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THE SITUATION ROOM

Herman Cain on Damage Control; Libya's New Leader; NATO Ending Libya Mission; Cain: "I was Falsely Accused"; Rick Perry Campaign Facing Headwinds; Perry: "I'm a Doer, Not a Talker"; Obama Tackles Drug Shortages; 1.8 Million Without Power in Northeast; Stocks Slump as Dollar Rallies; Should Smokers, Obese Pay More for Health Care?

Aired October 31, 2011 - 16:00   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now:

(BEGIN VIDEO CLIP)

HERMAN CAIN (R), PRESIDENTIAL CANDIDATE: I have never sexually harassed anyone.

(END VIDEO CLIP)

BLITZER: The hard-charging Republican front-runner Herman Cain suddenly forced to stop and confront shocking allegations from the past. What Cain was accused of, what action was taken and what it means for his campaign right now. We will hear from reporter Ken Vogel of Politico, which broke the story, and our own CNN contributors and analysts. Stand by.

Plus, as NATO officially declares an end to the mission, Libya gets a new leader, but is Libya ready to stand on its own.

I'm Wolf Blitzer, and you're in THE SITUATION ROOM.

Herman Cain has been flying high, a leader in the race for the Republican nomination. But suddenly there are stunning allegations of sexual misconduct that threaten, threaten potentially to dramatically hurt his campaign. They date back to the 1990s, brought by two women who reportedly received a financial settlement.

Herman Cain flatly denies the harassment allegations. They were first reported in Politico. He says the allegations are totally false. But why was his campaign seemingly caught flat-footed by something going back more than a decade?

CNN's Joe Johns has been digging deeper into all of this for us.

Joe, what are you looking?

JOE JOHNS, CNN SENIOR CORRESPONDENT: Well, Wolf, Herman Cain calls it is a witch hunt and says there was an investigation at the National Restaurant Association, where he worked in the 1990s. He says that investigation determined there was no factual basis for what he calls false allegations against him of sexual harassment, though he also says he see no reason to release any more information about the story. Cain says he is not aware that the association paid a financial settlement against these alleged cases, though he hopes they didn't pay a lot of money. In hindsight still, it took him a long time to come out and publicly admit that there had been a complaint, false or otherwise.

(BEGIN VIDEOTAPE)

JOHNS (voice-over): It's never a good day for presidential campaign when the candidate's name appears on the morning headlines in a story about alleged sexually inappropriate behavior.

But from a campaign management standpoint, this may be a textbook example of how not to handle a crisis. Politico, which broke the story, says there was plenty of warning. It first asked the campaign about this 10 days before this confrontational interview outside CBS on Sunday.

CAIN: I'm not going to comment on that.

JOHNS: And when the campaign's chief of staff was asked about Politico's allegation two women received settlements, he seemed confused too, saying he was not aware of any, just hours before the candidates said publicly that he had been falsely accused, Herman Cain's words, of sexual harassment.

CNN political analyst Rich Galen says it sounds like there was plenty of time for the campaign to prepare for the story to hit.

RICH GALEN, CNN POLITICAL ANALYST: This is the kind of thing that you see with campaigns that aren't very skilled and very experienced. Every campaign will have a bad time. Every campaign will have to explain something they didn't think they were going to have to explain. But you practice it, you try to get ready for it, and when it does happen, if it does happen, you just kind of execute on the plan.

JOHNS: Here is how one reporter at Politico responded when we asked if the story came from another Republican presidential campaign.

JONATHAN MARTIN, SENIOR POLITICAL WRITER, POLITICO.COM: My colleagues and I have been reporting this story for the last three weeks. In the course of that time we have talked to dozens of current and former employees at the organization, current and former board members at the organization, and a lot of folks in Washington who are close to the organization. So this has been an extensively reported story, a thorough story. And we have a half a dozen sources telling us about various aspects of these claims against Mr. Cain.

(END VIDEOTAPE)

JOHNS: A huge question there really, where did the story come from? We have also heard from Politico. They did get a tip on this, not clear at all where that tip came from.

Repeating, Herman Cain says there was an investigation into all of this back in the '90s. He says it determined there was no factual basis whatsoever for claims made against him. Maybe that's why he thinks nothing else needs to be released on it. The problem for the campaign is that when you have a story like this, people want to know more.

Their strategy has been to try to turn it into a media story accusing the media of drumming up false allegations in an attempt to discredit the candidate, which could work of course, unless new details start trickling in to keep the story alive -- Wolf.

BLITZER: We will play his entire statement that he made at the National Press Club later this hour. Our viewers will be interested in that. Joe, thanks very much.

