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THE SITUATION ROOM

Herman Cain Still GOP Frontrunner Amid Sexual Harassment Allegations; Interview with Gene Sperling; President Speaks at G-20 Summit; Israel May Plan Airstrike against Iranian Nuclear Facility; Israel May Plan Airstrike against Iranian Nuclear Facility; Jon Corzine Retains Criminal Legal Counsel; One of Herman Cain's Accusers Will Not Speak Publicly on Incident; General is Dismissed for Criticizing Afghan Government; CIA Releases Tapes Used to Brief President Reagan

Aired November 4, 2011 - 17:00   ET

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


WOLF BLITZER, HOST: To our viewers you're in THE SITUATION ROOM.

Happening now, breaking news -- the lawyer for one of Herman Cain's accusers says she stands by her allegations of sexual harassment and claims he made very specific and unwanted advances. I spoke with that attorney just a little while ago. Stand by for all of new details that are coming in and the Cain campaign's reaction as well.

Plus, President Obama is heading back to the United States from France. He claims progress towards solving Europe's huge debt crisis and slamming Republicans in Congress for inaction at home.

And Syrian security forces respond to Friday's protests with new bloodshed. Demonstrators are calling the government's promise to end its crackdown a lie.

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

We didn't hear from Herman Cain's accuser herself, but her lawyer says she still believes she was the victim of sexual harassment by Herman Cain back in 1999. Joel Bennett responding specifically to Cain's denials by saying where there's smoke, there's fire. Our own Brian Todd is standing outside of Joel Bennett, the attorney's office right now. It was a very dramatic moment when he walked out, Brian, where you are and he read that statement.

BRIAN TODD, CNN CORRESPONDENT: It was, Wolf, very dramatic, very highly anticipated. We were waiting here for a couple hours for Mr. Bennett to come out, and he did and delivered a one-page statement on behalf of his client, who is one of Mr. Cain's accusers. A couple of very operative passages from that statement, essentially standing behind her complaint, which Mr. Bennett says was filed in 1999.

The operative parts we're taking from this statement right now, quote, "She made a complaint in good faith about a series of inappropriate behaviors," plural, "and unwanted advances from the CEO." This was very strong indication that there were more than one incident involved in this. Mr. Bennett later said there may have been more than a couple, but then he came back and said he only wanted to leave it at more than one incident.

And then at the end of the statement he says the client stands by the complaint she made. She's delivering a strong rebuttal to Mr. Cain. Mr. Bennett was asked a short time after that about Mr. Cain's denials and his claim she had no evidence for they are claim.

(BEGIN VIDEO CLIP)

JOEL BENNETT, ATTORNEY: Mr. Cain knows the specific incidents that were alleged. My client filed a written complaint in 1999 against him specifically and it had very specific incidents in it. And if he chooses to not remember or not acknowledge those, that's his issue.

(END VIDEO CLIP)

TODD: And just a short time ago we got a statement from the National Restaurant Association kind of in coordination with all of this. The statement reads in part "In July 1999 Mr. Bennett's client filed a formal internal complaint in accordance with the association's existing policies prohibiting discrimination and harassment. Mr. Herman Cain disputed the allegations in the complaint. The Association and Mr. Bennett's client subsequently entered into an agreement to resolve the matter without any admission of liability. Mr. Cain was not party to that agreement."

So that from the National Restaurant Association, kind of in coordination that association saying they had essentially signed off on Mr. Bennett coming out and giving this statement, Wolf.

BLITZER: We just received a statement from the Herman Cain campaign. I'll read that to our viewers, Brian, as well, "We look forward to focusing our attention on the real issues impacting this country like fixing this broken economy and putting Americans back to work through our nine-nine-nine plan as well as strengthening national security."

Brian, stand by for a moment. I also want to bring in our chief political analyst Gloria Borger. Is that possible right now in the current environment, Gloria, that Mr. Cain will be able to get back on message?

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Well, he's certainly go to try. We have to see how this story unravels, Wolf, because as you pointed out in your conversation with the attorney, there are lots of people who know who this woman is or these women are, and it's sort of like a question of how long you can keep these women private. As the attorney said, if it happens, it happens. She'd rather remain a private individual, but you know how these stories proceed.

I want to add one thing also, though, Wolf. We don't really know what the result of the internal investigation was that was done by the National Restaurant Association. When Mr. Cain spoke at the Press Club earlier this week, he said, and I quote, "that it was concluded after a thorough investigation that it had no basis."

In the statement from the National Restaurant Association today, all we know is that there was an agreement that -- without any admission of liability. The statement doesn't even mention the matter of a settlement.

