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THE SITUATION ROOM

President Obama Talks with Israeli Prime Minister; Romney in Pennsylvania; Supreme Court's Surprise Wild Card; 15 Killed In Iraqi Prison Break; Iran News Agency Duped By Fake Story; Apple Apologizes For Map Issues; Benghazi A "Deliberate Terrorist Assault"

Aired September 28, 2012 - 16:00   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now: President Obama on this day, he has some time to raise money in person, but only time for a phone call with Israel's leader, more criticism coming in.

We're also looking at the Obama administration's evolving attempts to explain who's responsible for the deadly attack on the U.S. Consulate in Libya. Is the confusion becoming a political liability?

And Mitt Romney says he has a little secret. You're going to hear him predict he will win a state most experts think is safely in President Obama's column.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

We're down to just 39 days until the presidential election. And in about 20 minutes, the president begins a series of fund-raisers right here in Washington. Those are the only public events on his calendar today.

Yet, this is the same day the president didn't have time for a face- to-face meeting with Israeli Prime Minister Benjamin Netanyahu, who's in New York. Instead, they spoke by phone.

Here's CNN's White House correspondent Dan Lothian -- Dan.

(BEGIN VIDEOTAPE)

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Wolf, the White House always stresses that the president and Prime Minister Benjamin Netanyahu are in touch frequently. They downplay any daylight between the two leaders. But they didn't meet face-to-face this week. And so one phone call is getting a lot of attention.

(voice-over): President Obama and Prime Minister Netanyahu attended the United Nations General Assembly in New York, but at different times. The White House insisted it was a scheduling issue, not a snub. No meetings, no handshakes, but today a follow-up phone call that a senior administration official told CNN lasted more than 20 minutes.

In a statement released by the White House, the conversation included -- quote -- "a range of security issues," the president reaffirmed his commitment to Israel security, and the two leaders were in full agreement on preventing Iran from obtaining a nuclear weapon.

Prime Minister Netanyahu has been pressuring the U.S. to lay down a so-called red line on Iran that would prompt military action. At the U.N., he used a prop to drive home his point.

BENJAMIN NETANYAHU, ISRAELI PRIME MINISTER: A red line should be drawn right here, before Iran completes the second stage of nuclear enrichment necessary to make a bomb.

LOTHIAN: While some have accused the prime minister of pressuring the president to help GOP nominee Mitt Romney, Mr. Netanyahu has said his actions are not tied to the U.S. political calendar.

The White House downplays any friction between the two leaders and brushes aside criticism that there was no face-to-face meeting.

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: The president has met with and spent time on the phone with Prime Minister Netanyahu more than with any leader since he took office. And that is reflective of the importance of and the closeness of the relationship between the United States and Israel.

LOTHIAN (on camera): The White House would not say if the two leaders talked about the so-called red line, which, of course, is a key issue, and no specifics on how they will stop Iran from obtaining a nuclear weapon. But they did agree to -- quote -- "continue their regular consultations on this issue" -- Wolf.

(END VIDEOTAPE)

BLITZER: Dan Lothian reporting from the White House, thank you.

Mitt Romney also spoke by phone today with the prime minister. The call came while Romney was at the Philadelphia Airport after making several campaign stops in Pennsylvania. That's a state most political experts don't think he will win.

But as CNN's national political correspondent, Jim Acosta, is reporting, Romney seems to have some other ideas.

Jim's joining us right now.

What's he saying? What's going on in Pennsylvania, Jim?

JIM ACOSTA, CNN CORRESPONDENT: Wolf, you're right. Mitt Romney did predict he's going to win the state of Pennsylvania come November.

But even though his campaign has mainly been a focus on fixing the nation's economy, Mitt Romney in recent days has been stepping up his attacks on the president on the issue of national security, and specifically lately on who's a better friend of Israel.

And there are signs the Obama campaign is paying attention.

(BEGIN VIDEOTAPE) ACOSTA (voice-over): At a military academy in Pennsylvania, Mitt Romney tried to make the case for a new commander in chief. Romney once again questioned the president's recent description of events in the Middle East as bumps in the road.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: I sure as heck don't consider Iran becoming nuclear a bump in the road. We need someone who recognizes the seriousness of what's ahead and is willing to lead.

