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THE SITUATION ROOM

Drought Aid?; Planes Come Too Close for Comfort; No Aid for Livestock as Lawmakers Leave; Romney's Horse In The Spotlight; Big City Mayors Versus Chick-Fil-A; Terror Suspects Under Arrest In Spain; Boehner: GOP "In Pretty Good Shape"; Romney Reviews Running Mate Search; A Motorcycle You Drive Like A Car

Aired August 2, 2012 - 16:00   ET

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


CANDY CROWLEY, CNN ANCHOR: Happening now: Officials scramble to explain why three commuter airliners, one coming in, two taking off, got way too close for comfort.

U.S. ranchers devastated by the drought have a new problem: gridlock in Washington.

Plus, a political animal. Find out how Ann Romney's horse did at the Olympics today.

Wolf Blitzer is off today. I'm Candy Crowley. And you're in THE SITUATION ROOM.

We start with a scary communication breakdown that put a commuter airliner and two other planes dangerously close to one another. It happened at Washington's Reagan National Airport. And in an extraordinary move, the FAA administrator and the transportation secretary came out today to talk about what happened.

Our Brian Todd is at the airport -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Yes, Candy.

Extraordinary because for the first time we're getting the hard information from America's two top transportation officials that this was really too close a call. They come out in a news conference today a hastily called news conference, to say, yes, it was too close a call.

But another part of that news conference, they really want to brush back on initial media reports saying that these planes were on a collision course. They're saying they wouldn't have collided. That wouldn't have happened.

Essentially the way they lay it out is this. It all played out pretty much over where I'm standing here. Tuesday afternoon, there was a whole line of planes coming in from that direction toward me to land at that tarmac right there. At some point, a regional control center miles away from here made the call to switch directions because the weather at that time was doing kind of what it's doing now.

It was changing and the wind was shifting. They said everybody switch directions. Everybody's now going to land this way from north to south. And they're going to all take off this way from north to south.

Well, that order somehow got lost in the communication. And while an incoming plane was traveling this way to land at that tarmac north to south, two planes over here were cleared to takeoff from south that way this way. Translation, they were heading right for each other, two planes, one after the other taking off heading toward an incoming plane.

Now, at that moment very shortly after that mistake had happened, the controller in this tower behind me at Reagan National caught it and ordered the incoming plane to turn in that direction to his right. And it avoided a possible collision.

But here's what the pilot said to the controller in the moments right after that.

(BEGIN AUDIO CLIP)

UNIDENTIFIED MALE: Well, 180, we were cleared back there. What happened?

UNIDENTIFIED FEMALE: Yes, 3329, stand by. We're trying to figure this out too. Stand by.

(END AUDIO CLIP)

TODD: And so at that point a possible collision was avoided, but again, top transportation officials saying even if the controller had not made that call, these three planes would not have hit each other. This is the FAA administrator, John Huerta, earlier today.

(BEGIN VIDEO CLIP)

MICHAEL HUERTA, FAA ADMINISTRATOR: It is important the planes were on different headings and at different altitudes, so they would not have collided.

(END VIDEO CLIP)

TODD: Slight correction. That was Michael Huerta, the FAA administrator, saying these two planes would not have collided, mainly he says because the plane taking off was at a higher altitude, 800 feet above the incoming plane, and they would not have collided.

But they're still saying this was a close call. There was a miscommunication here, Candy. They are investigating.

CROWLEY: So are is there any preliminary guess as to -- was it communicated and not heard? Or was the weather change not communicated in the first place?

TODD: That is really at the crux of the matter.

I pressed the two top transportation officials. Was it a bad -- was it miscommunication from the regional center to this control tower? Or did this control tower here not communicate it properly to the planes in question? They said they don't know yet. They are looking into that.

But clearly there was a breakdown in communication somewhere along the line. But they are quick to praise the controller in this tower who caught the error and diverted that incoming plane.

CROWLEY: I imagine they will find out. They may not have been on a collision course, but it was certainly too close to anybody on the plan, I'm sure. Thanks so much, Brian Todd. Appreciate it.

Now to politics. President Obama's in another must-win state right now. This time, he's hoping to convince Florida voters to ignore the unemployment numbers due out tomorrow and focus instead on Mitt Romney's tax plans.

CNN White House correspondent Dan Lothian is traveling with the president -- Dan.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, you know the president is really fighting hard to win the battleground state of Florida.