So that is the big question that still remains out there. What happened? Was there sexual harassment? And so we don't know the answers to those questions, so Herman Cain can continue on with his campaign because we don't know the specifics of this yet and this woman has decided to remain private.

BLITZER: She wants to protect her privacy. She's been married for 26 years. She works for the federal government right now and doesn't want to be in the spotlight.

Listen to what Joel Bennett, the attorney representing this woman, said about that agreement, that settlement, the severance pay, listen to this, whatever it was called.

(BEGIN VIDEO CLIP)

BENNETT: A severance agreement is when someone is leaving employment and there is an agreement to pay the person usually a certain number of months of salary for whatever reason. It could be just because the person is leaving. That's very common in companies that are having economic problems that have severance policies that are unrelated to any misconduct or performance issues. This was a settlement of an internal complaint of sexual harassment. It was not a severance agreement.

(END VIDEO CLIP)

BLITZER: He's very specific, Gloria, on that. He made an allegation of several instances in his words of inappropriate behavior, sexual harassment. And she then and Joel Bennett was her attorney back in 1999, worked out an agreement with the National Restaurant Association in which she was paid a certain amount of money because of these allegations that she made.

BORGER: Right. And so, you know, it could be go away money or it could have been that they felt that there was a real issue and that this need to be settled before it was litigated. And we have Mr. Cain's statements On the Record saying that it was concluded that it had no basis and that is clearly not what Joel Bennett is saying today.

And also he added, and this is of course he represents this woman, but in terms of the other women he said "where there's smoke there's fire."

I should add, though, Wolf, one thing about the Cain campaign. Since Sunday they've raised $1.6 million. In the entire last quarter they raised just over $2.5 million. So they've done very well fundraising off of this.

BLITZER: Since Sunday night when "Politico" broke this story.

BORGER: That's right.

BLITZER: Let me play that little clip of what Joel Bennett, the attorney representing this woman, said when he was asked if there are other incidents out there.

(BEGIN VIDEO CLIP)

BENNETT: There's an expression, where there's smoke there's fire. The fact that there are multiple complaints tells me that it's more likely than not that there was some sexual harassment activity by this man at that time. All of that is subject to proof. He would be allowed to rebut all of them and but I -- but the fact that there's more than one complainant is meaningful.

(END VIDEO CLIP)

BLITZER: We know there's at least one, maybe two other women out there who have expressed their concern that they were sexually harassed by Mr. Cain as well. So while this one woman represented by Joel Bennett decides she doesn't want to go public, we don't know what these other women might be doing.

BORGER: Right. I think that's why, Wolf, when you say can Herman Cain get beyond this, what will happen to the story, honestly at this point we don't know. We just don't know.

What we do know is that Herman Cain wants to talk about, as his spokesman said in the statement, nine-nine-nine, national security, and the rest of the issues. And we also know that in the polls at least right now he is not suffering within the Republican Party.

BLITZER: He and Mitt Romney are the two front-runners in the national polls and several of these early state polls as well. Gloria, stand by. Herman Cain did get a brief break today from his nearly week-long fight against sexual harassment allegations. He and Mitt Romney held dueling appearances before a conservative group here in Washington.

CNN's Jim Acosta watched the two Republican front-runners in action. He's joining us now.

Jim, tell our viewers what happened before this conservative audience.

JIM ACOSTA, CNN POLITICAL CORRESPONDENT: Wolf, Herman Cain may be facing allegations of sexual harassment, but you would not know it from a response he got at a big Tea Party summit here in Washington. As you mentioned, he and Mitt Romney gave speeches at this event, but the reactions were very different.

(BEGIN VIDEOTAPE)

ACOSTA: After one week in a political storm, Herman Cain came thundering back at a big Tea Party summit for the group Americans for Prosperity. Conservatives were dancing in the aisles.

HERMAN CAIN, (R) PRESIDENTIAL CANDIDATE: The biggest crisis we have is a severe deficiency of leadership crisis in the White House.

(APPLAUSE)

ACOSTA: Cain, who once worked for Americans for Prosperity, did not hold back. He all but blew a kiss to the group's founders, the Koch brothers, libertarian billionaires who have bankrolled much of the Tea Party movement.

CAIN: This may be a breaking news announcement for the media. I am the Koch brother's brother from another mother.

(LAUGHTER)

(APPLAUSE)

CAIN: Excuse me.

ACOSTA: After a week of conflicting responses to allegations of sexual harassment, Cain and his supporters are playing offense. Look no further than the latest ad from a pro-Cain political action committee. A new "Washington Post"/ABC News poll shows Cain is still a front-runner, nearly tied with Mitt Romney. What's more, 55 percent of Republicans say the harassment allegations are not a serious matter, and 70 percent say the accusations make no difference in their vote.

