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THE SITUATION ROOM

Romney Ad Calls Obama a Liar; Scathing New Report on Penn State Scandal

Aired July 12, 2012 - 18:00   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now: Mitt Romney suggests the president of the United States is a liar.

Folks at Penn State University are responding to the scathing new report on the cover-up of child sex abuse.

And a secret tunnel to smuggle drugs into the United States is found under a bathroom sink. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

If you look at the latest presidential campaign ads, you know that outsourcing has become the new dirty word in American politics.

(BEGIN VIDEO CLIP)

NARRATOR: Mitt Romney's companies were pioneers in outsourcing U.S. jobs to low-wage countries. He supports tax breaks for companies that ship jobs overseas.

NARRATOR: When a president doesn't tell the truth, how can we trust him to lead? The Obama outsourcing attacks, misleading, unfair, and untrue. There was no evidence that Mitt Romney shipped jobs overseas.

(END VIDEO CLIP)

BLITZER: It is getting ugly out there.

But there's something the Romney and Obama camps aren't telling you. There are winners, as well as losers when U.S. companies ship jobs overseas. American workers lose big time when their jobs go to workers in China, India, or other countries. But American consumers often win.

Just walk into any Wal-Mart. Most of the low-cost products there are made in other countries, usually China. If they were made in the United States, they would almost certainly cost a lot, lot more. Think about that when low- and middle-class families start buying clothes back-to-school and other products for their kids at the end of the summer.

And the same goes for Apple products that so many of us use. American consumers can spend about $500 for a new iPad that's mostly made in China, but it might cost $1,000, maybe even more, if it were made in California's Silicon Valley. Don't get me wrong. I know how painful it can be for American workers to lose their jobs to outsourcing. I speak as someone that grew up in Buffalo, New York, and saw the collapse of the steel and automobile industry in my hometown. The population in Buffalo used to be almost 600,000, the city itself. Now it is down to less than 300,000.

I fully understand the pain my fellow Buffalonians suffered. But as much as politicians rant about the awful impact of outsourcing, I think we all need to remember the tens of millions of American consumers who win by saving a lot of their hard-earned money buying products made overseas.

We're going to have much more on outsourcing coming up later this hour, including Mitt Romney's new ad attack against the president.

But let's go over to Kate right now, where we're watching this story, a lot of other news as well.

KATE BOLDUAN, CNN CORRESPONDENT: A lot of other news coming into us right now, Wolf, including "There are more red flags here than you can count," said the former FBI Director Louis Freeh, announcing results of the independent investigation into the Penn State scandal.

A key charge, the most powerful people at Penn State failed to do anything to stop former assistant football coach Jerry Sandusky from abusing children for more than a decade, and those men, including Joe Paterno, disregarded the victims.

(BEGIN VIDEO CLIP)

LOUIS FREEH, FORMER FBI DIRECTOR: Our most saddening and sobering finding is the total disregard for the safety and welfare of Sandusky's child victims by the most senior leaders at Penn State. The most powerful men at Penn State failed to take any steps for 14 years to protect the children who Sandusky victimized.

(END VIDEO CLIP)

BOLDUAN: Just got your hands on a statement from the former athletic director, one of the people implicated in today's report.

What is he saying?

JASON CARROLL, CNN NATIONAL CORRESPONDENT: As you know, Tim Curley, his name has been thrown around a lot, he's the former athletic director here at Penn State.

And from the Curley camp, the feeling is really they have not had an opportunity to get their side of the story out. That's why the statement is so important. I want to read you it basically in its entirety.

It says -- quote -- "The Freeh group was limited in its investigation by lack of subpoena power and the reluctance of many people to be interviewed. Therefore, the Freeh report has limited impact on the defense of Tim Curley. At the request of Pennsylvania attorney general, the Freeh group didn't interview key witnesses, key critical witnesses such as Mike McQueary and others. The result is a lopsided document that leaves the majority of the story untold. Thus the conclusions reached in the Freeh report are based on an incomplete record."

And not only are we now getting a statement coming in from the Curley camp, we're also getting a statement coming in from Gary Schultz. He's former senior V.P. here. He is represented by Tom Farrell.

Let me read you part of what his statement says. It says: "When the complete factual story is told before an impartial jury, it will be clear that Mike McQueary never told Mr. Schultz that he witnessed Mr. Sandusky engaging in a sexual act with a young boy, that Mr. Schultz did not possess or maintain any secret files about Mr. Sandusky."

So what we're seeing now is finally we're starting to get the other side of this story from some of those mentioned in the Freeh report. They feel as though the Freeh report didn't treat them fairly and they also feel as though their side of the story will be ultimately told in a court of law -- back to you.

BOLDUAN: That was a scathing criticism coming from Curley.

Jason Carroll, thank you so much for bringing that to us. Thanks.

