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THE SITUATION ROOM

In-Depth Interview With Former President Bill Clinton; President Obama versus Palin in Iowa; Clinton on the GOP Candidates; GOP Race for 2012 Nomination; Taliban Attack U.S. Combat Outpost; Taxpayers on the Hook for Empty Office; Colbert: "I Am A Super Pac"; Forgotten Assault Rifle

Aired July 2, 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: Bill Clinton on the Republicans he says will be most threatening to President Obama in 2012. Stand by for my one-on-one interview with the former president of the United States. We'll talk about the campaign, the economy, and much more, including a topic that made him get rather emotional.

And a cavernous office space is empty leased by the federal agency for millions and millions of dollars; this hour U.S. taxpayers on the hook for what's being called an outrageous waste of money.

In the line of fire: CNN is embedded with U.S. troops in Afghanistan when the Taliban attack.

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

A special gathering to tackle America's serious economic problems. Key figures from government, business and academia came together this week in Chicago for the Clinton Global Initiatives America Conference. The event was the brainchild of former President Bill Clinton. I sat down with him 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, FMR. PRESIDENT OF THE UNITED STATES: Thank you, Wolf.

BLITZER: Good to be here at the CGI America. First time you've done this.

CLINTON: Yes, it is.

BLITZER: As far as the U.S. economy is concerned. Normally it's global issues. And I want to get to that, but let's talk about some of the big issues right now. Jobs, jobs, jobs. 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 2nd 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 are 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. He regrets it now. He said that was a mistake.

CLINTON: But, you know, when you're not president and you think the votes there, seems like a freebie, and you can say I did to protest this. But that's a reason that most governments in most countries don't even think about having a vote on this because they know that the reason they have to raise the debt ceiling is because of the seeds 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 willing to put capital in this country, think that we don't pay our debts. That's like saying we --

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 consequences 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'd 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.

BLITZER: That August 2nd deadline is a pretty hard deadline?

CLINTON: 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're a grown up country who know what we're doing.

Now, how bad the long term damage is will be determined by how quickly we recommend it, but it's -- since it's never happened before, it's impossible to be absolutely specific. But it is nutty-what you're really saying when you don't raise the debt limit is not you want to balance the budget in the future. It's, I'm sorry, I'm so mad I can't get my way, I'm not going to pay our past debts. And grown up country wouldn't do that. We can't afford to do that.

BLITZER: How do you resolve it? There is a compromise in the works, but it will be painful for both sides. Republicans say they're 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's a long term deal. Because what they're really saying is that the tax rates which prevailed on people in our income group, upper income people, when I was president will never allowed to --

BLITZER: 39.6 percent. It's gone down to 35 percent.

CLINTON: Will never be allowed to go back into effect, even though those are 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 is about their politics.

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

CLINTON: Alan Greenspan, a conservative Republicans says we ought to go back to those rates. What they call a compromise is they take 90 percent of what they want, instead of 100 percent, and that is compromise. And then the Democrats get nothing.

So, I understand that. But I frankly don't think we should be raising taxes or cutting spending 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-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 if there were certain conditions including a commitment for a balanced budget amendment. Is that a good idea?

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

BLITZER: Governors have to deal with balanced budget amendments.

CLINTON: They do. But the governors don't have to deal with national emergencies either. The balanced budget amendments are 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. 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 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 current expenditures only, and was suspended whenever there was a recession. 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's $2 trillion sitting on the sidelines right now, the banks, corporations, individuals have. They're just sitting on it because they're nervous about using that money, investing it to create jobs.

CLINTON: Corporations have $2 trillion in cash, that they have not yet committed. American corporations with world operations, they haven't 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, let's say 8 to 12 to 1. Now, in that $2 trillion is about $160 billion in potential direct exposures 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 stories.

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. See, this money they're giving--

BLITZER: You can't blame them for being nervous.

CLINTON: But the money that they are giving-let me just say what Bank of America will have. Bank of America will lose profits for six months, yeah. 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 who 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 can 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-it lifted enormous economic and psychological burden off the country. So the banks have a lot of money. We have to figure out how to get it invested.

BLITZER: Easier said than done.