ACOSTA: Romney's tough talk on Iran follows Israeli Prime Minister Benjamin Netanyahu's dramatic performance at the United Nations, aimed at drawing the world's attention to his nation's nuclear worries.

BENJAMIN NETANYAHU, ISRAELI PRIME MINISTER: A red line should be drawn right here.

ACOSTA: Just days after the president declined to meet with Netanyahu in New York, the two leaders spoke over the phone. But then, hours later, Romney, who enjoys a much friendlier relationship with Netanyahu, got his own call, chatting with the Israeli leader while sitting on a tarmac in Philadelphia.

It was a reminder of the power of the Jewish-American vote in places like Florida, where Vice President Joe Biden defended Mr. Obama's relationship with Israel.

JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES: I'm not going to talk about Israel today. But I just want to say one thing. I just want to tell you how proud I am, how proud I am to stand shoulder-to- shoulder with a guy who has done more for Israel's physical security than any president of the eight I have served with.

ACOSTA: Switching gears to court the state's senior citizens, Biden said Romney's plan to lower taxes would force the nation's elderly to pick up the tab.

BIDEN: Their plan on Social Security, the one they have now, would raise taxes on your Social Security.

ACOSTA: Romney, who has accused the president of misleading the public on the subject of taxes, repeated his pledge on the issue.

ROMNEY: I will not raise taxes on middle-income Americans.

ACOSTA: Less than one week from his debate with the president, Romney is trying to expand the election map, boldly predicting twice during his visit to Pennsylvania that he can win here.

ROMNEY: I have got a little secret here, and that is that the Obama campaign thinks that Pennsylvania is in their pocket. They don't need to worry about it.

And you're right and they're wrong. We're going to win Pennsylvania. We're going to take the White House.

ACOSTA: It could be a questionable move. Not only does Romney have ground to make up in swing states like Ohio and Florida. The latest CNN poll of polls in Pennsylvania shows Romney trailing the president by 10 points.

Republicans have tried, but failed to win Pennsylvania in recent presidential elections. Just ask John McCain, who made his own last- ditch effort.

SEN. JOHN MCCAIN (R), ARIZONA: There's just one day left until we take America in a new direction. We need to win in Pennsylvania tomorrow. With your help, we will win.

(END VIDEOTAPE)

ACOSTA: Now, it's unclear what kind of resources Romney would put into Pennsylvania. When asked whether the campaign would buy any ads here, a Romney aide said that is for the Romney campaign to know and for the Obama campaign to worry about.

But getting back to that phone call, Wolf, between Romney and Prime Minister Netanyahu, Mitt Romney just briefed reporters on his campaign plane just about a half-an-hour ago about that conversation. He said Netanyahu did talk about that red line on where he would try to draw a line on Iran's nuclear weapons program.

And Romney said he offered his own comments on the issue, but he wouldn't go into any greater detail than that. And also -- it's also interesting to note, Wolf, Romney was asked on the plane about any current assessments on how the president and how the White House is handling the diplomatic attacks in Libya, the investigation into those diplomatic attacks, and Romney said it would be premature -- that was the word he used, premature -- to offer any new assessments on the issue.

That's a pretty stark contrast from that statement he put out a few weeks ago that raised a lot of controversy, Wolf.

BLITZER: Yes. He was burned with that initial statement, so it's better to be cautious right now and let others do some of the talking for him on some of these very, very sensitive issues. They're doing a lot of talking. We will much more on this later on.

Jim, stand by.

I want to go to the president right now. He's at a fund-raiser at a hotel here in Washington. I want to listen in briefly, hear what he's saying.

(JOINED IN PROGRESS)

OBAMA: We're creating thousands of jobs all across the country as a result.

And today the United States of America is less dependent on foreign oil than any time in nearly two decades. So the choice is, do we build on this progress, or do we go with a plan that would reverse it, like my opponent's proposing? I do not believe in letting oil companies write this country's energy plan. I don't believe in endangering our coastlines or having them continue to collect another $4 billion in corporate welfare from our taxpayers.

So we have got a better plan that keeps investing in wind and solar and clean coal technology and allows farmers and scientists to harness new biofuels that power our cars and trucks. And we're putting construction workers back to work retrofitting buildings, to they use less energy and developing a 100-year supply of natural gas.

We do all that, we can cut our oil imports in half by 2020. It's good for the environment. It's good for the economy. It's good for our national security. That's what I mean when I say we need to go forward.