MITT ROMNEY, (R) PRESIDENTIAL CANDIDATE: Thank you.

ACOSTA: In his own speech at the same summit, Mitt Romney was less red meat in his remarks than he was in his new plan to dramatically cut spending. In his own speech at the same summit, Romney in his remarks than he was in his new plan to dramatically cut government spending. Romney would cut $500 billion per year until 2016. He would partially privatize Medicare for future seniors, allow states to run Medicaid, eliminate the president's health care law, and cut funding for foreign aid, PBS, Planned Parenthood, and Amtrak.

ROMNEY: The future of Medicare should be marked by competition, by choice and by innovation rather than by bureaucracy, stagnation, and bankruptcy.

ACOSTA: Romney can boast he's the one Democrats want to destroy, but it was Cain who got the rock star welcome. Jackie Wilson drove all the way from North Carolina with her new Herman Cain become in hand.

UNIDENTIFIED MALE: Are you bothered by all the stuff that came out this week is it.

JACKIE WILSON, CAIN SUPPORTER: Absolutely not. No way.

UNIDENTIFIED MALE: What do you think about all that?

WILSON: I think it's a bunch of junk.

(END VIDEOTAPE)

ACOSTA: A lot of the conservatives in this crowd may still love Cain but there are rumblings inside the Republican Party that some out in states look Iowa, New Hampshire, are growing weary of Cain's campaign staff. One Iowan Republican, Wolf, told me he would like to see Cain's chief of staff, Mark Block, resign. But there are signs that Cain is trying to put this matter behind him. One thing that he's doing on Monday, he's going on the late night talk so with Jimmy Kimmel. That is not the sign of a candidate who thinks he's in trouble, Wolf.

BLITZER: Thanks very much, Jim Acosta, for that. We'll have more on this story coming up. Also we're getting new information revealing just how worried the Obama administration is right now about a possible Israeli strike against Iran. Stand by for that. And we'll also show you the secret CIA videos that helped Ronald Reagan prepare for some major moments in his presidency. Lots of news happening today here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Now to President Obama and the U.S. economy. He may think wrangling with word leaders over Europe's debt is a walk in the park compared to the harsh reality he faces back here in the United States. Republicans are blaming him for a sharp slowdown in hiring last month even though the overall jobless rate improved slightly, dipping to nine percent. The campaign season battle over America's economy followed the president to the G-20 summit in France. He's on his way home right now but our chief White House correspondent Jessica Yellin is still in camp. Jessica?

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Wolf, President Obama has said solving the Eurozone crisis was a top priority for this G-20 summit, but at the end Europe's leader seemed no closer to filling in the details of their rescue plan.

(BEGIN VIDEOTAPE)

YELLIN: President Obama's marathon 35-hour trip to the G-20 summit didn't change his stark view of the global economy.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The recovery has been fragile. The world faces challenges that put our economic recovery at risk.

YELLIN: But on the most pressing issue facing the group, resolving the euro's own crisis, he insisted --

OBAMA: Here in Cannes we have moved the ball forward.

YELLIN: The U.S. isn't going to fund Europe's bailout. Instead the president and his aides offered advice, prodding the Europeans to get their house this order quickly.

OBAMA: I know it isn't easy, but what is absolutely critical and what the world looks for in moments such as this is action.

YELLIN: But even as he pressed Europe to right its economy, the president couldn't escape questions about troubles at home.

REP. JOHN BOEHNER, (R) HOUSE SPEAKER: The House will be in order.

YELLIN: With his jobs bill and deficit reduction plan stuck on Capitol Hill --

OBAMA: As soon as I get some signal from Congress that they're willing to take their responsibilities seriously, I think we can do more.

YELLIN: -- and the nation's sluggish growth. Last month the U.S. added just 80,000 new jobs. Sounding like candidate Obama, the president offered this take on his stewardship of the economy.

OBAMA: When I came into office, the U.S. economy had contracted by nine percent. A little over a year later, the economy was growing by four percent, and it's been growing ever since.

YELLIN: From there the president attended two events that could be helpful in French President Sarkozy's own bid for reelection. He sat for a rare joint interview with Mr. Sarkozy and attended a ceremony marking the end of the NATO mission in Libya.

OBAMA: Together we have stood up for our ideals around the world, and today we pay special tribute to all those who have served and given their lives, French, American and forces from our allies and partners.

(END VIDEOTAPE)

YELLIN: For now Europe will have to find bailout funds in its own back yard. No outside country, not even China, made a new financial commitment to help troubled economies here. Wolf?