CLINTON: But I think green energy is one good way to do it. I still think if we retrofitted every public buildings in this country, and all the major private buildings that you know are going to be here in five years, you could get all these 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'd create a lot of jobs.

CLINTON: Yeah.

BLITZER: In construction.

CLINTON: You'd create 7,000 jobs for every $1 billion you reinvest. It is 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: We have much more of my interview with former President Bill Clinton. Up next, he rates 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: And the comedian Stephen Colbert sets up a political action committee. Is it just political satire, or is he serious? Stay with us, you're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Let's get back to my interview with former President Bill Clinton, as we turn 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 facts, I'll be surprised if he's not reelected. I think people understand this recession was more severe than one I had. And if you just look at what's going on in Michigan, 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 markets with these high powered batteries to make hybrid and all electric vehicles. Today we have 20 percent of the world market because of incentive that he put in and pushed, 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're trying to build a competitive economy. Where they're going forward.

I think he's got a good story to tell. If you look at this auto investment, he didn't bail out the automobile industry. He said I'll help you if you 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, sellers, all of this. And I think that that's going to look pretty good.

BLITZER: Do you talk to the president a lot about this stuff? How often do you talk to him?

CLINTON: Not a lot, but some. I try-I never-he's got plenty to do. He's got the Afghanistan problem, the Libya problem, the 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 to come?

CLINTON: Absolutely. I never-

BLITZER: You never initiate anything?

CLINTON: I don't think I should. He knows that I support in general what he's trying to do, and I'm out here trying to explain to people. But he's got a good team. And, you know, I talk to Gene Sperling for time to time. I talk to other people.

BLITZER: The 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, you know, 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 gets 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'd be surprised if the president doesn't win. I think he will. But you know, as you might imagine, there's a Democrat who I've always thought of myself as pro growth, pro business, pro labor Democrat. I like Governor Huntsman. I like Governor Romney. I think Governor Romney is doing a better job it this time than he did last time. He's more comfortable 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'm not surprised that Congresswoman Bachmann's off to a good start because she's a compelling public figure. I don't agree with her on a lot of things, but I think she comes across as real. And they've got other candidates that are quite good. I don't think we can tell yet. We have to let it play out.

The main they think 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 to of them and he put the first one in Mississippi, with Haley Barbour, the former chairman of the Republican Party. If he would do more of this in Washington, we'd get further. And that's-you know, I'm just trying to solve practical problems.

One last thing on the substance here. There are -- we have to create about 15 million jobs in the next few years to have real normal growth. And we've got probably 13 million just to get back where we were on the day that the economy collapsed. There are 3 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 will come out of this is what Michael Thurman, the former labor commission of Georgia, said about what he did in giving training money directly to employers saying don't hire them until we 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. Train them to suit yourself. They won't be (UNINTELLIGIBLE) employees. We need ideas like that.

Just think about it. If those 3 million people were going to work at a regular basis, by now, America would have 2 million more jobs. The world psychologically would be very different.

(END VIDEOTAPE)

BLITZER: Syria, Libya, Afghanistan and more up next, Bill Clinton weighs in on U.S. foreign policy. Does he back everything president Obama is doing?

And the former president has an emotional moment when I ask him about his wife. You'll want to hear what he says he's learning from her.

(COMMERCIAL BREAK)

BLITZER: Now to the final part of my interview with former President 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, first of all, I strongly support what die 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 we know that he was prepared to kill a whole lot of people who were innocent civilians, who weren't basically in lock step with him. And so, yes, I think anytime we can prevent that, particularly in the case of Libya, when we had --

BLITZER: He did the right thing in Libya?

CLINTON: Yes, with our NATO allies.

BLITZER: You still support what is going on in Libya?

CLINTON: Absolutely.

BLITZER: What about Syria? Bashar Al Assad, I remember covering Haifa 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 Hanna?

