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THE SITUATION ROOM

Strauss-Kahn Case Crumbling?; Bill Clinton Speaks Out

Aired July 1, 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 you can see more of Jim's report this weekend. It's part of a CNN special called "Stories: Reporter," hosted by Tom Foreman, Sunday night, 7:30 p.m. Eastern, 4:30 p.m. Pacific.

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

Happening now: a bombshell in the case of the former international finance chief accused of sexually assaulting a hotel maid, Dominique Strauss-Kahn freed from house arrests after new doubts are raised about the credibility of his accuser.

And a CNN exclusive -- we will take you inside the secret nerve center that coordinates America's counterterrorism efforts. We will hear from the man who has run this 24/7 operation.

Plus, was the blueprint for FOX News laid out nearly 40 years ago in a Nixon White House memo about ways to get the GOP on TV?

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.

A new shocker in the case that shocked the world. He was a powerful global finance figure from France charged in the United States for an alleged sexual assault on a hotel housekeeper. Now the former International Monetary Fund chief Dominique Strauss-Kahn is free from house arrest after serious doubt were raised about the credibility of his accuser.

Let's go straight to our national correspondent Susan Candiotti. She is in New York. She has covered this case from day one.

And this is really a bombshell development over the past 24 hours.

SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT: Oh, that's to put it lightly, Wolf.

Just over 24 hours ago, we first learned about serious problems with the believability of the maid making the accusations in this case. And tonight it's snowballed into a decision by the court to release Dominique Strauss-Kahn from house arrest and set him free on his own reconnaissance.

(BEGIN VIDEOTAPE)

CANDIOTTI (voice-over): His troubles aren't over, but a stunning reversal of fortune for Dominique Strauss-Kahn. With his wife at his side, a smiling DSK left court with a $6 million bail off his back after the state's sex assault case against him went into a freefall.

JUDGE MICHAEL OBUS, NEW YORK STATE UNIFIED COURT SYSTEM: There will be no rush to judgment in this case.

CANDIOTTI: Prosecutors admitted to the DSK defense attorneys Thursday and then to a judge that the hotel maid's credibility was developing gaping holes. She has accused the former powerful French world banker of sexually assaulting her in a posh New York hotel suite, but, according to authorities, now admits to lying about parts of her story, and that's not all.

Among other discrepancies, the state says after the alleged attack, she repeatedly told police and a grand jury that she stayed in a hallway after escaping DSK until he left in an elevator. Prosecutors now say she admits the truth. She first cleaned another hotel suite, then returned to the scene of her sexual encounter, before reporting it to her supervisor.

Other alleged lies include claiming she was gang-raped in her native Guinea as part of an asylum claim to remain in the U.S., admitting she didn't tell the truth in a tax return by claiming a friend's child as a dependent, and lowballing her income.

JOAN ILLUZZI-ORBON, MANHATTAN ASSISTANT DISTRICT ATTORNEY: Although it is clear that the strength of the case has been affected by the substantial credibility issues relating to the complaining witness, we are not moving to dismiss the case at this time.

CANDIOTTI: The maid's lawyer accused the Manhattan DA of, in effect, hanging his client out to dry.

KENNETH THOMPSON, ATTORNEY: Our concern is that Manhattan district attorney Cy Vance is too scared to try this case. The district attorney has an obligation to stand up for this rape victim.

CANDIOTTI: DSK's defense team is claiming credit for flagging credibility issues last month, now accusing the maid of -- quote -- "substantial lies."

BENJAMIN BRAFMAN, ATTORNEY FOR DOMINIQUE STRAUSS-KAHN: We asked you and we asked the world not to rush to judgment in this case. And now I think you can understand why.

CANDIOTTI: There a lot of whys that no one can answer. Question is, will the case be dismissed and will the truth ever be known?

(END VIDEOTAPE)

CANDIOTTI: And the other elephant in the room is that DNA evidence, forensic evidence that a sexual encounter of some kind happened in that hotel suite, according to authorities. But here we have a case where, even with that strong evidence, because of credibility issues, the prosecution is thinking about the possibility of dropping the felony case. Wolf, it's remarkable.

BLITZER: Yes, it is remarkable. So when is he due back in court, Dominique Strauss-Kahn?

CANDIOTTI: Well, he is supposed to appear again on the 18th of July, but if there is a decision to toss the case, it could of course come sooner. Defense attorneys are certainly calling for that, consistently maintaining Strauss-Kahn's innocence, but an attorney for the maid -- and you heard from him -- says she was allegedly assaulted in that hotel room and she wants justice.

BLITZER: Now, the prosecution now says he can travel anywhere in the United States. He is out free on his own reconnaissance. What a remarkable change from what existed only 24 hours ago.