But let's dig deeper right now, more on the allegations against Herman Cain, how they came to light, what's going on?

Ken Vogel is the chief investigative correspondent for Politico, part of the team that worked on this story.

Three weeks, you have been working on this story. What, 10 days ago you went to the Herman Cain campaign and said what?

KENNETH VOGEL, THEPOLITICO.COM: Well, we said that we had heard of these allegations. We subsequently actually named one of the women who had made the allegations.

Initially their response was to first ignore us, and then to say that they were unfamiliar with them. Then they shifted and said they were vaguely aware with these allegations, but denied that he had ever been accused of sexual harassment which you heard Herman Cain say himself yesterday on that video that you just showed.

Today, of course, he is admitting that in fact he was the subject of a sexual harassment allegation, but he says that they were false. He says there was an investigation into it that cleared him. We are actually reporting now that in fact there was no such investigation or if this was, it was very narrowly held, within the top executives of the National Restaurant Association, because neither the director of human resources nor the officers of the board of directors knew anything about any of these allegations, let alone a settlement when we talked to them.

BLITZER: So basically you're saying what he said today, that there was an investigation, you're suggesting when you say there was no investigation or it might have been a very modest investigation, you are saying he is misleading us on this?

VOGEL: Well, if he is saying that there was a comprehensive investigation, I don't know his exact words, but they were something to that effect, we talked to all of the folks who would have been involved in such an investigation and most of them had never heard anything of the sort.

BLITZER: Because this is what you write among other things, because I want you to elaborate. "The women complained of sexually suggestive behavior by Cain that made them angry and uncomfortable." And you go on to say "There were also descriptions of physical gestures that were not overtly sexual but that made women who experienced or witnessed them uncomfortable."

Did you get more specifics? You have more details of what this is all about?

VOGEL: Well, in fact, I was talking to a source today who said that one of the women told him that Herman Cain invited her up to his hotel room during a National Restaurant Association event and made sexually explicit suggestions to her that made her feel uncomfortable.

That would be an example of the type of thing that we are talking about here.

BLITZER: And this was a woman who worked for him?

VOGEL: That's correct. She was a woman who worked for him. She felt threatened. She felt as if her job was at risk and she was very upset. The source who told this to me, who she told it to, said that this is a very exposed young who nonetheless was extremely angry that she had been put into this situation by Herman Cain.

BLITZER: Did you and your colleagues actually speak to these two women?

VOGEL: Some of my colleagues did the reporting and talked to either of the women or representatives of the women or folks to whom they had directly relayed these...

BLITZER: But some of your colleagues, your journalistic colleagues at Politico, did speak to both of these women personally?

VOGEL: At least one of them.

BLITZER: At least one of them. The other didn't want to say anything. They apparently signed confidentiality agreements that they would not disclose anything in exchange for what you say were five figures, what, $50,000, $75,000? Do you know any specifics on how much each of them received?

VOGEL: We're not revealing the details. They were obviously more than $10,000 and less than $100,000 and included in those were nondisclosure agreements, that they not talk about them. That is part of the sensitivity here, part of the reason why we are not naming these people.

BLITZER: Were they not allowed to speak to their friends or family about it either or just the public?

VOGEL: Well, not being familiar with the precise language, we did have one of my colleagues who did in fact review one of these documents. I can't speak to directly what this particular one said, but typically the way a nondisclosure agreement would work would be folks outside of the sort of inner circle. BLITZER: When I read the report, you guys posted it last night on Politico, my first suspicion as a longtime reporter, political reporter here in Washington was the initial tip for Politico may have come what is called opposition research from some of his political rivals.

Can you tell us, without getting into the specifics of who tipped you off, was it another campaign?

VOGEL: We got a tip and it was from someone outside. We managed to corroborate all of the details and more. We have to be clear here that this tip was sort of a general tip. And we through dogged reported, talked to dozens of people, both within the Restaurant Association, on the board, former staffers, people who knew the women who made these allegations and corroborated all of the details that we reported on the case.

BLITZER: But it would be significant -- you are a good reporter -- if it came from a political campaign, another Republican campaign. And when you say outside, maybe someone from the National Restaurants Association or whatever. You understand the interest where you got that original tip to go check this out?

VOGEL: Certainly.

And I would say that what's more significant are the facts of the situation. And we independently corroborated and verified them.

BLITZER: I know, but you don't want to tell us if -- you don't want to say whether or not opposition research from another campaign provided the initial tip?

VOGEL: That's correct. We don't think that's -- the original source is as important as the actual information...

