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THE SITUATION ROOM

Donald Trump Talks Candidates; Pastor Supporting Rick Perry Calls Mormonism a Cult; Iraqi Prime Minister May Be Allying with Iran; Coptic Christians and Muslims Clash Violently in Egypt; How Europe Could Drag U.S. Into Recession; Who Qualifies as 'Rich' in America?; Fighting Strip Searches

Aired October 10, 2011 - 17:00   ET

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


WOLF BLITZER, CNN ANCHOR: He toyed with the idea of running for the Republican presidential nomination. But now Donald Trump is watching the contest closely from the sidelines. Just a little while ago, he talked about this with CNN's Erin Burnett of "ERIN BURNETT OUT FRONT."

(BEGIN VIDEO CLIP)

ERIN BURNETT, HOST, CNN's "ERIN BURNETT OUT FRONT": So, one other thing on the Republican Party --

DONALD TRUMP, CHAIRMAN, TRUMP ORGANIZATION: Republicans do have great hope, though. I think their leadership has done a horrible job of setting it up for the candidate to win, but I think the candidates have a great, great hope and they have a great chance of beating Obama.

BURNETT: Do you think -- Chris Christie has talked a lot about the Republican Party needing to go back to being a tent party. One of the frustrations that some people have is that it is a smaller tent party, in part because of its focus on social issues.

Just this week you have this whole discussion over, are Mormons Christians and all of a sudden, religion comes into it again. Do you have any frustrations that the Republican Party still ends up defining itself by abortion stance or gay marriage?

TRUMP: Well, I think that is more true four years ago than it is today and it is still true to a certain extent. But I think it's now about jobs and the economy.

I really believe that even people pretty strong into social issues are really looking and that's why I hated to see what's going on about the whole Mormon thing and Mitt Romney is a good man. I think it is unfair how that came out and the way it came out.

(END VIDEO CLIP)

WOLF BLITZER, CNN HOST, "THE SITUATION ROOM": You can see more of Erin's interview with Donald Trump later tonight on "Erin Burnett Out Front" 7:00 p.m. eastern only here on CNN.

And to our viewers, you're in THE SITUATION ROOM. Happening now, the Obama White House braces for the next shoe to drop on the Solyndra scandal. This hour the threat of a criminal investigation into millions of dollars of government backed loans.

Plus, a reality check on Mitt Romney's religion and whether it will hurt him in the Republican primary. We are following the fallout after an evangelical preacher calls Mormonism a cult.

And he was arrested in front of his own family and strip searched twice, because of this, traffic fines. Now he is going to the United States Supreme Court, warning this nightmare could happen to anyone.

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.

Right now a political liability for the Obama White House is threatening to explode possibly into a full scale criminal investigation. We're following new developments in the Solyndra loan scandal. Lisa Sylvester is joining us with the latest. Lisa, what are you learning?

LISA SYLVESTER, CNN CORRESPONDENT: Hi, Wolf. Representative Tim Murphy, who sits on the Energy and Commerce subcommittee investigating Solyndra says he believes these new emails and documents coming out should be turned over to the Department of Justice for a criminal investigation.

The new e-mail show there was a major rift between officials at the Treasury Department and the Department of Energy over the solar panel company. The Department of Energy restructured Solyndra's $535 million loan earlier this year, and in that deal it allowed in the event of a bankruptcy that the investors, not the taxpayers, would be paid first.

But officials at the Treasury Department had major concerns that this might be against the law. In one e-mail, the chief financial officer at the Treasury Department's federal financing bank reached out to DOE's chief council in DOE's office saying, quote, "Unless DOE has other authorities, these adjustments may require approval of the Department of Justice."

In another e-mail, the treasury assistant secretary for financial markets wrote to the deputy director of OMB saying, quote, "In February we requested in writing that DOE seek the Department of Justice's approval to any proposed restructuring. To our knowledge, that has never happened." And Representative Murphy wants to know why protocol wasn't followed.

(BEGIN VIDEO CLIP)

REP. TIM MURPHY, (R) ENERGY AND COMMERCE COMMITTEE: When it is taxpayer's money, you can't bypass the system of checks and balances. What we have to find out from treasury on Friday is, were they sending signals over to energy and saying there were some serious problems. Did energy ignore it or know about those things? Why did the Department of Energy move forward, and who sells giving influence, if anyone, on this? We will follow the data trail and connect the dots.

SYLVESTER: As he referenced, there is another subcommittee hearing scheduled for this Friday. Representative Murphy says he wants to know why the Department of Energy, they agreed to the change in the terms of the loan that left the taxpayer at a disadvantage. And ultimately he wants it to know, Wolf, who gave the OK for that to happen. Wolf?

BLITZER: So what's the answer?

SYLVESTER: We don't know. I mean, that's part of what all of this digging. And they have requested a lot of these documents. It is now commanded to include documents from the White House. They want documents from the White House, documents from the treasury. It is to see how far up this goes now, Wolf.

