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THE SITUATION ROOM

Wall Street Plunges; President Obama Calls for Syrian President to Step Down

Aired August 18, 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're in the SITUATION ROOM. Happening now, breaking news. Wall Street reels after a brutal day that saw massive losses across the board. We have details of what caused this latest stock massacre.

Also, the U.S. says the Syrian leader, Bashar al-Assad, must go, as the United Nations sounds the alarm about potential crimes against humanity and the regime's brutal crackdown.

And she's a Tea Party favorite and potential kingmaker in her own state. So which Republican presidential hopeful will South Carolina Governor Nikki Haley endorse? I will ask her this hour.

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.

It was a perfect storm of dismal forecasts and discouraging reports and it wreaked havoc on Wall Street and the stock market. We are following the breaking news, where all three major indexes on Wall Street suffered sharp losses today. The Dow was down 420 points, the S&P 53 points, the Nasdaq 131 points, more than 5 percent.

And this was only the fourth worst day of this month for the Dow. It's lost more than 110 points or 9.5 percent so far, so far in August.

Let's go behind the numbers right now with our chief business correspondent, Ali Velshi. He's in New York.

Ali, what is going on over here?

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Wolf, you know full well that if you made 9.5 percent, if I told you I could give you an investment that gave you 9.5 percent in a year, you would say that's OK. To lose 9.5. percent in a month is a big deal.

But I'm a numbers guy. I like the charts and I wanted to pull it back to the whole year. We are eight-and-a-half months in. Let's take a look at what this Dow has done all year. We started up a bit above 11500. And it's been a volatile year. There's no way to disguise it. But we were up above 12500 on the Dow. Then we saw a bit of a dip in June, back up in July.

But take a look at this. Look at August. Look at that dip from above 12500 to below 11000 and then we saw some of it made up in August, but then we have seen this dip again. Even when you take the big perspective, Wolf, it's a problem. It's a rough month, both on the S&P 500 and on the Dow which resemble your 401(k).

Let's take a look at the reasons for it. There are a couple of big ones. Number one, we already had problems in Europe. We went into this trading day with Asian markets down, European markets, and then this Morgan Stanley report came out early, early this morning in the wee hours.

And I was reading it. Boy, it had some shockers in there, not anything that we're entirely surprised about, but it was all there in black and white in one report distributed to investors around the world.

And it says we are dangerously close to a recession, not that we're in one, not that we're even necessarily going to be in one. It's not their base case scenario. But, boy, we are dangerously close. It says that the U.S. and the European zone made policy errors. They have not made the right decisions, the central banks and the political entities. And it has made situations worse.

They referred specifically, Wolf, to the drama of the debt ceiling debate in the United States sucking investor confidence out. Number three, it says the Federal Reserve and the European Central Bank -- that's what ECB stand for -- may have to intervene again, may have to put more money into the economy.

You remember what Rick Perry said, Wolf. He said that it would be treasonous for the Fed to print more money. That's at odds with what investors are thinking. OK. That's what happened with the Morgan Stanley report.

Then let's talk about what happened right here in the United States of America. We got a bunch of reports that in and of themselves shouldn't have caused this kind of a drop. But the first thing is every week we get jobless claims, every Thursday, the number of people who last week filed for the unemployment claims for the first time. That number was up by a few thousand. Not good, but it wouldn't have caused this kind of a sell-off.

Number two, existing home sales and home prices down compared to last month. Wolf, we are at record lows. Credit is available. Mortgage rates are under 4.5 percent. Why is that happening? Number three, consumer prices are up. That's inflation. So you have got inflation. Things cost you more money. But you are not making more money. Your stocks are not gaining money. Your house is not earning more value. How are you going to handle that?

Number four, the manufacturing industry which has been strengthening for the last year looks like it's weakening. You put that all together, Wolf, and you have the sell-off that we have got right now. No one thing, a lot of the same stuff, people saying I'm taking my money out of this.

Wolf, as you know, they took their money out of stocks. They went into treasuries and they went into gold, which set another record today -- Wolf.

BLITZER: Yes, it's not pretty at all. Excellent explanation, Ali. Appreciate it very much.

Other news we are following right now, kidnapping, torture, murder and more. A United Nations fact-finding mission now says Syria is guilty of human rights violations and possibly crimes against humanity through its brutal crackdown on anti-government protesters. All this comes as the Obama administration now joining other Western powers in dramatically ratcheting up the pressure on the Syrian president, Bashar al-Assad.

Our foreign affairs correspondent, Jill Dougherty, is joining us now with more.

Jill, the United States, the Obama administration now finally doing what so many had been urging them to do for a long time, flatly say that Bashar al-Assad must go away.

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: Right, Wolf. But the bitter truth about the United States and Syria is that Washington on its own actually has very little leverage with Syria.

