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THE SITUATION ROOM

Fugitive Siblings Caught; Wall Street Plunges

Aired August 10, 2011 - 18:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


JACK CAFFERTY, CNN ANCHOR: Arguably, the shrewdest politician of the last maybe 100 years, except for Reagan, who also had a tremendous instinct for how to navigate these waters. But you're absolutely right. Clinton -- Clinton figured it out.

WOLF BLITZER, CNN ANCHOR: Yes, brilliant politicians indeed.

All right, Jack, thank you.

(CROSSTALK)

CAFFERTY: Like yourself.

(LAUGHTER)

BLITZER: And you're in THE SITUATION ROOM.

Happening now, breaking news: a stomach-churning plunge on Wall Street, with a new wave of steep losses across the board, billions of dollars worth of wealth vanishing with the closing bell. What's behind these latest dramatic losses? Stand by.

Also, a high-speed chase and a violent crash bringing an intense manhunt to an end. But these former fugitives are not just suspected bank robbers. They are also siblings in their 20s.

And the militants who downed an American helicopter in Afghanistan over the weekend paid for it with their lives. Details of the attack that took them out, including the man who fired the fateful grenade.

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're in THE SITUATION ROOM.

You need a strong stomach on Wall Street these days to handle the wild fluctuations. But once again today, the direction was down, down, down.

When it was all over, each of the three major indices had lost more than 4 percent. The Dow was down 520 points, closing at 10720. The S&P 500 fell 52 points to 1121, and the Nasdaq shed 101 points closing at 2381.

Much of the damage happened in the final minutes of today's session. Let's bring in Poppy Harlow of CNN Money and our chief business correspondent, Ali Velshi.

Let me start with you, Poppy. What happened today? Because yesterday there was a huge gain. Today, a tremendous loss.

POPPY HARLOW, CNN CORRESPONDENT: There is no rationale to this market whatsoever, Wolf.

When we look at the paper losses, the amount of money lost from the stock market today, it's equivalent to $600 billion. That essentially wipes out the $700 billion in gains we saw yesterday. So you could just trade the two days and we would be nowhere. An irrational market. Yesterday why did we jump so much when the Fed issued such a bleak message?

No one knows. One short seller that I talked today who makes a lot of money when the market falls like this, I asked him, are we near the bottom? He said we have a long way to go. And just to give you a sense of how irrational this market is when we saw that huge more than 600-point decline on Monday, every single stock in the S&P 500 fell and some of them very dramatically.

Today you saw some gainers in the S&P 500, some retail, some consumer-facing stocks. So this is not clear what is driving this. What we know though is that the fundamentals of the economy are very, very bleak not only in the United States, but globally. And investors are clearly seeing that and it's playing out in the market today.

Take a listen to the short seller that I talked to today, what he had to say about what is driving this market significantly lower. Take a listen.

(BEGIN VIDEO CLIP)

RYAN BEND, PRUDENT BEAR FUND: It's all macroeconomic. It has nothing to do with price earnings and ratios and valuations. It's all macroeconomics. It's sovereign risks. It's France, Germany, Greece. That's really what's driving this market. And it's greed and fear right now.

(END VIDEO CLIP)

HARLOW: It's not the performance of the companies represented on the stock market that we are seeing right now. As we have been saying for weeks, a lot of these companies, Wolf, have record earnings right now.

The fear is how we do deal with this economy that is getting worse and this market that is getting worse. There are many out there that will say that policy-makers are running out of ammunition to deal with this, Wolf.

BLITZER: It's starting to look, Poppy, the stock market at least a little bit like the financial crisis of 2008 and as you know, there is a lot of fear of a so-called double dip recession just over the horizon. What are analysts telling you?

HARLOW: Well, if you listen to Nouriel Roubini, many have nicknamed him Dr. Doom, but he has been spot on. He called the housing collapse and he was exactly right. When you ask him, he told CNN this week that he believes there is a 50 percent chance that we have another recession not only here in the United States, and this is what is critical, but he is saying all across the Eurozone.

You have got such the weakness across the Eurozone, you have got a lot of talk and fear that France's debt may be downgraded, of course the ratings agencies not saying anything about that. But what Nouriel Roubini, the economist says, is that what he is seeing now is not only the U.S. economy, but these European economies at stall speed. And he fears a freefall.

And I have got to tell you watching these markets especially in the last hour of trading, whether it's in Europe, which had a just horrific day, or whether it's here in the United States, the fear is playing out in that final hour of trading. And for everyone watching at home, here's why it matters to you.

When you look at two of the biggest mutual funds out there, Vanguard and American Funds growth funds that you may be invested in, Wolf, in the last week, not even counting today's losses, they are down 7 percent -- Wolf.

BLITZER: Yes, that's a lot of money for people who have those mutual funds. Their portfolios are suffering, 401(k)s, IRAs.