(CROSSTALK)

BLITZER: I know the actual information is important, but the original source is important as well, if we're looking at the whole political environment, what is going on among the Republicans, because you know we have covered a lot of campaigns. Opposition research always provides reporters, journalists, you go check out this, go check out that, you may find something good.

And I'm just curious because it is part of the presidential campaign right now whether another campaign helped you begin this reporting.

VOGEL: I mean, politics are politics, as you said. And certainly there are people who are digging up opposition research. I'm just not going to do anything that would identify -- that would point towards the identity of our original source.

BLITZER: Yes. By the way, what Cain did say at the National Press Club, it was, and I'm paraphrasing, but he said it was concluded after a -- quote -- "thorough investigation" that there was no sexual harassment. That's what his explanation was today, a thorough investigation.

What you are saying is that is not true. There was no thorough investigation?

VOGEL: It is certainly possible that it could have been thorough, but it would have been very narrowly held. In other words, we talked to some of the people who would logically be involved in such an investigation, including the director of human resources, who he explicitly named in that statement and said that this person, named her by position, was involved in this.

We talked to her and she said, no, she had never heard a thing about it.

BLITZER: Is it possible -- he was the head of this organization, this lobbying organization, that he didn't know if there was any financial settlement? He says he didn't know. If there was a settlement with these two women, as you guys are reporting, he didn't know that. Is that possible based on all your reporting, what you are seeing? Did he know about a five-figure financial statement to each of these women?

VOGEL: We didn't report explicitly on that. I assume it could be possible that in fact he didn't know of the settlement.

But clearly he knew of the allegations. He said that there was an investigation of them and this is something that it took him a while to say, that initially when we confronted him with these allegations, and with a specific name of a woman who made these allegations, he pretty much denied all knowledge.

Now you have him admitting knowledge, but saying he was exonerated in a thorough investigation.

BLITZER: How much longer after the financial settlement did he continue working at this organization?

VOGEL: It is unclear at this point. However, he did leave the organization early. He signed for a three-year term in June -- or rather in November of 1999 -- 1996. He left in June of -- late June of 1999. So he left a few months before his three-year term was up.

We talked to a number of board members, including those who were on the executive committee at the time of his departure. And they are unclear as to why he left. They said that in fact his resignation came to them. They accepted. They thought it was for personal reasons, but they didn't have any indication as to what they were.

BLITZER: But that is not really unusual for someone to leave a few months before the end of the contract.

VOGEL: It is possible that, particularly if he was going to something specific. In this case, though, the ambiguity and sort of the lack of clarity about his plans and why he was leaving was something that was in fact notable to some of these board members who nonetheless did not know anything about these settlements until we told them about it. BLITZER: Ken Vogel, I know you guys are going to be doing more reporting on this. Thanks very much for coming in.

VOGEL: My pleasure.

BLITZER: We will have more on this story coming up, including the entire statement that Herman Cain delivered today explaining his side of the story. That's coming up in the bottom of the hour -- much more coming up.

But let's check in with Jack Cafferty right now. He's got "The Cafferty File."

As we say, Jack, the world of presidential politics never dull.

JACK CAFFERTY, CNN ANCHOR: Well, if you assume that this came from somebody else in the presidential political arena, it may not have, it might have come from someone else.

BLITZER: Right. We don't know . And as you just heard from Ken Vogel, he is not telling us.

CAFFERTY: Well, and if you were holding those aces, you wouldn't be tipping your hand either, probably. But it is a good story and they did a good job reporting it. There is probably more to come in the days and weeks ahead.

In the meantime, smokers and fat people could soon be paying a lot more for their health insurance. Reuters reports a growing number of companies are raising health care costs for so-called unhealthy employees, translation, people who can't quit smoking, lose weight or lower their cholesterol.

In the past few years, a lot of employers have been trying to get workers to voluntarily improve their health, bring down soaring insurance costs. They have introduced weight loss programs or classes to stop smoking.

But not enough employees have signed up for these and improved their health. So instead companies are now going to start making these employees pay more.

One recent survey shows the use of penalties is expected to climb next year to include almost 40 percent of large and medium-sized companies. That's up from 19 percent this year, only 8 percent in 2009.

Penalties include higher insurance premiums and deductibles for those who aren't participating in the company's health programs and those engaged in risky health behavior, like smoking.

Wal-Mart insures more than one million people. It is one such company. And they say smokers consume about 25 percent more health care services than non-smokers do.

Starting next year, Wal-Mart will charge smokers higher premiums, along with offering a free program to quit smoking. Critics worry these kinds of penalties will hurt poor people the most since health care costs consume a bigger portion of their income and they may not have as much access to gyms or fresh food.