It's Europe, the Arab countries, Turkey that do have that. There was a lot of heavy-duty diplomacy before President Obama made his move.

(BEGIN VIDEOTAPE)

DOUGHERTY (voice-over): President Obama left it to his secretary of state to deliver the message on camera.

HILLARY RODHAM CLINTON, U.S. SECRETARY OF STATE: The transition to democracy in Syria has begun and it's time for Assad to get out of the way.

DOUGHERTY: Mr. Obama issued a written statement. Privately, White House aides said they were trying to stay on message about jobs in America.

"For the sake of the Syrian people," Mr. Obama's statement said, "the time has come for President Assad to step aside."

The administration also unleashed its strongest economic sanctions on Syria so far, freezing Syrian assets under U.S. jurisdiction, banning Americans from any business with Syria, banning U.S. imports of Syrian oil or petroleum products.

But with 90 percent of Syria's oil deals in Europe, not the U.S., the administration needs its allies to levy their own sanctions. In a full-court press, the leaders of France, Germany, Britain and the European Union weighed in with calls for the Syrian president to step aside.

That followed condemnation of Assad's crackdown from Arab nations and from Turkey. But some U.S. critics including a former ambassador to Morocco call it too little, too late.

MARC GINSBERG, FORMER MIDDLE EAST PRESIDENTIAL ADVISER: I would say that at this point in time they have been leading from behind on Syria. Whatever the administration says orally will be irrelevant to Assad.

DOUGHERTY: Some Republicans insist President Obama should pull U.S. Ambassador Robert Ford out of Damascus. Keeping him there, they claim, just rewards the Assad regime. U.S. officials counter, Ford who has traveled to Syrian cities is a potent symbol of U.S. moral support for the Syrian people and the embassy they say provides valuable information on the opposition movement.

But why, other critics ask, did it Mr. Obama so long to call on Assad, a dictator, to step down while moving quickly to demand that a former ally, Egyptian President Hosni Mubarak, renounce power?

VICTORIA NULAND, STATE DEPARTMENT SPOKESWOMAN: The tools at our disposal, both in terms of our relationships and our influence and our long-term investment, et cetera in the various countries, has been different. And therefore the responses has had to be tailored.

(END VIDEOTAPE)

DOUGHERTY: And so far, Wolf, the opposition in Syria has been weak and disorganized. But the State Department today said that they actually have been making what they called significant strides. And if President Assad actually does ultimately end up stepping down, that had better be the case -- Wolf.

BLITZER: Well, a quick question. I want to be precise on this, Jill.

The State Department, the Obama administration I saying he should step aside, Bashar al-Assad. They are not saying he should be arrested like Slobodan Milosevic, for example, brought to the International Criminal Court and charged with crimes against humanity. They are not going that far, are they?

DOUGHERTY: They're not going that far, but on the crimes against humanity, you do have the International Criminal Court looking at possible violations.

I wouldn't say that that's out of the picture, but at this moment, the biggest thing they did was simply say, step down. Those were the magic words that they hadn't said. Now they have said it and they also said it with other countries. That's the significance of what happened today. There will be more. You can be very sure of that, Wolf.

BLITZER: All right, we will see what happens. Jill, thanks very much.

Let's dig a little deeper right now with our CNN senior political analyst David Gergen. Rick Stengel, he is the managing editor of our sister publication "TIME" magazine. It has got a new issue out on the newsstands right now, a new issue with the headline on the front cover "The New Greatest Generation." It is really an excellent article. Also joining us, CNN's Hala Gorani.

Hala, you have been to Syria not that long ago. You know this country. You know Bashar al-Assad and his cronies, if you will. You think this will make any difference?

HALA GORANI, CNN CORRESPONDENT: Wolf, I don't think anybody thinks that Obama asking for Bashar al-Assad to step down will actually lead to Bashar al-Assad stepping down.

But it's an international growing chorus of condemnation. It's continuing to isolate the Assad regime and importantly if Europe followed the United States in imposing sanctions on the crucial oil and gas industry in that country that funds this regime, then you might be seeing something significant happening in that country.

But you have to remember, this is not Egypt. It's not Libya. It isn't even Yemen. The military is firmly under the control of this regime. There are no significant defections. Anything that happens will be much longer-term. If you start seeing the business elite unhappy about what's going on, if economic activity grinds to a halt, perhaps it might have an impact. But so long as the regime, this police state, maintains hold of the military and the security forces, things are not likely to go the protesters' way, Wolf.

BLITZER: Yes, good point. Excellent point, Hala.

David, the Republican presidential candidates, they are issuing their own statements. Let me play Michele Bachmann's statement what she said reacting to President Obama's decision today calling on Assad to step aside.

(BEGIN VIDEO CLIP)

REP. MICHELE BACHMANN (R-MN), PRESIDENTIAL CANDIDATE: This is yet one more instance of President Obama leading from behind on foreign policy. The president should have acted weeks ago to call on President Assad to step down.