Ali, it was a bad day in France today. We heard a lot about Italy. We heard a lot about Spain, but now France, even President Sarkozy cutting short his vacation and coming back to Paris. Was that what triggered the collapse today on Wall Street?

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Yes. And, look, it's such a volatile market that anything can trigger it. But in this case it was France.

It was rumors that France could have its sovereign debt, its national debt downgraded from a AAA. That resulted in a massive sell- off in Societe Generale, the biggest bank there. And anything sets this ball rolling.

Here's the difference. Nouriel Roubini says we have a 50 percent chance of a global recession. I would say that would means we have a 50 percent chance of not having global -- chance of not having one.

And here's the difference between what is going on in Europe where there are structural problems which are very hard to change. They have got problems there with respect to taxation, tax collection, working hours and benefits and age of retirement. These are things that are societal and cultural. Here in the United States, this is strictly political. This is a fight about cutting, spending, or raising taxes, both of which have a similar effect on the economy.

The difference is, Wolf, that America can actually create a little more stability if we had a political solution to this. And frankly maybe we should take a lead from what's going on in Europe, with everybody coming back from vacation. The British did it because of the riots in London. The French are doing it because of this.

It may be time that we think about the fact that we don't have a deadline in November for this debt ceiling negotiation. We need to do this now.

BLITZER: Yes, good point, because you get nauseous.

VELSHI: Sure.

BLITZER: On Monday the Dow goes down 600 points. On Tuesday it goes up 400 points. Today, it goes down once again. These are big, big fluctuations.

VELSHI: You remember last time we had these, right, Wolf? You just said it. It was in 2008.

Here is the key difference between 2008 and now. In 2008, individuals and companies were overextended. They borrowed too much and the government stepped in and started to help out and keep the oil in the economic engine. Now, individuals have been piling up cash and the savings rate is higher than it's been in years. Companies, as we know, are piling on cash.

Governments don't necessarily have the money to backstop. That is what is happening in Europe. This is where the problem lies. It's the opposite problem. So the key difference to remember, Wolf, is back in 2008, nobody could borrow money, banks wouldn't lend banks money. Now you can't give money away. The federal government can borrow money on a 10-year basis for less money than they could on Monday, which was less than they could on Friday.

Despite the downgrade, money has gotten cheaper in America.

BLITZER: Yes. And finally, Ali, since April, what, the Dow Jones has gone down almost 2,000 points. You know what that means of equity at least on paper, how many trillions of dollars people have lost in their investments?

VELSHI: We are closing in on three, are we not? I haven't seen -- something around that. That's a lot of money.

BLITZER: About $3 trillion.

VELSHI: That's a lot of -- this is where it hits the road. And again something to think about and something Washington needs to think about is we are talking sometimes about tax increases or reductions on the margin.

For a whole lot of people, these losses are substantially greater than we might have dealt with if we had had tax increases or cuts around the margin. We are losing real money here because of political inactivity and inaction. This is not Europe. It's not structural.

BLITZER: Ali, thanks very much.

Poppy, thanks to you as well.

We're going to have much more on this they coming up.

But let's move on to a dramatic end to an unusual manhunt. Three siblings in their 20s have now been captured in Colorado after a high speed car chase and crash, more than 1,500 miles from the scene of their alleged crimes, an armed bank robbery and the attempted murder of a policeman.

CNN's Brian Todd is working the story for us.

Brian, what's the latest?

BRIAN TODD, CNN CORRESPONDENT: Wolf, the three siblings are now in custody in Colorado. Officials say they were armed with at least a MAC-11 machine pistol, two AK-47 rifles and a handgun when this crime spree came to an abrupt end.

(BEGIN VIDEOTAPE)

TODD (voice-over): The skid marks on the highway reflect an appropriately violent ending to their odyssey. Officials say three siblings from Florida armed, dangerous had fired on law enforcement vehicles pursuing them on a southern Colorado highway.

After several miles and speeds approaching 100 miles an hour, the vehicle rolled off Interstate 25. The sheriff who had chasing them in Florida wasn't surprised.

CHRIS NOCCO, PASCO COUNTY, FLORIDA, SHERIFF: They were prepared for a battle. And that's what they got.

TODD: Ryan Dougherty, his sister Lee Grace Dougherty and their half-brother Dylan Dougherty Stanley are now in custody in Colorado. It could have ended much worse.

JIM DAVIS, COLORADO DEPARTMENT OF PUBLIC SAFETY: She turned and made an attempt to chamber a round and point it at the officer. And he fired at least one shot, striking her I believe in the leg.

TODD: The injuries to Lee Grace Dougherty and her brothers are not considered life-threatening. The three siblings were wanted for trying to kill a Florida police officer who had tried to stop them...

UNIDENTIFIED MALE: Fired several more shots at me.

TODD: ... and for robbing a bank using automatic weapons.