CANDIOTTI: I will say. And certainly he has been staying all along, all this time in a very posh townhome that he has been renting and paying, oh, about $250,000 a month for security, for his electronic surveillance and he certainly doesn't need to do that anymore. Now, the court did not give him his passport, so he must stay in the United States.

BLITZER: Other than that, he is free to go about living in the United States and doing whatever he wants, at least for now.

CANDIOTTI: So it would seem.

BLITZER: All right, thanks very much, Susan, doing some excellent reporting for us.

Let's dig deeper right now with our senior legal analyst, Jeffrey Toobin. He's joining us on the phone.

Jeff, I think it's fair to say this is truly a stunning development in this case, but give us some perspective.

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Well, Wolf, I have covered a lot of trials and a lot of investigations and I think today was one of the most extraordinary and dramatic days I have ever since in any case.

This case is really hanging by a thread at this point. But there was also something perplexing, because even though these were damaging statements about her credibility, they didn't seem to justify dropping the case at this point. There is not -- lying on an asylum application and not telling the full truth about your -- the initial event is not, it seems to me, something that needs to justify dropping the case.

BLITZER: Well, it sounds to me they have more evidence of lying on her part.

I read this letter that the district attorney, County of New York, sent Dominique Strauss lawyers. And there is a pattern of this woman lying to the federal government on a whole range of issues unrelated to the case at the hotel, but even some related to the case at the hotel.

TOOBIN: No, that's certainly true. And there is a paragraph in that letter which basically says, and there are other lies, which we don't know about them.

But I have to say, the press conference held by the victim's lawyer, where he describes the injuries that she suffered -- or that he claims she suffered -- was very persuasive and very dramatic and frankly would not be much affected by the fact that she lied on her asylum application.

So his claim that Cyrus Vance is effectively throwing the victim under the bus, that really needs to be considered. I was very struck by that. And I think Cy Vance, if he dismisses the case, is certainly going to have a lot of explaining to do.

BLITZER: One thing he's going to have to explain is why he so quickly decided to charge Dominique Strauss-Kahn, within hours, not knowing much about this woman's history or past, her credibility.

TOOBIN: We often talk about it, but it is reinforced time after time, the dangers of a rush to judgment, whether it was the Duke lacrosse case or this case. Cases look different after you investigate them for a few days or a few weeks.

And prosecutors, journalists, we all could learn that lesson. And Cy Vance may learn a very unfortunate and damaging lesson for what might be a rush to judgment here.

BLITZER: Yes. And there's no doubt that, as you pointed out, he has in Benjamin Brafman one of the best criminal defense attorneys in New York. He's a guy who just doesn't lose a whole lot of cases, isn't he?

TOOBIN: He certainly doesn't.

And, again, what always mattered most in these cases is not courtroom theatrics, but thorough investigation. And here, to the credit of the district attorney's office, they were the ones that disclosed the damaging information about their own witness. That's part of their obligation as prosecutors. But there was also a defense investigation about her credibility.

And it seems clear that there are a lot of problems, but there is also DNA evidence of a sexual encounter. There is evidence of injury. And a jury might find that very persuasive, even if she does have credibility problems. So I don't think this case is over. But it obviously looks a lot different now than it did 48 hours ago.

BLITZER: All right. We will stay on top of the case together with you. Jeffrey, thanks very much.

Other news we are following. The Libyan leader, Moammar Gadhafi, is warning NATO of revenge attacks if it doesn't stop its air war against the regime. In an audio message relayed to thousands of supporters in Tripoli today, Gadhafi advised NATO to withdraw and run away.

He said the Libyan military could be like locusts and bees in Europe, potentially targeting homes and offices. The Libyan leader still has many loyal followers, including a number of female fighters.

CNN's David McKenzie has this report from Tripoli.

(BEGIN VIDEOTAPE)

DAVID MCKENZIE, CNN CORRESPONDENT (voice-over): Assembling a general purpose machine gun with an unusual accessory at hand. The women of the region have come to Ben Walid to prove their loyalty and to show off their weapons, which they're not afraid to use.

(on camera): These are people -- sisters, grandmothers and mothers. But in Moammar Gadhafi's Libya, they are a fighting force.

(voice-over): From a young age, girls get military training in schools here. But with a war on, Libya's embattled leader has caused for fresh volunteers. And women of all ages are signing up, like 40- year-old textile worker Fatima Masul (ph).

"I train after work at 4:00," she says." I go to train on using weapons. I like it and I like the training, and defending my country. And now I'm training other women to use the guns."

"They learn to use this to defend Moammar and the country," this sergeant says. "They're trained to use it. They assemble it and they take it apart, and they shoot and they get excellent scores."

But many of these women are still unfamiliar with their rifles.