The president should expel the Syrian ambassador who is in the United States of America today. And the president should immediately withdraw the United States ambassador to Syria. President Obama placed our ambassador in Syria on a recess appointment against the objections of members of the United States Senate.

I urge President Obama to lead against this brutal regime and to stand up for the Jewish state of Israel, our ally in the Middle East region, and against our enemies like Syria and Iran.

(END VIDEO CLIP)

COOPER: All right, let me get David to weigh in.

What do you think about -- her reaction sort of typical from most of the other Republican candidates. DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: First off, congratulations to Rick Stengel, as you just said, Wolf, about the cover on the young military veterans coming home to redefine leadership here in the United States. Great cover package.

With regard to Michele Bachmann and the Republicans, they are naturally going to take shots. It's that season. But I must tell you from my perspective I think the president has handled this one extremely well. He left most of the heavy lifting to Hillary Clinton. He's got other fish to fry.

They waited and gave the Turks, who wanted it, time to see if they could negotiate an end to the terror by the Assad regime. And that worked out, so the Turks are along with us on this. We're together on this. They allied themselves with Western Europe so we are not doing this alone and he's gradually building up the coalition.

Will it all succeed? We are not sure. But I can tell you this. The more we isolate Assad, the tougher it is. Iran is weakened and Hamas and Hezbollah may also be weakened as well. And Israel will be better off for that.

BLITZER: Well, Rick, as you know, he has still got some support, Bashar al-Assad, especially from the Iranians. And I write on my blog today he has got some support from the Iraqi leadership, Nouri al- Maliki, the prime minister of Iraq, the Shiite-led government Iraq.

He is not totally isolated. He has got his own followers and supporters in neighboring Lebanon as well. Here's the question to you. What will it take to get rid of Bashar al-Assad?

RICHARD STENGEL, MANAGING EDITOR, "TIME": It will take a lot, Wolf.

He looks around the Middle East and he looks at the example in Egypt of President Mubarak. And probably the lesson that he takes from that is that Mubarak didn't crack down hard and fast enough. He looks over in Libya and he sees a situation where the West was united along with the Arab League and that is an unresolved situation.

The lesson he may take, which was the lesson that he learned from his father, Wolf, who had a vicious crackdown in 1982 that was successful, was the iron fist may be the thing that is successful. The country is completely wired. It's a police state. He may look at this as a long, long game that he could ultimately win.

BLITZER: Excellent points all around, guys.

Let me just put the cover of "TIME" magazine up on our screen one more time. It's an important article, "The New Greatest Generation." I recommend everyone go out and get a copy and read this. You will learn something about the men and women coming home to the United States from the wars in Iraq and Afghanistan.

Guys, thanks very much for coming in.

Check out my blog by the way at CNN.com/situationroom. I think you will want to read what I have to say on this very subject.

A prolonged and deadly attack on Israeli civilians and Israel's equally deadly response. Details of the new violence rocking the Middle East on two fronts.

And she's a fast-rising Republican star and a potential kingmaker in her state. Would South Carolina's Governor Nikki Haley consider running for vice president? I will ask her.

And Michele Bachmann's eye-popping campaign promise. Can she really bring gas prices back to $2 a gallon?

(COMMERCIAL BREAK)

BLITZER: Let's bring back Jack. He's got "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: It's hard not to compare Rick Perry to the last Republican governor from Texas who made it all the way to the White House, that being George W. Bush.

Both men are conservative and religious, and neither is what you would call a Rhodes Scholar.

But as Texan author James Moore writes on CNN.com -- quote -- "If Perry and Bush had been born into the same family, W. would have become known as 'the smart one.'"

Now, that's saying quite a bit.

Bush went to Yale. Perry went to Texas A&M, where he got C's and D's at a school that Paul Begala describes as "this cute remedial school we have in Texas."

Oh, yes, and they were both cheerleaders in college. How weird is that? Very.

Both were in the service, Bush in the Air National Guard, Perry in the Air Force.

When Bush got out of the Guard under a cloud of suspicion that he failed to fulfill his entire obligation, he went on to fail in the oil business in Texas before becoming a multimillionaire off his ownership, part ownership, of the Texas Rangers.

Perry headed straight from the military to the family cotton farm, stayed there for seven years before entering Congress. And since being elected to that job, Perry hasn't made a dime in the private sector. All his checks have all come from the government.

By the way, neither one of these men is a cowboy. They like to pretend, like little boys who put on cowboy hats and boots and then stomp around like they're on the set of the TV show "Bonanza." But neither one of them is a cowboy.

Differences? As governor, Bush was known for reaching across the aisle. Perry just the opposite.