BLITZER: This story is just beginning. Lisa, thanks very much.

SYLVESTER: Meanwhile, there are now new fears that the uprising in Libya coon boom for terrorists. Thousands of missiles from Moammar Gadhafi's regime are now missing. Let's bring in Brian Todd. You have been spending a lot of time working on this story. I know U.S. intelligence and military personnel are deeply concerned.

BRIAN TODD, CNN CORRESPONDENT: They are, Wolf, as they have for months now. Moammar Gadhafi spent decades acquired almost every kind of weapon imaginable. That includes up to 20,000 shoulder-fired missiles. Now U.S. officials are wondering what has happened to many of them, and there are serious concerns about smuggling.

(BEGIN VIDEOTAPE)

TODD: They can fit into the trunk of a car, hit a target 2 1/2 miles away, and bring down a commercial plane. A senior U.S. State Department official tells CNN Moammar Gadhafi's regime stockpiled up to 20,000 portable anti-aircraft missiles. And he says U.S. officials are very concerned that during this civil war some of those shoulder fired missiles may have been smuggled across Libya's borders and into neighboring African countries. The official says they have no firm evidence but they take the concern seriously enough to speak to the NATO and EU counterparts.

(on camera): Experts say the weapons could easily be smuggled across Libya's six borders, and from there the implications is ominous. They could make their way into three different groups, over to Gaza where Hamas is located or even down to Somalia and one of the most dangerous Al Qaeda affiliated groups.

(voice-over): U.S. officials say the new leaders of Libya recognized their ability to control the weapons but it is not clear how much after handle they have on the situation. So they say intelligence person from the U.S. and allies have been on the ground in Libya and neighboring countries, ramping up efforts to security missiles. Matt Schroeder tracks these weapons for the federation of American scientists. He says one type of shoulder fired missile was used widely in Libya and it one of the most commonly found weapons outside of government control anywhere.

(on camera): Why are these weapons so attractive to militant group?

MATTHEW SCHROEDER, FEDERATION OF AMERICAN SCIENTISTS: They are guided, so after the missile leaves the launch tube, mistake is minimal. They're lightweight, 35 to 40 pound.

(END VIDEOTAPE)

TODD: The state department officials CNN spoke with said in Libya they believe thousands of these weapons were destroyed during NATO operations. Many others were in the control of anti-Gadhafi forces, but he says a State Department expert is on the ground with nine contractors doing inventory of sites where weapons were stored. Wolf?

BLITZER: There are a staggering number of attacks on these weapons used in the years.

TODD: Really there have. It is hard it get your mind around this. Since 1975 40 civilian aircraft have been hit by these things, 28 crashes, more than 800 deaths. That's just a civilian aircraft. It doesn't account the U.S. and Soviet wars in Afghanistan. So these things are lethal, floating around all over the place, and now worried about repercussions from Libya.

BLITZER: You should be worried. You don't know where the weapons will wind up. Thanks, Brian, for that.

A final stronghold of Gadhafi's loyal fighters appears closer to falling. We are talking about Gadhafi's hometown of Sirte. Libya's transitional government says its troops have seized a key hospital there in what they call the final stages of the fight to control the city. A field commander reports about 10 people were killed, more 100 in this latest round of fighting.

President Obama and other world leaders are calling today for restraint in Egypt after a weekend of major bloodshed. At least 25 people were killed and hundreds wounded in clashes between the Egyptian army and protesters, demanding rights for Coptic Christians. It's the worst violence in Egypt since the uprising that toppled President Hosni Mubarak.

Our Senior International Correspondent Ben Wedeman is joining us now from Cairo. Ben, you have been in Cairo for years. This issue with Christians who of course are Egyptian citizens, a minority, is not new. They have been under attack for a long time. But what sparked this latest round of violence against Egypt's Christians?

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, what sparked it was last week a church in southern England was torched by Muslim militants. The Copts around the country felt that this was yet another example of the government not taking seriously the security of Christian religious places.

So on Sunday there was a large march. This is planned, publicly announced, a large march of Christians. But also, Egyptian Muslims in solidarity. They came to this area. We're right next to Egyptian state TV, which is the focus after lost these protests app as they are approaching. And we're told by eyewitnesses, there were plain clothed men who started throwing rocks, attacking the pedestrians with sticks and machetes. Pandemonium broke out.

According to the eyewitnesses, several military vehicles drove madly into the crowds, killing at least 17 people, as many as 25. And of course this sparked a whole night of street battles in several parts of the Egyptian capitol. The government is akiezing some Christian protesters of attacking military vehicles, taking weapons and shooting some of the soldiers.

After that, Egyptian state TV started to call on what they called "honest Egyptians" to come to the center of the city and protect the army and the security forces against what they said were Coptic protesters. So this really set off a night of violence we have not seen in Cairo since the fall of the Mubarak regime.