(NEWS BREAK)

BLITZER: There's new dust-up over Mitt Romney's tenure as CEO of Bain Capital. A new report has raised questions about exactly when he left the private equity firm.

Romney said he left Bain in February 1999 to run the 2002 Winter Olympic Games in Salt Lake City. But "The Boston Globe" reports that Romney was listed as chairman of capital on some government documents until 2002.

CNN's Jim Acosta has obtained a Bain Capital document that lists Romney as president and director of the company in 2000.

Why would any of this matter? The Obama campaign says it is proof, proof Romney should be blamed for job losses at Bain after 1999. Romney's campaign stands by its claim he had no active involvement with Bain after he left to run the Olympic Games.

A Romney spokeswoman says the "Boston Globe" report is not accurate.

We are joined now by our chief national correspondent, John, King and our chief political analyst, Gloria Borger, who is in Boston.

John, first to you. You spoke to a Bain partner today. What did he tell you about the complicated nature of when Mitt Romney ended his tenure at Bain?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Steve Pagliuca, one of four current or Bain officials I talked to today, Steve was the only one who would go on the record.

He is a registered, but he's a close friend of Mitt Romney's, want to make that clear. He is the only one that would go on the record. He says this "Boston Globe" report and what the Obama campaign is saying now is simply not true. Here is part of what he said directly.

He said Mitt Romney left Bain Capital in February 1999 to run the Olympics and he has had absolutely no involvement with the management or investment activities of the firm or with any of its portfolio companies since the day of his departure.

The three other sources were very consistent with that, Wolf. Of the four sources, three of them are Democrats, two of them are active Obama supporters in campaign 2012. They say they were all there at Bain at the time, they say Mitt Romney left pretty quickly, the deal with the Olympics was struck pretty quickly. They said we need you, we need you to come now. All four insisted he left in the middle of February 1999, and they say they never saw him around the office, he was never involved in any dealings.

To explain the SEC filings, they say yes, it is his name. They say it took about two years, because it was so sudden, to get the new management team in place. They essentially had to split up the company, divide it among the existing partners, and they said that took about two years. In that time, they insist they were required by law to leave his name on those documents. That's the point of contention there.

BLITZER: Major point of contention.

Gloria, the political fallout from this is intense, because it is getting not only getting nasty, but it's getting really ugly between the two campaigns.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: It really is getting ugly.

I was over at Romney headquarters today in Boston, and I can tell you that senior advisers I spoke to there are outraged, they're defiant, they're indignant about all of this.

Let me read you one thing a senior adviser said to me about the Obama campaign. He said either they don't understand what they're talking about or they're completely reckless. So they believe this is totally out of bounds. He described it as an act of desperation to me.

You know the Romney campaign had an ad out today, essentially calling the president a liar. They think this is one way the Obama campaign was trying to shift the conversation. But they believe in the end the American people will say we're going to see through this. This is what was required by law and that's why Romney's name was on the documents.

BLITZER: John, when you think about it, one campaign calls the sitting president of the United States a liar, the other campaign says the Republican nominee may have been committed a felony. This is brutal.

KING: It is brutal rhetoric. It tells you two things. Number one, forget about a polite campaign, unfortunately, forget about more time spent on the big challenges facing the country, and look for it to be personal, and nasty, and look for both sides to question the character of the other side.

Wolf, we are inside 120 days now. This race is as close as it comes. The Romney campaign would concede to you privately, and I am sure Gloria got this when he was there today, that the recent attacks -- the Obama campaign is outspending the Romney campaign on TV right now with sharply critical attacks, and Governor Romney's negatives are on the rise.

Inside team Obama, they're quite happy it is a 50/50 race given the last four months of jobs reports. They believe one of the reasons is their ad campaign has raised Romney's negatives. What we have seen today is proof that they don't plan on stopping.

BLITZER: Did they concede that, Gloria?

BORGER: Well, Wolf, yes. Wolf, here is what's happening. The Obama campaign is going for the jugular early.

What they're trying to do is define Mitt Romney, and someone in the Obama campaign essentially said this could be a felony. What the Romney people are saying is they're trying to get us off our game, they're trying to distract us from our strategy. We're going to continue to pursue our strategy.

However, I will tell you, the Romney team is getting criticized by fellow conservatives, Republicans who are saying you know what, you have to understand that the Obama team is experienced at this, they're very good, you have to strike back, and you have got to strike back harder than you have done in the past.

That's why they jumped on this today. That's why they did their ad calling the president a liar, and as John said, we're going to see a lot more of this and it is only July.

BLITZER: It's only just beginning. Thanks very much, guys. Appreciate it.

A corruption scandal is exploding right here in Washington, D.C., and it is around the mayor of Washington. There's new evidence he may have known about some shady campaign money earlier than a lot of us realized.

And at 55 past the hour, a diver wearing a camera on his head records his close encounter with a huge shark. .