Today, he was trying to draw that contrast between his policies and the policies of Mitt Romney specifically when it comes to tax policies. He also talked about what he's doing to help the middle class. Now, the president is up by six points here in the Sunshine State. But there's still 95 days and nine hours until Election Day.

(BEGIN VIDEOTAPE)

LOTHIAN (voice-over): President Obama is trying to convince Florida voters that even with a high unemployment rate in the Sunshine State of 8.6 percent, his economic policies are working and that he deserves four more years.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We have been able to see 4.5 million jobs created. That's why we have been able to see the housing market just barely slowly start to tick back up. That's the reason that we have seen the auto industry come all the way back.

LOTHIAN: The message team Obama wants voters to get is this: Mitt Romney's tax policies will hurt, not help, the middle class.

OBAMA: The top one-tenth of 1 percent would get a tax cut under Mr. Romney's plan of almost a quarter of a million dollars -- $250,000 would go to folks who are making $3 million a year or more.

NARRATOR: Now he has a plan that would give millionaires another tax break.

LOTHIAN: It's a message playing over and over in a new campaign ad that airs in Florida and seven other battleground states.

NARRATOR: And raises taxes on middle-class families by up to $2,000 a year.

LOTHIAN: But in this battle for Florida, there's always a counterpunch.

As Mitt Romney campaigned in Colorado, his top surrogate in Florida and potential running mate, Republican Senator Marco Rubio, was at an event not far from the president's rally outside Orlando. He accused the president of making a bad economy worse, told voters Mr. Obama might raise taxes to historic levels. Then he delivered a compliment and a jab in the same breath.

SEN. MARCO RUBIO (R), FLORIDA: His election was historic, but his presidency's been a historic disaster.

LOTHIAN: And the Romney campaign continues to use the president's own words from a speech in Virginia last month to highlight what they say makes him unfit to fix the economy.

OBAMA: Because if you got a business, you didn't build that. Somebody else made that happen.

LOTHIAN: Even though the Obama reelection campaign says those words are being taken out of context, 13 video billboards are up in the Orlando area drawing attention to what he said and offering rebuttals from voters.

(END VIDEOTAPE)

LOTHIAN: Now, a senior Obama campaign official told me that they believe that this issue of the focus on taxes is resonating with voters, so expect that the president will continue to hit that in the coming days.

On a lighter note, Candy, just before the president began his formal remarks here today, the crowd started singing happy birthday to him. the president's birthday is this coming Saturday. The president thanked them and said winning Florida would not be a bad birthday present.

CROWLEY: Well, we will see. A long time between now and November. But he's right. It would be a great birthday present for him anyway. Thanks so much, Dan Lothian.

Mitt Romney is in another swing state, Colorado. He isn't about to let anyone forget about jobs and unemployment.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: This is important. Getting America working, this isn't a statistic we're talking about; 23 million Americans out of work or underemployed, 23 million, it's a tragedy. It's a moral failing for a country as successful and wealthy as ours to have had policies that kept people from going to work.

(END VIDEO CLIP)

CROWLEY: CNN chief political analyst Gloria Borger is here.

Gloria, the president is hitting Mitt Romney both on his tax plan and on his wealth. You know, a lot of Democrats have been kind of worried at least about the wealth part. It says to me that he believes this kind of attack is working.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Yes. I do think they believe that their attack is working.

What they're trying to do is essentially disqualify Mitt Romney over the summer. And what they're saying is, not only is he wealthy, because that in and of itself is certainly not a disqualifier, but that he's completely out of touch, that he pays a 14 percent tax rate.

And guess what? You don't get to pay a 14 percent tax rate. So this is the way they say to the American people he's different, that there are two sets of rules, one set of rules for you and me and another set of rules for Mitt Romney.

And they believe, as Dan was saying, that that has a lot of resonance with the voters. For example, the polls show that the voters want to repeal the tax cuts for the wealthy. So the president's on terra firma when it comes to that issue.

CROWLEY: And Mitt Romney back on the campaign trail today also talking about the middle class. Anything new there in the message?

BORGER: Well, there's nothing really new. It's all about the economy.

And as the president of course was in the important swing state of Florida, Mitt Romney released a campaign ad in that state. Let's take a look at a little of it.