BLITZER: And it looks like so many of the protesters at Tahrir Square now are really angry at the Egyptian military, which is of course, the ruling government in Egypt right now. The frustration, the anger we are seeing on the streets, are people now looking back nostalgically for the good old days of Mubarak, or is that too much of a stretch?

TODD: It may be a bit of a stretch at this point. Certainly you hear complaints about the lack of law and order, about the failure of the military junta to come and clean on its promises for real democratic reform, end to the emergency law, a variety of things that are still hold overs from the Mubarak regime.

So we haven't done the point where there is nostalgia. Really what there is now is anger across the board from Christians, Muslims, and secular against this new military regime that has in many ways retained the methods of the Mubarak regime which people came into the streets by the millions to overthrow just last February. Wolf?

BLITZER: Ben Wedeman on the scene for us in Cairo. Ben, thanks very much.

We are taking a closer look at the impact on Mitt Romney's campaign, after an evangelical pastor called Romney's religion a cult.

(COMMERCIAL BREAK)

BLITZER: Mitt Romney is getting ready to hold a town event in New Hampshire this hour. The new poll shows him leading the Republican presidential pact by an 18-point margin in the lead off primary state of New Hampshire. Romney's camp, though, faces new concerns about evangelical Christians support after a pastor who supports Rick Perry publically called Romney's Mormon faith a cult. Just a little while I spoke with this controversy with the other Mormon presidential candidate, Jon Huntsman.

(BEGIN VIDEO CLIP)

JON HUNTSMAN, (R) PRESIDENTIAL CANDIDATE: The fact that, you know, some moron can stand up and make a comment like that, you know, first of all, that's outrageous. Second of all, the fact that we are spending so much time discussing it makes it even worse.

BLITZER: Are you concerned that Rick Perry who is introduced by this pastor at the voter summit is really not distancing himself, challenging, going after this pastor in a way that you probably would like him to?

HUNTSMAN: Make an immediate and decisive break, period. This kind of talk I think has no home in American politics these days. Anyone who is associated with someone willing to make those comments ought to stand up and distance themselves in very bold language. And that hasn't been done. And Rick ought to stand up and do that.

(END VIDEO CLIP)

BLITZER: Strong words from Jon Huntsman. Let's bring in CNN's Joe Johns. He's working this story. It exploded on Friday. Joe, at least as of now it is not going away.

JOE JOHNS, CNN SENIOR CORRESPONDENT: That's right, Wolf. The power of the evangelicals is that whether they show up or not can be the difference of winning or losing for a Republican presidential candidate in the early primary states. And yes, polls do show a Mormon candidate's religion could be a factor for a third of evangelical voters.

(BEGIN VIDEOTAPE)

JOHNS: Robert Jeffress is the leader after Southern Baptist mega church in Dallas who introduced presidential candidate Rick Perry at the Values Voters Summit. Over the weekend, Jeffress wasn't exactly backing down from his remarks about Mormonism being a cult. In fact, he doubled down, singing out Mormonism, along with other religions. Listen to his words.

PASTOR ROBERT JEFFRESS, FIRST BAPTISTS CHURCH OF DALLAS: Part of a pastor's job is to warn his people and others about false religions. Islam, Hinduism, Buddhism, and Mormonism are all false religions. And I stand by those statements.

(APPLAUSE)

JOHNS: Richard Land of the powerful Southern Baptist Convention says it is about policies that candidates support, not religious preferences.

RICHARD LAND, SOUTHERN BAPTIST CONVENTION: We do have a government prohibition on a religious test for office, and I don't think Americans should have a religious test for office. I think we should be more concerned how that person's faith is going to apply to their government.

JOHNS: It's an important question because Iowa and South Carolina, two of the states that get to weigh in early on who should be the Republican nominee for president, have a lot of evangelical and social conservative voters. The last time Romney ran for president, he gave a big speech trying to put the religion issue to rest.

MITT ROMNEY, (R) PRESIDENTIAL CANDIDATE: I do not define my candidacy by my religion. A person should not be elected because of his faith, nor should he be rejected because of his faith.

JOHNS: Evangelicals are historically thought to have a power presence in Iowa and South Carolina. But even in the early primary state of New Hampshire four years ago religious preference had an effect.

KEATING HOLLAND, CNN POLLING DIRECTOR: So a lot of the evangelicals were clearly going for Huckabee not simply because they disliked Romney's religion, but because they liked who Huckabee was, not just his religion but his place in that religious hierarchy.

JOHNS: Now several Republican candidates are competing for the evangelical vote, and the spotlight on Romney's religion, a reminder of how enduring the question is, echoes of John Kennedy's attempts to get people off his back because he was Catholic.

While this year it may be a Catholic against whom the finger of suspicion is pointed, in other years it has been and may someday be again a Jew or a Quaker or a Unitarian or a Baptist.

JOHNS: Or a Mormon.

(END VIDEOTAPE)

JOHNS: But don't think that reluctance to vote for a Mormon is unique to evangelicals. A poll from Pew earlier this year suggested that liberal Democrats are even less likely to vote for a Mormon than evangelicals. Thing is, liberal Democrats are not picking a Republican nominee, Wolf.