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: In the water, it just looked massive. I think if it wanted to, it could have made a meal out of us really.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: Here in the nation's capital, the mayor, Vincent Gray, is under pressure to resign because of an exploding corruption scandal.

One of the key questions, when did he learn about a secret and illegal shadow campaign allegedly conducted on his behalf?

Brian Todd has been investigating the story for us.

It has national ramifications, Brian. What are you learning?

BRIAN TODD, CNN CORRESPONDENT: We learned from a source the mayor knew this past January campaign money from 2010 wasn't reported. But the mayor dodged us when we asked if he knew about it while it was happening.

(BEGIN VIDEOTAPE)

TODD: Mr. Mayor, did you know in January that money for your 2010 campaign...

(CROSSTALK)

TODD: Well, we're allowed to ask.

(voice-over): Embattled Washington Mayor Vincent Gray wants to talk about a new 911 service, but evades questions about a campaign finance scandal that suddenly engulfed his office.

Federal prosecutors are investigating what they call the mayor's shadow campaign in 2010, when secret money they say was not reported to campaign finance officials. An ally of the mayor's, Jeanne Clarke Harris, admitted this week she helped steer illicit money from a wealthy businessman to the mayor's campaign.

I spoke with the U.S. attorney Ronald Machen.

(on camera): What kind of money are we talking about, and how was it handled?

RONALD MACHEN, U.S. ATTORNEY FOR D.C.: We're talking over $650,000 that was funneled from a co-conspirator's company to Ms. Jeanne Clarke Harris' company, Belle International, and then that money was used to buy campaign materials for a mayoral campaign. And it was unreported and unregulated.

TODD (voice-over): Separately, another source close to the investigation tells CNN Mayor Gray learned from Jeanne Harris in January of this year that some of the money spent for his 2010 campaign was not properly reported.

The source says Gray told Harris then to report it immediately. Prosecutors' documents don't indicate whether Gray knew of the alleged secret spending at the time it was happening.

Most Elleithee, who worked on Gray's 2010 campaign, says this.

MOST ELLEITHEE, CAMPAIGN WORKER: I never saw any evidence during the campaign that he knew anything about it at the time.

TODD: For D.C. Council Member Mary Cheh, who went against many of her constituents to endorse Gray, that's not good enough.

MARY CHEH, D.C. COUNCIL MEMBER: Because people were acting in his name, and for his benefit, they committed probably the biggest election fraud in the history of the district. And I have asked him to resign.

TODD: She's joined by two our council members.

(on camera): The swirl of scandal is nothing new in this building. Other D.C. mayors have been accused of either incompetence or outright corruption.

(voice-over): Former Mayor Marion Barry was arrested in 1990 for crack cocaine use and possession when a sting operation targeted him and a former girlfriend at a hotel. He spent time in jail.

Barry's successor, Sharon Pratt Kelly, built up huge budget deficits. More recently, former Mayor Adrian Fenty was investigated for steering contracts to a friend. He was cleared.

I asked analyst Mark Plotkin what has tainted the D.C. mayor's office.

MARK PLOTKIN, D.C. POLITICAL ANALYST: I do think that if we had these higher positions that people could aspire to and attain, then the people at the starting level would be of a different caliber.

(END VIDEOTAPE)

TODD: He is talking about the fact that Washington has no real voting power on the floor of Congress, no senator, nothing to reach for after the mayor's office.

We reached out to Gray's attorney to respond to the allegations. He declined, citing a pending investigation -- Wolf.

BLITZER: Brian, what has the mayor said, Mayor Gray said about the calls, increasing calls, I should say, for him to resign?

TODD: We caught up to him late this afternoon. He told us he would not resign. The mayor said he is disappointed that council members, especially Mary Cheh, called for him to step down.

Mark Plotkin says he thinks it is just a matter of time before the Mayor resigns. Plotkin says even if Mayor Gray is exonerated, his legitimacy as mayor has been thrown into question by the scandal.

BLITZER: Yes. Thanks very much for that, Brian Todd looking into the story, which is, as you know, Kate, exploding and exploding.

But Mark Plotkin makes a very good point. Residents of the District of Columbia, they are American citizens. They should not only have representation, but voting rights in the United States Congress. They pay taxes. Taxation without representation.

(CROSSTALK)

BLITZER: Not good.

BOLDUAN: I am biased in this debate, because I live in the District.

BLITZER: Yes.

BOLDUAN: But that's how it has been. Well, this story is definitely not going away, though. That's right.

(NEWS BREAK)

(COMMERCIAL BREAK)

(NEWS BREAK)

BLITZER: Here is what's making news on CNN.

Our medical unit is taking a closer looking at mood disorders, this after Congressman Jesse Jackson Jr.'s office released a statement from his doctor saying he is being treated for a mood disorder.