(BEGIN VIDEO CLIP)

NARRATOR: Four years ago, Barack Obama was concerned about Florida's economy.

OBAMA: When wages are flat, prices are rising, more and more Americans are mired in debt, our economy as a whole suffers.

NARRATOR: But under President Obama, 8.6 percent unemployment, record foreclosures.

(END VIDEO CLIP)

BORGER: So there are lots of people who believe that in a state like Florida that Mitt Romney ought to be doing better, because the economy is not doing well there.

But we just had a battleground state that came out this week which showed that Mitt Romney is six points behind the president in Florida. And the campaign -- the Romney campaign believes Florida is really a must-win for them. So, that's not really great news. CROWLEY: Yes. But speaking of maybe not great news, we're expecting some unemployment, jobless figures for the month of July tomorrow.

BORGER: Right.

CROWLEY: We often talk about how the economy under George H.W. Bush was getting better...

BORGER: That's right.

CROWLEY: ... when he lost his reelection, but folks didn't feel it. They had already made up their minds about the economy. Are we at that state in this race yet?

BORGER: Well, it depends who you talk to. Democratic pollsters will say, no, no, no, people haven't quite jelled yet, and Republicans will say, yes, they have, that people understand things are getting worse and the polls bear that out.

A majority of Americans believe things are getting worse. If there's not good economic news on Friday, I think you would have to say that public opinion would be jelling against the president. So that's not good news for him. But here's what the campaign looks at. Let's take a look at this, at the unemployment rates in the key battleground states.

And you see there that in four of the seven battleground states, the unemployment rate is actually lower. In Florida and Nevada, those are places where it's higher than the national average. That's another reason people are saying, why isn't Mitt Romney doing better in the state of Florida if the unemployment rate is higher than the national average?

So this right now, this, you know, snapshot, works to the president's advantage to a degree because in some of these battleground states, they're not feeling it as badly as they are in the rest of the country.

CROWLEY: Such a small margin of people who haven't made up their minds yet that these numbers may in fact...

(CROSSTALK)

BORGER: Yes, one out of 10 maybe.

CROWLEY: Gloria Borger, thanks very much.

BORGER: Sure.

Here's a look at some of the other political headlines making news on the CNN "Political Ticker."

More uncertainty for California Democratic Congresswoman Maxine Waters. The House Ethics Committee is extending the contract of special counsel Billy Martin. He's investigating Waters' alleged efforts to influence of the 2008 federal bailout of a bank in which her husband had a financial interest. With the contract extension, the Waters investigation could cost taxpayers $1.3 million.

And by voice-vote today, the House of Representatives reprimanded California Democratic Congresswoman Laura Richardson. An Ethics Committee investigation found she misused her congressional staff by making them do campaign work. Richardson apologized just before the vote, but also took issue with some of the allegations. The reprimand carries a $10,000 fine.

Former California Governor Arnold Schwarzenegger is getting his own think tank. "The L.A. Times" reports he's committing $20 million to fund the USC Schwarzenegger Institute for State and Global Policy. It will bring together experts to think up bipartisan solutions to environmental problems, economic policy, political reform and other public policy issues.

For complete political coverage, be sure to read the ticker on CNNPolitics.com.

You're looking right now we hope at some dramatic images out of Litchfield, Illinois, where a megabus has crashed on Highway 55. We are monitoring this and we will bring you the latest details.

And still ahead, more than half the counties in the U.S. are disaster zones because of the drought, but coming up, why Congress probably won't lift a finger to help all the ranchers and livestock producers who are hurting.

Also, Kofi Annan gives up trying to make peace in Syria and takes a few parting shots of his own.

And for all you city dwellers, a new report might change your mind about renting.

(COMMERCIAL BREAK)

CROWLEY: We have been monitoring a mega bus accident of some sort. We're told about 20 ambulances on the scene in Litchfield, Illinois, which is just north of St. Louis. It's on I-55. We're told the interstate is now closed to traffic. You can see those pictures there.

I want to bring in trooper Doug Francis of the Illinois state police.

Trooper Francis, give us what you know right now.

TROOPER DOUG FRANCIS, ILLINOIS STATE POLICE (via telephone): OK. The bus hit the bridge abutment at 1:22 is when we received the call. We are told it blew a tire. The bus did not roll over. It stayed upright.

And at this time 30 ambulances were dispatched to the scene. Ten medical helicopters and seven fire departments were dispatched to the scene.