Anyway, here is the question: Should smokers and fat folks pay more for healthcare or health insurance?

Go to CNN.com/CaffertyFile. Post a comment on my blog or go to our on THE SITUATION ROOM's Facebook page -- Wolf.

WOLF BLITZER, CNN ANCHOR: We'll do, Jack. Thank you.

Other important news we are following, including NATO -- it officially ends its mission in Libya. But is it too soon? Stand by.

And more on the sexual harassment allegations against Herman Cain that go back more than a decade. So, why were the campaign and his campaign seemingly caught off guard? Donna Brazile and David Frum, they're both standing by live. Much more on this story coming up this hour.

(COMMERCIAL BREAK)

BLITZER: Less than two hours from now, NATO will officially end its military mission in Libya. NATO took over the allied air campaign seven months ago. It was aimed at protecting Libyan civilians and with almost 10,000 strike missions alone, it certainly helped speed the end of the Gadhafi regime.

With the bloody civil war barely over, Libya's National Transitional Council today elected its interim prime minister, Abdel Rahim al-Kib. He's an engineer who lived in the United States for more than three decades.

But Libya still faces extraordinary challenges.

Let's go live to CNN senior international correspondent Matthew Chance. He is joining us from Tripoli.

Matthew, are the allies ending their military mission too soon? What are officials in Libya and other experts telling you?

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, if you speak to NATO, as I've been doing today, what they say is they are ending it at exactly the right time. They say they achieved all of the objectives of the mission. They fulfilled the U.N. mandate to protect civilians they say, to the letter.

When you speak to Libyan officials, you get a slightly different picture. They are concerned about the security threat still facing Libya. They are concerned that loyalists to Colonel Gadhafi could rally themselves. They could muster and pose a security challenge in the future.

But none of this is convincing NATO. They are determined in about two hours and 40 minutes from now, their mission in the skies over Libya will come to an end.

Earlier, I sat down with the Anders Fogh Rasmussen, who's the secretary-general of NATO. I flew with him actually from NATO headquarters into Tripoli.

Take a listen about what he had to say.

(BEGIN VIDEO CLIP)

ANDERS FOGH RASMUSSEN, NATO SECRETARY-GENERAL: We have been mandated by the United Nations Security Council to protect civilians and that mission has been a great success. We have prevented a massacre. We have saved countless lives. We have fully implemented the United Nations mandate. That was our mission and we have done what we promised to do.

(END VIDEO CLIP)

CHANCE: So, as far as NATO is concerned, then, Wolf, mission accomplished. But here on the ground in Libya, it still could go in many directions. Lots of questions about what kind of country Libya will emerge.

BLITZER: I heard the sound bite with Rasmussen, the NATO secretary- general in the plane. But all that extra sound, the ambient sound, I really couldn't understand what he was saying. What exactly did he say to you that really jumped out?

CHANCE: Basically, he has been congratulating his own organization, NATO, for a mission which he says has been done extremely well. They are calling it the most successful mission in NATO's recent history. They are proud to the fact they got what they call a clean act. They're leaving at midnight local time, something they haven't been able to do, for instance, in Afghanistan and Iraq.

They also downplayed, even denied, that NATO caused any civilian casualties in Libya as a direct result of its bombardments. Remember, there were thousands of airstrikes, as you mentioned a few moments ago, on the country. They are saying that no civilian casualties were caused as a direct result that they can confirm from that NATO bombardment.

And so, they are putting the most positive spin on this that's possible, Wolf.

BLITZER: Did Rasmussen say that they were -- that NATO allies would formally ask the new Libyan government to reimburse NATO for the $1 billion or $2 billion that NATO spent operating this campaign in Libya in the past few months? There have been hints from the Libyans that they might be willing to do so. They are relatively rich oil- exporting country. They've got money.

Are they ready to reimburse the U.S. and the NATO allies? Did you get into that with Rasmussen?

CHANCE: I didn't. I mean, I don't think, given that this is a sort of congratulatory sort of triumphant visit to Tripoli that that's something specifically that would have been addressed today when the secretary-general came. But I have no doubt whatsoever, Wolf, that this is being discussed behind closed doors. Certainly, Libya has the potential to pay back a lot money, whether or not a deal is in the offing or not, I just can't say.

But I can imagine, given the economic tremors in much of the world, in Europe, in the United States as well, that many European countries, U.S. as well, may be looking to a relatively rich Libya to, you know, pay back some of the money they spent liberating the country.