The Illinois Democrat is on leave of absence, hasn't been on Capitol Hill since late May. Until now, his office would only say he has been suffering from a medical condition.

Our senior medical correspondent, Elizabeth Cohen, spoke with Suzanne Malveaux about the diagnosis.

(BEGIN VIDEO CLIP)

ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: A mood disorder is not very specific. It sort of covers a whole bunch of different disorders. And let's go over what the two big ones are. The two big mood disorders are depression. I mean we hear a lot about depression. Probably all of us know someone who's suffered from depression. And also bipolar disorder, which some people call manic depression. So those are the two big diagnoses that come under mood disorder.

SUZANNE MALVEAUX, CNN ANCHOR: Is this the kind of thing that he could be treated and he could simply go back to work?

COHEN: You know, the psychiatrists we talked to said, sure, people who have these disorders work all the time. But at the same time, it is something that they deal with, usually for the rest of their lives. It's not something where you go in, you get treatment and you're fine. They said that often you will have to go back for treatment. Maybe just outpatient the next time. But it's not something that gets cured with one hospitalization.

(END VIDEO CLIP)

BLITZER: The name of Jackson's doctor was never revealed by the congressman's office. His statement says Jackson is responding positively to treatment he is receiving at a residential facility and is expected to make a full recovery.

Meanwhile, a new Romney campaign ad suggests President Obama is a liar. We will fact-check the ad. We're going to talk about the raw attacks by both campaigns.

(COMMERCIAL BREAK)

BLITZER: Mitt Romney says in a new TV ad the president of the United States is essentially lying, and the Obama campaign is firing right back. Things are getting nasty.

BOLDUAN: Things are getting nasty, Wolf.

You talked about this at the top of the hour. Team Obama says Mitt Romney isn't being honest about when he left the private equity firm Bain Capital. But the Romney campaign says President Obama is the dishonest one.

Well, we have our Tom Foreman fact-checking the new ad for us.

Tom, what is this all about?

TOM FOREMAN, CNN CORRESPONDENT: Well, Kate, let's just put aside the whole question of when he left Bain right now. That's still being hashed out at this moment.

President Obama and his team have been hammering Mitt Romney in general with claims that he has a long record of outsourcing jobs. And now Romney is hitting back hard. Take a look.

(BEGIN VIDEOTAPE)

(BEGIN VIDEO CLIP, AD)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: ... Romney, and I approve this message.

UNIDENTIFIED MALE: When a president doesn't tell the truth, how can we trust him to lead? The Obama outsourcing attacks, misleading, unfair, and untrue. There was no evidence that Mitt Romney shipped jobs overseas. Candidate Obama lied about Hillary Clinton.

HILLARY CLINTON, SECRETARY OF STATE: So shame on you, Barack Obama.

(END VIDEO CLIP)

FOREMAN: So that's the core, the meat of this ad. Very strong words. So let's break them down, and we start with this key question. Did Mitt Romney outsource jobs while he was the governor of Massachusetts? The state had a contract with Citigroup to handle calls about Food Stamps. Citigroup, in turn, sent some of that work to India. That did happen.

And when legislation was proposed to forbid such outsourcing, Mitt Romney vetoed it. He said he did that because those jobs would not likely come back to Massachusetts anyway, because the state does not run a whole lot of call centers. He said the legislation, quote, "didn't necessarily protect a single job here." And it's worth noting when those jobs eventually did come back, they went out to Utah, not to Massachusetts, as he predicted.

What about his time at Bain? It is true that Bain invested in some companies that had some outsourcing going on. One notably, called Motus Media, did outsource some jobs. But there's very little evidence to suggest Romney played a role in promoting or encouraging that practice.

So Kate, all the evidence we find suggests that the Obama camp is at least misleading voters with very thin evidence to back its claims on this, and this part of the Romney ad is quite simply true -- Kate.

BOLDUAN: Tom, what about including that quote from Hillary Clinton in this ad?

FOREMAN: That is where the Romney camp runs into a bit of trouble. It is correct that Hillary Clinton was calling out Barack Obama for essentially the same tactic, using thin evidence to support a claim to voters, sort of misleading evidence.

But it doesn't really make clear that Hillary Clinton's scolding of Obama was from the 2008 Democratic primary and on entirely different issues, and on that front, you could easily say that the Romney ad is itself misleading -- Kate.

BOLDUAN: Tom Foreman, thank you so much.

BLITZER: May be misleading, but it's pretty -- pretty powerful. Let's talk about what's going on with Democratic strategist Bill Burton. He's from Priorities USA Action. That's a pro-Democratic super PAC, and Republican strategist Bay Buchanan, a senior adviser to the Romney campaign. Also, the author of a book, entitled "Bay and Her Boys." A very good book, I must say. Indeed.