The volunteers were bused out by the government to meet us. It's tempting to dismiss them as a military force, but consider this -- the Nuns of the Revolution, Gadhafi's famous female bodyguards. They're not just cosmetic. One reportedly took a bullet for him in Athens in '98. And since the '70s, women have trained in a special facility in Tripoli for combat.

We met a female soldier at a graduation ceremony. She didn't want her name used. She's still fresh from the eastern front, a (INAUDIBLE) still attached to her wrist.

"I forget my role as a woman. My role is now to fight," she tells me. She has four children and a husband fighting near Misrata.

"Do not underestimate any women in Libya, whether old or young," she says." At any age, do not underestimate her. The women are still able to perform more than you think."

The Libyan government claims they have handed out more than a million weapons to civilians since the beginning of the uprising. Raised to fight, could the loyalty of Libya's women be the defining factor in this war?

David McKenzie, CNN, Tripoli.

(END VIDEOTAPE)

BLITZER: Class warfare in the battle over raising the U.S. debt limit.

(BEGIN VIDEO CLIP)

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: In just the eight years before President Obama took office, 90 percent of the income gains went to the top 10 percent and over 40 percent of the income gains went to the top 1 percent.

And if you point that out, you're accused of waging class warfare.

(END VIDEO CLIP)

BLITZER: He feels very strongly about this accusation of class warfare.

You are going to hear more of my interview with Bill Clinton, the former president weighing in on the current president's battle with the GOP.

Also, an exclusive interview with a man who has been front and center in the fight to keep America safe. He tells us what his greatest concern in the war on terror is right now.

And did Roger Ailes have a blueprint for his FOX News Channel in the early days of the Nixon White House? We're going to show a document that is raising some questions.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: With the 2012 battle lines drawn, President Obama this week used some very tough language to take his political adversaries to task on the U.S. economy, specifically the looming debt crisis.

I had a chance to talk about that with a former president who won reelection. I'm talking about Bill Clinton. We sat down during in Chicago his Clinton Global Initiative Conference, a forum aimed at tackling America's economic problems.

(BEGIN VIDEOTAPE)

BLITZER: President Obama at that news conference this week, he really went after the Republicans. It was almost class warfare, as they like to say. Does that help or hurt this effort to resolve this crisis right now, when you get into that bitter kind of rhetoric?

CLINTON: I don't know. I didn't hear the press conference and I can't comment. But I think you got to be careful, all the rest of you who report on this, in talking about class warfare.

Let's just look at the facts here. Ever since their theory of the case become dominant in America, right, in the 1980 presidential election. From 1981 to 2011, let's look at what happened. From World War II to 1981, the bottom 90 percent of Americans earned about 65 percent of the national income. Top 10 percent earned 35 percent. Top one percent earned nine. It was enough extra to encourage people to be smart, to work hard, to be creative, to take risks.

From 1981 to 2011, the bottom 90 percent share of national income dropped from 65 to 52. The top 10 percent went from 35 to 48. The top one percent went from one to nearly 22. In just the eight years before President Obama took office, 90 percent of the income gains went to the top 10 percent and over 40 percent of the income gains went to the top one percent.

And if you point that out, you're accused of waging class warfare.

BLITZER: Because the president's accused of being anti-business.

CLINTON: Yes, but you're not anti-business.

Look, when I raised taxes they said all that about me. We had more jobs than ever before and I cut a lot of business taxes. But I cut taxes for investment and for investment, particularly technology and investment and in particular areas. And I would be all for that again. I'm for a payroll tax cut on business employers as well as employees. I have no problem with that any time you're creating jobs. But what our goal should be is to go back to being a country with the biggest middle class in the world and broadly shared.

One of the reasons that most of our economic gains in the seven years and eight months, from the time I left office to the financial crash, most of our economic gains were in finance, housing and consumer spending. They were -- and the consumer spending was financed by maxed out credit cards because we weren't creating enough new jobs and people weren't getting pay raises and health care costs went up at three times the rate of inflation.

So it's not class warfare to point that out, to point out that this economy needs to reinvigorate a path for poor people to work their way into the middle class and for the middle class to improve their incomes. That's not class warfare. It's not class warfare to ask Bill Clinton, who was the disproportionate beneficiary of the economy for the last 10 years to actually return to the taxes I was paying when all of America had a much stronger economy and all of America was benefiting more.

BLITZER: Because the argument is, you know, the top 2 percent of income earners in America pay, what, 30 or 40 percent of all federal income tax. And half of the people in America pay no federal income tax.

CLINTON: That's right. And they shouldn't. But the top one percent also got 43 percent of the income gains in the last decade. BLITZER: So what you're saying, they can afford to pay some more tax.

CLINTON: Yes. I'm saying, when your country's in trouble and you're saying, look folks, we're all going to have to sacrifice, they'll have to be changes in Medicare, they'll have to be changes in Social Security, they'll have to be changes in this, that and the other thing. The public workers need to give up some of their pension benefits. And I think a lot of these state reforms have been necessary.