At this time I don't have the number of injuries or the number of people on board. I do not have their destination.

CROWLEY: OK. Let me just back up a little bit. So it hit this bridge abutment, but I'm assuming we're seeing on the pictures which you may not be able to see. So it was on the road, blew a tire and then swerved off the road and hit the abutment? Is that what happened?

FRANCIS: That would be correct.

CROWLEY: So with the 30 ambulances, is that standard amount? Or must somebody have had some idea of injuries there?

FRANCIS: Usually they send ambulances until they tell them to stop sending ambulances.

CROWLEY: OK. And we are seeing helicopters. Are those life flight helicopters in there? Do you have any reports on the kinds of injuries we're looking at?

FRANCIS: No. I do not have the reports on the types of injuries at this time.

CROWLEY: OK. That's trooper Doug Francis with the Illinois state police helping us get some information on a bus crash in Litchfield, Illinois. Right now, as you can see an unfolding situation. Certainly CNN will continue to uncover it. Thank you so much, trooper Francis, for being with us.

Now, take a look at the latest drought report mapping out today. Nearly half of the continental U.S. is orange or red. And that represents severe drought or worse. That's not just farmland in trouble.

Livestock producers are suffering. And they're not going to get any help from Congress.

Our senior congressional correspondent, Dana Bash, is live on Capitol Hill.

Dana, we know Congress is headed out of town without a -- to a specific part of the population hurt by this drought.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: That's right. First, I just want you to look at this, Candy, from all your years covering Congress this is a familiar scene to you as I know. All of the cars waiting for members to come out to take them to the airport and take them out of town for summer recess. As you mentioned, before they do that they're going to have what we understand a nail-biter of a vote to give just a small portion of those hit hard some quick relief.

But according to the people in the Senate they're not going to pass it.

(BEGIN VIDEOTAPE)

BASH (voice-over): A hard-hit hog farm in Iowa. Livestock producers are devastated by drought, but they're not getting the federal aid most farmers are. Livestock is not covered by key government programs.

Why? Because of an accounting trick to save money in the farm bill four years ago. Congress eliminated federal aid for livestock in 2012, this year. And, oops, it turned out to be the biggest drought in half a century.

STEVE ELLIS, TAXPAYERS FOR COMMON SENSE: I expired because they were playing a gimmick to keep the costs of the last farm bill down. So it turned around and really bit them in the behind.

BASH: So, now, in a mad dash to act before leaving for summer break, the House took up a $383 million bill to restore four expired programs, for livestock, certain trees, honey bees and farm-raised fish.

REP. KRISTI NOEM (R), SOUTH DAKOTA: We can't gamble with people's lives and businesses here.

BASH: Freshman Republican Kristi Noem, a rancher and farmer herself, argues the aid now is crucial.

NOEM: Our livestock guys take just as much risk as any other farmer or rancher out there. And they need to have some kind of protection in situations like these.

BASH: But in the Senate, Democrats refuse to pass drought relief before leaving town. Why? Bare knuckle negotiating.

Democrats like Agriculture Chairwoman Debbie Stabenow worry a short-term fix will undermine their long-term five-year farm bill which includes disaster relief and reforms scores of farm programs.

(on camera): In the optics of Congress leaving town with the worst drought in half a century and not doing something, not so good?

SEN. DEBBIE STABENOW (D), MICHIGAN: The optics are in this building. If we get out in the real world, that's not what we're hearing from farmers and ranchers. Farmers and ranchers want us to get our job done. They want a five-year farm bill. They want us to address disaster assistance. I intend to do both.

BASH (voice-over): So, why not pass that five-year farm bill? A candid House speaker admitted he doesn't have the votes.

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: The House is pretty well divided. Frankly I haven't seen 218 votes in the middle to pass a farm bill.

BASH: Still, Republicans came to power promising reform. Not fast fixes like this drought bill. Democrats had a field day.

REP. JARED POLIS (D), COLORADO: I want to hand it out to whoever comes to town and begs for it, go right ahead. I have some rooftop terrace owners in my district. Give some while you're at it. That's not a solution.

BASH: Despite Noem's plea for help from a rancher's perspective.

NOEM: There's no safety net for livestock producers.

BASH: Congressional inaction during their month-long recess won't make a difference.

STABENOW: At this point, 30 days only makes a difference for those who are trying to play politics.