All right, Bay, let's first of all, talk a little bit about this Romney ad accusing the sitting president of the United States of being a liar. Isn't that going way too far?

BAY BUCHANAN, SENIOR ADVISOR, ROMNEY CAMPAIGN: No, it's certainly not. Because what we've seen over the last couple weeks is the president's campaign put ad out there after ad that said clearly that he did something at Bain which he simply did not do. And he continued to run the ad after "The Washington Post" and all kinds of newspapers, documents out there showed clearly he was not part of Bain when that outsourcing was done, those decisions were made. It was overwhelming, the evidence that he was not part of Bain. Not only did he say it, Bain said it, documents proved it, and across the board, people out in these fact-checking groups have affirmed it.

BLITZER: So you don't have a problem with him calling the president a liar?

BUCHANAN: I think this is what's wrong here.

BLITZER: It is not very respectful.

BUCHANAN: It is not very respectful when you reduce your campaign as president of the United States to try to tear down a man's reputation for one reason and one reason alone, because he had the audacity to run against you.

Mitt Romney spent a lifetime building a stellar reputation as a businessman, as an individual. And this campaign is out there making one false accusation after another.

BLITZER: Bill Burton, respond to the specific charges. She's not backing away from her campaign calling the president of the United States a liar.

BILL BURTON, PRIORITIES USA ACTION: Look, it was Mitt Romney who made the centerpiece of his campaign his business experience. And the truth is, he won't even talk about it. He does not have a good explanation for how what he did in private industry would make him a better president of the United States.

Now, this ad that the Romney campaign is specifically attacking is based on a "Washington Post" report that they're trying to get retracted, but "The Washington Post" stood by their reporting.

As for when Mitt Romney was at Bain -- and I know we'll get to this in the discussion -- again, Romney campaign went after "The Boston Globe" who reported that. Actually, he was on documents long after he said that he wasn't. And they tried to get that retracted, and they couldn't get that retracted either, because the "Boston Globe" stood by their reporting. The truth is, Mitt Romney has a real problem with his time in private industry, and the more voters learn about it, the less likely they are to think that he would be a good president of the United States.

BUCHANAN: He has no problem running on his record, my friend. None whatsoever. As a businessman, he made it very clear, there's documents over there. "Fortune" magazine came out again today and said all the documents show he left Bain in February 1999, had no managerial interaction with them after that point. And that's the point that you guys keep wanting to fail to make.

So when you suggest he won't run on his record, he'll run on his record as a businessman -- he does -- as a governor, as the head of the Olympics. It's your fellow, the president of the United States, that will not, cannot run on his failed record.

BURTON: And I have to say I respect your work and what you do, but what you're saying is just not accurate.

BUCHANAN: Oh, it is.

BURTON: The documents that we're talking about -- the documents that we're talking about, the SEC filings have Mitt Romney's signature on them.

BUCHANAN: Yes, they do.

BURTON: Between 1999 and 2001, "The Boston Globe" report is 100 percent accurate. Romney was the CEO. He was the chairman. He was the sole shareholder of Bain Capital. He was responsible for what Bain was doing.

And to suggest that he wasn't involved when he was all those things. When you sit as chairman of a board, you are actually very responsible for the things that your company is doing.

And I understand why he wants to distance himself from those years. Because more people were laid off, more jobs were sent out of this country, and more companies went under. So yes, if I'm Mitt Romney and the Romney campaign, I do want to distance myself from this part of -- those years.

BUCHANAN: You keep repeating, but what is clear from all the evidence -- and the clearly, again today, we see it once more in records that have come forward -- is that sure, his name is on there as the owner, the CEO. What happened was very abrupt when he left for the Olympics. So he was running that company, it was his company. And at that time he turned it over to a management team who took total responsibility for management. And it took several years for that legal transition to take place, all the documents to be done. And that was done, and it was effective as of 1999.

So just because there's some documents out there which were accurate, because he did continue to hold those titles while the transition was being made, he had no managerial responsibilities...

BLITZER: Take a break. Go ahead and respond, we'll take a break and we'll continue this conversation.

BURTON: I just think that it is astounding to suggest that a company that's known for its management experience and for a man who's running on his management experience that it would take three years, not a couple of months, not one year, but three years for him to extract himself from the company.

BUCHANAN: The facts are clear, and there was documents that went out as they went to equity funds. They went out for offers, and they listed the management team in those offers after 1999, and he was never listed in them.

BURTON: A selective -- a selective bunch of documents that Bain released to one reporters that they will release to the public does not make the case.

BOLDUAN: We'll continue in just a second.

BLITZER: Bill Burton and Bay Buchanan are sticking around. They're sticking around, as well.

BOLDUAN: Because I am enjoying this.

BLITZER: We have a lot more to discuss when we come back. Stay with us.

(COMMERCIAL BREAK)

BLITZER: We're in the middle of a lively conversation with Bill Burton, Bay Buchanan. Lively, key word.