But the one group we cannot ask to sacrifice that are the people that have already benefited the most, who while they were benefiting, did not create many jobs for this economy. I don't think that's class warfare. I think -- and maybe the words should be different. But that's what I asked America to do in 1993 and it worked because we had half revenue increases and half spending cuts. And we got may more deficit reduction than we thought because we had more economic activity.

We just need a plan where we share the investment in the future, we share the opportunities and we share the responsibilities.

BLITZER: I remember those days because I was covering the White House for CNN at that time and you were bitterly criticized when you raise taxes but you got yourself reelected in 1996, as you well remember and all of our viewers remember.

(END VIDEOTAPE)

BLITZER: All right, let's dig deeper right now. That was the final part of my interview with the former president of the United States.

CNN's Joe Johns is here.

We always hear this charge of class warfare. What do you think of the way the former president dealt with this accusation?

JOE JOHNS, CNN SENIOR CORRESPONDENT: Well, the former president used a few words there that were very important: "Maybe the words should be different."

Back in the day when Bill Clinton was president, certainly, he did raise taxes, and then he moved along and he actually had a huge trade agreement, NAFTA, among other trade agreements, and built himself up as this sort of pro-business president over the years.

BLITZER: Created 20 million jobs during his eight years at the White House.

JOHNS: Absolutely. Right. Right.

And we look at President Barack Obama. He is still very new into his administration. Well, he's midway, I should say, into his administration. BLITZER: Two-and-a-half years.

JOHNS: Right. Right. And he's got a little bit different rhetoric.

You hear so much talk about raising taxes on millionaires and billionaires, but the rhetoric of it is raising taxes on people who make $250,000 or more. You hear this talk about corporate jets over and over again in a news conference, and you start to understand the words this president is using are lending themselves to this argument that he's engaging in more class warfare than usual, because it's always been a part of the system.

The only thing the founders cared about was that it didn't turn violent.

BLITZER: And it helps explain why so many of the big business leaders in the country think that President Obama, rightly or wrongly, is anti-business.

JOHNS: Sure. Right.

And I talked to one Democratic strategist today who said, the thing about President Obama is, he hasn't owned or run a big business. He doesn't understand the language a lot of these people speak.

And this person was saying to me, look, if they raise a lot of taxes on me, I am going to really have to make some tough hiring decisions on the people who work for me. So, that becomes the kind of discussion that you want to have with somebody who feels very comfortable having run a business or whatever.

BLITZER: And that's why a lot of people are going to be watching -- if Timothy Geithner, the treasury secretary, leaves any time soon -- I don't think he will, but if he does leave, who the president would nominate to replace him at the Treasury Department.

Would it be someone from academia or someone like Timothy Geithner, who is sort of in the government business, or somebody from big business? That's a question we won't have the answer to until he nominates someone.

(CROSSTALK)

BLITZER: I suspect Timothy Geithner is going to stay for the time being.

JOHNS: Yes. We will see.

BLITZER: Yes. All right, John, thanks.

(CROSSTALK)

JOHNS: A hard job.

BLITZER: Yes. He looked like -- I flew back from Chicago on the same flight with him yesterday.

JOHNS: I know.

BLITZER: So -- and when I spoke with him, he gave me the impression he was staying at the Department of Treasury. But we will see.

JOHNS: You bet.

When you look at the guy, the first thing you think of is, what a run this guy has had. It's been a very tough, tough period to be treasury secretary.

(CROSSTALK)

BLITZER: And between now and August 2, it could get a whole lot worse if that debt ceiling isn't raised, if they don't work out some sort of deal.

Joe, thanks very much.

You can see, by the way, the rest of my wide-ranging interview with the former President of the United States Bill Clinton tomorrow in THE SITUATION ROOM, Saturday, 6:00 p.m. Eastern, right here on CNN.

You can read my blog today, what I wrote about the president and this class warfare struggle that is going on, this debate over class warfare, CNN.com/situationroom, what we call the Blitzer Blog. Go ahead and read it, check it out.

An exclusive look inside the National Counterterrorism Center.

(BEGIN VIDEO CLIP)

MICHAEL LEITER, DIRECTOR, NATIONAL COUNTERTERRORISM CENTER: We generally have a map of the world, so we can see where we are concerned at certain threats. We might have information about where there are airliners traveling that we were watching for some reason.

(END VIDEO CLIP)

BLITZER: Jeanne Meserve got inside. And you are going to meet the man in charge of connecting all those dots and find out why he is leaving now. Stand by. This is a CNN exclusive.

And long before he started FOX News, Roger Ailes worked in the old Nixon White House. Now a newly unearthed document -- document shows what may have been an early blueprint to get the GOP on TV.