BLITZER: Yes. There's no doubt about that. The U.S. alone spent about $1 billion and U.S. still has frozen, I think, about $30 billion in Libyan assets. Many members of Congress have suggested deduct some of that money and reimburse U.S. taxpayers. But I'm sure we'll get more on that in coming weeks and months.

Thanks, Matthew. Thanks, very much.

Presidential candidate Herman Cain embroiled in a potentially devastating scandal. But can he dig his way out of it. That's coming up next, our strategy session.

(BEGIN VIDEO CLIP)

HERMAN CAIN (R), PRESIDENTIAL CANDIDATE: I have never sexually harassed anyone.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: Let's get back to our top story.

Republican presidential Herman Cain forced to respond to a report he sexually harassed two women while he headed the National Restaurant Association back in the 1990s. Listen to this.

(BEGIN VIDEO CLIP)

CAIN: Delighted to clear the air.

(APPLAUSE)

CAIN: Number one, in all of my over 40 years of business experience, running businesses and corporations, I have never sexually harassed anyone. Number two, while at the restaurant association, I was accused of sexual harassment -- falsely accused, I might add. I was falsely accused of sexual harassment.

And when the charges were brought, as leader of the organization, I recused myself and allowed my general counsel and my human resource officer to deal with the situation. And it was concluded after a thorough investigation, that it had no basis.

As for, as a settlement, I am unaware of any sort of settlement. I hope it wasn't for much, because I didn't do anything. But the fact of the matter is, I'm not aware of a settlement that came out of that accusation.

Per the article, two anonymous sources claiming sexual harassment -- we're not going to chase anonymous sources when there's no basis for the accusation. I would draw your attention to the three people mentioned at the end of the article that were at the restaurant association as past chairman, chairman and incoming chairman of the board who would have known about this if it had turned out in fact to be a charge with some validity. But it was not.

And so, as a result, I have never sexually harassed anyone and those accusations are totally false.

(APPLAUSE)

(END VIDEO CLIP)

BLITZER: So, a statement from Herman Cain over at the National Press Club here in Washington in earlier in the day.

Let's discuss what's going on in our strategy session. Joining us, our CNN political contributor, the Democratic strategist Donna Brazile. Along with CNN contributor David Frum of the FrumForum.com.

For 10 days his campaign has been alerted that this was on the way. They didn't respond, really. They could have gotten ahead of this story instead of trying to catch up. What's going on here?

DAVID FRUM, FRUMFORUM.COM: The amateurishness of the Cain organization should not lead us to a conclusion that Cain did something very bad. He may just be a victim of the fact that he is not running a normal presidential campaign. He is not ready for primetime. That doesn't make him guilty of anything serious.

It's important to understand that companies settle claims all the time for reasons other than thinking they did something wrong, especially with the amounts of money here that is said to be in the five figures. So I did a little research today. And in the world of sexual harassment litigation, those are not big figures.

BLITZER: As Ken Vogel from "Politico" said anywhere from $10,000 $90,000. And sometimes companies just do it to get this thing out of the way and move on, as you well know.

DONNA BRAZILE, DEMOCRATIC STRATEGIST: First of all, anyone who is accused of sexual harassment, that's a very serious charge, it is a very serious incident, because it's a serious incident. It is discrimination in the workplace. It makes people very uncomfortable. It is a form of bullying, and we should take the charges of allegations seriously.

That's why I think the Cain campaign should have been prepared for it. They should have understood the seriousness of the allegations. It is not just one woman, it is two women. It is now a drip, drip, drip. I don't think it's going to go away because I don't think Mr. Cain officially answered the question. He is trying to put it behind him after with answering questions.

BLITZER: The National Restaurant Association says as a matter of policy, they don't talk about personnel issues in the past or current personnel issues, which is standard boilerplate comments from most associations.

GRUM: So he will have to give a fuller answer than he has given. And we probably will end up knowing what that answer is. Sexually harassment covers a wide range of different behaviors. As we remember from the Thomas case, that's what put --

BLITZER: Clarence Thomas.

BRAZILE: The Clarence Thomas case -- before the Thomas case there were 7,000 or 8,000 sexual harassment case easier according to the EOC. Afterwards it jumped to over 15,000. So there a big change in consciousness. It covers a lot of territory, everything from an untoward remark if a physical attack. And, again, people will feel differently about this depending on the details --

BLITZER: The difference is Anita Hill went public with accusations against Justice Thomas, whereas these two women are staying silent, honoring their confidentiality agreements they made with the organization.