BLITZER: Good point, Joe. Thank you very much.

And this could be a very pivotal week for Republican presidential candidate Rick Perry. He is hoping to recover some ground after a series of major stumbles. Our chief political analyst Gloria Borger is here working this part of the story for us. Gloria, I got a major Republican debate this week, our debate the following week. What does he need to do, Rick Perry?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well, he needs have strong debate performances Wolf. Those were a problem for him. He needs better control of the facts. And he needs to start talking about the economy, which of course is issue number one.

He is giving a speech on his energy policy and jobs policy on Friday, and that could be crucial, because take a look at this new "Washington Post"-Bloomberg poll just came out today. Republicans were asked who would do most to improve the economy? That's Republicans and Republican leaning independents. Rick Perry, back the 12 percent, Wolf. So he has to convince Republican voters he has an economic plan and thereby convince him he's the man to take on Barack Obama on the economy.

BLITZER: Before he takes on Barack Obama, he has to take on Mitt Romney.

BORGER: Oh, yes.

BLITZER: So he has to come out swinging.

BORGER: And he is. Take a look at this web video just released, which he really takes on Romney.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I agree with Mitt Romney, he's right.

UNIDENTIFIED FEMALE: Jimmy Carter throwing his weight behind Mitt Romney.

UNIDENTIFIED MALE: He will find us the best candidate.

(END VIDEO CLIP)

BORGER: So the mandate question is of course a very, very big question with Republican voters.

BLITZER: As far as healthcare is concerned.

BORGER: As far as anything is concerned. They don't like mandates. And Romney, of course, has said, look, mandates were right for the state of Massachusetts. They're not right for the federal government. But he is not backing off of his healthcare plan.

BLITZER: How is this debate between these two Republicans going shake up?

BORGER: It's sort of mirror, mirror on the wall, who is the most conservative of them all? Right now they are fighting for that. Romney is of course going to continue to take on Rick Perry on one issue, which is very important to conservatives, and that's the issue of immigration. As you know, Wolf, in the state of Texas Rick Perry supported a plan to allow in-state tuition for the children of illegal immigrants. Take a listen to what Romney said about that today.

(BEGIN VIDEO CLIP)

MITT ROMNEY, (R) PRESIDENTIAL CANDIDATE: Why in the world would we want taxpayers in the United States to say a tuition break for people who are here illegally? It makes no sense. If you are an illegal in Texas and you lived there for three years, you can go to college there and get $100,000 dollar break in your tuition.

(END VIDEO CLIP)

BORGER: Perry has a different retort. At first he said it was heartless to not allow these kids to pay instate tuition in college. Now he says it it's an economic issue, that he was trying to make them productive, tax paying citizens. So that's his new response.

BLITZER: You heard Jon Huntsman here in THE SITUATION ROOM with that Perry should have an obligation to distance himself from that pastor who called Mormonism a cult. He was very firm, Jon Huntsman himself being a Mormon.

BORGER: And I wouldn't be surprised if in some way, Wolf, that comes up at the debate, and you have the other candidates piling on Perry and saying you better do that.

BLITZER: We will see what the candidates, not all of them, have been willing to distance themselves that far from that pastor either. Gloria, thanks very much.

By the way, CNN will host one of the next major Republican debates. Join us for the western Republican presidential debate in Las Vegas. It airs live, Tuesday, October 18, 8:00 p.m. eastern only here on CNN.

There is nothing going on in Iraq right now that has me and a lot of other people all fired up. We will talk about the President Nouri al- Malaki's disturbing bedfellows. Is there what United States fought for in Iraq? Stand by.

And one man's fight before the United States Supreme Court. He says the strip search nightmare that happened to him could happen to you.

(COMMERCIAL BREAK)

BLITZER: Turning now to Iraq and the escalating concerns that the country could be forming a dangerous alliance with one of the major adversary of the United States. We are talking about Iran. I was on the air back in March of 2003 when President Bush launched the war against Saddam Hussein in Iraq. And if someone would have said then that the Iranian regime of Mahmoud Ahmadinejad could potentially emerge as the big strategic leader in the region, I would have said that person was crazy.

But if you look at what is going on right now, the Iraqi government is actually joining with Iran to help bolster the regime of the Syrian president Bashar al Assad even, even if the face after brutal assault against peaceful Syrian protesters. Let's get more of what is going on with Middle East scholar Fouad Ajami, a senior fellow at the Hoover Institution. Why is Nouri al-Malaki, the prime minister of Iraq, supporting Bashar al-Assad in this crackdown against peaceful protesters?

FOUAD AJAMI, SENIOR FELLOW, HOOVER INSTITUTION: This is one of the great riddles and great questions about Prime Minster Maliki. One would have hoped he would support peaceful change and Democratic change in Syria. But the truth of Nouri Maliki, I think he sees this conflict through sectarian terms. It is a potential ally and he fears the coming after Sunni regime in Damascus that would be, if you will, against his own interested in Iraq.