(COMMERCIAL BREAK)

BLITZER: A key move in the war on terror: President Obama planning to name a new director of the office which coordinates America's 16 intelligence and security agencies.

The White House says the nominee to head the National Counterterrorism Center will be Matthew Olsen, a former federal prosecutor who is now at the National Security Agency.

Our homeland security correspondent, Jeanne Meserve, got some exclusive access to the nerve center and the man who until now has been leading it.

It's a really amazing situation that is unfolding there, Jeanne.

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: It is, Wolf.

As director of the National Counterterrorism Center, Michael Leiter has been front and center in the fight to keep America safe. In an exclusive interview, he reflected on the highs, the lows and the current threat picture.

(BEGIN VIDEOTAPE)

LEITER: This is where, 24 hours a day, seven days a week, information from every element of the U.S. government and from around the world comes together in one place.

MESERVE (voice-over): The National Counterterrorism Center was created after 9/11 to better integrate and analyze intelligence and mitigate the possibility of again failing to connect the dots.

(on camera): So, these are your foot soldiers, as it were.

LEITER: These are. These are the sergeants and the noncommissioned officers who are working every day, finding those nuggets and making sure that we can detect threats before they materialize

MESERVE (voice-over): It is a big job.

LEITER: We're awash in threats all the time. So, it's filtering through those. And, right now, we don't see anything of particular concern.

MESERVE (on camera): Awash in threats all the time. What do you see here and what do you see in terms of trends?

LEITER: Well, we see over 6,000 to 10,000 pieces of intelligence related to terrorism here every day. Forty, 50 threats a day that are of particular concern to us. And the threats are, especially over the past two years, far more diverse than they used to be.

MESERVE: Leiter's greatest concern right now, al Qaeda in the Arabian Peninsula, which is exploiting the personal unrest in Yemen.

(on camera) Do you see the safe haven there expanding?

LEITER: I think Al Qaeda has taken advantage of some of the disruptions, especially in the south of the country, and that's a real concern for us.

MESERVE: Does it present an opportunity for the United States in some way? Is this the moment, perhaps, to take action?

LEITER: We look at this as an excellent time to take the fight to the enemy.

MESERVE (voice-over): That includes al Qaeda central, which Leiter believes is vulnerable after the death of Osama bin Laden. Leiter says bin Laden's successor, Ayman al-Zawahiri, is among those who may try to exact revenge.

LEITER: I think certainly the desire is there, but the question is, do they have the capability. And that's why, again, we're trying to hit them during a period of real vulnerability.

MESERVE: Leiter says the raid on the bin Laden compound was one of the high points of his tenure. He says relief was the dominant emotion in the White House situation room when bin Laden was killed

LEITER: I wouldn't say rejoicing. We really didn't rejoice. But for me, knowing that we had closed a bit of the story and turned to a new chapter for the families in their memory, I think that was the most rewarding thing.

I know after the event, I called one of the families of the victims of 9/11. And to speak to them and know that we could show that we had been working on this for so long and so hard and have some success, that was incredibly gratifying.

MESERVE: The low point, Leiter says, was Christmas Day 2009 when a Nigerian named Umar Farouk Abdul Mutallab allegedly tried to light a bomb concealed in his underwear and bring down a jetliner over Detroit.

LEITER: We thought we were doing everything we could, and we thought we were doing everything well and it turned out we missed one. And us missing one almost led to a tragic death of many, many people. So that was a -- that's a tough moment and a tough month after.

MESERVE (on camera): It was a wake-up call?

LEITER: I think it was a wake-up call. And I think the organization at that point and I at that point had an opportunity to make a choice. Did we kind of curl up and die? Did we not accept criticism or take the criticism and prove the center? And I think we close the latter, and I'm quite proud of that.

MESERVE (voice-over): When the Christmas Day plot unfolded, Leiter went on a previously scheduled ski vacation with his young son. When White House officials said they approved it, Leiter was criticized.

LEITER: I'm not sure that people understand the reality: you're not really on vacation and the constant communications we're in in these jobs. But I have regrets, because it left an image of NCTC and it left an image of the counterterrorism community as not being 100 percent focused on these issues all the time. And I was extremely regretful and continue to be that my choices ended up reflecting badly on the organization and the administration. I'm very sorry about that.

(END VIDEOTAPE)

MESERVE: Michael Leiter is stepping down because he says it's good for the agency to have new leadership with new perspective. And after four and a half years running at 100 percent capacity 24 hours a day. He says he's ready to slow down a bit.

On Monday, we'll Leiter talk about homegrown terrorism, how to balance security and privacy, and how his connection to the World Trade Center has inspired his work -- Wolf.