BLITZER: Jessica Yellin on the scene for us in France.

The Republican Party chief says today's jobs report underscores what he calls the devastating toll of President Obama's record on whether it comes to the economy. We're joined now by one of the president's top advisors, the director of the National Economic Council, Gene Sperling.

Thanks for coming in.

GENE SPERLING, DIRECTOR, NATIONAL ECONOMIC COUNCIL: Thanks, Wolf.

BLITZER: You know in order to really see some improvement in the unemployment, you need at least 150,000 to 200,000 jobs a month given the growth of the population. This month, October 80,000 jobs, better than losing jobs, but still not where you want to be.

SPERLING: Absolutely. You know, what we've seen is that there has been steady progress. You saw numbers were revised up. So at this point in the year the United States economy, the private sector, has created about 1.5 million jobs. But we've lost jobs at the state level, at teachers' level that has hurt job growth some. But even at 1.5 million private sector jobs, that is not even close to good enough when you are digging yourself out of what is the worst recession since the Great Depression.

I mean, this president inherited what we call the Great Recession, and it is a long way out. And that's why we're not satisfied one bit, and that's why this president is putting his focus on passing the American Jobs act, Wolf, because those who are opposing it and putting no alternative of their own on the table are essentially saying they're satisfied with the current pace, they're satisfied to be at nine percent or to have projections of just two percent growth next year.

You have it exactly right. In order for us to get job growth at the level it needs to be to start bringing down unemployment at a quicker pace, we need to spark this economy, we need to inject demand.

And that's why what is so disappointing, Wolf, is not even so much they have blocked the president's American Jobs act or refused to pass major components, but they have not even been willing to put on the table anything credible at all that would do something to give the type of significant job growth you were just talking about to help us start bringing the unemployment rate down and get Americans back to work.

BLITZER: Well, they have their own proposals, the Republicans, and they sort of emulate what the U.S. Chamber of Commerce said in their reaction to today's jobs numbers as well. I'll put up on the screen. "We need to stop saddling employers with burdensome regulations and uncertainty. We need to restructure the tax code that is dragging down our economy and undermining competitiveness. We need to reform entitlement programs that are pushing the nation toward insolvency. Until we do those things, we can expect anemic growth and weak job creation."

What they are saying is they don't think the government needs to do all this. They want the private sector unleashed. Do you have a problem with that?

SPERLING: You know, there are many important things we need to do for the long term. This president is leading on commonsense deregulation. We just passed three free trade agreements, we passed patent reform. These things are all important.

But it's time to be serious. What you just read there is what the Chamber of Commerce and many of the Republicans would have put out at any moment at any time. This is not a time to just be putting out your old, stale agendas.

And even if you're for long-term issues you'd like to debate with us let's talk about them in that context. None of those thing, not one single one, has anything to do with sparking job growth, sparking demand next year.

People -- top experts project that next year we're likely to grow at only two percent, that our job growth would not be enough to bring unemployment down. If the president's plan was passed, top independent forecasters project it could add up to two percent growth, Wolf. That's the difference between some have projected 1.5 percent growth and 3.5 percent growth, between 50,000, 60,000 a month and over 200,000 jobs a month. This is absolutely essential.

So if people do not like the American jobs act, then put up a real plan, not a bunch of old, stale, you know, positions. Whether they have merit or don't have merit in our long term, we need to inject demand and spark this economy for just the reason you said, Wolf, because if we don't, we're going to allow more of our Americans our fellow neighbors and workers to be out of work, families to be hurting.

And what's the message from those who take that position? The message is things are good enough. We don't have to take bold action. We're going to sit on the sidelines. That is absolutely the wrong position. Nobody should take that position.

BLITZER: But it doesn't look like the Republicans are going to allow any of these measures to pass. They've been rejecting them one by one by one.

We're almost out of time, Gene, but a quick question -- do you believe the so-called super committee, they have till November 23rd, it's not a whole lot of time, will in fact reach an agreement to cut $1.2 trillion in government spending?

SPERLING: Well, I hope so, Wolf. But we all know for that to happen you need legitimate, genuine compromise. And I think people should feel very good about the fact that the Democratic leaders really led by President Obama over the summer have been willing to compromise even on very difficult entitlement savings as part of a grand compromise.

But it takes two to compromise. The public wants shared sacrifice. They want to make sure if they're being asked to go without a little for our common good that those who are most fortunate are also contributing a little in terms of higher revenues. That's the grand compromise that we need. That's the sense of balance.

And as long as the Republicans insist that the only way to get that $1.2 trillion is to put it on the backs of seniors, of students, of people who need health care, there's never going to get to be an agreement and it would not be one the public would support anyways. So I remain hopeful and optimistic, but we need to see some real compromise on revenues from our Republican colleagues.