That's what we're going to need to do. We need to give every American the chance to compete by making sure we have got the best education system in the world. That's the reason I'm standing here today. That's the gateway of opportunity and the gateway of the middle class.

And because of the work we have already done, millions of young people are better able to afford college already. And now we have got to do more by hiring 100,000 new math and science teachers, by making sure that we're providing millions of new slots for folks to retrain at community colleges for the jobs that exist right now, continue to lower tuition costs for students so they're not loaded up with debt once they graduate.

My opponent thinks that it makes sense for us to gut our investment in education in order to give a tax break to the wealthy. I disagree. I think what the United States of America means is, is that no child should be deprived of a good education.

It means that no family should have to set aside a college acceptance letter just because they don't have the money. And no employer should have to look for workers with the right skills in China, instead of the United States of America. I want us to focus on education.

That's what we have been doing. That's what we're going to keep on doing in a second term when I'm president of the United States.

(CHEERING AND APPLAUSE)

BLITZER: All right.

So you get a flavor of what the president's saying at a fund-raiser. He's doing a few of these fund-raisers here in Washington today starting just a few moments ago.

Let's talk about what's going on, specifically Pennsylvania right now. It's a handful of those so-called swing states expected to decide the presidential election. But is it really a swing state? Is it closer than it looks as Mitt Romney is suggesting and predicting today, as you just heard in Jim Acosta's report, that he will win Pennsylvania? Our senior political analyst, Ron Brownstein,is here with us in THE SITUATION ROOM. He's the editorial director of "The National Journal."

Is Pennsylvania realistically possible for Mitt Romney? Because the polls show, what, right now a 10-point gap between these two men.

RON BROWNSTEIN, CNN SENIOR POLITICAL ANALYST: Yes, it will be a very different race if Pennsylvania is really in play.

The fact it's not in play though is kind of instructive. Right now President Obama seems safely ahead in all of the polling. Pennsylvania is actually the kind of state that Mitt Romney's promise a year ago was that he was going to be able to put into play, the same way John McCain's promise was supposedly that.

The reason why Pennsylvania has become so solidly Democratic -- they have won in each of the past five elections -- is largely because the suburbs outside Philadelphia, white-collar, affluent voters, probably a little right of center economically, left of center social issues, have moved decisively towards the Democrats.

Originally, Mitt Romney was seen as a candidate who could appeal to those voters. But he's not really making many inroads there. As a result, Pennsylvania seems out of reach in any realistic scenario.

BLITZER: But he was doing some fund-raising there. That may be the major reason while he's there, although his aides are being a little bit coy right now. Maybe they're pretending that they think it's realistic to get the Democrats to start spending some money there. Wouldn't be the first time.

(CROSSTALK)

BROWNSTEIN: We will see if they put any television money or time in there.

BLITZER: Yes. Let's see if they put up their words with some money.

(CROSSTALK)

BLITZER: You have been taking a closer look at the so-called Sun Belt vs. the Rust Belt swing states. What are you seeing?

BROWNSTEIN: Well, look, when both of us first started covering politics, presidential elections were almost decided in the Rust Belt, those kind of behemoths of the Midwest, Michigan, Iowa, Wisconsin, even Pennsylvania.

And those states are still important. There's now a second group of swing states that are also emerging on the map. These are states in the Sun Belt, Florida, Virginia, North Carolina in the Southeast, Colorado, Nevada and New Mexico in the Southwest that had generally been reliably Republican but are being moved toward the Democrats by a combination of more diversity, more minorities and more upscale whites. What's fascinating, Wolf, is that when this election began, it looked like Obama, President Obama, was better positioned in those Sun Belt swing states because they more reflect his national coalition, but in fact today he's doing better in those Rust Belt swing states, which are more of a headache for Romney because the president is simply running better among the blue-collar and older whites who are very prevalent in those states, and he's running better in the Midwest among those voters than he pretty much is anywhere else.

BLITZER: Is that in part because of the car industry, the auto industry he helped bail out GM and Chrysler?

BROWNSTEIN: Clearly, that's part of it. A number of reasons.

One is that in other parts of the country, more blue-collar whites are evangelical Christians who are very strongly Republican, and that's less of a factor in the Midwest, but certainly the auto bailout is important, and just the message. That is where the case that they have tried to make that Mitt Romney is not someone who gets your life, not someone who kind of understands what you're going through has probably has the most effect.