BLITZER: He's a really, really good guy, a smart guy who's done great work for the country, and we wish him only success and happiness in the next chapter of his life, too.

MESERVE: Whatever it is.

BLITZER: We don't know what he's going to do, but I'm sure he'll be doing something good and maybe he'll be working a little bit less. He's been working hard over these years, protecting all of us. Thanks very much, Jeanne. We will look forward to the report on Monday.

Was the blueprint for FOX News laid out some 40 years ago in a Nixon White House memo about ways to get the GOP on TV? We have a document.

And the trial that gripped the nation enters a critical new phase. What's next for Casey Anthony?

And a look how a would-be rapper managed to shut down Times Square.

(COMMERCIAL BREAK)

BLITZER: From four decades ago in a memo from the Nixon White House. Brian Todd has been digging through the archives. Brian, what have you learned?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, that memo and some notes on it from a man believed to be FOX News founder Roger Ailes shows that, as far back as 1970, conservative leaders and their media consultants had a plan to influence TV news.

(BEGIN VIDEOTAPE)

ANNOUNCER: It's fair and balances.

TODD (voice-over): They say they're a fair and balanced alternative to the liberal media. Did Roger Ailes have a blueprint for the FOX News Channel in the early days of the Nixon White House?

CNN obtained an early '70s memo from the Nixon Library entitled "A Plan for Putting the GOP on TV News." A Nixon aide wants to create a news service to provide pro-administration videotape hard news actualities to the major cities of the United States. They want to do that on local TV stations to circumvent the broadcast networks.

It's not clear who wrote the memo. The Nixon Library tells us it's in the files of Nixon's later convicted chief of staff, H.R. "Bob" Haldeman. But there's handwriting all over it with detailed suggestions on how to make the plan work. The person writes, "Bob, if you decide to go ahead, we would, as a production company, like to bid on packaging the entire project." He later signing off, "Best regards, Roger."

The Web site Gawker, which first discovered this, says the handwriting is that of Roger Ailes, then an outside media consultant for Nixon. Howard Kurtz of CNN's "RELIABLE SOURCES" says you can't compare Ailes then to Ailes now, but...

HOWARD KURTZ, HOST, "RELIABLE SOURCES": Ailes recognized then and recognized when he created FOX News Channel that there was a mighty media machine that he believes leans to the left. And FOX was created, in part, as an antidote to that. Not to put out Republican talking points, but to give what FOX would say is the other side of the story.

TODD: We asked Kerwin Swint, author of a book on Roger Ailes, how the memo reflects the Nixon White House's dealings with the media.

KERWIN SWINT, AUTHOR, "DARK GENIUS": It says very clearly that they did not trust the mainstream media, that they viewed the media as an instrument of the political left. They believed that they were never going to get a fair shake through the mainstream media.

TODD: And what a potential counter attack. The memo lays out every production cost and a schedule: from videotaping interviews with Republican congressmen in the morning...

(on camera) Getting the taped pieces to the national airport to getting it to the cities.

KURTZ: It shows me that Roger Ailes had a great attention to detail to make things work, but it also shows me that this was an era, almost a Paleozoic era, before satellite interviews, so that you had to find a way to not only do the interviews with your own Republican partisans, but to physically get the tape to television stations so they can play them in the same news cycle.

(END VIDEOTAPE)

TODD: The plan never appears to have gotten off the ground, but Ailes went on to establish FOX News Channel a quarter century later, 1996. We contacted FOX for a response. A spokeswoman there said they would provide a statement only if CNN promised, sight unseen, to run the statement in its entirety. It's against CNN policy to make such promises -- Wolf.

BLITZER: The man, Roger, believed to be Roger Ailes, in this particular case, he also took into account the possibility the plan wouldn't work. TODD: He raised all these scenarios. It's fascinating. He says maybe it won't work if there's going to be too much Republican fear of a Democratic outcry over this. Maybe it won't work if too many local TV station managers are Democrats or if the egos of the news department heads are too big, and they want to do this kind of thing themselves. So much detail in that memo that shows they were very serious about this. They really wanted to do this.

BLITZER: You've got to give him a lot of credit, though, Roger Ailes. He's got a lot of credibility in terms of what he has achieved over these years.

TODD: Absolutely.

BLITZER: FOX News Channel is very, very successful.

TODD: Yes.

BLITZER: Thanks very much for that.

The president of Venezuela has cancer. Lisa Sylvester is monitoring that and some of the other top stories in THE SITUATION ROOM right now. What do you have, Lisa.

LISA SYLVESTER, CNN CORRESPONDENT: Hi there, Wolf.

Well, Venezuelan officials insist President Hugo Chavez is capably running the country from Cuba. Chavez dropped a bombshell last night when he announced on state television that he's been in Cuba where he's had a cancerous tumor removed. He didn't give any details, but the news is raising concern about a power vacuum in Venezuela.