(on camera): The spree began last week when officials say the three siblings tried to kill that police officer in Zephyrhills, Florida. Then, according to officials, they robbed a bank in Valdosta, Georgia, using automatic weapons. Then over the next few days, according to officials, they made their way all the way out to the Colorado Springs area. Now, according to the Pueblo County Sheriff's Department, the three siblings camped out Tuesday night in the San Isabel National Forest just west of Colorado City. They were spotted outside Colorado City Wednesday morning. At that point they were pursued and engaged in a high speed chase down Interstate 25 for about 20 miles. That chase ended with the crash just outside the town of Walsenburg.

(voice-over): Before all this, there were indications of trouble. Ryan Dougherty had been sentenced last week for sending harmful information to a minor. Police say he had cut off an ankle monitor before they took off. A CNN affiliate reports the siblings had spent time living in a bunker made of cargo containers buried underground.

Lee Grace Dougherty, a part-time stripper, had posted on the social media site flickr "I love to farm and shoot guys and wreck cars. I like milk and German engineering and causing mayhem with my siblings."

I spoke with Bill Sorukas of the U.S. Marshals, who has hunted fugitives for 25 years.

(on camera): Are you surprised that in the end they were together, that they hadn't split up?

WILLIAM SORUKAS, U.S. MARSHALS SERVICE: Not really. I think the information from the very beginning was that they were very close. And I think individually they would have had a more difficult time surviving. They had strength among the three of them together as opposed to being separated.

(END VIDEOTAPE)

TODD: Sorukas says he is surprised they were on the run for as long as they were and that they got as far as they did. Given the media attention in this case and the fact that their faces were on digital billboards across the country, he says he thought they would have been caught much sooner -- Wolf.

BLITZER: In the end, these three siblings, Brian, they didn't even listen to the pleas of their own mother.

TODD: That's right. Their mother, Barbara Bell, had gone on local TV in recent days and had pleaded for them to turn themselves in, but there was never really any indication that they would. Ryan Dougherty had previously sent his mother a text message saying -- quote -- "There's a time for all of us to die."

Looks like they might have wanted to go out in a blaze of glory. They may have kind of half got their wish today, but they were caught.

BLITZER: Yes. All right, Brian, thanks very much.

NATO and U.S. military officials say they have killed the militants who brought down a U.S. helicopter in Afghanistan over the weekend killing 30 Americans and eight others. Let's go to our Pentagon correspondent, Barbara Starr. She's got some new information coming in on the crash.

What are you learning, Barbara?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Several new details tonight, Wolf.

First of all, the military had indicated for several days 22 SEALs killed on board that helicopter. They are now correcting, 17 SEALs. The rest of the Navy personnel had more conventional jobs in the Navy. And, of course, the Air Force and Army personnel all on board, all 30 remembered by their families.

The real news today however is the U.S. military is reporting indeed that it killed the insurgents who brought down that helicopter in an airstrike overnight on Monday, an F-16 airstrike against the compound in which they were hiding.

Listen for a minute to General John Allen, the new commander of the war in Afghanistan

(BEGIN VIDEO CLIP)

LT. GEN. JOHN ALLEN, COMMANDER, INTERNATIONAL SECURITY ASSISTANCE FORCES: We tracked them, as we would in the aftermath of any operation, and we dealt with them with a kinetic strike. And in the aftermath of that, we have achieved certainty that they in fact were killed in that strike.

(END VIDEO CLIP)

STARR: Very convinced the U.S. military says that they got the insurgents responsible for this and in particular the insurgent that fired the rocket-propelled grenade that brought down the helicopter.

But there's another very tragic detail here, General Allen reporting as that helicopter came in for landing, it came under fire from multiple directions, the RPG, other small-arms fire. So it was enduring some amount of gunfire from multiple directions before that RPG shot brought it down -- Wolf.

BLITZER: All right, thanks very much for that update.

Growing fear of a double dip recession and growing criticism of President Obama from the left. What should he do? What can he do about it? We will talk about that and much more with former Clinton Labor Secretary Robert Reich.

Also, Republicans reveal their pick for the so-called super committee charged with finding a way out of America's debt crisis. Jack Cafferty and Tom Foreman, they are both standing by.

And we're learning new details about a wave of sabotage and vandalism apparently hitting one of the largest U.S. telecommunications companies, leaving thousands of customers cut off. (COMMERCIAL BREAK)

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

JACK CAFFERTY, CNN ANCHOR: The saying is, where there is a will, there is a way. Well, it's not clear if our leaders have the political will or the backbone to fix the country's serious very, very debt trouble.

We're going to find out soon enough though when the so-called super committee gets to work. Can't wait for that. We're starting to learn who is going to on this powerful group, including John Kerry on the Democratic side, Jon Kyl for the Republicans. Their job is to cut the deficit by $1.5 trillion over 10 years.

By the way, our deficit this year, about $1.5 trillion. To do that, they have got to take on the issues of tax increases and entitlement cuts. So far, Congress has refused to touch either one of those, even though the country is now insolvent, has had its credit rating downgraded for the first time in our history.

With an election coming up next year, what makes anyone think that they're going to suddenly start making the tough decisions now? Ain't going to happen.

