)

NICK PATON WALSH, CNN CORRESPONDENT: Well, here on Kapurklekay (ph) in Eastern Afghanistan, the Kunar province, you get a sense, really, of the limits of America's capabilities here towards the end of this nasty decade-long, almost, war. Here we are sandwiched down by a river between two hills. The last time this place was attacked it came from both this side: these mountains, that ridge line there, as well, and the other side of the base, as well. The troops, frankly, hemmed in by mortars fired by the enemy and also rocket- propelled grenades.

One soldier, injured, had to be medivacked from here. They have to take in air strikes in order to push the insurgents back, use large numbers of mortars. American firepower here without question superior to that of the insurgency. But the insurgents can vanish in minutes back into the hills.

This consistent back and forth violence between the Americans and the Taliban stops one thing: it stops the Americans from getting out into the community, winning hearts and minds, and putting into effect that counter-insurgency strategy that, for years now, they've been trying to use this to win this long war here.

So you have, really, a stalemate where at the end of the day the Americans will endure a huge financial and human cost for being here. But not really score that decisive victory over the insurgency that means life becomes more peaceful for them here.

The clock, frankly, for that reason ticking on this base and ticking on America's -- sorry, test firing to my left here -- ticking on America's presence in this particularly volatile part of Afghanistan.

Nick Paton Walsh, CNN, Kunar, Afghanistan.

(END VIDEOTAPE)

ANNOUNCER: This is CNN breaking news.

BLITZER: We're getting some breaking news coming in, a very interesting report about the treasury secretary, Timothy Geithner. He's actually here in Chicago at the Clinton Global Initiative America conference right now. Lisa Sylvester is monitoring these developments and some other top stories. What's the latest on Geithner, Lisa?

LISA SYLVESTER, CNN CORRESPONDENT: You know, Wolf, this information is just in. Treasury Secretary Timothy Geithner is thinking about stepping down after a deal is reached on raising the U.S. debt limit. That's what a source familiar with discussions tells CNN's chief White House correspondent, Jessica Yellin.

According to various accounts, family considerations are weighing on Geithner. And the source says he's already informed President Obama he is weighing a departure. There's no official word yet from the Treasury Department or from the White House.

And the Justice Department says a special prosecutor is recommending a criminal probe into the deaths of two prisoners who were -- who were subject to so-called enhanced interrogation while in CIA custody. A U.S. official confirms that one of the cases involves the death of the detainee at Iraq's Abu Ghraib prison back in November of 2003. The special prosecutor cleared American interrogators in 99 other cases he reviewed.

And a surprise for outgoing Defense Secretary Robert Gates. He was awarded the Presidential Medal of Freedom by the commander in chief at his Pentagon going-away ceremony today. President Obama also paid tribute to Gates with tongue partially in cheek.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATS: You look past all of Bob's flashiness and bravado and his sharp attire, his love for the Washington limelight, then what you see is a man that I've come to know and respect. A humble American patriot. A man of common sense and decency. Quite simply, one of our nation's finest public servants.

Bob, today, you're not only one of the longest-serving secretaries of defense in American history, but it is also clear that you've been one of the best.

(END VIDEO CLIP)

SYLVESTER: Gates was first appointed by President George W. Bush and asked to stay on by President Obama, making him the first defense secretary to serve under two presidents from different parties. He's being succeeded by former CIA director, Leon Panetta. And the upcoming NBA season is in jeopardy. The league and players have failed to reach a new collective bargaining agreement, and the NBA says it will now recommend a lockout. Commissioner David Stern says the last season was not profitable for owners and he's resigned to the potential damage a lockout would cause.

And look at what happened to French President Nicolas Sarkozy. He was grabbed and pulled up against a barrier while shaking hands with the public in southwest France today. Security officers, they tackled the man who grabbed Sarkozy, and they took him into custody. And fortunately, Sarkozy wasn't hurt, Wolf.

BLITZER: Wow. That's pretty scary, though...

SYLVESTER: Yes.

BLITZER: ... when you're president of the country and someone does that to you.

SYLVESTER: Look at those pictures.

BLITZER: Those secret service guys, obviously, responded quickly. Very dramatic stuff. Fortunately, he's OK.

Thank, Lisa. Thanks very much.

He started out mocking campaign finance. Now the comedian Stephen Colbert is part of it with his own super, super political action committee. Stay with us.

(COMMERCIAL BREAK)

BLITZER: What started out as a skit on his hit Comedy Central show has now morphed into a political action committee for the comedian, Stephen Colbert, who's shining a satirical spotlight on campaign financing. CNN's Brian Todd is joining us. He has more.

Brian, is Stephen Colbert really serious about all of this?

BRIAN TODD, CNN CORRESPONDENT: He may or may not be, Wolf. You know, for a while now on his show, Colbert has been taking on the ever-loosening rules on campaign finance. He's specifically been aiming his jokes at a Supreme Court ruling last year that opened the doors for more corporate donations to campaigns. Now, in typical Colbert fashion, he's parodying that system by seemingly pretending to join it.