And Bush pushed ideas and policies he didn't necessarily believe in, but were politically expedient. Perry on the other hand believes what he's selling and has been described as looking on compromise as -- quote -- "a kind of terminal cancer" -- unquote.

Lastly, seems like there's not much love lost between the Bush and Perry camps. The Daily Beast reports Karl Rove and his operatives appear to have launched a campaign to try to derail Rick Perry's bid for the White House.

So, here's the question: How would you compare Rick Perry to George W. Bush?

Go to CNN.com/caffertyfile. Post a comment there. Or go to our post on THE SITUATION ROOM's Facebook page -- Wolf.

BLITZER: Jack Cafferty, thank you.

A deadly and very violent day in southern Israel and later in Gaza beginning with coordinated attacks on Israeli civilians and soldiers followed by an Israeli airstrike on Gaza residents suspected of plotting the attacks.

When it was all over, at least 20 people were killed.

CNN's Kevin Flower has the details.

(BEGIN VIDEOTAPE)

KEVIN FLOWER, CNN CORRESPONDENT (voice-over): Images of a bullet-riddled Israeli passenger bus and its interior strewn with debris, the aftermath of what the Israeli military is calling a multipronged and intricate terrorist attack.

Midday Thursday, a group of gunmen in a car opened fire on the bus, initiating a series of brazen daylight attacks against Israeli targets near the resort city of Eilat and close to the Israeli- Egyptian border.

"I got the first two bullets in the front and later in the door, first in the front on top, above me and later we got all of this," the bus driver told Israeli television. "I carried on with a crazy drive. I didn't stop, did not look back. Nothing."

It was the deadliest attack in Israel in over two years. The attackers used guns, rockets and roadside bombs against civilians and military personnel and the attacks went on for several hours. Israel was quick to retaliate launching an airstrike against the leaders of this Gaza-based resistant group, the Salah al-Din Brigades.

Five militants and one child were killed. A spokesman for the organization said they had nothing to do with there attacks near Eilat, but the Israeli prime minister, Benjamin Netanyahu, claimed otherwise. "The people who gave the order to murder our citizens and that were hiding in Gaza are no longer alive," said Netanyahu in a televised statement. "If the terrorist organizations think that they can hurt our citizens, they will soon find out that Israel will have them pay a price, a very heavy price."

The deadly violence along Israel's 200-kilometer border with Egypt is stoking fears in Jerusalem as to whether the military is up to the task of battling Islamic radical groups based in the Sinai Peninsula in league with Palestinian militants.

"Egyptian control over Sinai is weakening," Israeli Defense Minister Ehud Barak told reporters. "And this is probably the reason that this attack that originated in Gaza has made it all the way down here."

(on camera): The sudden and dramatic uptick of violence here has civilians in both southern Israel and the Gaza Strip worried of a return to the daily pattern of rocket fire and airstrikes and that a major Israeli military operation against its enemies in Gaza might not be too far behind.

Kevin Flower, CNN, Jerusalem.

(END VIDEOTAPE)

BLITZER: South Carolina's Governor Nikki Haley is fighting back. My interview with her, that's coming up.

(BEGIN VIDEO CLIP)

GOV. NIKKI HALEY (R), SOUTH CAROLINA: Fight, fight, fight until the president will step up and speak on it. What you have is a rogue agency that won't even answer subpoenas by Congress.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: She is certainly a Tea Party favorite. And as governor of a key early primary state, she is also a favorite of the Republican presidential candidates.

Her endorsement could certainly help propel any one of them to victory in South Carolina and beyond.

(BEGIN VIDEOTAPE)

BLITZER: And joining us now from South Carolina, the governor of that state, Nikki Haley. She is certainly a rising star in the GOP.

Governor, thanks very much for coming in.

HALEY: Thank you, Wolf. It's a pleasure to be with you. It's a great day in South Carolina.

BLITZER: Is there one of these Republican candidates for president that you like the most?

HALEY: No, it's too soon.

What I have told everybody is now is the time where we need to weigh in on asking them the hard questions, asking them about tax reform, asking them about energy independence, asking them on what they think we need to do for the economy, asking about foreign affairs. This is the time we really need to be doing a lot of the listening to what their details are and what their specifics are and waiting to weigh in until we can really see what the full platform looks like.

BLITZER: So you are studying their records, like all of us are.

HALEY: Yes.

BLITZER: Mitt Romney and Rick Perry, they disagree on the issue of manmade global warming. Mitt Romney believes that men and women have a role in global warming. Rick Perry is not convinced of that. Who is right?

HALEY: I'm going to pick who is right and wrong.

What I will tell you is, the one thing I want them talking about is jobs. The one thing I want them talking about is the economy. The one thing I want them talking about is what they are going to do to balance our budget. That's where I think we need to be.

As long as we are talking about those things, then I think we're going to find the person that is going to take us in the right direction.

BLITZER: But isn't global warming an important issue for the country?