Plus, how is this supposed to lead to compromise -- this kills me -- if all of the Republican super committee members have already signed a pledge not to raise taxes? Consider Washington's track record on the issue of deficit reduction.

Last year, President Obama named a bipartisan debt commission -- had a lot of this very same stuff in it. The proposals all came out after the midterms last December and were promptly ignored. Then there was the gang of six in the Senate. They also recommended tax reform, changing the entitlement programs. And that went nowhere.

The last time there was a significant drop in federal government spending was 1954. This is nothing but cheap political theater.

Here's the question: How much faith do you have in the "super committee" to fix our debt woes?

Go to CNN.com/caffertyfile. Post a comment on our blog or go through our post on THE SITUATION ROOM's Facebook page.

This is a very cruel joke being that is perpetrated on all of us, Mr. Blitzer.

BLITZER: Yes, I'm willing to give them a chance to see if they can do something.

CAFFERTY: Well, yes, but you are much more accommodating than I am.

BLITZER: I am.

CAFFERTY: You're a much nicer guy.

BLITZER: All right. Let's see what they do between now and Thanksgiving. Hopefully they can come up with something really smart. I'm hoping, hoping.

All right, Jack, thank you.

Let's get some more on the makeup of the super committee.

CNN's Tom Foreman has that part of the story for us.

Tom, the Republicans revealed their picks today.

TOM FOREMAN, CNN CORRESPONDENT: Yes, they have, Wolf. Jack is being tough on them there.

But let's take a look at the people and really see what we have here. Here's the Republican picks over here. This is on the Senate side of things. The Republican picks are entirely revealed, Senate and House. And on the Democratic side, we are still waiting on Nancy Pelosi to introduce her three people down here.

Here's a question we had when we looked at all of these folks here, Wolf. Where do they stand on the political spectrum and what will they bring to the table? Can they reach a deal? Let's put it simply. What the Republicans have picked over here are people who by and large really are economically very conservative.

If we had to rate them on a scale from blue to red and purple in the middle, they will be pretty much over here. On the Democratic side, if you look at their teams over there, right now, based on these three, you would be a little bit more toward the middle. But that's not counting these three down here from Nancy Pelosi, which based on her district and on her political record, probably are going to be more hard-core Democrat. You will end up with a parallel here where you have Republicans way over here and Democrats way over here.

How can they work together? Look at some of the players, because this really does matter over here. Sure you have got over here like Patty Murray who has created something of a stir. She chairs the Democratic Senatorial Campaign Committee. Some people have raised some concerns about that.

She has strong traditional Democratic values. That's certainly a fact. We all know that. But then you also have people like John Kerry, Max Baucus. These are old hands, been around a long time. Max Baucus is 33 years in the Senate, sort of an elder statesman character. He is the kind of person who has been around long enough to see days when there was cooperation and to perhaps long for days when that might be possible.

Over here on this side, you have players like Portman over here. He's an interesting character, former budget director for President Bush, a deficit hawk, but somebody who really understands the numbers of this. Some people over here may not agree with him, but they respect his knowledge. You also have people like Camp down here, chairman of the House Ways and Means Committee, somebody else who knows about these numbers and how it works.

So while you have people who are dyed-in-the-wool believers in their sides here and that would at the surface say they will never reach agreement, they will never be able to find this middle area here where they can get along, while you have people like that, you also have older hands who know something about it.

And if you compare their experience levels, look what we are getting over here the Democrats side. The experience level compared to the rest of Congress, these folks are going to tend to be a little more on the more experienced side. Same thing over here on the Republican side. And that's really going to matter because you need people who for all of their fury know how to compromise.

Are these the people? We don't really know. But we know for either side to win, at least one person from each side would have to agree to the other side for anything to be agreed upon, Wolf. That's the makeup of the committee. We will wait to see the last three here. And that will tell us really whether they have the ensemble that can make a deal.

BLITZER: Yes, we will see if the Democrats are willing to engage in entitlement cuts, cuts in spending for Social Security or Medicaid or Medicare. And we will see if the Republicans are willing to have any revenue increases, meaning tax increases.

All six of those Republicans, Tom, have signed that no-new-tax pledge that Grover Norquist has put out. So we will see if they're willing to move beyond those position.

FOREMAN: And all six of them, I should point out, Wolf, are also rated very high by groups out there that rate people who oppose tax increases. They're all rated very low, so that's another gulf that they have to span.

BLITZER: Yes.

Tom Foreman, thank you.

Another important story we are following here in the United States, the strike against Verizon Communications. It's getting uglier. The company says its property has been vandalized, including fiberoptic lines that have been slashed in several states. Verizon warning any employee linked to the crimes will be fired.

Lisa Sylvester is back. She has got some details for us.

The story is getting ugly, Lisa.

LISA SYLVESTER, CNN CORRESPONDENT: It certainly is, Wolf.