(END VIDEOTAPE)

BASH: And one reason she feels comfortable saying that is because she's got the Cattle Ranchers Association and others behind her in her decision not to go ahead and pass this.

Now, speaking of politics, Candy, Stabenow is up for re-election in just three months. She is the chairwoman of the agriculture committee. Safe to say that if she thought this was politically bad for her, she would be passing this quickly before leaving town.

CROWLEY: I would think so. It's not going to do much to help congress' overall approval rating I don't think.

Thanks, Dana. I appreciate it.

Syrian rebels are fighting government forces with tanks as the regime attacks its most populated city from the streets and the air. Now there's been a major setback in the struggle to stop the violence.

And a dramatic discovery is serving as an important reminder to all of us. What scientists are finding in fish? It's a first. It's ahead.

(COMMERCIAL BREAK)

CROWLEY: Heavy shelling and violent clashes rage across Syria as the rebel movement grows stronger.

Mary Snow is monitoring that and some of the other top stories in THE SITUATION ROOM.

Mary, what's the latest?

MARY SNOW, CNN CORRESPONDENT: Well, Candy, rebels are battling for control of a military airport near Syria's most populated city.

Today, regime war planes shelled the western and northern parts of Aleppo which is also the country's commercial capital. Rebels are fighting back with heavy weaponry including tanks. Thousands have fled their homes in recent days. Opposition forces say at least 100 people were killed across the country today.

And as the fighting continues in Syria, there's been another setback in diplomacy. Today, Kofi Annan, the U.N. and Arab League's joint special envoy to Syria, announced he's resigning and championed a six-point peace plan earlier this year but it's gone nowhere. He slammed the international community's failure to secure a peaceful transition of power away from Bashar al Assad.

And consider this a reminder to put on some sunscreen. Scientists have discovered skin cancer in wild fish in Australia's Great Barrier Reef. And they say U.V. radiation is the likely cause. About 15 percent of coral trout in two locations had cancerous lesions on their scales. And you can see them on these fish. They're the darker grey spots.

You need a reminder, there it is.

CROWLEY: Wow. That's kind of sad, actually. I guess people know the barrier reef is pretty far off the coast. But it's obviously very shallow. So those fish are up near where they get the sunshine. It's amazing.

Thanks so much, Mary. Appreciate it.

SNOW: Sure.

CROWLEY: A Spanish official calls it, quote, "One of the biggest organizations against al Qaeda in Spain." Details ahead on the arrests of suspected terrorists officials say were ready to act. And it's competition day for Ann Romney's horse. But the mare is taking center stage in the race to the White House as well. Is it a smart move for Democrats?

(COMMERCIAL BREAK)

CROWLEY,: I'm Candy Crowley. Here are some stories we're working on.

Ann Romney says her horse's performance at the Olympics today, quote, "thrilled me to death," but was it good enough for a medal?

And during our 5 p.m. Eastern hour, an exclusive report from the epicenter from the latest outbreak of the Ebola virus.

And in our new hour at 6:00 Eastern, what a foiled terror plot tells us about al Qaeda's strength. Standby, you're in THE SITUATION ROOM.

Today was the first day of Olympic competition for Ann Romney's horse. While you may not have seen it in action in the arena, you might soon be seeing a lot more of this horse on your television.

Thanks to some liberal groups and their political ad teams. Our Tom Foreman has been following all the Olympic action and keeping an eye on politics. Tom, you're ambidextrous. TOM FOREMAN, CNN CORRESPONDENT: I do what I can, Candy. Look, it's a spoiler alert because in a minute I'm going to tell you what Ann Romney's horse, Rafalca, did in the dressage competition.

But this might be a warning to Democrats out there who see a political opportunity in this horse. But you know, they might be wrong, take a look.

(BEGIN VIDEOTAPE)

FOREMAN (voice-over): Dressage is one of the oldest sports in modern Olympics going back a century with origins in the training of military horses.

It is considered one of the most technically demanding equestrian sports, horse and rider must perform a series of complicated, precise maneuvers which much like gymnastics are rated by judges.

ANN ROMNEY, CO-OWNER, RAFALCA: Pretty good therapy.

FOREMAN: Ann Romney's involvement began when she was diagnosed with multiple sclerosis 14 years ago. She turned to riding as therapy to build muscle and fight the disease.