HALEY: I think global warming is an important issue, but if you asked anybody in America right now, if you asked them what their number-one concern was, global warming is not going to be it.

It's going to be getting a job. It's going to be balancing the budget. It's going to be tax reform. I think we need to stay very focused on the things people care about and understand that we don't have time to sit there and go through all the other issues right now, when we have got people that are still looking for jobs with high unemployment, when we have had this debt debate that really resulted in nothing, and when we have got the fact that we have just lost our credit rating. That's what we want to talk about. Those are the things that the people want to talk about.

BLITZER: Yes. I want to get to that in a moment.

But let me ask you another question about Rick Perry, because in recent days, he has caused quite a stir, the governor of Texas, calling Ben Bernanke, the chairman of the Federal Reserve, potentially treasonous because he wants to print supposedly more money. He has questioned President Obama's love for our country. He's also questioned whether the men and women of the United States military really respect the commander in chief.

Here's the question for you. Has Rick Perry crossed the line?

HALEY: No.

What you are going to see is you have got candidates out there that are running feverishly with a lot of passion, that are saying a lot of things, that have the pressure on them, that have the press on them. Let's listen to what they are about. Let's listen to what their leadership is going to be about.

Let's talk about policy. You can talk about who messed up on a fact about Elvis or you can talk about whether somebody said that Ben Bernanke did something wrong. But at the end of the day, is it really talking about the leadership that the president is going to bring? No.

What is going to talk about the leadership is, what are you going to do to bring the credit rating back. What are you going to do about jobs in this country? Are you going to fight for a balanced budget? And how are going you going to do it differently?

Those are the things I want the press to care about. Those are the things that people want to hear about. It's not about who messed up with small little tidbits on the campaign trail or who offended who. It's about what are they going to do and how they are going to win.

BLITZER: Sarah Palin just said today that is still seriously thinking of throwing her hat into the ring. Do you think she should?

HALEY: You know I think right now this is the time that everybody should throw their hat in the ring. But after September we need to get going. She has an amazing ability to get people to care about their government. I think she is very passionate. So I would welcome her into the race like we have others.

This is a field of rock stars hands down. And what I love is that they all have policy they want to talk about and have a fight in them in a way they know America deserves better. And I appreciate that from every one of them.

BLITZER: Let's talk about jobs in South Carolina, a subject close to your heart. There is a Boeing plant for the new dream liner you are familiar with this case, the national labor relations board says that you know what Boeing, you can't go ahead without plan because you may have violated union workers' right who struck in Washington state, a statement from the NLRB saying "a worker's right to strike is a fundamental right guarantees by the national labor relation act. We also recognize the rights of employers to make business decisions based on their on the economic interest, but they must do so within the law".

Here's the question. What if anything cans you do to reverse this penning decision by the NLRB that is effectively stopping Boeing from building the dream liners in South Carolina? HALEY: Fight, fight, fight until the president will step up and speak on it. What you have is a rogue agency that won't even answer subpoenas by congress. They are rally do nothing but bullying and fighting for the unions. It's unacceptable. You have a great American company like Boeing that created a thousand new jobs that we desperately need.

At the same time, they expanded 2,000 jobs in Washington State. Now one person was hurt. Yet we have a president that won't speak out on it. That it's continuing to let them do what they want to do and he talks about jobs on one side and he is killing American jobs on the other side.

What I will tell you is Boeing and I are in this fight together. They are not going to let this happen to any other company. I'm not going to let it happen to any other governor.

In the end, we will win. The sad part is they will have to spend a lot of time and money to do it they could be hiring people with. Here or in Washington state. And that doesn't do us good with anything else. The president said this is an independent agency. He has nothing to do with it.

Leadership is not silenced. It's standing up and either saying that you agree with the NLRB and you are agree in what they are trying to do to Boeing or that you don't. But you can't stay on the sidelines and say I'm sorry I'm not going to weigh in on this.

BLITZER: But right now, there is not much, other than speaking out, that you can do, right?

HALEY: Well right now, we are going to fight. You know speaking out is only words. Fight is letting them know we are not going away. You know the union sub sued me because they said I spoke out too much and I talk too negatively about them and what I told was until they started to really show us that they were relevant, I was going to do that.

Unions, we have plants in South Carolina. Michelin we got BMW, we got Boeing. All of them have denied unions into their plants because our employers have a great direct relationship with their employees.

What we are asking is for President Obama to acknowledge that. We are asking him to say there is no case here. We are asking him let Boeing get back to doing their job which is building airplanes.

BLITZER: One final quick question and quick answer, if for you are named as a possible vice presidential running mate for the Republican candidate, would you accept?

HALEY: No, I would not.

BLITZER: Why?