Verizon says thousands of its customers have been impacted by this vandalism and it is affecting people up and down the East Coast and causing real headaches for businesses and families

(BEGIN VIDEOTAPE)

SYLVESTER (voice-over): D.C. resident Bill Powers this morning had no cable, phone, or Internet service. He went outside and found a couple of Verizon contractors.

UNIDENTIFIED MALE: One gentleman told me that something inside the box had definitely been sabotage and that's why service was lost on a great portion of this block.

SYLVESTER: In the District of Columbia and nine states, more than 20 acts of vandalism in the last 48 hours, Verizon cable and telephone lines snipped, cable boxes sabotaged. This comes on the third day of a strike involving 45,000 Verizon workers. Workers walked off the job over health care and pensions. Verizon says it is seeking to bring benefits more in line with industry standards, the unions insisting the company is demanding cuts even as it rakes in billions in profits.

(on camera): For Verizon customers needing repairs, it can take hours to get someone on the phone.

COMPUTER VOICE: Thanks for calling Verizon. Please be advised, due to a strike, you may experience significant delays in having your call answered.

SYLVESTER: Verizon stopped short of blaming the unions for the sabotage, but said it's absurd to think that there is not a connection.

MICHAEL MASON, CHIEF SECURITY OFFICER, VERIZON: When you cut cables, it's not a crime against a faceless, monolithic company. It is a crime against individual people, American citizens, your neighbors, hospitals, police departments. It's simply not a faceless act. There is a consequence for cutting cables. And those consequences can be fairly severe to those who have been impacted by the cuts.

SYLVESTER: The Communications Workers of America and the International Brotherhood of Electrical Workers are denying their workers had anything to do with the cut lines.

PAUL FEENEY, IBEW SPOKESMAN: We have absolutely no information that any Verizon workers, our members that are on strike, are involved in any of these instances. So this is more of some gamesmanship on Verizon's part. It's a way to turn the public sentiment against the strikers.

(END VIDEOTAPE)

SYLVESTER: So far no leads in the investigation, but Verizon says there was a police department in New Jersey and at least one hospital where phones were impacted, not to mention many small businesses that have had their phones and Internet disrupted. Verizon's chief security officer says sabotaging the country's communications grid is a federal offense -- Wolf.

BLITZER: Thanks very much, Lisa, for that report.

He's a top economic expert. He has served presidents. Up next, Robert Reich will be live here in THE SITUATION ROOM giving us his perspective on the country's economic future.

And later, CNN's Anderson Cooper will join us live from Somalia. He's in Mogadishu, where time is running out for millions of people facing starvation.

(COMMERCIAL BREAK)

BLITZER: It's been dubbed a super committee and there's no question it's facing a supersized task, finding bipartisan agreement on how best to slash U.S. debt.

Congressional Republicans have now named their six picks for the panel.

Let's discuss what's going on with Robert Reich. He's a former labor secretary under Bill Clinton, now a professor of public policy at U.C. Berkeley.

Do you think these -- we know nine of the 12 so far, three Democrats still to be named, but based on what you have seen so far, Professor Reich, you see room for some sort of significant deal? They have to come up with recommendations by Thanksgiving.

ROBERT REICH, FORMER U.S. LABOR SECRETARY: Wolf, significant deal? No. I don't think the deal would have been terribly significant.

I think the chances are very, very high that the trigger mechanism will actually be invoked, which means automatic spending cuts right across the board. And, by the way, let me just say, this is the worst time to even talk about spending cuts, because the economy, if you haven't noticed, is dead in the water.

Right now, we do not have a debt crisis. We have a jobs and wages and economic growth crisis. They're not the same thing.

BLITZER: So are we facing a double-dip recession, in your opinion?

REICH: I think the chances of double dip, Wolf, have actually at least moved to 50 right now. It's not just the stock market. Consumers are 70 percent of the economy. And consumers continue to be Laden with debt they can't borrow. Their jobs are disappearing. Their wages are declining. Their housing values are dropping.

Most Americans are saying to themselves, "Look, I can't spend like I was spending before." That's a completely rational response to this crisis. Well, the trouble is that when all the American consumers, 70 percent of the economy, make that judgment -- and many are making that judgment -- there's just not enough aggregate demand to keep the economy going.

That's why government's spending. And we're talking about government spending in terms of stimulating the economy. I hate to even use that word. It's now become such a bad word, at least among Republicans. Well, you've to have some sort of boost to the economy to get people, their jobs back to get the entire economy going again.

BLITZER: Everyone seems to agree, Professor Reich, where is the money going to come from? There's no more money to be -- to be found to go ahead and stimulate the economy, to create the kind of jobs that you're talking about.

REICH: Well, that's absolutely false. I mean, just -- just right there, Wolf, we are the richest country in the entire world. We're richer than we have ever been before. Not only that, but look at the treasury bill. I mean, right now the treasury bill is trading at a very, very low interest rate. In fact, the lowest we've had in years.