BLITZER: Gene Sperling is the director of the National Economic Council over at the White House. Thanks for coming in.

SPERLING: Thanks, Wolf.

BLITZER: Heightened U.S. concerns Israel could be on the brink of attacking Iran. There's new information just coming out of the Pentagon. We'll have a live report. And new hot water for the former governor of New Jersey, Jon Corzine, why he now has a criminal defense attorney. Stay with us. We'll explain.

(COMMERCIAL BREAK)

BLITZER: Now to new information we're just getting about serious U.S. concerns that Israel could be about to strike Iran' nuclear program. Let's bring in our Pentagon correspondent Barbara Starr. Barbara, what are you hearing over there? BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, look, Wolf, we go through these periods of rising public rhetoric both in Israel and Iran, but today I asked a senior U.S. military official if the U.S. military is worried that Israel might be about to strike Iran, and he said absolutely. That is not an answer you get every day covering the Pentagon.

People's hair is not on fire, but what we do now know is the U.S. military, the U.S. intelligence community is definitely keeping a closer eye on things, any potential movement of troops, equipment, military gear in either Israel or Iran.

There is concern Israel's rhetoric could lead to some sort of action against Iran, against their nuclear program. Nobody is saying it's about to happen but what we are seeing, Wolf, is this increased awareness, this increased vigilance and a lot of concern, because of course what the U.S. wants to happen is reliance on diplomatic and sanctions initiatives, and if can came to that, if there was military action, the U.S. wants Israel to consult the Obama administration first before it does anything. Wolf?

BLITZER: We know that everyone is bracing for the International Atomic Energy Agency report that's coming out next week. You know, in the Middle East a lot of the military action is certainly contingent on geography, Barbara. So what does Israel have to worry about with a contingency of some military action against Iran's nuclear reactors?

STARR: Spot on, Wolf. In the Middle East any military action is dictated by geography to a great extent. If you look at the map, it tells the whole story about what Israel would be facing, because of course if they were to go with a manned aircraft option, look at the terrain they have to cross there. They have to get across some pretty hostile territory. If they want to launch warplanes and drop bombs inside Iran, they have to be able to refuel. They have to be able to get past Iran's very effective air defenses, its radars, its anti-air missiles.

Israel has some ballistic missiles, the Jerichos, that could potentially reach into Iranian targets. We saw them conduct a missile test this week of one of their missile systems. But militarily, history tells us the Israeli like that manned aircraft option. That is very risky. The bottom line for the U.S. in all of this, they don't want to see any hostilities break out. It would be a disaster for those oil shaping lanes in the Persian Gulf, and the U.S. has tens of thousands of troops in the region, mainly in Iraq.

BLITZER: Barbara Starr is watching this story over at the Pentagon. We're watching it with you as well. Thank you, Barbara.

Other news we're following, the former New Jersey Governor Jon Corzine might be in hot water. He's now resigned as the CEO of the now bankrupt MG Global, a brokerage firm, and he's hired a criminal defense attorney. This after $600 million in customer funds vanished. Lisa Sylvester has been reporting on the story. What's the latest, Lisa? LISA SYLVESTER, CNN CORRESPONDENT: Well, Wolf, Jon Corzine, he's been very quiet since the story first broke. Today we got a first statement in which he expresses regret. Meanwhile, the investigation into what happened to the missing money continues and subpoenas are now being issued.

(BEGIN VIDEOTAPE)

SYLVESTER: Jon Corzine voluntarily stepped down as the head of MF Global, agreeing to forego any severance package. In a statement he said, quote, "I feel great sadness for what has transpired at MF Global and the impact it has had on the firm's clients, employees, and many others."

It's a hard fall for Corzine, former governor of New Jersey and once the head of Goldman Sachs. Corzine has not been accused of any specific wrongdoing, but he has now hired a defense lawyer. A New York bankruptcy court ruled that the trustee overseeing the case can move forward with subpoenas to try to unravel what happened to about $600 million in missing customer funds.

The federal regulator, the U.S. Commodity Futures Trading Commission, is also conducting its own investigation. Commissioner Bart Chilton calls mf global a poster child for the need for tougher regulation.

BART CHILTON, CFTC COMMISSIONER: Customers funds are supposed to be segregated and protected and they're not there. And they need to do a Tom Cruise and show us the money. That's a big problem.

SYLVESTER: MF Global had invested $6 billion in risky European sovereign debt. After its rapid collapse and news of the missing funds, MF Global's customers found their accounts frozen. Customer Jim Mindling is outraged.