BOLDUAN: Lively, key word. But let's continue this discussion. President Obama today, he gave an interview to CBS. And he was asked what his biggest mistake was. They released an excerpt of the interview. Listen to this.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: In the first two years, I think the notion was well, you know, he's been juggling, managing a lot of stuff, but you know, where's the story that tells us where he's going? And I think that was a legitimate criticism.

And so getting out of this town, spending more time with the American people, listening to them and also then being in a conversation with them about where do we go together as a country, I need to do a better job of that in my second term.

UNIDENTIFIED MALE: Better job explaining?

OBAMA: Well, explaining, but also inspiring.

MICHELLE OBAMA, FIRST LADY: His hope is still there.

(END VIDEO CLIP)

BOLDUAN: The Romney campaign has already released a response to this. I want to read this to you guys. It says, "President Obama believes that millions of Americans have lost their homes, their jobs and their livelihood because he failed to tell a good story. Being president is not about telling stories. Being president is about leading, and President Obama has failed to lead. No wonder Americans are losing faith in his presidency."

So Bill, I mean, this begs a serious question. Does Governor Romney have a point here? I mean, President Obama says that his biggest mistake is not explaining and not inspiring enough? I mean, is that really a good answer?

BURTON: The campaign is so bitter. If you look at what the president... BOLDUAN: Please clarify. The Romney campaign you're talking about?

BURTON: Romney campaign, yes. Yes. As the first lady said, there's still hope. If you look at what the president has done in the course of these last couple of years, he inherited an economy that was shedding hundreds of thousands of jobs a month.

He's created more than 4 million jobs. The economy is growing instead of shrinking. The auto industry was saved. The financial industry was saved.

The war in Iraq was ended. The war in Afghanistan is on the road to ending. Osama bin Laden is no longer a threat to this country, you know.

And then you look at all the things that happened in this country. There wasn't a lot of time for the president to go out and do press conferences, and interviews, and town halls as much as he would have liked to, to explain all the different things that he was doing and what impact it was having on the lives of Americans.

The president would be the first person to tell you there's a lot more work to be done in the economy. There's no doubt about that. But to say -- for the president to say that he wished he had more time to speak with the American people talking about the policies and the impact that it would have on people's lives, I think this...

BLITZER: Is it just communications? Communications, Bay?

BUCHANAN: Clearly, it's not. You know, we have -- more people have lost their jobs, lost their homes, fallen into poverty, three- and-a-half years this man has been president. It's the worst job record of any president since the Great Depression.

You don't -- you don't have to tell the American people that they're in trouble, that times are really bad, that their jobs are being lost, that they feel insecure about their future. You don't have the president tell them gas prices are going up. They are well aware of the problems in this country.

And where this president has failed is the lack of understanding of how to create jobs, and the regulatory burdens he's putting on businesses, which is crushing them, the tax policies, the outrageous spending. Huge deficits that he's running up.

BLITZER: Can he run on the question, Bay, "Are you better off today than you were four years ago when the country was losing 700,000 jobs a month?"

BUCHANAN: You know, we were -- there's no question he inherited a recession. But then we had an anemic recovery, a jobless recovery. And it looks like we're headed back into recession.

This should have come up slowly, possibly, maybe more slowly than most of us would like, but it should still be climbing. What happened? Last quarter, worst jobs report in two years. Things are bad again and going in the wrong direction. And that's what's wrong with America. We're moving in the wrong direction.

BOLDUAN: On the point of view, I want to ask you, do you agree with what John King actually said just a little earlier, that these personal attacks that we're seeing, does that mean that it's all about personal attacks now, it's all about personal attacks? They're completely off message on talking about the issues that really affect Americans now. That's all we're seeing is lobbing and lobbing of personal attacks.

BURTON: Well, I think that's what makes the news. But if you look at what advertisements actually happened in the states, the president is actually doing a good job of telling his story through the advertising that's happening.

And you know, what's also happening is people are learning a story about Mitt Romney, and it's not all positive. And so yes, that is getting a lot more attention. What you're not hearing from Mitt Romney is, with any specificity, how exactly he would create jobs, and what it is about his record that would suggest that he would do a better job.

BLITZER: He does have a 59-point proposal he put out a while ago. He doesn't talk a lot about it.

BURTON: There's a lot of points; there's a lot of pages. He's got hardly any...

BLITZER: Fifty-nine (ph) proposals. All right, guys, unfortunately, we've got to end it right there. I'll just wrap it up by saying I don't remember when a challenger has accused a sitting president of being a liar and when the other campaign has accused the challenger of committing potentially a felony. But that's what we've been seeing the past 24 hours.

BOLDUAN: Yes, that's where we are today.

BUCHANAN: The only way they can win is by character assassination.

BLITZER: Let's hope it calms down on both sides.