ROMNEY: The thought of getting on a horse was so exciting to me that I would force myself to get out of bed. And I could come out here and trot maybe once around the arena and then I would be finished and exhausted, but I would feel great.

FOREMAN: She's also good at it repeatedly winning high honors in competitions. Her candidate husband acknowledged her deep commitment to this sport on NBC's "Today" show.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: My sons gave me a box and said if you wear this, mom will pay more attention to you. I opened it. It was a rubber horse mask.

FOREMAN: Still, a great dressage horse easily costs six figures. So the money, obscure nature of the support and the attire have made Mitt Romney's attraction to it a natural for comedy.

UNIDENTIFIED MALE: No surprise the liberal critics call dressage elitist just because the uniform makes you look like Mary Suitor from Downtown Abbey.

FOREMAN: And that has played perfectly into Democratic attacks on Romney as a rich elitist out of touch with normal Americans.

UNIDENTIFIED FEMALE: Romney spent $77,000 a year on my upkeep. And after Mitt Romney repeals health care and ships your job overseas, I dare say your life not nearly as pampered as mine. After all, you're not one of his horses.

(END VIDEOTAPE) FOREMAN: So that's part of the political war going on out there, Candy. Let's look at the results here in our spoiler alert. This is what we know about today's round of competition. Ann Romney's Rafalca competed and wound up 13th.

The Brits took the top positions. A lot of European competition, this is very tough. This is just today. There are some more tomorrow to see which ones go on to the grand prix event later on.

But it is a pretty good showing for U.S. horses, a tough, tough event to do well in. The real question though, Candy, is how will the points stack up in this presidential race at home?

Are the Democrats overplaying their hand by criticizing a horse that really seems to have been essential to this woman's therapy in getting over an illness, or is this fair game? It fits sort of the story of a rich guy out of touch with everyone else -- Candy.

CROWLEY: Well, we will ask that very question to our next couple of guests, Tom. Thank you. Joining me for today's "Strategy Session" are two CNN contributors, Democratic strategist, Hilary Rosen and Republican strategist, Mary Matalin.

So, Hilary, first to you, moveon.org is out with an ad making fun of this very expensive dressage horse. You heard Ann Romney in previous interviews describing how this helped with her therapy. Is this, A, trivializing politics or, B, going a little too far? What do you think of that ad?

HILARY ROSEN, CNN POLITICAL CONTRIBUTOR: I don't know. I think they were just trying to make a substantive point in a comedic way. Whether it works or not, I can't really say.

I do know that yesterday a nonpartisan tax policy center said that Mitt Romney's policies, which is after all the person we're trying to evaluate for president, would raise taxes on the middle class and would essentially --

MARY MATALIN, CNN POLITICAL CONTRIBUTOR: So why not do an ad about that though?

ROSEN: Well, there are plenty --

MATALIN: Why not do an ad about that?

ROSEN: Well, the president's done ads about that and I think that, you know, he's the one we're holding accountable here and I think that's appropriate. I don't think the president's accountable for external groups' ads.

I think that the focus ought to be on Mitt Romney and how he's going to raise taxes on the middle class and how he doesn't have a jobs plan that economists believe in. That ought to be the focus.

CROWLEY: Just to follow-up, if you don't think the president is responsible for the outside group ads that also mean Mitt Romney isn't responsible for his outside group ads? For future reference, I'm just asking.

ROSEN: Well, I think that's right.

CROWLEY: OK.

ROSEN: When you look at the content in the ads, the outside group ads against Mitt Romney have been asking him to release his tax returns, have been asking about his record at Bain. The content is stuff that are legitimate questions and when the content is legitimate, then the ad should be taken seriously.

CROWLEY: Mary, is it pretty much anything is fair game? Are you offended by the horse ad? Do you find it amusing? Give me your reaction to it.

MATALIN: It's clever, but it's irrelevant. It's completely irrelevant. It might be counterproductive for Democrats. As Tom suggested, you can't talk about that horse without talking about Ann Romney's determination and her grit to deal with her MS, with her affliction.

She's an amazing and inspiring woman. And I think -- I felt a burst of pride and patriotism to see the United States in the Olympics. I don't know how productive it is. But Hilary, of course, is right that neither campaign legally can collude on these ads. They just can't. That's true.