JIM MINDLING, MF GLOBAL CUSTOMER: I think they should go to jail. Basically, this is the problem with Wall Street. They trade in derivatives. MF Global was leveraging the money 40-one to buy European sovereign debt.

SYLVESTER: The head of the Securities Investor Protection Corporation said he received a call about 5:00 a.m. Monday morning that MF Global was on the verge of bankruptcy. That's the agency tasked with helping investors at failed brokerage firms. Civic, as it's known, has been working to help transfer MF Global accounts it other brokerage houses. Now that the trustee has subpoena power, Stephen Harbeck says that will help shed light on the money trail.

STEPHEN HARBECK, SECURITIES INVESTOR PROTECTION COMMISSION: The trustee needs to be able to take testimony to unravel why assets are missing and who is responsible for that if in fact it turns out that assets are missing. It's a powerful tool that helps him to find assets and find out why they are not where they're supposed to be, and, in fact, to retrieve them for the benefit of investors.

(END VIDEOTAPE) SYLVESTER: Forensic accountants from the trustee's office are right now at MF Global offices in Chicago and New York. And witnesses are expected to cooperate. And the trustee will issue a report of its finding to federal regulators. That report will eventually be made public.

Now, I should mention, wolf, there was a report today from Bloomberg News that indicated that the missing funds might have been found in an account at JP Morgan Chase. We have just received a statement, literally only about five minutes ago from the trustee's office investigating MF Global that reads in part, and I can read it here, quote, "The trustee's office has been aware of a number of accounts of JP Morgan. The investigation will attempt to gain a full accounting of the location and the nature of these assets."

And I just got off the phone with the trustee's office. They're saying that there is still, still an apparent shortfall. What they have to do is they've known about these accounts at JP Morgan Chase. What they're trying to do now is to line it up to see if this money had already been accounted for and not part of this missing shortfall. That is all part of their investigation.

But the bottom line, Wolf, they are saying that there is still an apparent shortfall of $600 million missing of customer money, Wolf.

BLITZER: Yes, they're supposed to keep that totally segregated. We'll see what happens. All right, Lisa, thank you.

The fire storm surrounding Herman Cain is growing more intense by the day. We're going to get reaction from Iowa where the first votes will be cast this primary season. Also, hundreds of thousands of Americans have been powerless and in the dark for nearly a week. What's going on? When will their ordeal be over?

(COMMERCIAL BREAK)

BLITZER: We're back with the breaking news this hour. The lawyer for one of Herman Cain's accusers is speaking out. I spoke with Joel Bennett a little while ago about his client's decision not to speak publicly about the sexual harassment allegations herself. Listen to this.

(BEGIN VIDEOTAPE)

BLITZER: How worried are you that her name will eventually be made public?

JOEL BENNETT, LAWYER FOR CAIN'S ACCUSER: I'm not worried about it. If it happens, it happens and she'll deal with it. We just appreciate people respecting her privacy.

BLITZER: When they say in the statement, the National Restaurant Association, that at the time Mr. Herman Cain -- I'm reading from their statement -- "disputed the allegations in the complaint," he flatly says that whenever she was alleging was not true. I want you to respond to that. BENNETT: In almost 40 years of being a lawyer, I cannot recall anyone who has been accused of sexual harassment who said I did it.

BLITZER: So you're just saying what?

BENNETT: They always deny it. Very simple.

(END VIDEO CLIP)

BLITZER: All right, let's see how this controversy is playing in the heartland out in Iowa where the first ballots will be cast in the Republican presidential race less than two months from now, January 3rd. Our chief national correspondent, John King, is joining us from Des Moines. John, how is it playing, the Herman Cain uproar in Iowa?

JOHN KING, CNN HOST, "JOHN KING USA": It's quite fascinating, Wolf. He leads in the polls here, or at least he's tied with the former Massachusetts governor Mitt Romney, depending on which poll you look at. And when you talk to conservatives, on the surface they say they see no evidence of any damage. If you talk to them a bit more and ask a few questions, they do say he's going to have some questions to answer and needs to come out here and campaign more.

A couple of interesting observations. I spoke to one candidate who would perhaps benefit the most or more than others if Mr. Cain suddenly started to drop in the polls. That's the former Pennsylvania senator Rick Santorum. He's a long shot out here. He needs evangelical voters. Cain right now leads among evangelicals.

Rick Santorum told me, Wolf, remember what we've been talking about for the past five days. It's been all the Herman Cain story. He said he's had 20 town halls in Iowa and not once has a voter asked him about this controversy or raised a question about it. So to Rick Santorum that was proof it's not a huge concern of the voters now.