BURTON: It just feels like that.

BLITZER: Let everyone discuss and debate the issues.

BUCHANAN: Amen to that. We'll welcome that. Bring it on. Bring the issues on.

BLITZER: Guys, thanks very much.

BOLDUAN: A little foreshadowing of that the next four months will be like.

BLITZER: We're also getting an up-close look at another secret tunnel -- yes, a secret tunnel -- for smuggling drugs that's been discovered. We're going to take you there live.

(COMMERCIAL BREAK)

BLITZER: Mexican drug smugglers are going to new lengths and depths to get into the United States. CNN's Casey Wian is in Arizona for us right now. Officials there have discovered a huge tunnel into Mexico.

Casey, tell us what this is all about.

CASEY WIAN, CNN CORRESPONDENT: Well, Wolf, I've got to tell you, I've seen a lot of these tunnels over the years, and this is one of the most incredible feats of drug-smuggling engineering I've ever seen.

It started over here. Look at the above-ground view of it. That building right behind me there is where the tunnel began in the United States. And then we swing around, across this park, and then over there, you see the first layer of border fence. That border fence is on the U.S. side. Over that is another layer of border fence, and then there's the Mexican side. Two hundred and forty yards underground.

No, we've got some pictures that we shot a little while ago of what the tunnel looks like inside that warehouse. It's really incredible. It dropped down 57 feet below the surface. Our photographer, John Torigoe, went down to shoot some of these photos for you. And it was really incredible. It's a good thing he is in good physical condition, because it is a narrow, difficult trek trying to get down there.

There is rebar that is used as a ladder to get down. Also there is wood, reinforced all the way around this entire structure that stretches 240 yards underneath the U.S./Mexico border. Here's what the DEA's top man in Arizona had to say about this tunnel.

(BEGIN VIDEO CLIP)

DOUGLAS COLEMAN, DEA SPECIAL AGENT IN CHARGE: This is the most sophisticated one I've ever seen in Arizona.

WIAN (ON CAMERA): Because of the way that it's designed. Most of the tunnels we have in Arizona. We'll find a lot of them in the Gallos (ph) area. And those are just digging through dirt to get into the sewer system, using the sewer system, and then punching out again.

This one, I mean, when you look down that hole, you're going to see, it is completely 4x6'd all the way, plywood all the way around it, rebar in there reinforced. There's a ventilation system in there. The air down there is exactly the same as the air up here. They've got it ventilated.

There's a lighting system that runs all the way down. All they're going to do is just put eventually, I'm sure, they would have put a pulley system into this, between the two, to pull the dope from one side to the other. They haven't got that far yet but I'm sure that's eventually what they were going to end up doing.

(END VIDEOTAPE)

WIAN: It's interesting how this tunnel was discovered, Wolf. Agents say they had this business under surveillance actually since January of this year. They knew something funny was going on in this area.

But what happened is the Arizona state police pulled over a truck on a highway a little bit north of here. They found 39 pounds of me amphetamine. They questioned the driver and occupants of the truck. It led them back to this business, and they discovered this tunnel on July 6.

Three suspects now in custody. Investigation, though, is continuing on both sides of the border, Wolf.

BLITZER: Casey, what's going to happen to this tunnel now that's been discovered?

WIAN: Well, once they get through this with investigation, they're actually going to pour concrete. That's what they do to these tunnels now.

They've found over 150 of them over the last two decades on the California and Arizona borders. They're going to pour it with concrete. The border control have to secure this area for a long period of time while they fill that up with concrete to make sure it doesn't get reopened by the drug smugglers, Wolf.

BLITZER: Got to believe they'll find another tunnel someplace else not too far away. There's a lot of money at stake.

Casey, good report. Thanks very much.

Up next, our "Video of the Day," and Jeanne Moos with two fish tales you don't want to miss.

(COMMERCIAL BREAK)

BLITZER: You're going to like this.

A pair of scissors like you've never seen before. Our "Video of the Day," That's next.

BOLDUAN: I can't forget -- see it.

(COMMERCIAL BREAK)

BOLDUAN: You know when you really need a pair of scissors but just can't scrounge up a pair? Well, this man has a solution, a very interesting one. Use a piranha, since I know you have several along. He doesn't seem to be afraid of those notorious teeth, holding on to the carnivorous fish with his bare hands while those jaws snap down on a stick. This video was shot in a rainforest in Ecuador, actually, and it's racked up 1 million views on YouTube so far. That would mean stay out of the water.

Tough stuff over there.

BOLDUAN: He clearly knows how to handle it. I would not recommend that you and I handle a piranha.

BLITZER: No. I'm not ready to do that.