CLINTON: Yes. And he's 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 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 to make peace, for example, with the Israelis. Who really would have liked 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's 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 --

BLITZER: Not too late after 1,100, 1,200, 1,300 people have been killed? CLINTON: Yes, I think it is to late for him. But if I were in his position and I wanted to save my skin, my advice would be -- for me it's too late, I want him to go. But I would say, well, maybe I can survive this because all the people that really want me out of here, they're up to their ears in Iraq and Afghanistan and in Libya. And they're worried about instability in Bahrain and other places. So maybe I can survive this. But I 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've 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 can have some allies, Australia and South Korea and others, but never. And a third is the president has already announced that he will begin to drawdown our troop levels.

On the other hand, I think it's a mind-bendingly tough problem. 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're going to try to keep those folks as safe as responsible, and get it over with as quick as we can.

BLITZER: I'm 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've 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're the most gifted person I ever met in public service. I still feel that way. I'm very, very proud of her.

BLITZER: She's doing an amazing job.

CLINTON: Yeah, I'm really proud of her. She's done a good job.

BLITZER: How do you feel?

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

BLITZER: How is that diet?

CLINTON: It's good. I gained a little weight in the wintertime 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 to shape. 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: I hope I can stay there.

BLITZER: A year ago we were in South Africa, in Cape Town, as you remember, watching the USA lose (UNINTELLIGIBLE).

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

BLITZER: 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 (ph), that was pretty exciting.

CLINTON: Yeah, it was a great night.

BLITZER: Mr. President, thanks very much.

CLINTON: Thanks, Wolf.

(END VIDEOTAPE)

BLITZER: President Obama visited a couple of key battleground state this is week with two big name Republicans nipping at his heels. (AUDIO GAP) after Mr. Obama, fueling more speculation that possibly she could run for the White House. And the president and candidate Mitt Romney both held fundraisers in Pennsylvania about 50 miles apart from one another.

Let's talk about the race for the White House. Joining us now Joe Johns and our chief political correspondent Candy Crowley. Candy, is it fair to say and you heard President Clinton suggest that Romney and Jon Huntsman, the former Utah governor, the U.S. ambassador to China.

They are formidable. He likes them and they maybe the most formidable challengers to President Obama's re-election.

CANDY CROWLEY, CNN CHIEF POLITICAL CORRESPONDENT: I think it's fair to say that whoever looks as though they might have the best chance of beating President Obama is who Democrats fear the most.

And certainly the names that come up when you talk to Democratic strategists, when you even to people inside the campaign and say who worries you, actually their first answer is the economy.

But their second answer always is, well, Mitt Romney looks strong. Huntsman looks strong, but, you know, it will ebb and flow. But I think it always comes down to who looks as though he has the best chance against Obama.

JOE JOHNS, CNN ANCHOR AND CORRESPONDENT: Yes, money is one thing. Romney looks pretty strong in fundraising. Huntsman is a tremendous self-funder. You know, there's some talk that he put, you know, a couple of million in pretty early.

That's one thing. The other thing that it's pretty clear just from the fact that this administration hired Huntsman, sent him 7,000 miles to the other side of the planet to be the ambassador. So, yes, they've got some worries there with these guys, but it's still early. So, you know, anything can happen.

BLITZER: A lot of people say these two guys, Romney and Huntsman, may have an easier time getting elected in a general election than winning the Republican nomination.

CROWLEY: That is probably always the case. It is always the case that the nomination by and large is in the hands of the most conservative part of the Republican Party.

By the way, usually the most liberal part of the Democratic Party and so then what happens is the most conservative voters in the country or the most liberal, but in this case the most conservative voters in the country get a nominee and then they put him out to the country and then the moderates go that may be too conservative.

So we always talk about how you got to go to the right in the primary and move back to the center. I don't think this is any different. It does have the Tea Party, which is a lot more together and collected than --

BLITZER: Powerful.

CROWLEY: Very powerful and therefore they can be a great influence, but I don't think the story line is that different from previous.

JOHNS: You always hear Republicans at this stage in the game talking about the most electable conservative. I was out in Iowa last week chasing Sarah Palin around and there were a lot of people talking about Michele Bachmann.

BLITZER: She's doing well.

JOHNS: Right, exactly because she sort of talks the talk and she speaks to a lot of the social conservative in Iowa, which you know, is a jump-start if you do well there. But a lot of people say even if she does very well there and moves on, whatever, she'd have a real problem in a general.