They could speak out against them if they wanted. But also this week to dovetail with what Hilary said, another study that wasn't done by -- and previously worked for Obama said his plan would cost 700,000 jobs, his tax increases cost 700,000 jobs.

He's going to tax small business out of business. That's what this election is going to be about. Not Ann Romney's therapy for her MS.

CROWLEY: No, and I don't think it's specifically about this horse. But you know that the Democrats -- and this includes the Obama re-election campaign, are trying to paint Mitt Romney as an elitist.

And so here's elitist sport that they are tying to him. They're trying to make him look as wealthy and out of touch and in so far as this feeds into that perception is it not helpful to Democrats?

MATALIN: I think anybody who does not like success, does not appreciate that Romney is truly an American success story is not going to be for Romney. They're going to be for Obama. It's class warfare.

It's demagoguery. They've used it before. It hasn't worked. If that's the evident of how effective it's going to be the in the past if they want to waste their money on this class warfare, keep it up.

CROWLEY: Let me take you, both of you to another subject. I'm sure you've heard the Chick-Fil-A controversy that has been going on. We had some big city mayors weighing in recently from Boston and Chicago. I want to play you some of what they said.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: A company that speaks out against gay rights in our country today has the opportunity to operate in the city of Boston.

UNIDENTIFIED MALE: Chick-Fil-A's values are not Chicago's values. They're not respectful of our residents, our neighbors and our family members.

(END VIDEO CLIP)

CROWLEY: And then let me read you what Chicago's arch bishop had to say after Rahm Emanuel talked about Chicago values, quote "Recent comments by those who administer our city seem to assume that the city government can decide for everyone what are the values that must be held by citizens of Chicago.

I was born and raised here and my understanding of being a Chicagoan never included submitting my value system to the government for approval."

That's from the arch bishop of Chicago. Hilary, just to reset for our viewers if they don't know, the head of Chick-Fil-A has said that he's against same sex marriage.

This doesn't have to do so far as we know with any kind of discrimination in the hiring or serving of Chick-Fil-A. It's burst on to the scene.

But now we have two city officials coming in saying they're not really welcome to open up a franchise here. Is that a wise thing for them to do?

ROSEN: You know, I don't tend to favor using government to sensor speech. But I do think that it's important that people realize that this is just sort of not a debate between businesses and politicians about whether you're for or against same sex marriage.

You know, the Chick-Fil-A folks and others, when you oppose same sex marriage, what you are doing is you're not protecting your own values. You're imposing your values on someone else. You're denying taxpaying citizens the right -- the same rights and benefits to all of the activities that American citizens enjoy, that married citizens enjoy.

This is not an equal issue one or the other. There's actually one side is depriving the other side of rights and the other side is just trying to simply have an equality --

CROWLEY: Mary, let me bring Mary in here. I've got 15 seconds. I'm sorry. I want to get your quick question. MATALIN: It is breathtaking. Democrats are so Looney left. Their liberals are so (inaudible). They're like the Henry VIII. The law is whatever pleases the king. Whatever the Democrats say the law is.

Whatever the Democrats say the constitution is that the government can assault your religious and your economic liberty for an opinion is worse than Henry VIII.

CROWLEY: Mary Matalin, Hilary Rosen, thank you both so much.

Not long ago House Speaker John Boehner raised some eyebrows when he said there's a one in three chance Republicans would lose the House in the fall. How is he feeling now?

And every month you pay your rent. You wonder if you should be buying and paying a mortgage instead. We've got the answer.

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CROWLEY: Mary Snow is monitoring top stories in THE SITUATION ROOM right now. Mary, what have you got?

MARY SNOW, CNN CORRESPONDENT: Well, Candy, Spain's interior ministry says the men were ready to act. Police are still searching for explosives. They think the men had stockpiled.

Spanish security officials suspect the men were plotting to attack a joint U.S. Spanish naval base. Authorities believe the men are tied to a Pakistani terror group and at least one was trained in Afghanistan or Pakistan.

In April, House Speaker John Boehner said there's a 33 percent chance Republicans would lose control of the chamber in this year's election. But now he's feeling better about his party's chances.

(BEGIN VIDEO CLIP)

REPRESENTATIVE JOHN BOEHNER (R), HOUSE SPEAKER: Our team's in pretty good shape. Our members have worked hard. Frankly, our candidates and challengers out there, a lot of them have been through tough primaries. And I feel good about where we are as a team.