All right. From piranhas to sharks. They can certainly sneak up on you when you least expect it. And when there's a video camera involved, it gets really scary and amazing to watch. Cut the -- cue the "Jaws" music right now. CNN's Jeanne Moos has this report.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): This is a tale of two fish stories. One on a deck in Florida Tuesday. The other in a boat in Australia last year. In both cases, a person fishing hooks a fish, only to have a shark snatch it.

UNIDENTIFIED MALE: Oh, (EXPLETIVE DELETED)!

MOOS: Florida, Australia.

UNIDENTIFIED MALE: Oh, no, (EXPLETIVE DELETED)!

MOOS: Now, both parties took the name of the lord in vain.

UNIDENTIFIED MALE: Oh, (EXPLETIVE DELETED) (EXPLETIVE DELETED)!

MOOS: But that's where the similarities end.

SARAH BRAME, WITNESS: It's a shark! A shark! There's a big shark!

UNIDENTIFIED MALE: That's pretty cool.

UNIDENTIFIED MALE: Woo!

UNIDENTIFIED MALE: Geez, I hate sharks.

UNIDENTIFIED MALE: Oh, God!

UNIDENTIFIED MALE: What a dirty scum. He's gone.

UNIDENTIFIED FEMALE: That's a big shark!

MOOS: Sarah Brame had never before caught a fish, let alone encountered a shark.

BRAME: I was actually kind of scared, because I seen it jump, and I was like, gosh, it could jump up here and get me.

MOOS: When you combine the ballistic Americans...

UNIDENTIFIED MALE: Oh, (EXPLETIVE DELETED)! MOOS: ... with the chillin' Australians.

UNIDENTIFIED MALE: Bloody sharks.

MOOS: ... you get the catch of the day. Holy bloody shark.

Last year, Australia's 9 network morning show sent a reporter to fish for a shark supposedly sighted in a lake.

UNIDENTIFIED MALE: I'm going to give you one chance to catch this shark.

MOOS: His cast was impressive, but his catch missed the mark.

UNIDENTIFIED MALE: You got a bird. It's a bird. Look.

UNIDENTIFIED MALE: Oh, nice.

UNIDENTIFIED MALE: I'd go to another shot.

UNIDENTIFIED MALE: Stop now, stop now, stop now. Stop now, stop now. That's enough.

UNIDENTIFIED MALE: Peking duck anyone?

UNIDENTIFIED FEMALE: Awkward.

MOOS: But at least the duck was fine. Unlike the mackerel that failed to duck the shark.

(on camera) Now, the one place you'll never catch a shark is in the New York city subway, right?

(voice-over) Well, maybe you couldn't catch one, but you could buy one. The Web site Gothamist obtained photos of a guy selling a live baby shark aboard a J Train at 1 in the morning. He wanted 100 bucks for the little shark he said he caught at Coney Island after it bit him on the butt.

But seriously, folks, your chances are way better of hooking a Bud than hooking "Jaws."

(MUSIC: "JAWS" THEME)

MOOS: And grabbing a brew sure beats being shark stew. \

Jeanne Moos, CNN, New York.

BLITZER: She does amazing work.

MOOS: All I know in, if I caught a shark on a fishing line, my words would not be made for television. That is for sure.

So now it is your turn to ask Wolf a question. This iReport was sent in to us asking about religion in presidential politics. Listen here. (BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: What's up, Wolf? Given that there are no more rampant rumors out there about President Obama being a Muslim and Mitt Romney is a devout Mormon, do you think that Americans have finally put the issue of religion aside in a presidential election?

(END VIDEO CLIP)

BLITZER: That's a good question from Obey Congo Debinga (ph) one of our iReporters...

BOLDUAN: right.

BLITZER: ... right here from Washington, D.C.

BOLDUAN: That's right. So what's your answer?

BLITZER: Look, there will always be an element out there that believes that the president of the United States is a Muslim, and they'll hold it against them. There will be an element out there -- Mitt Romney obviously is a Mormon but some people don't like Mormons for whatever reason.

But I think those are, fortunately, our country is small elements of the country right now. I'm totally confident that we have -- most of us have moved way beyond that, and this will not be a factor. I'm an optimistic person about that.

BOLDUAN: You are an optimistic person. All right. I think that...

BLITZER: That's just my opinion.

BOLDUAN: Keep asking questions. Keep them coming.

BLITZER: Good question today.

BOLDUAN: Our iReport, Facebook, all that stuff.

BLITZER: Can they ask Kate Bolduan a question, too?

They can Kate Bolduan, you're going to get a lot of questions.

BOLDUAN: Pretty much.

BLITZER: You asked a lot of questions.

That's it's. That's all the time we have. Remember, you can follow Kate, @KateBolduan. You can follow me on Twitter, @WolfBlitzer. Love hearing from all of you.

A lot more coming up tomorrow. Thanks very much for watching. I'm Wolf Blitzer in "THE SITUATION ROOM." Erin Burnett "OUTFRONT" starts right now.