HALEY: No, I would not. I love being governor of South Carolina. And let's be clear. I have a lot of things I wanted to do that I promised to the people of South Carolina. I have been in the job eight months. If we are going to look at vice president, let's look at somebody that can bring a lot of experience to the table. Let's look on somebody that can do more. I think we have a lot of great candidates for that.

What I will tell you is we have a president who now has a 71 percent disapproval rating on the economy. We have a country that's lost their credit rating. We have jobs that being lost overseas. And we are now seeing that this country is in a pretty bad shape. And what I do see is we have great candidates that are going to lift us out of it and I thing we will have great candidates for vice presidential as well, but I am not going to be one of them.

BLITZER: Governor Haley, giving us a firm answer. Thanks very much for the honesty.

HALEY: Thank you, Wolf. It's always a pleasure.

BLITZER: Republican presidential hopeful Michele Bachmann was campaigning and Governor Haley's state today and made an eye popping campaign promise.

(BEGIN VIDEO CLIP)

GOV. MICHELE BACHMANN, PRESIDENTIAL CANDIDATE: Under President Bachmann, you will see gasoline come down below $2 a gallon again. That will happen.

(END VIDEO CLIP)

BLITZER: All right, stand by for a reality check.

(COMMERCIAL BREAK)

BLITZER: Militants are becoming increasingly bold in Southern Yemen.

Lisa Sylvester is monitoring that and some other top stories in THE SITUATION ROOM right now. What's going on?

LISA SYLVESTER, CNN CORRESPONDENT: Hi there, Wolf. Well, Islamic fundamentalists connected to Al Qaeda have reportedly seized a strategic town on the Arabian Sea. A local security official said the government is preparing to send reinforcements and militants have been increasingly active in Southern Yemen since February.

And officials in Belgium said at least three people are dead after a violence storm caused a stage to partially collapse at the music festival. Sixteen others were reportedly injured. This is the latest in the stream of such accidents we have seen this year.

Former Obama administration official Elizabeth Warren is taking a major step for running for U.S. senate in Massachusetts. Today, she filed paperwork to create an exploratory committee and she launched a Web site to draw a contribution and volunteers. Now, if she gets the democratic nomination, she would challenge Republican Senator Scott Brown.

Warren is a Harvard University professor who served as a special adviser to the president overseeing the creation of the consumer financial protection bureau, a lot of people though that she would head up the bureau but that didn't happen that way.

BLITZER: Yes. She wasn't going to be confirmed that she's going to head it up but she might run for the senate. Let's see if she does. Thanks very much.

Michele Bachmann is promising $2 a gallon gas if she is elected president, standby for a reality check.

(COMMERCIAL BREAK)

BLITZER: Presidential candidate Michele Bachmann is promising $2 gas if she is elected. CNN's Joe Johns has been digging deeper into the story for us.

So John, what are you finding out?

JOE JOHNS, CNN CORRESPONDENT; Well Wolf, the last time gas was around $2 a gallon was after President Obama was elected in a nasty recession. Not exactly the good old days, but now Republican presidential candidate Michele Bachmann made the case that somehow, some way she has the secret of stopping the pain at the pump.

(BEGIN VIDEOTAPE)

JOHNS (voice-over): You can't make this stuff up, Michele Bachmann at a town hall in Greenville South Carolina, making an outlandish campaign promise.

BACHMANN: Under President Bachmann, you will see gasoline come down below $2 a gallon again. That will happen.

JOHNS: Seriously? All you have to do is elect Michele Bachmann and your troubles with gas prices just go away? Experts say the problem with this claim is it's not just unrealistic it's completely fact-free because in the first place it's not up to the president to fix oil prices.

FRDERICK JOUTZ, GEORGE WASHINGTON UNIVERSITY: The price of crude oil is not set in Washington, D.C. It's not set in Louisiana. It's not set in Texas. It's set worldwide.

JOHNS: High prices frustrate any White House, but they can't fix it. Recently Mr. Obama blamed Mideast unrest.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Over the last six months, we had a run of bad luck, some things that we could not control. We had an Arab spring that promises democracy and potentially a growth of human rights throughout the Middle East, but caused high gas prices.

JOHNS: George W. Bush and oil man was resigned about it. GEORGE W. BUSH, FMR. PRESIDENT OF THE UNITED STATES OF AMERICA: I wish I could wave a magic wand and lower the price at the pump. I would do that. That's not how it works.

JOHNS: About the only way for gas prices to get back to $2 a gallon is for the entire global economy to tank in which case demand for gas along with the price would go down.

CNN Chief Business Correspondent, Ali Velshi.

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: It is an entirely irrational, baseless claim. Not doable. The only way to bring the prices to $2 is to cut the price of gas of oil, a barrel of oil more that in half. And the likely way to get there is a global depression. Not just a recession.

JOHNS: Bachmann didn't explain how she would get to $2 a gallon gas there and we asked her about it too. Though on her congressional Web site, she calls energy independence a goal we can get to by offshore drilling in places now off limits.