I think partly he is making a kind of a vow toward Iran, but I also think it is his own call. Remember, Wolf, he lived for 17 years in exile in Syria. So he knows these characters and they know him.

BLITZER: Because a lot of people are saying he is really cozying up to Mahmoud Ahmadinejad and the rulers in Tehran, even though the United States has spent hundreds of billions of dollars, lost thousands of lives at trying to create a democracy, a pro-U.S., pro- western democracy in Iraq, yet he seems to be more interested in maintaining a strong relationship with Iran.

AJAMI: You're absolutely right. But I honestly dissent slightly on this one. I don't think so much about Iran and what Iran wants in Syria. I think it is about Malaki and the coalition around him, and his own dread, dread of what the Sunni regime, possibly jihadist regime in Syria would look like. Again, 17 years are not for nothing. You live somewhere for 17 years, you form this bond with the intelligence people in Syria, with the regime in Syria, and this is what he is doing.

BLITZER: Let's talk about Egypt for a moment, because it looks like all of the great hope after Tahrir Square, a lot of it is being then way if you will. The Egyptian military cracking down on peaceful protestors right now in Tahrir Square. The Christians, the Copts of Egypt are struggling and are fearful for their very lives. You have seen the violence the past few days. What is going on?

AJAMI: I think Egypt is the great heartbreak, if you will, because it is the trendsetter in the Arab world. When we witnesses the revolution in Liberation Square in Cairo, we were hoping, if you will, everything in Egypt would be rectified.

But look at what's happening now. There is prime minister in place, but he doesn't have all the power. The supreme council of the armed force says the power behind the scenes, but it doesn't assume any responsibility.

One note though about the torment of the Copts in Egypt. This is not about this moment, by the way, Wolf. This is about before. For several decades now it's been very difficult for the Copts to have a normal existence in Egypt, and I think the Egyptians, they owe it to themselves to defend seculars and to defend pluralism in their own country.

BLITZER: Is it dangerous to be a Christian in Egypt right now?

AJAMI: Well, I think so. There is also something demeaning about it. They can't repair their churches, they can't have a new church, they can't build a church. If they want to build a church, then come the fundamentalists, and they say that you can't have -- the church can't have church bells, it can't a cross outside.

I think these are the kinds of things that are problematic. And even if you go back on New Year's Eve, just New Year's Eve, about six weeks before the overthrow of Hosni Mubarak, there were troubles in Egypt between Muslims and Copts, and there was a fire set, an arsonist fire set in the Church of St. Peter and St. Mark in Alexandria, the most sacred of the Coptic churches. This is a problem of long standing.

BLITZER: Is there going to be a free and fair election in Egypt, or will the military, which is in charge right now for all practical purposes, maintain, consolidate its power over the Egyptian people? AJAMI: Well, you know, I don't think we really know the answer to that, Wolf. I think what's interesting about the military is they really don't want responsibility.

They understand the consequences of responsibility. They witnessed and saw what happened to Hosni Mubarak, who was their boss, who was their leader. And when millions of people, hundreds of thousands of Egyptians go out and chant against (INAUDIBLE), the head of the armed forces, I think he has second thoughts about whether he indeed would like to be at the helm of that country.

BLITZER: Let me switch gears briefly with you, Fouad. I know you write occasionally for "The Wall Street Journal."

Look at -- I'm going to put it up on the screen, the front page of "The Wall Street Journal" today. Look at these two men.

That's Steve Jobs on the right, obviously. And that's his biological father -- his biological father, who was a Syrian immigrant to the United States. You can see the similarity between these two men.

But it's a fascinating story, and I know you've looked into this relationship. And also, some more recent developments in Syria in this very strange, almost scary connection. Tell us about it.

AJAMI: Well, you know, Wolf, on THE SITUATION ROOM with Wolf Blitzer, I actually had a chance to comment about a pianist named (INAUDIBLE), and I know we witnessed the ordeal of his parents in the city of Homs, being assaulted by the vigilantes and the goons of Bashar al-Assad. This is the same family, if you will, the biological family of Steve Jobs.

So now we understand Steve Jobs' father had come to the United States from Syria via Lebanon. He went to Wisconsin. He obtained a Ph.D. in political science. He had this child. He put him up for adoption.

And now we understand the ancestry of Steve Jobs. And as you can imagine, in the Arab world, there is incredible interest in Steve Jobs. So, being the giant that he was, the genius that he was, you would not be surprised they are claiming him as the grandson of the city of Homs.

BLITZER: You know, it's almost chilling when you think about it, because that story moved so many people. We aired it here in THE SITUATION ROOM, that Syrian pianist. He was protesting here in Washington, and then his elderly parents, a doctor in his 70s, they were brutally beaten up by Bashar al-Assad's thugs, if you will, to send a message to their son in Washington. And now we've learned this is the same family of Steve Jobs' biological father.