BLITZER: Although she is moving up -- the most recent poll in New Hampshire, she's moved up. Romney is still way ahead in New Hampshire. She could potentially win Iowa, come in second or third in New Hampshire then it goes down to South Carolina.

CROWLEY: Sure. I mean, there are any number of scenarios you could put together. But also remember that Michele Bachmann is probably the newest face of the new faces and was also the one who most recently had the headlines. And that always gives you a bump. When Romney went out and announced, his poll numbers rose. She went out and announced, her poll numbers rose.

BLITZER: Some have suggested Michele Bachmann in Iowa could turn out to be the Howard Dean of Iowa on the Republican side as opposed to the Democratic -- you've heard of that analogy.

JOHNS: I sure have and you know, and there were people - you know you just talk to people around town and there were people talking about the idea of Sarah Palin getting in the race running against sort of canceling out Michele Bachmann because there's fear that she gets started like a house fire and then it all just sinks, which could leave some Republicans in a bad position.

BLITZER: And let's be cautious right now, this is still very, very early.

CROWLEY: Very.

BLITZER: Because at this stage four years ago --

CROWLEY: It's fun.

BLITZER: We were talking about President Giuliani as a lot of viewers probably remember.

JOHNS: And on the Republican side, this was about the time when we were saying John McCain had not a very good chance and turned out to do quite well.

BLITZER: All of a sudden Huckabee came up and didn't necessarily turn out all that great either. All right, guys, thanks very, very much. See you Sunday on "STATE OF THE UNION." You got a good show lined up this weekend?

CROWLEY: Yes, we're going to talk a lot about the American dream, but we have Suzie Orman to talk about financial security, Russell Simons, godfather of hip hop to talk about how he made it and a little discussion about entrepreneurial and where are the jobs.

BLITZER: Sunday morning 9:00 a.m. Eastern. Also noon Eastern Sunday morning, "STATE OF THE UNION" with Candy Crowley. Guys, thank you very much. Joe, see you next week.

All right, CNN embedded with U.S. troops in Afghanistan when the Taliban attacks and now we're following up with an exclusive look at what happens after the firefight.

And a federal agency leases a huge office space, but leaves it empty. We're going to tell you how much U.S. taxpayer money is at risk of being wasted. We're talking millions. Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK) BLITZER: We have a CNN exclusive report for you now. An American combat outpost to the eastern Afghanistan attacked by Taliban militants twice in 24 hours. CNN's Nick Paton Walsh was there.

(BEGIN VIDEOTAPE)

NICK PATON WALSH, CNN INTERNATIONAL CORRESPONDENT (voice-over): Everywhere you look here in Cona on Afghanistan's eastern border, the choices aren't good.

Outpost caught between hills full of Taliban. If the Americans leave, militants from Pakistan will flow through the valley. If they stay, then every few days, this happens. The mortars hit the base.

The last attack was long enough ago there's panic. They're worried the Taliban have been preparing a big one.

(on camera): After days of nothing, the insurgents are getting attacked from all sides.

UNIDENTIFIED MALE: Come on, hustle up.

WALSH (voice-over): They use mortars first, aiming for Taliban dug into the hills, but the incoming fire is very accurate here.

UNIDENTIFIED MALE: Go, go, go!

WALSH: They arrange cover from heavy machine guns, but the bullets are too close. Locals scatter. Just before huge American fire power has the last word. Four massive air strikes across the hills and then the Taliban fall silent. America knew why it came here, but isn't sure why it's staying.

UNIDENTIFIED MALE: Can we get like a police call for like cigarette butts?

WALSH: Ten minutes later, jets swoop into strafe the hills, a show of force for the Taliban are now either gone or dead, at least five killed by the soldiers count. The next morning, it starts again. Mortars and rocket propelled grenades pound the base.

(on camera): For a second time in just 15 hours, the place is under attack. Much heavier this time and it appears they've taken casualties.

(voice-over): More air strikes. This valley is vital strategically, but doesn't want to be conquered. The medics fly into collects one soldier. His injuries are not life threatening.