The truth, there are 18 billion barrels of oil out there. Energy department said, by one estimate it probably wouldn't last as more than 2 1/2 years. Other strategies? Eliminating gas taxes that would bring in pennies on the dollar. Same thing with releasing part of the strategic oil reserved.

(END VIDEOTAPE)

JOHNS: President Obama has actually released 30 million barrels out of the oil reserve this year. The official reason was that was due to a supply disruption, but he was heavily criticized by congressional Republicans for playing politics, Wolf.

BLITZER: Yes, he was. All right Joe, Thank you.

Unemployment is the number one issue facing President Obama right now. And he is under enormous pressure from all sides to spur job growth including pressure from African-American lawmakers.

CNN's Congressional Correspondent Kate Bolduan is here with more on this part of the story. He is getting some pressure specifically from the congressional black caucus.

KATE BOLDUAN, CNN CONGRESSIONAL CORRESPPONDENT: He absolutely is and here is why. African-Americans face the highest unemployment rate from any racial group and that is actually a rate that is almost doubled that of whites, a good reason why African-American leaders and many in the black community are hitting the road to help. Also a reason behind the growing frustration they have with president Obama.

(BEGIN VIDEOTAPE)

BOLDUAN (voice-over): Gladys Lewis is a lab technician but has been out of work for three years. GLADYS LEWIS, LAD TECHNICIAN: I can't pay my bills. I can't pay my bills. I have no income. I got no welfare. To get food stamps for the first time in my life.

BOLDUAN: That's why Lewis is here joining thousands of others unemployed workers looking for a job.

UNIDENTIFIED MALE: I'm unemployed and I'm here. I want to take advantage of it.

UNIDENTIFIED FEMALE: I have been looking for a job for over a year now and that's just crazy.

BOLDUAN: Jobs fairs like this one in Atlanta and across the country are part of a month long push by the congressional black caucus trying to tackle the staggering unemployment problem facing African-Americans, 15.9 percent out of work compared to the national jobless rate of 9.1 percent.

REP. MAXINE WATERS (D), CALIFORNIA: We were going to go to those cities were congressional black caucus members who were inviting us and we were going to work to connect employers with the unemployed.

BOLDUAN: While lawmakers like Congresswoman Maxine Waters focused their attentions on the black community, President Obama wrapped up a bus tour this week reaching out to largely white communities in the Midwest.

OBAMA: There are so many things we have control over right now that we could be doing to put people back to work.

BOLDUAN: A stark reminder of the growing frustration among the black community that the first African-American president is not doing enough for African-Americans. Leading Waters to ask a crowd in Detroit Tuesday to "unleash black caucus members to confront the president on the jobs issue."

WATERS: We don't know what the strategy is. We don't know why on this trip that he is in the United States and he is not in a black community. We don't know that.

BOLDUAN: At the same time, Waters and other CBC members are careful to say they still support the president, pointing the finger instead at Republicans.

WATERS: We want him to know there are a lot of people out here depending on him and will stand with him. We want him to fight. We don't want any backing down from the tea party.

BOLDUAN: No matter who is to blame for the jobs crisis, a frustrated Gladys Lewis left this job fair asking the same question as so many other unemployed Americans.

LEWIS: Where are the jobs?

(END VIDEOTAPE) BOLDUAN: Very good question. The congressional black caucus is hosting its final jobs fair in town hall in Los Angeles at the end of this month. Their goal is to help get 10,000 people hired by the end of all these events and the issue of jobs of course will greet them when they return to Washington as President Obama prepared to unveil his plan early next month.

BLITZER: Yes, right after Labor Day. But you sense the frustration that's out there across the board.

BOLDUAN: You absolutely do. People who are in Atlanta, who are at this event, they talked to people in the line, very long line. Thousands of people at the event, a real sense of frustration among members of the black community that they have been just out of work to long and don't see enough going on to help them get the jobs.

BLITZER: Unemployment in the African-American community nearly doubled what it is in the white community, right?

BOLDUAN: It is really astonishing.

BLITZER: All right, thanks very much for that.

Jack Cafferty is coming up with the Cafferty file.

Also, Jeannie Moos and the art of the walk out.

(BEGIN VIDEO CLIP)

CHRITINE O'DONNELLE, FMR. DELAWARE SENATE CANDIDATE: OK, I'm being pulled away. You know, we turned down -

(END VIDEO CLIP)

BLITZER: Let's get back to Jack for "The Cafferty File." Jack?

JACK CAFFERTY, CNN CORRESPONDENT: The question this hour is how would you compare Rick Perry and George W. Bush?

Karen in Naples, Florida. How do you do Jack? From a former Texan, I was telling my husband last night that Perry is exactly like Bush. Sounds like him, bobs his head like him. Same ideas, same feigned religious fanaticism. All that jobs BS, I've been paying $4 a gallon for the last year, so naturally the oil state of Texas should be doing good.