It would be the easiest thing in the world, if we wanted to do it, for the government to borrow more from the rest of the world right now and use it to rebuild our roads and our bridges and our ports and our airports to create a WPA, a Civilian Conservation Corps, to do all kinds of things that we need to get people actually back into jobs. Now, this is not the problem. The problem is political will.

BLITZER: Here's what Maureen Dowd, the "New York Times" columnist wrote today in an article entitled "Withholder in Chief": "The politician who came across as a redeemer in 2008 is now in need of redemption himself. Faced with a country keening for reassurance and reinvention, Obama seems at a loss." Do you agree with her?

REICH: Well, look it. I am a great fan of Obama and President Obama, and I supported him, but I do think that right now, by continuing to lead the country to think that this is a deficit and debt crisis, agreeing with, basically, the Republicans and not standing up, as any president should, right now when the economy is dead in the water. We are losing jobs. A larger percentage of the adult population is really looking for work, out of work in terms of full-time jobs than we have seen in 30 years.

Right now the president needs to stand there and say, "This is my jobs package, my jobs idea, my set of initiatives. We're going to get people back to work. And if the Republicans don't like it, I will fight for this right through the election and if I'm reelected beyond. I am not going to stand for this degree of unemployment and under employment. This is the No. 1 issue that I right now understand as my responsibility."

BLITZER: And I'll leave my viewers with what you tweeted this week, Professor Reich: "Obama gave a pep talk. Wish he had presented a real jobs plan and summoned Congress home to pass it, rather than same old policy miniatures." Any revisions you want to make to that tweet?

REICH: Look, again, when I say "policy miniatures," I mean certainly, we need to have extended unemployment insurance. We need to continue the tax break and payroll taxes that have already been initiated.

We also probably ought to have some sort of an infrastructure bank. It's ill-defined right now. But these are all small initiatives relative to the size of the problem. I mean, everybody knows somebody who's out of work and in danger of losing their jobs. The stock market is the -- is the kind of evidence that, finally, Wall Street is catching on to the severity of this crisis. But most Americans are not -- you know, they've never gone out of the recession. It's not a double dip. Most Americans are still in the same jobs recession they were in three years ago.

BLITZER: Robert Reich, thanks very much for coming in.

REICH: Thanks, Wolf.

BLITZER: They left everything behind to save their children. Instead, they lost them all. The heartbreak of famine in Somalia. CNN's Anderson Cooper is there, and he'll join them live. That's next.

And the raid that killed bin Laden is going Hollywood and stirring up huge controversy in the process.

(COMMERCIAL BREAK)

BLITZER: It's a situation as dire as it is heartbreaking. The famine in Somalia has created a slow motion human disaster, and CNN is dedicating its global resources to the story. Our own Anderson Cooper is in Mogadishu right now. He's joining us live on the phone.

What are you seeing there today, Anderson? How bad is the situation?

ANDERSON COOPER, CNN ANCHOR (via phone): Well, we went to a hospital today where the -- a major hospital today in Mogadishu and where a lot of the kids are sent, the acute kids, the kids with acute malnutrition.

I've got to say, Wolf, it was just pretty shocking, the few medical supplies that this hospital had. I mean, the children's ward was so full of kids that they're actually now treating kids in the hallways of the hospital. We can see a few IVs, but there wasn't a lot of kids drinking fortified milk or, you know, Plumpy'nut, which is a peanut paste that can bring kids back to life where you see in other feeding centers, we've seen in other hospitals elsewhere.

It was pretty shocking to see that a major hospital in Mogadishu, a place right now which is at the epicenter of this food catastrophe, this famine in some parts of the country would be so badly stocked and so many kids in need. In fact, one child died just before we got there. His parents were sitting on the bed with his body between them wrapped in a shroud. They didn't know what to do. They didn't have enough money to even bury their child. It was just one of the heartbreaking themes, the kind which we have seen here day after day. BLITZER: Is any international aid really getting in? Doctors, nurses, health-care specialists, food, water? What's getting in?

COOPER: Well, there is. I mean, a lot of the focus has been down in the south along the Kenyan border where some half a million or so Somalis have fled over the last years and, in particular, a big uptick over just the last several months.

Much of the drought, as you know, is in the south in the areas controlled by al-Shabaab. That's where the real famine is. But you also have hundreds of thousands, tens of thousands of internally displaced people who have come up to Mogadishu just in the few -- in the last few weeks and months. They are overwhelming the city. The camps are sprouting up with sort of makeshift camps all over the city.

And these are the places that are really having problems getting supplies. It's just now that large shipments of medical supplies and food supplies are being flown directly into Mogadishu. As you know, Wolf, for years the city has been virtually off limits to a lot of relief agencies who haven't been working here because of al-Shabaab and the conflict here. It just hasn't been safe for relief workers.

Slowly, the pipeline is starting to come back, and the World Food Program is bringing food, but as you know, the World Food Program is saying they may run out of food in three weeks, given the current stores they have and the current amount of money that they've been receiving to get new supplies.