There is no real victory to be had here, though. Just a question of how long they will stay growing louder. Nick Paton Walsh, CNN, Afghanistan.

(END VIDEOTAPE)

BLITZER: Very courageous journalist we have there in Afghanistan. It's a huge empty space and it's on track to cost American taxpayers millions and millions of dollars. We're looking into an outrageous case of broken government in the United States.

Plus Stephen Colbert dives into the world of campaign finance, but is the Comedy Central star really serious?

(COMMERCIAL BREAK)

BLITZER: A huge office space leased by a federal agency is being held up as an example of outrageous government waste in the United States. The reason? It's empty.

Our own Lisa Sylvester has been doing some great reporting on this story for us. Part of her broken government series. What have you learned here, Lisa?

LISA SYLVESTER, CNN CORRESPONDENT: Wolf, this lease is raising a lot of eyebrows. It was done without any bidding, without any approval and as it turns out, without the SEC even having the money to rent the building.

(BEGIN VIDEOTAPE)

SYLVESTER (voice-over): It's a gorgeous building with its own private sculpture garden, a fountain and lots and lots of space. But there are no workers here. No computer, no phones ringing, nothing.

The Securities and Exchange Commission leased nearly a million square feet of the Constitution Center Building in Washington, D.C. at a cost of $557 million over 10 years for workers it never hired.

That expanded space was in addition to a brand new headquarters near Union Station across town. In a scathing report, the inspector general of SEC says the commission grossly overestimated the amount of space needed.

Representative Jeff Denham whose subcommittee oversees public buildings is equally outraged.

(BEGIN VIDEO CLIP)

REPRESENTATIVE JEFF DENHAM (R), CALIFORNIA: Shocked. I mean, shocked that we're look at budget cuts and a huge debt to find out that there's an agency that could go out during a weekend, find this property, secure the property, sign the lease without any bids or any signoff, it's an outrage and a waste of money.

(END VIDEO CLIP)

SYLVESTER: July 2010, the SEC signed a lease assuming it would have to hire about 800 new workers under the Dodd/Frank Wall Street Reform Act. By October 2010, it was clear Congress concerned about the deficit wasn't going to appropriate new funds.

January of this year, the SEC inspector general began investigating why the lease was even signed and around this November, the first rent check for the property will be due.

(on camera): This building takes up an entire city block and it has spectacular views. Take a look outside the window. You can see clear across the river to Virginia. The SEC originally leased about 900,000 square feet.

When it said couldn't use the space, it had to sublease it out to two other agencies. Now what's left is about 350 square feet of just empty space.

(voice-over): In a congressional hearing, the SEC had two representatives testify, but neither could explain why basic procedures were not followed.

(BEGIN VIDEO CLIP)

JEFF HESLOP, SEC CHIEF OPERATING OFFICER: I'm new to the position. I'm reviewing the current process and trying to improve -- fix that process going forward. So I can't speak to past operating practices other than to tell you as you've seen they were deeply flawed.

(END VIDEO CLIP)

SYLVESTER: We asked the SEC for an interview, but they declined. The head of the SEC Office of Administrative Services who signed the lease is still on the job and still in that position.

(END VIDEOTAPE)

SYLVESTER: Now, the SEC is unique as a federal agency because it has its own authority to lease buildings. Other federal offices have to go through the General Services Administration.

Congress, though, is looking at revoking the SEC's leasing authority and next Wednesday, there will be another hearing on this issue and the chairman of the SEC has been called to testify. Wolf.

BLITZER: Keep us up to speed. It's an outrage. I think everyone agrees on that. Thanks very much. Lisa Sylvester reporting.

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

And Jeanne Moos with an embarrassing police blunder.

(COMMERCIAL BREAK)

BLITZER: What started out as a skit on his Comedy Central show has turned into a political action committee for the comedian Stephen Colbert who's shining a satirical spotlight on campaign finance.

CNN'S Brian Todd is here. He's working the story for us. All right, what is Stephen Colbert really doing?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, for a while 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 donation to campaigns. Now in typical Colbert fashion, he's parodying the system by seemingly pretending to join it.