(BEGIN VIDEOTAPE)

COLBERT: Ladies and gentlemen, I'm sorry to say, we won! I am super PAC, and so can you.

TODD (voice-over): In character as always, Stephen Colbert jumps into the mind-numbing world of campaign finance. The Federal Election Commission gives the OK for the comedian to form his own so-called super PAC, a political action committee that will be able to raise and spend unlimited money on ads for the 2012 campaign.

It's part of Colbert's ongoing satire, poking fun at last year's Supreme Court ruling that allowed corporations to spend whatever they want.

COLBERT: I don't know about you, but I do not accept limits on -- my free speech. I don't know about you ...

(END VIDEOTAPE)

TODD: Well, we had a technical problem there, but Colbert went on to kind of make fun of the campaign finance system to make fun of the new Supreme Court ruling as of last year that allowed corporate donations to campaigns.

He had a lot of very funny comments at this rally. He broke out his -- his iPad that was especially outfitted as a credit card swiper and started taking campaign donations. It was a very funny scene out there.

He is starting this new what he calls super PAC that's going to be allowed to accept unlimited donations from corporations. Specifically, this super PAC is going to allow him to create ads for his show. And if his parent company, Viacom, actually helps him produce these ads and they run only on his show, they can spend whatever they want, and they don't have to report it. But if the ads run outside of his show, outside of his network, they do have to report that, Wolf.

So he is taking aim kind of in a tongue in cheek way at the campaign finance system by seemingly joining it, by forming his own super PAC.

BLITZER: Fascinating stuff. Brian, this could have broader, though, implications for politicians on other television networks.

TODD: That's right. You know, some activists who want stricter campaign finance laws are going to be watching this very closely to see if politicians who are also network TV pundits like Sarah Palin and Mike Huckabee on FOX will use that network's resources to help their own political action committees. You know, Stephen Colbert won't say exactly what he's going to do with his new PAC, what kind of money he's going to put into it, what kind of ads he's going to run, but suffice it to say, he'll probably run some, and they'll be very funny.

BLITZER: All right, Brian. Thanks very, very much. Stephen Colbert, as always, very funny, but occasionally serious, as well.

A political analyst, meanwhile, is taken off television after using a four-letter insult to describe the president of the United States. Jeanne Moos will bring us her take on that when we come back.

(COMMERCIAL BREAK)

BLITZER: A pivotal moment in the Casey Anthony murder trial today. Her defense rested without calling Anthony to the stand. CNN's Carol Costello is in Orlando, Florida, with the latest -- Carol.

CAROL COSTELLO, CNN CORRESPONDENT: Wolf, every single day of the trial, people were wondering, would Casey Anthony take the stand? Well, speculation is over. After 49 witnesses, the defense called it a day.

(BEGIN VIDEOTAPE)

BELVIN PERRY, JUDGE: Will the defendant be testifying?

JOSE BAEZ, CASEY'S ATTORNEY: No, sir.

COSTELLO: And with that, all the "will she or won't she" speculation by the millions glued to this case ended.

PERRY: You understand that your decision to testify or not testify is solely your decision and your decision alone?

CASEY ANTHONY, ON TRIAL FOR MURDER: Yes, sir.

PERRY: And it is your decision not to testify?

CASEY ANTHONY: Yes, sir.

COSTELLO: Anthony's decision means jurors will never hear a first-hand account of Anthony's contention her daughter drowned or her contention George Anthony covered it up or her contention she went along with the scheme because of years of sexual abuse at the hands of her father.

UNIDENTIFIED FEMALE: Do you swear or affirm to tell the truth, the whole truth, nothing but the truth so help you God.

COSTELLO: Instead, Anthony's defense attorneys put Krystal Holloway on the stand, who claims she had a sexual affair with George Anthony in 2008, which started before Caylee Anthony's body was found.

KRYSTAL HOLLOWAY, DEFENSE WITNESS: He was sitting on my couch, and I was sitting on the floor. And he had told me -- he had said it was an accident that snowballed out of control. And by the time I looked up, his eyes were filled with tears.

COSTELLO: George Anthony denied the affair and the comment, and the prosecution did its best to discredit Holloway.

JEFF ASHTON, PROSECUTOR: How much money did you or some member of your family get from the "National Enquirer" for selling your story?

HOLLOWAY: Four thousand.

ASHTON: Four thousand dollars. And that was just for talking to them?

HOLLOWAY: Yes, sir. COSTELLO: And then the defense tried what some legal experts called a kind of "Hail Mary" pass. Caylee Anthony's remains were found in a plastic bag with duct tape. Defense attorneys tried to link that with how the Anthony family buried their pets.

BAEZ: When you moved here, did you have a dog named Bo?