NFL quarterback Michael Vick has landed his first endorsement deal since he served 20 months in prison for dog fighting. He recently signed with Nike, which dropped him in 2007 as the scandal exploded. The endorsement deal is the latest step in Vick's professional rehabilitation, which has included signing with the Philadelphia Eagles.

And the man who grabbed French President Nicolas Sarkozy and threw him up against a barricade in a story that we told you about yesterday, well, he has been given a six-month suspended sentence and released. The 32-year-old was charged with violence against a person holding public authority; will also have to perform community service. Sarkozy did not press charges against the man. Look at those -- those pictures, but in the end, Sarkozy decided not to charge.

BLITZER: It's a pretty amazing situation. All right. Thanks very much.

A closely-watched murder trial now in the home stretch.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: No one else benefited from the death of Caylee Marie Anthony. Caylee's death allowed Casey Anthony to live the good life, at least for those 31 days.

(END VIDEO CLIP)

BLITZER: Major developments approaching in the Anthony -- in the Casey Anthony murder trial. We're going live to Florida for the latest.

Plus, British royals get a rock star welcome. We're following William and Kate in Canada.

(COMMERCIAL BREAK)

BLITZER: Canadians are celebrating their national day with two high-profile visitors, the duke and duchess of Cambridge, better known as Prince William and his new bride, Catherine. CNN's Max Foster is following their visit in Ottawa.

(BEGIN VIDEOTAPE)

MAX FOSTER, CNN CORRESPONDENT (voice-over): Here they come, the duke and duchess of Cambridge in the open-top Canadian state Landau. The crowds are screaming "Will and Kate, Will and Kate."

Pulling up here, and they're about to come out onto the red carpet and to make their way to the centennial flame. They'll hear the royal salute and you'll hear the snow birds in formation flying over Ottawa. But this really is reminiscent, isn't it, of the royal wedding in that open-top carriage.

Catherine wearing a high street outfit which she's worn before, appropriately, in white and red.

Here we have it. Full pomp and pageantry on display here on Canada Day in Ottawa. The duke and duchess standing on the red carpet. Twenty-one-gun salute.

This is rock star royalty, isn't it? Catherine and William walk past the crowds to enormous applause. These people have been waiting all morning to see the royal family, and this is the next generation.

(END VIDEOTAPE)

BLITZER: Max Foster reporting for us. We're going to continue to watch the visit to Canada and then to the United States.

The Casey Anthony murder trial is almost over. We're live with the jury results. When will the jury actually get its hands on the case?

And the would-be rapper who shut down Times Square by sitting atop a pole. Jeanne Moos will take a closer look.

(COMMERCIAL BREAK)

BLITZER: The most closely watched murder trial in recent years is about to enter a new and final phase. Closing arguments in the Casey Anthony trial likely to happen this weekend. CNN's -- CNN's David Mattingly is in Orlando, Florida, watching all of this wrap up.

So what's the schedule for tomorrow and maybe even Sunday? What's going on here?

DAVID MATTINGLY, CNN CORRESPONDENT: Well, Wolf, all the witnesses have been called. There's no more testimony in this case. The attorneys for the defense and the prosecution will be having their closing arguments beginning Sunday morning. And that means the jury could get this in their hands by some time Sunday evening. And it's this jury that will be determining Casey Anthony's future, her life and her freedom.

BLITZER: And what about tomorrow, Saturday? What happens tomorrow?

MATTINGLY: Tomorrow there is no court at all. Both sides will be retreating in private to work on their closing arguments. It's a preparation day. They have a lot at stake. They've had over 100 witnesses. We've had 33 days of testimony. They've got a lot of information to package and present to the jury when they do those closing arguments on Sunday.

BLITZER: So closing arguments Sunday and maybe it will go to the jury on Monday. We'll see what happens in that area.

There was another -- yet another surprise on this date. Casey Anthony's mother apparently caught in a lie. What happened?

MATTINGLY: That's right. Experts called by the prosecution today testified that, according to computer records where she works, Cindy Anthony was actually at work, working there at a time when she testified earlier that she was at home doing searches for information about chloroform.

That is a big blow to the defense, if the jury decides that Casey Anthony was the one at that computer, searching for information about chloroform and neck breaking. That shows potential premeditation, and that could weigh very heavily as they determine the death penalty.

BLITZER: All right. We'll see what happens. David, thanks very much.

First came Friday prayers. Then came the deaths. Lisa Sylvester is monitoring the situation in Syria right now. Also some of the other top stories in THE SITUATION ROOM. What's going on, Lisa?

SYLVESTER: Hi, there, Wolf.