BRAZILE: That's true. As you recall, the Senate first ignored Anita Hill, and that led to many women on Capitol Hill watching, members of congress, marching across the tarmac. And of course we all know what happened when Anita Hill was finally able to testify.

I still believe he hasn't fully answered the questions. I think he has to do a better job by answering these allegations, otherwise it will distract from his campaign. He is running, not because of his experience in government, but in large part because of his character. He is a businessman. He's an unconventional candidate. This is a problem he needs to talk about.

BLITZER: He is doing amazingly well for someone with no real strong political experience. Look at "Des Moines Register" poll that came out over the weekend in Iowa. Cain is at 23 percent among likely Republicans caucus-goers. Romney statistically tied, 22 percent, Ron Paul 12. Perry seven, Gingrich seven, Santorum five. You see, and in the national polls among Republicans, he is doing very well indeed.

Here is the question to you. How much, this early stage in this, do you think this could hurt him?

FRUM: If it turns out to be an allegation with substantial bite, of course it could hurt, especially because he is running as a candidate of faith and family. If it turns out that what happened here was he made a rude joke or said something stupid, people took offence and in order to make it go away his organization wrote a relatively small check, then it won't mean anything at all.

BRAZILE: This is why women get so upset, when men just try to dismiss it. It was just a rude joke. It was just routine. No, these are serious allegations whenever they are brought up, and it should have been investigated. It may not have been properly investigated. We should know more and he should be more forthcoming. He cannot clearly just blame the media and try not to answer these allegations.

FRUM I'm not a Herman Cain fan, but let's roll back. We don't want to use the word "allegation" because we don't know what allegations are. There is fact of a settlement. Companies settle all the time, including when nothing happened, because the case is cheaper to settle than it is to defend. We and if we find out what's in it, we will learn what the allegations were. As yet, there are no allegations. There's only the fact of settlement.

BRAZILE: Well, first they denied it, then then acknowledge that there was allegations. So drip, drip, drip.

FRUM: If there was a slip and fall at the company, that would be a serious thing if the company were to blame.

BLITZER: Let's be precise, because we're going to move on in a second, don't go away. In his remarks at the National Press Club, he did confirm there was an allegation of sexual harassment that was leveled against him. He says there was a thorough investigation that cleared him. "Politico" is saying maybe not such a thorough investigation, although there was a settlement. He said he wasn't aware of the settlement, so there's a lot more that we're going to be learning about.

So guys, stand by, we have a lot more discuss, including Rick Perry, was poked some fun at president Obama for using a teleprompter. But he uses one as well. He also tried to do without one, and he doesn't do all that well with these remarks. We will play it for you and discuss more in our strategy session when we come back.

(COMMERCIAL BREAK)

BLITZER: Rick Perry has been taking pokes at President Obama for reading from a teleprompter, but we will check how the Republican candidate fairs himself with and without one. Take a look at this.

(BEGIN VIDEO CLIP)

RICK PERRY, (R) PRESIDENTIAL CANDIDATE: If you're looking for a slick politician or a guy with great teleprompter skills, we already have that. And he is destroying our economy. I'm a doer, not a talker. In Texas we created 40 percent of the new jobs in the entire country since June 2009, and we cut a record $15 billion from our state budget. Now they say we can't do that in Washington. Well, they're wrong, and they need to go.

(END VIDEO CLIP)

BLITZER: Rick Perry's new ad. Let's continue with Donna and David. Anything wrong with the politician, for example, using a teleprompter? We know President Obama does it very well.

FRUM: During a financial crisis when an unfortunate stray remark can be heard by markets, it may be a very good idea. President's words carry very powerfully. And there is a reason for caution.

In this case, this particular attack is a particularly weird one because if the suggestion is, well Barack Obama, he would be completely tongue-tied, everyone knows he can't talk. We all know he can talk. No one gainsays that. So if he can talk so well, why mock him for talking carefully?

BLITZER: When Governor Perry gave his major economy speech in Pittsburgh the other day, he was reading from a teleprompter.

BRAZILE: I don't have a problem with that. I typically I can read from one, if it's close up. If not, I just go by the cuff.

BLITZER: I use a teleprompter every day.

BRAZILE: I don't have a problem with it. The point is I don't think Rick Perry has anything to say. I have watched his campaign for the last month. It looks like Rick Perry is struggling to get a message with voters and he is having a struggle with his own words, not the words coming out of President Obama.

He is getting a lot of buzz because of this the other day. He was speaking without a teleprompter, off the cuff. Let me play an excerpt.

(BEGIN VIDEO CLIP)

PERRY: This is such a cool state. Live free or die. You got to love that, right?