(BEGIN VIDEOTAPE)

STEPHEN COLBERT, HOST, "THE COLBERT REPORT": Ladies and gentlemen, I am sorry to say we won! I am a 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 on elections.

COLBERT: I don't know about you, but I do not expect limits on my free speech. I don't know about you, but I do not accept the status quo. But I do accept Visa, Mastercard, and American Express.

TODD: He keeps that campaign pledge with a handy credit card swiper.

COLBERT: We're doing it. It's authorizing. Thank you. Thank you very much. How much can I put you down for? That's true American right there.

TODD: The ruling means Colbert can use unlimited money from his network's corporate parent Viacom to produce ads. It's not at all clear if Viacom wants to.

If the ads run during his show, "The Colbert Report," Viacom doesn't need to disclose that it produced them or how much it paid. But if the ads run outside the network, they do have to report all that.

(on camera): What is the impact of today's decision on what Super Pac can and can't do?

ROBERT LENHARD, FORMER FEC CHAIRMAN: I think that Super Pacs are here to stay. They're raising a lot of money right now and they're going to have a big impact on 2012. The Colbert advisory opinion today is a sign of the role that Super Pac is starting to have in the process and is making some fun of it.

TODD: Former FEC Chairman Bob Lenhard says the difference between a Super Pac like Colbert's and a traditional political action committee is that a standard pac can raise limited amounts from individuals, can contribute to candidates and buy ads. A Super Pac, he says, can accept unlimited money from corporations or unions, but cannot contribute to specific candidates.

COLBERT: Knock, knock -- unlimited union and corporate campaign contributions.

(END VIDEOTAPE)

TODD: So what's Colbert going to do with the Super Pac? He says he's going to run ads, but that's the only detail he's given. He has not said anything about the content or when they're going to air.

He does joke that he's going to use money to determine the winner of the 2012 elections, Wolf. Whatever he comes up with is going to be hilarious.

BLITZER: Whatever he does is very, very, funny. Thank you very much. Jeanne Moos is next with a police blunder.

(COMMERCIAL BREAK)

BLITZER: A major embarrassment for a Seattle police officer. Jeanne Moos shows us.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): Ever drive off with something sitting on your roof? Well, imagine you're a cop and driving with this thing on your trunk. Even as Seattle police say --

UNIDENTIFIED MALE: That's a careless act.

MOOS: A semiautomatic assault rifle --

UNIDENTIFIED MALE: We're very embarrassed.

MOOS: Probably loaded say the police --

UNIDENTIFIED MALE: People should expect more.

MOOS: Sitting unattended on the trunk of a patrol car parked in downtown Seattle. Passerby Nick Gonzalez snapped a picture, alerted officers on bikes, and sent the photo to Seattle alternative newspaper "The Stranger." Sure was a strange sight.

UNIDENTIFIED FEMALE: What?

UNIDENTIFIED FEMALE: Oops. That wasn't very smart.

MOOS (on camera): Now it's one thing to leave, say, a cup of coffee on the roof and take off.

(voice-over): But the gun apparently didn't fall off. A source confirms to CNN that one officer was unloading his car in the precinct garage. He set the rifle down on the trunk of a second car then forgot it.

A lieutenant came out, got in the car, and drove off with the gun on the trunk. She parked a few blocks away to stop at a Starbucks, and that's when passersby spotted the rifle. The whole thing feels like a scene out of "There's Something About Mary." Ben Stiller rests Cameron Diaz's dog in a body cast on the roof and forgets it and drives off.

Now when police do this with a gun, it would most likely be considered minor misconduct and result in a reprimand or a suspension of a day or two.

Of course, there are worse things you could leave on top of your car -- on the MTV series "Jackass," they put a baby doll on the roof. To see how folks would react.

The real mystery is how did that assault rifle not fall off on the drive to Starbucks, though truth be told -- three, two, one -- we had to do a couple of takes because our coffee cup stuck. Take off -- Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

BLITZER: That's it for me. Thanks very much for watching. I'm Wolf Blitzer. Join us week days in THE SITUATION ROOM from 5:00 to 7:00 p.m. Eastern, every Saturday at 6:00 p.m. Eastern right here on CNN and at this time every weekend on CNN International. The news continues next on CNN.