(END VIDEO CLIP)

SNOW: Now, the speaker says Republicans can't sit back and relax. There's still a lot of work to do between now and November.

If you live in a major U.S. city and you rent, chances are you're better off buying a place instead. A survey by the real estate web site Zillow finds that in the majority of cities that analyzed.

Owners reached a breakeven point with renters in three years or less. The survey takes into account the cost of owning a home like down payments and upkeep and record low mortgage rates -- Candy.

CROWLEY: Mary Snow, thank you.

Just ahead, a motorcycle that you drive like a car, it might change the way all of us get around.

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CROWLEY: Mitt Romney's on the campaign trail in Colorado. And CNN political reporter Peter Hamby is there as well. Peter, Aspen seems to be the center of the universe.

And I am told that with the governor is the woman who is in charge of his search for veep. That has to have you all speculating at this point.

PETER HAMBY, CNN POLITICAL REPORTER: Yes, absolutely, Candy. Aspen is where the Republican Governor's Association is meeting many top governors from the Republican Party and their donors along with lot of party strategist including Karl Rove, Ed Gillespie and Eddie Barber.

But you're right, Beth Miers, long-time Romney advisor is heading the VP search and sort of holding that tight to her chest. She came out here with Romney, which is raising eyebrows. No one knows why she's here specifically.

But, Candy, it's a reminder that this VP pick could come any day now. And a lot of Republicans you talk to out here think probably if not this week then next week it will definitely happen.

Romney himself is actually meeting -- sitting down with several governors in a few minutes just behind me in Basalt including Bobby Jindal who's one of those people thought to be on that short list of four or five Republicans who could be Romney's running mate.

So we're going to be watching that here in just a few minutes -- Candy.

CROWLEY: Peter Hamby, I'm going to take a guess and say it won't be while the Olympics are going maybe afterwards. So it's getting close. Thanks so much, Peter Hamby. Appreciate it.

Now fasten your seat belt because we're about to take you on a spin. And in our 5:00 p.m. Eastern hour, are all -- all your Facebook friends real people?

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CROWLEY: If you'd like to get around on something small and fuel efficient, but don't want a motorcycle, CNN's Dan Simon may have found just what you're looking for.

(BEGIN VIDEOTAPE)

DAN SIMON, CNN CORRESPONDENT (voice-over): I've been given the chance to test drive a new kind of vehicle, revolutionary in fact. Feels basically like a normal car except technically it's a motorcycle. It's got just two wheels. This prototype is the brain child of Danny Kim. A car aficionado and industrial design guru.

DANNY KIM, CEO, LIT MOTORS: It will change the way people get around, the way people commute, change how we look at transportation, and what's a personal vehicle.

SIMON: We first met Kim last year shortly after he launched his San Francisco start-up called Lit Motors. Back then they had just this model and a small scooter demonstrating the technology could work.

Since then Kim and his nine employees have been practically working around the clock and only recently took their creation for a spin.

(on camera): Kind of like what the Wright Brothers felt like with that first airplane.

KIM: We were just yelling and hooting and hollering. It was great. We had a lot of fun.

SIMON (voice-over): The vehicle is fully electric and enclosed. Its top speed will be 120 miles an hour, but what makes it truly unique is its ability to balance on two inline wheels even when stopped.

Something once considered unachievable. Another breakthrough when it comes to safety. The company says it will even stay up right in the event of a collision.

(on camera): This right here is a gyroscope. This is the key to making the vehicle work. It allows it to be stabilized and balanced and go forward on two wheels.

(voice-over): The C-1 as they've called it has two gyroscopes that spin up to 12,000 times per minute. The faster they go, the more force they put on the vehicle to keep it upright.

KIM: That's what emits all the torque that defies gravity. That's what you're basically banking your life on.

SIMON: Kim hopes to get the C-1 in production in two years with a starting price of $24,000, expensive. But his aim is to slash that significantly over time.

KIM: A feeling of actually seeing this vehicle built from the ground up, we designed everything ground up, all in-house. It's overwhelming. It's overwhelming.

SIMON: Like many tech entrepreneurs, Kim had dreams of bringing a product to the masses, but he's already succeed in taking a farfetched idea and proving it can be done. Dan Simon, CNN, San Francisco.

(END VIDEOTAPE)

CROWLEY: You're in THE SITUATION ROOM.