Well, at least nine people have been reported killed in what are now regular Friday protests in cities across Syria. Human rights activists accuse the regime of President Bashar al-Assad of killing more than 1,300 civilians since anti-government demonstrations started in March. The government says armed gangs are responsible for most of those deaths.

And while deadly protests demanding change have swept the Arab world, Moroccans peacefully voted on change today. A referendum announced last month by King Mohammed VI would drastically reshape the country's constitution while diluting the king's power. Among the changes: voters would elect a prime minister instead of the king appointing one.

And large portions of New York state will soon be open to natural gas drilling using a controversial method called fracking. It involves injecting water, sand and chemicals into the ground to crack shale rock and release the gas inside. Critics say it contaminates drinking water. Fracking would be banned in the New York City watershed.

And new rules have been approved to help fight fatigue among air traffic controllers following some widely-reported incidents of controllers falling asleep on the job. Among the changes: those working overnights will be allowed to listen to the radio and read appropriate material. And anyone too tired to work can request a leave of absence -- Wolf.

BLITZER: Thanks very much for that, Lisa. Appreciate it.

For our North American viewers, "JOHN KING USA" is coming up at the top of the hour. Then here in THE SITUATION ROOM, before then, Jeanne Moos will show us how an aspiring rapper shut down Times Square.

(COMMERCIAL BREAK)

BLITZER: Here's a look at this hour's "Hot Shots."

In Thailand a candidate salutes a crowd of her supporters two days before major elections.

In Russia, boys cool themselves in a fountain during a hot summer day.

In Monaco, people wearing traditional costumes parade prior to a royal wedding.

And in Israel, hundreds of people participate in an annual water fight.

"Hot Shots," pictures coming in from around the world.

Being discovered in New York certainly isn't easy. One aspiring rapper, though, took a shortcut. As CNN's Jeanne Moos tells us, it didn't lead to fame, but it led to Bellevue.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): It doesn't take much these days to shut down the crossroads of the world. A guy on a pole?

(on camera) What was he doing up there?

UNIDENTIFIED MALE: Sitting there, eating (ph) the top of the pole, acting like an idiot.

MOOS (voice-over): His little pole dance caused police to close Seventh Avenue in the heart of Times Square.

(on camera) What did you see him doing up there, anything?

UNIDENTIFIED FEMALE: He was rapping.

MOOS (voice-over): Rapping after being ejected from Viacom's MTV for trying to hand out CDs.

Police surrounded the light pole, pulled their truck up against it, and inflated an air bag in case 34-year-old Raymond Velasquez of Brooklyn fell or jumped. Some in the crowd jokingly yelled...

UNIDENTIFIED FEMALE: Jump!

MOOS: For almost two hours, police tried to talk him down, even as he talked on his cell.

UNIDENTIFIED MALE: He's on the phone.

UNIDENTIFIED FEMALE: He's on the phone?

MOOS: Witnesses downloaded videos of the Times Square pole guy to YouTube. When he lifted his shirt.

And while his Times Square pole performance was inaudible, you can hear him on his MySpace page rapping under the name C.I. Joe, Coney Island Joe.

RAYMOND VELASQUEZ, WOULD-BE RAPPER (rapping): Coney Island off the sea (ph) like the polar bears.

MOOS: His pole performance wasn't his first public disruption. He posted grainy video of himself crashing the CBS "Early Show" as they were tossing to some snowstorm footage.

VELASQUEZ: C.I. Joe, Coney Island's in the house.

UNIDENTIFIED MALE: And there you go. Nutty.

MOOS: Not as nutty as refusing to come down from a pole.

UNIDENTIFIED MALE: I think he was a moron. He went -- he went up there to make a show. He just cost New York City so much money. It's ridiculous.

MOOS: This hearkens back to the 1920s when pole sitting was a fad.

The last time something like this happened in New York City, it was two nearly naked people, one a transsexual, the other a gay guy, refusing to climb down from a tree in Central Park. They even threatened police with broken branches to keep them at bay.

UNIDENTIFIED FEMALE: In all your years in the force, what do you make of this, Inspector?

UNIDENTIFIED MALE: Well, it's Earth Day.

MOOS: By nightfall, they came down from their perch, and so did the rapper. He was transported to Bellevue for evaluation.

(on camera) All clear. All clear. The show's over. Do you know what the show was?

UNIDENTIFIED FEMALE: No.

UNIDENTIFIED FEMALE: No.

MOOS: Some guy on a pole.

UNIDENTIFIED FEMALE: Who?

UNIDENTIFIED MALE: Well, this is New York.

MOOS: Yes.

UNIDENTIFIED MALE: If you've got a pole, somebody is going to climb it.

MOOS (voice-over): Yes, well, tell it to the cops.

Jeanne Moos, CNN...

UNIDENTIFIED MALE: (EXPLETIVE DELETED)

MOOS: ... 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 right now.