I also will tell you this, Wolf. I sat down for a cup can of coffee a few moments ago with the governor here, Terry Branstad, the veteran Iowa governor. He knows this state very well. He says the voters care most of all about the economy. But he said Herman Cain to put this behind him is going to have to be more forthright and more detailed.

So Governor Branstad, while not wanting to wade into the specifics saying he takes Mr. Cain at his word but that he is going to have to, in the governor's view, do a better job of explaining this to the voters of Iowa.

BLITZER: I'm sure issue number one is certainly the economy. That's what Herman Cain would like to address. But I suspect this current issue is going to keep on coming up. I have no doubt about that.

John, what else is going on? What do you have for our North American viewers at the top of the hour?

KING: It's a fascinating time to be here. Five of the candidates for president here are here for a big dinner tonight. We're trying to get the pulse of this state. There's no question Cain and Romney are atop the pack now. The tradition is you have to be here, do more retail politicking. So we'll have live for us the man making the biggest move in the race, former House Speaker Newt Gingrich. He'll join us live. Plus more of that conversation with Senator Santorum and Governor Branstad. It's a great time. It's unseasonably warm, Wolf, not snowing yet. But it's a great time to be out in Iowa. It's 60 nights from tonight the first official votes in the 2012 presidential cycle.

BLITZER: Yes. And Newt Gingrich, by the way, he's moving up, as you point out, in these polls. So we'll be watching at the top of the hour. John, thank you.

We're also getting new information coming into THE SITUATION ROOM right now about a senior U.S. general in Afghanistan who is highly critical of the Afghan government and President Karzai. There are breaking developments unfolding. Stand by. We'll be right back.

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BLITZER: Another U.S. general in deep trouble because of comments made about what's going on in Afghanistan. Let's go back to our Pentagon correspondent Barbara Starr. What's going on here, Barbara?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Wolf, this word just coming in from Afghanistan. Major General Peter Fuller, one of the top U.S. commanders in the effort to train Afghan forces relieved of duty, fired by the top commander general John Allen. This follows General Fuller making remarks to a reporter from "Politico" here in Washington yesterday where he certainly disparaged, there's no question about it, the Afghan government. He made remarks that Afghan leaders, including Hamid Karzai, the president, are isolated from reality. At one point he told the "Politico" reporter, quoting, "You've got to be kidding me. I'm sorry, we just gave you $11.6 billion and now you're telling me I really don't care?"

General Fuller not disputing, we are told, that he made those remarks, that he was quoted accurately, now relieved of duty. After saying these sorts of things publicly, there was no way he could continue in that position, which really is a NATO and U.S. job helping train Afghan forces, $12 billion a year in taxpayer money going to try and help the Afghans. Wolf?

BLITZER: All right, Barbara, thanks very much.

Coming up, a never before seen look at secret CIA videos that were designed to brief President Reagan to prepare him for trips abroad. Stand by.

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BLITZER: For our North American viewers, Erin Burnett will be continuing the coverage of Herman Cain's crisis later tonight. She's also taking a closer look at the illegal weapons business in the U.S. and around the world. Erin's joining us with a little preview. Erin, what are you finding out?

ERIN BURNETT, CNN HOST, "ERIN BURNETT OUTFRONT": It's pretty amazing. You saw there, Victor Booth, the merchant of death, was selling weapons to people who wanted to kill Americans down in South America, Al Qaeda, the Taliban. He -- one woman spent 15 years tracking him, 15 years. She's the biggest expert in the world in terms of illegally trafficked weapons. Her name is Kathy Austin. Angelina Jolie's is going to be playing her in a movie. She's going to be our special guest.

And get ready for this, Wolf. I looked into it, and it is stunning. The AK-47 is the most trafficked weapon in the world. There are about 100 million around the world. If you just compare that to the U.S. competitor weapon, the M-16, there's only 5 million to 7 million of those around the world.

The AK-47 now joined by things like rocket propelled grenades and a lot of these things have now gone missing in Libya that we don't know where they are, whether falling into the hands of Al Qaeda or other terrorists that could be used against commercial aircraft. So we're going to talk about all of that.

But it's amazing. And Wolf, you know, to get a new AK-47, according to the sources I've been speaking to, it's about $240. But to buy one on the black market where you can get it readily around the world, any idea what it might cost you?

BLITZER: I have no idea.

BURNETT: I'm going come out with a guess because it's hard to guess. It's $30, Wolf.

BLITZER: Wow.

BURNETT: It's $30 for a semiautomatic that can fire at a rate of 600 rounds a minute. These are everywhere. These are the tip of the iceberg when it comes to illegal weapons that are still be sold around the world and falling into the hands of terrorist groups. So we're going to be talking about that.