BLITZER: What a story. What a horrendous story. Thanks, Sanjay [SIC], for doing it for us. We'll check back with you later.

This important note to our viewers. On "AC 360" later tonight, 8 p.m. Eastern, Anderson will speak to Bono about Somalia's devastating drought and famine. Plus, he'll also have special reporting from Dr. Sanjay Gupta. All that coming up on "AC 360," live from Somalia at its new time, 8 p.m. Eastern.

And to find out more about how you can help all those in need, and you can. This is what you do. You go to CNN.com/impact, and you'll be able to impact your world.

A war of words between the White House and a top lawmaker over Hollywood's plans to make a movie about the killing of bin Laden.

(COMMERCIAL BREAK)

BLITZER: Lisa Sylvester is following another fast-moving story.

Lisa, what's going on here?

LISA SYLVESTER, CNN CORRESPONDENT: Hi, there, Wolf.

Well, the FBI is confirming that a potential explosive device was found attached to a gas line near Okemah, Oklahoma, today. This device is being described as a type of pipe bomb with a timing device on it. The potential IED was safely disabled. The FBI says that the device is now being examined and that an investigation is under way -- Wolf.

BLITZER: We'll check out that story, as well. Thanks very much, Lisa.

That U.S. raid that killed Osama bin Laden is going Hollywood. An Oscar-winning filmmaker is in the preliminary stages of making a movie about the raid and has gotten access to White House, Pentagon and CIA officials. That has the Republican chairman of the House Homeland Security Committee, Peter King of New York, demanding an investigation.

(BEGIN VIDEO CLIP)

REP. PETER KING (R-NY), CHAIRMAN, HOUSE HOMELAND SECURITY COMMITTEE: We're talking about revealing classified information that can put American lives at risk. And this administration has done for 90 days, if they haven't done it up until now, I'd say OK. They have such a horrible track record. It's embarrassing what they've done. More than embarrassing, it's putting lives at risk. And that's why so many people in the intelligence community were outraged by what they've been doing for the last 90 days.

And on top of that, if we can't trust them to keep classified or sensitive information in the last 90 days, how can we trust them when they're dealing with a Hollywood script writer, especially someone who is involved in a previous movie, Ms. Bigelow, where the Defense Department had to break off its contacts with her, because she violated her agreement on "The Hurt Locker."

(END VIDEO CLIP)

BLITZER: Let's go to Pentagon correspondent, Barbara Starr. She's getting reaction to this. What are you learning, Barbara?

BARBARA STARR, CNN CORRESPONDENT: Well, wolf, I don't want to be in the position of taking on Congressman King here, so I'm going to tell you what officials are telling us.

They say, look, Katherine Bigelow, the Oscar-winning director of "The Hurt Locker," the movie about bomb disposal experts in Iraq, has been here to the Pentagon. She has met with officials, as many Hollywood directors, producers and stars do when they have a project that they want to bring to the Pentagon and consider asking for military help. It has been going on for decades. Everyone knows that.

So the question on the table is, is Katherine Bigelow getting access to classified information? I want you to listen to what the White House had to say about it.

(BEGIN VIDEO CLIP)

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: The claims are ridiculous. When people, including you in this room, are working on articles, books, documentaries or movies that involve the president and ask to speak to administration officials, we do our best to accommodate them to make sure the facts are correct. It is hardly a novel approach to the media.

We do not discuss classified information. And I would hope that, as we face a continued threat from terrorism, the House Committee on Homeland Security would have more important topics to discuss than a movie.

(END VIDEO CLIP)

STARR: There's no evidence at this point, quite frankly, that any classified information has been discussed.

You know, behind the scenes, one of the wrinkles here is, is this movie project something that maybe has a pro-Obama administration bent to it? Is there politics in play behind the scenes?

Katherine Bigelow and her office issued a statement today strongly indicating that they were going to look at the entire history of searching for Osama bin Laden all the way back into the Bush administration. It even, of course, extends back into the Clinton administration.

No evidence they're getting any access at this point to any classified information.

You know, Wolf, it might be worth remembering, the Pentagon even helped make the Transformer movies.

BLITZER: They have an office at the Pentagon that deals with motion pictures. That's all they do. Thanks very much, Barbara, for that.

Jack Cafferty is coming up with "The Cafferty File." Then Jeanne Moos takes a look at a controversial magazine cover.

(COMMERCIAL BREAK)

BLITZER: Let's get right to Jack for "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: The question this hour -- no joke now, we're serious -- "How much faith do you have in the super committee to fix our debt woes?"

Rich in Texas: "Another committee in Washington. What a novel idea. What's different about this committee than what's been done before? You leave politicians in charge of anything that involves money, and the loser is always the American people."

Francis writes, "None. The Republican leaders have chosen six right-wing people who signed Governor Norquist's pledge to never raise taxes, no matter what. How ignorant is that? They will never negotiate or compromise. They are still the party of no and hell no."