(LAUGHTER)

Everybody has a little slogan, right? Mine is cut, balance, and grow. That little plan I just shared with you doesn't force the granite state to expand your tax footprint. You know what I mean. Like nine percent expansion.

(LAUGHTER)

My plan is really pretty simple. It does deductions for the mortgage, deduction for charitable. Yes. You keep that in there. And your state and local taxes are in there. Put those on, $12,500, for every dependent that you have. And it is pretty easy math. Subtract it. Send it in. It's awesome.

(END VIDEO CLIP)

BLITZER: Is it fair or unfair to look at that and say, that looks a little, I guess, strained?

FRUM: It does look a little odd. You catch him in a relaxed moment. But I think what his candidacy will turn on is, is the Texas miracle true? Did it really happen the way he said it happened?

And as the evidence gathers that the state of Texas had the same fiscal problems or worse as everybody else. They look a little better because they do their budgeting over two-year cycle not a one-year cycle. As it turns out, a lot of jobs were government jobs, and many of the rest were taken by aliens, half of them illegal. That story doesn't look so compelling.

And then the simple solution to the nation's problems he produces, his numbers don't work. The idea that through expanded drilling can you create millions and millions or 1.2 million job over 20 years. That figure doesn't --

BLITZER: You saw that campaign commercial where he says 40 percent of all the jobs in the United States were created in Texas over the past couple years on my watch. That's a pretty effective slogan.

BRAZILE: David mentioned the fact that, look, Texas is blessed with a lot of oil. Some people in Louisiana think they have been taking some of our natural resources. But the truth of the matter is that Texas has a lot of resources. And that's one of the reasons why they created so many minimum wage jobs.

Is that the jobs we want to see created in the future? Not really. We want to see jobs in the middle class pay for their bills, et cetera. But I have to say, watching that clip, I thought I was watching Saturday night live.

BLITZER: It was a little painful watching that clip. And I guess the comedians will have fun with that. If you want to be president of the United States, whether you are Herman Cain, Rick Perry or Mitt Romney, or anyone else, you've got to expect that they will be scrutinized at every second, everything they say. It just comes with the territory.

FRUM: I get a little weary, though in the middle of this economy crisis. People may say I don't like the way that guy holds his shoulders or moves his head back and forth. You can be a very, very successful president whether you hold your shoulders one way or the other. Our economic problems are so severe, things are so out of line, and it is so important to find the right answer that those ticks of verbal, mannerisms, the physical ticks, I think, let's leave them to one side.

BLITZER: I think you make a good point. We should focus really -- there are major economic issues on the table. Who could do a better job with the economy, helping people who are losing their homes, and national security, some of the side issues. That's a fair point.

BRAZILE: Well, look, it is not the way he looks or how he holds his head or the jokes he makes. It's really, what is his plan for the future. What is his plan to grow the economy again and get the private sector off the side lines?

BLITZER: He has been outlining his energy plan, his tax plan. He has been outlining plans.

BRAZILE: We have looked at those plans. And I think most people come away saying, OK, is that the drill, baby, drill, and let's cut taxes for the wealthy. It's not a prescription for the future. And I think that's the problem Rick Perry is having, he doesn't have really anything to say.

BLITZER: You wrote a column. And I want you to tell us, give us the gist of it, because it is a good one, entitled "How the Tea Party could drive the GOP to Disaster." What are you talking about?

FRUM: I laid out their four options for the nomination and the election. What happens if you nominate a Tea Party candidate and the candidate loses? What happens if you nominate a candidate like Mitt Romney and he wins?

And I laid out the last hypothesis, what happens if you do nominate a Tea Party candidate and that person wins because of the depth of the economic crisis with a platform that is utterly inadequate to the crisis.

That would be a very, very dangerous thing because the country does not need tighter credit. The country does not need a premature focus on the deficit. These are the kind of large balanced approach that Mitt Romney laid out.

BLITZER: Do you think there is a Tea Party candidate among the Republicans out there who could win?

FRUM: I think Rick Perry is a very undervalued stock right now. I think as there is a lot of resistance to Mitt Romney. As the people who don't want him, look at their field of choices, Rick Perry is the choice that makes the most sense, if that's your point of view.

He is a governor. He has won elections. He has held public office and I think people will tend to converge on him as alternative. And then, it becomes -- if that happens early, he could beat Romney.

BLITZER: I wrote my blog today in our CNN SITUATION ROOM blog today, did you see it?

FRUM: Yes, I did.

BLITZER: On how the Democrats really are going -- they're focusing their attention on Mitt Romney, David, the president's advisor yesterday, saying he has no core basically ignoring all of the other Republican candidates. They are going simply after Mitt Romney. You noticed that.