It's chilling, isn't it, Fouad?

AJAMI: Well, you know, I was on your set, and it was almost hard to make any commentary about these two dignified parents. It was hard to keep one's composure, and I think it's very interesting. It tells us something about the twist and turns of life. And then we learn, as I think there was a discovery, if you will, in 2005 of Steve Jobs himself, who his father was and what his ancestry was.

BLITZER: Fouad Ajami, as usual, thanks very much.

AJAMI: Thank you. Thank you, Wolf.

BLITZER: Mounting fears of financial disaster in Europe. We're going to tell you why the White House is deeply concerned.

Plus, a monster hurricane barreling toward Mexico, putting some U.S. tourists in danger.

(COMMERCIAL BREAK)

BLITZER: The death toll climbing amidst rising floodwaters in southeast Asia.

Lisa Sylvester is monitoring that, some of the other top stories in THE SITUATION ROOM right now.

What's going on?

SYLVESTER: Hi, Wolf.

It's a troubling story. Authorities are desperately working to contain the massive flooding. Hundreds are dead in Thailand and Cambodia and others are missing.

The region has been hit by a number of tropical systems, as well as abnormal monsoon rain season. The government is hoping to purchase more than one million sandbags by Wednesday.

And in Mexico, not all the tourists are heeding warnings to steer clear of Hurricane Jova as it barrels towards Mexico's Pacific Coast. Authorities are describing the Category 3 storm as a great danger and have opened at least a hundred shelters. Hundreds of soldiers are also being deployed. Jova could intensify before making landfall tomorrow.

And Christopher Columbus is getting a humorous shout-out from the secretary of the Army. John McHugh had this to say at the annual meeting of the Association of the U.S. Army here in Washington.

(BEGIN VIDEO CLIP)

JOHN MCHUGH, SECRETARY OF THE ARMY: But I'm a little confused as to why we're kicking this great Army celebration off on Columbus Day. Frankly, I always thought of Columbus Day was kind of more of a Navy holiday. And I don't mean it because of that 1492 ocean blue stuff, but in my mind, Christopher Columbus was the quintessential Navy man.

After all, when he left, he didn't know where he was going. When he got there, he didn't know where he was. When he came back, he really didn't know where he had been. But before he left, he had to have three new ships.

(END VIDEO CLIP)

SYLVESTER: That's pretty good humor there.

The Association of the United States Army is a nonprofit organization that works with U.S. military on a number of issues.

That was pretty funny. That was the first time I had heard that.

BLITZER: I'm not so sure a lot of the soldiers were laughing because it was a little insulting to those --

SYLVESTER: I think though it was meant all in a little bit of humor, exactly.

BLITZER: Thanks very much, Lisa.

No matter what President Obama may do to try to boost the U.S. economy, there's a huge wildcard he certainly can't control. And that could help push the nation into recession.

Stand by.

(COMMERCIAL BREAK)

BLITZER: The Dow Jones today closed up a hefty 330 points thanks to German and French promises to try to solve Europe's debt crisis, something the White House is watching very closely, and for economic and political reasons.

Let's bring in our chief White House correspondent, Jessica Yellin.

Jessica, this is a big concern for the Obama administration.

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: It is, Wolf.

For the president, the biggest threat to reelection is the U.S. falling into another recession, and right now Europe and its economic problems may pose the greatest risk to the U.S. economy of all. Here is how one of President Clinton's former top White House economic advisers explains how a European meltdown would hit the U.S. economy hard.

(BEGIN VIDEO CLIP)

MARTIN BAILY, FMR. CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS: Once people start getting scared, then it means they don't lend and they don't borrow and they don't invest. And that could, I think, push us into a double-dip recession. If Europe really were to have a continuing crisis or a worsening crisis, it would be very hard for the U.S. to avoid a double-dip recession ourselves.

(END VIDEO CLIP)

YELLIN: Now, to put a point on it, Wolf, while we're all talking about the jobs bill here at home, a meltdown in the European economy would have a greater effect on us here in the U.S. than any single part of that jobs bill legislation -- Wolf.

BLITZER: So is there anything the U.S. can really do about this?

YELLIN: Well, we're not willing to give any money to any -- prop up any of the banks or to help any of the countries that are in danger of defaulting on their debt. So what the U.S. is doing is using -- giving technical assistance, advice, pressure. The president is talking to some of the top leaders of the biggest economies. And this will be the main topic when the president goes to the G20 meeting in France at the beginning of next month.

Here is what President Obama said last week during his press conference.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: My strong hope is that by the time of that G20 meeting, that they have a very clear, concrete plan of action that is sufficient to the task. It will have an effect. It is already having an effect here in the United States.

(END VIDEO CLIP)

YELLIN: But one challenge to keep in mind, Wolf, whatever plan the Europeans come up with will have to get through every parliament in the eurozone. Now, remember how hard it was to get that TARP bailout legislation through Congress here? Well, imagine trying to get it through 17 different congresses over in Europe. Challenging.