GEORGE ANTHONY, CASEY'S FATHER: Yes.

BAEZ: Was Bo buried in a blanket in a plastic bag wrapped with duct tape?

G. ANTHONY: I do not remember.

BAEZ: Did you have a cat named Penny?

G. ANTHONY: Yes.

BAEZ: Was Penny buried in a plastic bag with duct tape wrapped?

G. ANTHONY: No.

BAEZ: And Misty?

G. ANTHONY: Never had a dog Misty.

COSTELLO: The prosecution's responding question.

ASHTON: Mr. Anthony, have you ever taken a dead pet and thrown it in a swamp?

G. ANTHONY: No, sir.

(END VIDEOTAPE)

COSTELLO: Of course, the prosecution threw out that question to make that line of questioning appear ridiculous.

A few more witnesses will testify tomorrow. Closing statements will probably happen on Saturday, and the jury could get the case on Sunday -- Wolf.

BLITZER: Carol, thanks very much. Carol Costello reporting for us.

Timothy Geithner has spoken out about reports he's considering -- considering leaving his job as the treasury secretary. You're going to hear what he has to say. That's coming up at the top of the hour on "JOHN KING USA." That's coming up for our North American viewers.

But first, Jeanne Moos on a bad word, a bad bleep and a TV pundit now off the air.

(COMMERCIAL BREAK)

BLITZER: A bad word and a pundit now off the air. Here is CNN's Jeanne Moos.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): There hasn't been a guy you can call Dick in the Oval Office since President Richard Nixon. But suddenly on morning TV, the "D" word raised its ugly head. Begins with "D," rhymes with "hick."

MARK HALPERIN, AUTHOR/POLITICAL ANALYST: We're in the seven-second delay today?

UNIDENTIFIED FEMALE: Oh, boy.

HALPERIN: I wanted to characterize how I thought the president behaved.

UNIDENTIFIED FEMALE: Go for it. Let's see what happens.

JOE SCARBOROUGH, MSNBC HOST: You...

HALPERIN: I thought he was kind of a (EXPLETIVE DELETED) yesterday.

SCARBOROUGH: Oh, my God. Delay that. Delay that. What are you doing?

HALPERIN: I think the president...

SCARBOROUGH: I can't believe you. I was joking. Don't do that. Did we delay that?

MOOS: Nope. No delay. And there wasn't much of a delay in the apology either. After all, Mark Halperin is a big-time political writer and analyst.

HALPERIN: It's an absolute apology, heartfelt, to the president and to the viewers. I made a mistake. I'm sorry, and I shouldn't have said it.

MOOS: MSNBC suspended Halperin indefinitely as an analyst, saying, "We apologize to the president, the White House and all of our viewers."

The White House spokesman said he had called the network.

JAY CARNEY, WHITE HOUSE SPOKESMAN: It would be inappropriate to say that about any president of either party.

MOOS (on camera): Actually, the "D" word episode seemed to be part of a larger inside joke about the show's delay button.

(voice-over) The delay was set up almost three years ago after the host himself, Joe Scarborough, swore without realizing it.

SCARBOROUGH: For screaming "(EXPLETIVE DELETED) you" at the top of their lucks. My wife is going to kill me. MOOS: After that, two delay buttons were established, one for live remotes and one for the studio. Before the show the hosts were joking about testing the buttons. There was a new executive producer manning the controls.

ALEX KORSON, EXECUTIVE PRODUCER: This is one button here. Right? You think this is it. Well, apparently, there's this other button over here.

UNIDENTIFIED FEMALE: Alex, you're supposed to actually know how to do the job before you get the job.

KORSON: A lot of buttons here.

MOOS: If you really want to see a guy having trouble with buttons, check out this Tucson, Arizona, cable access host trying to cut off an obscene prank caller.

UNIDENTIFIED MALE: (EXPLETIVE DELETED), (EXPLETIVE DELETED), (EXPLETIVE DELETED)

UNIDENTIFIED MALE: OK. Mute.

MOOS: Remember the good old days when Jon Stewart was celebrated for using the "D" word to attack the then-hosts of a CNN show called "CROSSFIRE."

JON STEWART, HOST, COMEDY CENTRAL'S "THE DAILY SHOW": You're as much of a (EXPLETIVE DELETED) on your show as you are on any show.

MOOS: Turns out Mark Halperin apologized a couple of years ago for saying that John Edwards "thinks Obama is kind of a" 'P' word that means timid. Now that he's used the "D" word, as well, the Web site Gawker reports that Halperin has called Obama both types of genitalia.

Hey, gentle. As you look for the d-spot, disconnect.

UNIDENTIFIED MALE: One button, two buttons, three buttons, four.

MOOS: Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

BLITZER: That's it for me. Thanks very much for watching. I'm Wolf Blitzer in THE SITUATION ROOM. For our international viewers, "WORLD REPORT" is next. In North America, "JOHN KING USA" starts now.