BRAZILE: Well, you know, Mitt Romney is a great target for Democrats because it is true that he has had four positions on one issue and then he will change it when the weather changes.

But look, if Herman Cain can survive this round of scrutiny, I think that Cain will be a viable candidate, but I agree with David. Rick Perry still has another leg --

BLITZER: Donna, David, guys, thanks very much. Good discussion. President Obama today orders the FDA to do something about prescription drug shortages and to do it now. Stand by for details.

We will also tell what you today's executive order could mean for you. That and today's other top stories, that's coming up.

And it's one of the world's most dangerous and deadly drives, the 24- hour trek from Pakistan to Afghanistan. We are going along for the ride.

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BLITZER: Mary Snow is monitoring some of the other top stories in THE SITUATION ROOM right now. Mary, what's going on?

MARY SNOW, CNN CORRESPONDENT: Wolf, President Obama's tackling prescription drug shortage is headed today by issuing just a few hours ago, an executive order.

The order directs the Food and Drug Administration to take action by reporting further drug shortages and speeding up regulatory reviews.

So far this year, nearly 108 life-saving drugs have been declared in short supply. Meantime, the Justice Department will be tasked with examining possible price gouging.

Nearly two million people are still without power this hour after a freak snowstorm buried parts of the northeast over the weekend.

Crews are scrambling right now to get power restored to customers. Authorities in Massachusetts say, it could be Thursday before everyone has electricity again. At least 10 deaths are blamed on the storm.

And U.S. stocks fell more than 1 percent today as the dollar shot up against the yen. The Dow tumbled 208 points. The sell off comes on the final day of what is the best month for the stock market in years.

Experts say despite today's declines, markets are poised to close out a record month with the Dow up 11 percent in October -- Wolf.

BLITZER: All right, thanks very much, Mary for that. The "Cafferty Files" coming up next. Then in the next hour, Russian spies including Anna Chapman caught in the act. We have new video just released by the FBI, which shows foreign agents on the hunt for America's top secrets.

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BLITZER: Jack's back with the "Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: The question this hour is, should smokers and fat people pay more for their health insurance? A lot companies are going to start penalizing those groups of people next year.

Matt in Washington writes, "Yes, the basic concept of insurance is to spread risk. I'm sorry, but if you are overweight or a tobacco user, you're going to incur a greater risk and have a greater chance of needing insurance to cover medical costs.

Why should someone living a healthy lifestyle pay for someone who has chosen not to? If you don't like it, do something about it. Quit smoking, start working out."

Jeannie writes on Facebook, "What about people who drink alcohol or eat meat or are too skinny. Where's the line?

Pete writes, "Jack, you just described 50 percent of America. Good luck in getting that bit of reality dealt with."

David in Tampa writes, "Why not, Jack, if you drive an expensive or exotic car, you pay more for insurance. If your home is large on a beach in an earthquake or hurricane zone, you pay more.

If you're in a dangerous occupation, either you or your employer gets a larger bill. Smokers along with the tobacco industry should pay to cover healthcare costs associated with that bad habit."

Janne writes, "Only if drunks and drug addicts will pay more. How about stupid people, they are always doing dumb things, and getting themselves hurt. How about women who keep spitting out babies? How much does that costing us? You start slipping down a slippery slope when you single out select segment of the population.

Matt writes, "Jack, as a former smoker, I firmly believe that people who engage in unhealthy and unsafe activities should pay for their health care, but then not only works if they have insurance."

And Carl writes, "Jack, as a non-smoking fat ass, the answer is no."

If you want to read more about this, you can go to my blog, cnn.com/caffertyfile or through our post on THE SITUATION ROOM's Facebook page -- Wolf.

BLITZER: Jack, thank you. At the top of the hour, Herman Cain says there is witch hunt against him after allegations surfaced of sexual misconduct. We will talk about the consequences for his presidential campaign.

Plus trapped without food, water or working bathrooms. A JetBlue pilot's desperate plea for help after he and more than a hundred passengers get stranded on a plane for almost eight hours.

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BLITZER: Let's get to this hour's "Hot Shots." In Thailand, a child sits on a bench surrounded by flood water. The country is experiencing the worse the flooding in over 50 years.

In Spain, two women walk past tomb stones on the eve of All Saints Day. In Germany, a foggy autumn day does not stop man from rowing on a lake.

In New Zealand, look at this, cyclists participate in day one of the 2011 Tour of Southland. "Hot Shots," pictures coming in from around the world.