BLITZER: We'll be watch, 7:00 p.m. eastern, " ERIN BURNETT OUTFRONT." Erin, thanks very much:

BURNETT: Thanks, Wolf.

BLITZER: The prime minister of Iraq Nouri al Maliki is scheduled to be here in Washington next month. Our Lisa Sylvester is monitoring that.

Some of the other top stories in "THE SITUATION ROOM" right now. What's going on, Lisa?

LISA SYLVESTER, CNN CORRESPONDENT: Wolf, the Iraqi prime minister will sit down with President Obama at the White House on December 12th according to a statement released today. The visit comes just weeks ahead of the planned U.S. troop withdrawal at the end of the month. The president announced the final withdrawal deadline last month after a plan to keep thousands of troops there longer fell through.

And the Israeli military says its sailors have intercepted two aid ships headed to the Palestinian territory of Gaza. No resistance reported, but activists are calling the move illegal and vowed to continue the effort. Officials say those on board attempted to violate the security blockade in place and ignored calls to turn back.

And the daily deals website Groupon in made a strong debut on Wall Street with stocks soaring 40 percent above its initial offering price and raking in $700 million for the company. It's the second largest tech IPO ever, just behind Google, which raised $1.7 billion back in 2004.

And almost a week sense the freak October snowstorm slammed parts of the northeast and mid-Atlantic, hundreds of thousands of homes are still dark. Connecticut Light and Power hopes to have 99 percent of its customer restored by Sunday. More than a half dozen people have died from suspected carbon month poisoning. The region is bracing for more chilly temperatures overnight.

BLITZER: Hope there's no repeat any time soon, but you never know. All right, Lisa, thank you.

It turns out the CIA made secret videos for President Ronald Reagan.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Having begun operations in 1977, the Chernobyl nuclear complex is one of the largest plants in the Soviet Union and Europe.

(END VIDEO CLIP)

BLITZER: You're going to see for yourself the unique way the movie star turns president of the United States was briefed by the CIA. Stand by. They've just released these videos.

(COMMERCIAL BREAK)

BLITZER: We're getting a fascinating new glimpse into Ronald Reagan's presidency and the novel way he was briefed on national security and foreign policy. His top aides deciding that the best way to school the one-time actor was to roll the videotape. Here's our foreign affairs correspondent Jill Dougherty.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: This tele-production a current assessment of the nuclear accident at Chernobyl, was produced from the directorate of intelligence.

DOUGHERTY: From the CIA archives, a never before seen peak at how the intelligence community briefed President Ronald Reagan on America's cold war enemy the Soviet Union.

UNIDENTIFIED MALE: The Soviet space program might be described as something with a dual personality.

DOUGHERTY: For the former movie star president the CIA found the perfect way to get its information across. For the first time, the agency created videos on issues like the Soviet space program.

UNIDENTIFIED MALE: Here again, we note the Jekyll and Hyde nature of the Soviet space program.

DOUGHERTY: Or the devastating accident at Chernobyl nuclear plant.

UNIDENTIFIED MALE: The hydrogen built up until there was an explosion which destroyed the reactor hull roof.

DOUGHERTY: Then there were the travelogues.

UNIDENTIFIED MALE: Following the airport arrival, your motorcade will pass through the center of Moscow, a city of 8 million people that dominates the political and economic life of the Soviet Union.

DOUGHERTY: Preparing President Reagan and his wife Nancy for trips broad, complete with mood music.

(MUSIC)

DOUGHERTY: The CIA material also includes top secret memos and intelligence briefings that Reagan read daily. But to get the real flavor of what was going on back in the USSR, the CIA videos were unique.

UNIDENTIFIED MALE: This propaganda network encompasses over 4,000 newspapers, a large book publishing empire, a nationwide radio and television system, and an incessant stream of public lectures.

(END VIDEOTAPE)

DOUGHERTY: It's pretty amazing stuff, Wolf. You know, intelligence officials who are familiar with how presidents are briefed tell CNN now they tailor briefings to the needs of individual presidents and use the latest technology, including things like interactive videos.

BLITZER: Why did they decide to release the video now after all of these years?

DOUGHERTY: They've been releasing a lot of video, and I think in a way it buttresses they're points because it does show that you know the wrap was the CIA didn't know the Soviet Union was going to collapse. And actually some of it shows that they did have indications that something was going to happen.

BLITZER: That's going to be great material for historians down the road, I am sure. Jill, thanks very, very much. Fascinating stuff.

That's it for me. Thanks very much for watching. I'm Wolf Blitzer in THE SITUATION ROOM. The news continues next on CNN.