Anthony on Facebook writes, "These are the same people who put us in this situation. Zero faith." Pat in Michigan: "Sorry, Jack, but I think I can safely speak for a lot of Americans who have lost faith in anyone in government, with the exception of our children who fight for us in the armed services."

Mark in Phoenix: "Former senator Simpson thinks the research has already been done. But it's not the super 12's research. The super 12 committee needs to do three or four months' more research, then argue for a few weeks, reach no real conclusion, do absolutely no compromising, and let the automatic cuts kick in. Does anybody really expect Congress to make any real decisions, any hard decisions?"

Jim in Chicago writes, "The super committee which had replaced the excellent committee, had replaced the outstanding committee, will one day be replaced by the super duper most outstanding committee, by which time the debt will be so out of control there will be no more need for committees."

If you want to read more on this, go to my blog, CNN.com/CaffertyFile, or through our post on "THE SITUATION ROOM's" Facebook page. Not a lot of faith in this committee out there, Wolf.

BLITZER: No, but I'm giving them a little faith. I'm confident that they'll try. They'll try their best. They're public servants.

CAFFERTY: They're going to sit in a room and come out with the same outcome that they had the last time they sat down.

BLITZER: Let's give them a chance. Jack, see you tomorrow. Thank you.

CAFFERTY: Good luck.

BLITZER: A closer look at presidential candidate Michele Bachmann. Remember that spirited debate over that "Newsweek" cover shot? Stand by, Jeanne Moos is there.

(COMMERCIAL BREAK)

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

In London, a woman looks at notes posted on a peace wall. Hundreds of positive messages appeared on a boarded-up window following the riots.

In Indonesia, a man works on a wooden boat.

In India, people repair their roofs while surrounded by floodwaters during the monsoon season.

And in Amsterdam -- look at this -- a woman weighs a giant tortoise at a zoo. The tortoise weighed in at over 500 pounds.

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

Political controversy is raging about what some see as an unflattering photo of Michele Bachmann on the cover of "Newsweek" magazine, but now that controversy has turned into comedy gold. Here's CNN's Jeanne Moos.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): When it comes to this "Newsweek" cover, the eyes have it. On one newsstand, Michele Bachmann's eyes cover stare out right next to George Washington with a black eye on "TIME" magazine. All week conservatives have been saying "Newsweek" tried to make her look crazy. The ones who are really crazy about the cover are comedians.

JON STEWART, HOST, COMEDY CENTRAL'S "THE DAILY SHOW": I look at that picture and think, isn't that a little soon to be doing a female remake of "The 40-Year-Old Virgin"?

JAY LENO, HOST, NBC'S "THE TONIGHT SHOW WITH JAY LENO": Nancy Pelosi saw it, and Nancy Pelosi said, "Nah, doesn't look crazy to me."

CONAN O'BRIEN, HOST, TBS'S "CONAN": Play some spooky music. There you go. I see you

MOOS: The editor of "Newsweek" told MSNBC they didn't try to make her look crazy or cross-eyed. Tina Brown's favorite word is intensity.

TINA BROWN, EDITOR, "NEWSWEEK": The intensity in her eyes is in all the photographs of her, and there is something about Michele Bachmann with the eyes looking out.

SEN. MICHELE BACHMANN (R-MN), PRESIDENTIAL CANDIDATE: Good morning, everyone.

MOOS: "Newsweek" released what it called the outtakes from the shoot, apparently to make the point that her eyes are pretty intense in all of them. But Jon Stewart gave it back to "Newsweek."

STEWART: Shame on you, "Newsweek," and your editor, Tina Brown. No, too glamorous. That's it.

MOOS (on camera): The one person who hasn't bugged out ever Michele Bachmann's eyes, Michele Bachmann.

(voice-over) A voter asked her about it.

UNIDENTIFIED MALE: Sort of a wild-eyed photo with the headline, "Queen of Rage."

BACHMANN: Uh-huh, well, we'll have to take a look at that, won't we?

MOOS: But the campaign's not commenting. Blogs are. At BuzzFeed, they compiled "Hot Chicks with Michele Bachmann's Eyes," transplanting her eyes into, say, Michelle Obama, Rihanna, Britney Spears, Beyonce, even a cat. Now, Bachmann knows what it feels like to be Steve Buscemi, who had his eyes set to music.

UNIDENTIFIED FEMALE (singing): Steve Buscemi's eyes. MOOS (on camera): The last time we in the media focused this much on eyes, was back when "USA Today" got in trouble for retouching Condi Rice's peepers.

(voice-over) The paper's Web site raised eyebrows when it said it brightened Condi's image, though critics said it gave her devil's eyes.

At least no one is claiming "Newsweek" altered Bachmann's eyes. Though jokesters online enjoy intensifying them. Who needs fire in the belly when you've got fire in your eyes!

Jeanne Moos, CNN...

UNIDENTIFIED MALE: I've got one eye on you.

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.