BLITZER: We can't even do it with the House and the Senate, let alone all those other parliaments. Jessica, good point. Thank you.

The economic crisis will certainly take center stage once again this week here in Washington on Capitol Hill, where the Senate is expected to vote on an amended version of President Obama's controversial jobs bill. The bill includes a new millionaire surtax.

CNN's Tom Foreman is drilling down on what it really means to be rich in America -- Tom.

TOM FOREMAN, CNN CORRESPONDENT: Wolf, there no question that Democrats have hit upon a political winner with this idea of taxing the rich. It's hugely popular. And for months, they have said this is what is rich. Any couple making $250,000 or more, they are rich.

But now some congressional Democrats are starting to say hold on, let's talk about a millionaire's tax. Let's talk about people who make more than a million dollars, because this number means different things in different parts of the country, and not everybody making this would necessarily be considered rich.

Let's look at an example that explains this, a comparison between Manhattan, New York, and Manhattan, Kansas. If you made $250,000 a year, that means that each month, before taxes, you are making close to $21,000. But when you take out the taxes, look at the immediate discrepancy. Automatically, the people in Kansas are keeping considerably more of their money than the people in New York.

Let's look at an average mortgage in each place. The same things happens. In Kansas, you're paying about $1,100 a month for your mortgage. Look at this in New York, closer to $5,000.

What about health care? A difference there? You bet there is. In Kansas, $254. Up here, well over $500 in New York.

What about running a car? This isn't even counting a parking space, by the way, which can be exorbitant in New York City and not much at all, necessarily, in Kansas -- $318 a month for your car here. Again, pushing up toward $500 to run your car in New York.

What about food? Again, another big difference here. In Kansas, you're going to have about $112 a month. Up here, it's going to be $187.

And utilities, just basic utilities to run your home, it's going to be, again, considerably more in New York versus in Manhattan, Kansas.

So, if we come back over here, look at what is left at the end of a month. In New York, they have about half as much money left from the same income as somebody would have down here in money Manhattan, Kansas.

So you can see that the same amount of money means you're totally different in different parts of the country in terms of how rich you are in terms of what it may buy. But here is the real key that may have Democrats concerned. This is the average cost of living around the country. Above average in red, below average in green.

Guess what? Most of the red areas include the major urban areas which are largely Democratic. So, if you start taxing people at this $250,000 level, the Democrats are going to hit their own constituency much more geographically than they're going to hit Republicans. That's one of the reasons why they have to look at this carefully and say, is this really fair and really going after the truly rich?

Wolf.

BLITZER: Tom Foreman, good explanation. Thank you.

Meanwhile, congratulations are in order for two Americans who won the Nobel Prize for Economics today for their work studying a very timely subject, how government policies affect the nation's economy. Thomas Sargent of New York University and Christopher Sims of Princeton say their research could be used to help guide policymakers grappling with the global economic crisis.

Congratulations to the two of them. Imagine you are driving along with your family, and suddenly you're arrested and strip-searched. It happened to one man, and now he is taking his case to the United States Supreme Court.

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BLITZER: A very emotional case going before the United States Supreme Court this week. A New Jersey man says his rights were violated when he was arrested for minor offenses and then forced to endure two -- not one -- two strip searches in prison.

CNN's Kate Bolduan is joining us now with more on this story.

What happened, Kate?

KATE BOLDUAN, CNN CONGRESSIONAL CORRESPONDENT: Hey there, Wolf.

Well, this case comes down to privacy versus security. One man describes the strip searches he experienced as the most humiliating experiences and humiliating ordeal of his life. But the state says it's all done with public safety in mind. It's now the question before the high court.

(BEGIN VIDEOTAPE)

BOLDUAN (voice-over): Albert Florence was driving along this New Jersey highway with his family --

ALBERT FLORENCE, PLAINTIFF: We were not doing nothing illegal.

BOLDUAN: -- when Florence was pulled over and arrested under an outstanding warrant for unpaid traffic fines he had already paid.

FLORENCE: I was a little shocked though. I didn't understand why.

BOLDUAN (voice-over): After his arrest, Florence was taken here, the Burlington County Jail, where he was strip-searched, something every inmate goes through here regardless of the circumstances, regardless of the alleged crime. And that's when Florence said his nightmare was just beginning.

FLORENCE: I was just told, just do as you're told, wash in this disgusting soap, and obey the directions of the officer, who was instructing me to turn around, lift my genitals up, turn around, squat.

BOLDUAN (on camera): Can you describe what you were feeling at that time?

FLORENCE: It was very disgusting. It was just a bad, bad experience. It's like a nightmare. Like, I couldn't even believe that I was even there.

BOLDUAN (voice-over): It took six days before Florence was cleared and released, but not before he underwent a second strip search at another jail. After, Florence sued, arguing it was a violation of his constitutional right against unreasonable search and seizure.