Don't get me started on the problems with Texas. People should be very afraid of this man.

Marcia in West Virginia, brother from another mother, clone, just as goofy, swagger the same (and it doesn't help), neither is representative of Texas, liars. I could go on and on.

Doug writes Ricky has executed more than - Ricky, executed more than 230 inmates, Bushwhacked about 150. Rickie is clearly in a league by himself. Debra on facebook, with Bush as president, I had one foot in Canada. If Perry wins, there goes the other foot.

Bud in Virginia writes, they're both from Texas, the best thing to come out of Texas is interstate 10.

Don writes dumb and dumber.

Mark in New Jersey, Perry is apparently a Dominionist Taliban Christian and Bush kept his religion on the down-low most of the time except when it was politically expedient. Perry seems not to be as smart. And Bush was no member of Mensa. Perry has no sent Ella of self-controlled. Bush could at least do at Karl Rove told him and based on hit statements thus far, Perry is even a bigger liar if possible.

And finally M in Fort Lauderdale writes Rick W. Perry and Bush are part of a sleeper cell planted by the notorious comedy central team.

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, Wolf?

BLITZER: Excellent idea, Jack, thanks very much.

Christine O'Donnell, you might know this by now, she walked out of an interview with CNN's Piers Morgan, but could she have done a better job of walking out?

Jeanne Moos has a critique when we come back.

(COMMERCIAL BREAK)

BLITZER: You may have seen it right here on CNN last night. The former Delaware Senate candidate, Christine O'Donnell, walking off the set with our own Piers Morgan and it inspired Jeanne Moos to take a close, hard look at the dos and don'ts of walking out of an interview.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): Who doesn't love a walkout? Sometimes it makes great TV when host and guest disagree.

PIERS MORGAN, CNN HOST, PIERS MORGAN TONIGHT: Why are you being so weird about this?

O'DONNELL: I'm not being weird. You're being a little rude.

MOOS: But if you're going to walk out of an interview, here's how not to. Do not have your PR person intentionally block the camera.

MORGAN: What are you doing?

MOOS: And if you're going, go. Don't linger. O'DONNELLE: All right. Are we off?

UNIDENTIFIED FEMALE: Larry, you're being inappropriate. I'm not going to talk about -

LARRY KING: What? I'm asking a question?

MOOS: If you're serious about walking off, we recommend you don't keep looking off to the side at her PR people. It sort of dilutes the defiant act of walking off if you're looking for advice from the sidelines.

KING: Who are you talking to?

DAN HARRIS, CORRESPONDENT, ABC NEWS: Do you ever worry about your moment having passed?

PARIS HILTON, ACTRESS: (Inaudible)

MOOS: Do not do as Naomi Campbell did. Do not whack the camera. Do not overturn furniture just because the host called then quarterback Jim Edward a girl's name, Chris Edwards. And do not drop a string of f-bombs as comedian Andy Dice Clay did.

ANDY DICE CLAY, COMEDIAN: A guy wants to open his (bleep) mouth and doing a little routine here (bleep) so do you know what (bleep) (bleep) the whole (bleep) network.

Andy Dice Clay If you must cuss -

UNIDENTIFIED MALE: I think it's (bleep) -

MOOS: Try to confine yourself into a single expletive. Please, remember, TV producers love walkouts. You walk outs is likely to end up as a promo.

UNIDENTIFIED FEMALE: Sorry, what's the question?

UNIFENTIFIED MALE: It's the weirdest interview you'll ever see.

UNIDENTIFIED FEMALE: Delete that.

UNIDENTIFIED MALE: What sent Fergie completely off the rails?

MOOS: If you want to see an expert walk out, check out the young Donald trump.

DONALD TRUMP, HOST, THE APPRENTICE: I can't do this interview with somebody else. You don't need this. Do this with somebody else.

MOOS: Kiss front man Gene Simmons is being interviewed with his significant on other of 28 years when Joy Behar brought up his claim that he slept with 5,000 women.

GENE SIMMONS, PRODUCER: My back is very good, my shekel not so much. UNIDENTIFIED FEMALE: that's very nice of you to joke about.

SIMMONS: it's a joke! (beep) Where are you going? Thanks for the question.

MOOS: He's companion headed off toward a New York skyline.

What she didn't know is the only way out of here is through the fake garden wall. So, momentarily corralled, she paced.

SIMMONS: Please come back here.

UNIDENTIFIED FEMALE: Do you know what, no, you joke about it and it's not funny?

JOY BEHAR, HOST, JOY BEHAR SHOW: You want to come back? She doesn't.

MOOS: Before your walkout, make sure there's someplace to walk to.

Jeanne Moos, CNN.

SIMMONS: Shannon, come back.

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.