SUSAN CHANA LASK, ALBERT FLORENCE'S ATTORNEY: Your privacy is so violated for failing to make a payment, failing to make a court fine? I mean, the state went wrong everywhere on this. There is nothing right about this.

BOLDUAN: The state says these so-called intake searches are justified because they apply to any person taken into custody. The purpose, protect both inmates and prison staff from health risks and contraband like concealed weapons.

CARTER PHILLIPS, ATTORNEY FOR COUNTY PRISONS: The question is, do you have a reasonable expectation of certain kinds of privacy? And it seems to me when you are being lawfully admitted into a prison facility -- and he was -- at that point your expectations of privacy essentially drop to zero, and the importance of maintaining security rises to about 100 percent.

BOLDUAN: Now, six years later, Albert Florence says what happened to him could happen to anyone.

(on camera): Why have you taken it this far?

FLORENCE: We're just going to fight this thing head on, and we're going to make sure that this doesn't happen to me or it doesn't happen to anyone else ever again.

(END VIDEOTAPE)

BOLDUAN: Federal courts have struggled with this issue in the past. I'll tell you, though, the conservative majority that's currently on the court has recently been sympathetic generally to law enforcement on a variety of security-related issues. With this case, the justices here have a real opportunity to offer some much-needed guidance on this very hot-button issue, Wolf. Oral arguments are Wednesday, and we expect a decision early next year.

BLITZER: Yes, it's one of those cases that's certainly going to have an impact down the road. That's why the Supreme Court decided to take it.

We'll watch it together with you, Kate. Thanks very much.

Wiggling fingers in protest. Jeanne Moos takes a closer look at some hand signals behind the Occupy Wall Street resistance movement.

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BLITZER: The Wall Street protesters aren't just using their voices to get their message out.

Here's CNN's Jeanne Moos.

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JEANNE MOOS, CNN CORRESPONDENT (voice-over): They are the concert pianists of protesters, flutter fingers playing upon thin air, but saying what?

UNIDENTIFIED GROUP: (INAUDIBLE) across the country.

MOOS: This is silent applause, the sign of approval.

On the other hand --

UNIDENTIFIED MALE: This --

UNIDENTIFIED GROUP: This --

UNIDENTIFIED MALE: -- to show that we don't like what we hear!

UNIDENTIFIED GROUP: -- to show that we don't like what we hear!

MOOS: And if you're wondering why the Occupy Wall Street protester keep repeating themselves --

UNIDENTIFIED MALE: We use this human mike --

UNIDENTIFIED GROUP: We use this human mike --

MOOS: -- it's because they aren't allowed to use amplifying equipment. So --

UNIDENTIFIED MALE: We amplify each other's voices!

UNIDENTIFIED GROUP: We amplify each other's voices!

MOOS: And you constantly hear them saying --

UNIDENTIFIED FEMALE: Mike check!

UNIDENTIFIED GROUP: Mike check!

MICHAEL MOORE, FILMMAKER: It warms my heart --

UNIDENTIFIED GROUP: It warms my heart --

MOORE: -- to see all of you here!

MOOS: As Michael Moore noted, the system --

MOORE: It saves on electricity.

MOOS: But what does silent applause save on? Time spent waiting for the crowd to settle back down so everyone can hear.

(on camera): And guess who else does this same signal?

(voice-over): It's used by the deaf to signify applause in American sign language.

Other protester hand signals --

UNIDENTIFIED MALE: For the process. MOOS: -- to signify a point of order at protester assemblies.

UNIDENTIFIED MALE: Wrap it up.

MOOS: -- though not everyone is up to speed on the proper direction.

(on camera): Some of the signals could be misinterpreted.

(voice-over): When Michael Moore suggested those who brought down the economy should be --

MOORE: In handcuffs!

UNIDENTIFIED GROUP: In handcuffs!

MOOS: -- he inadvertently used the protester's most severe hand signal.

UNIDENTIFIED MALE: It's a block, which means that you have some moral or ethical disagreement.

MOOS: Not quite as conflicting as the confusing as the conflicting hand signals sent to a batter in "A League of Their Own."

(BEGIN VIDEO CLIP, "A LEAGUE OF THEIR OWN")

TOM HANKS, ACTOR: Who if the (EXPLETIVE DELETED) manager here?

(END VIDEO CLIP, "A LEAGUE OF THEIR OWN")

MOOS: The protesters take pride in not having a manager.

The police have their own signals.

UNIDENTIFIED MALE: Folks, please keep walking this way.

MOOS: And one officer ended up on Facebook giving that age-old symbol --

UNIDENTIFIED GROUP: Peace!

MOOS: Though on a police blog, someone suggested, "Maybe the cop is putting in his order for coffee. Yes! Two sugars."

Actually, the protesters' hand signals remind us of the ones used by the financial markets they're protesting.

UNIDENTIFIED MALE: We do this --

(END VIDEOTAPE)

BLITZER: Jeanne Moos, thanks very, very much.

I'm Wolf Blitzer in THE SITUATION ROOM.

The news continues next on CNN.