And you really see it in the movement in the polls among these blue- collar women in places like Iowa, Wisconsin and Ohio now moving to a point where Obama is winning half or more of them, much better than his overall national number among those same Democrats.

BLITZER: So in these final few weeks, what, less than 40 days, what should each candidate be emphasizing right now to solidify their position?

BROWNSTEIN: You know, I think Romney's, Mitt Romney's challenge is the same that it has been. It's not so much convincing a majority of the country that Barack Obama has not been a success in his first term. There are certainly a large number of voters who either are disappointed or at best ambivalent about the results of his first term.

What Romney hasn't been able to do is convince him that he would be a better alternative. And, in fact, President Obama's lead seems to me still to reside in a significant pool of voters, a slice of voters, 5, 6, 7 percent of the electorate who are not satisfied with his first term, but are sticking with him because they don't believe Romney offers a better alternative or understands their life. I think that is the overwhelming challenge for Mitt Romney in this debate -- much more than making the case against President Obama.

BLITZER: Ron Brownstein, thanks very much.

BROWNSTEIN: Thank you.

BLITZER: Next Monday, the first Monday in October, we're getting an important reminder. One of the least talked about issues of the campaign could turn out to be the most important.

(COMMERCIAL BREAK) BLITZER: Believe it or not, next Monday is the first Monday in October. And that means the start of the new term for the United States Supreme Court and a docket full of important and very controversial cases. And just like on health care reform, the chief justice, John Roberts, could be the wildcard.

CNN's crime and justice correspondent Joe Johns is here in THE SITUATION ROOM, taking a closer look at what we can expect. It's going to be an important series of cases.

JOE JOHNS, CNN CRIME AND JUSTICE CORRESPONDENT: A very important series of cases. And, Wolf, at the beginning of the new session, the Supreme Court is going to be watched very closely for signs of strain between the justices or anything else that suggests things may have changed since the health care ruling which was arguably the biggest opinion by the court since Bush versus Gore more than a decade ago.

(BEGIN VIDEOTAPE)

PROTESTERS: Strike it down!

JOHNS (voice-over): Right after the Supreme Court's health care decision in June, Chief Justice John Roberts joked to colleagues that he would find an island fortress to escape the political heat.

Here's how Justice Ruth Bader Ginsburg described the eventful spring.

JUSTICE RUTH BADER GINSBURG, SUPREME COURT: The term has been more than usually taxing. Some have called it the term of the century.

JOHNS: Now three months later, the court is back, and there are no signs of it cooling down.

THOMAS GOLDSTEIN, PUBLISHER, SCOTUSBLOG.COM: The justices are moving from the frying pan right into the fire. They are tackling some of the most difficult legal questions of the day. Across the board, probably the biggest term in at least a decade.

JOHNS: Cases involving the contentious issues of affirmative action, same sex marriage, voting rights and abortion are all likely to come up this term which kicks of Monday.

CARRIE SEVERINO, JUDICIAL CRISIS NETWORK: There's some very exciting cases already on the docket. There's a lot more in the pipeline that may -- the court's going to be making a decision on soon.

JOHNS: Another set of big decisions will bring even more scrutiny on the chief justice. Rumors surfaced that the healthcare ruling he authored caused a personal rift with conservative colleagues including Justice Antonin Scalia. A claim Scalia denied to CNN's Piers Morgan.

JUSTICE ANTONIN SCALIA, SUPREME COURT: No, I didn't have a falling out with Justice Roberts.

PIERS MORGAN, CNN'S "PIERS MORGAN TONIGHT": Loud words exchanged?

SCALIA: No.

MORGAN: Slamming of doors.

SCALIA: No.

MORGAN: Nothing like that?

SCALIA: Nothing like that.

JOHNS: The other big question, will the chief justice take the court in an aggressive new direction? Liberals fear a more hard line, dogmatic shift to the right.

ELIZABETH WYDRA, CONSTITUTIONAL ACCOUNTABILITY CENTER: A lot of progressives are concerned that this might mean that Chief Justice Roberts has built up some capital, some goodwill, and now will push the conservative agenda.

JOHNS: Tom Goldstein, who has argued before the court, thinks Roberts wants a more conservative court, but he'll do it gradually.

GOLDSTEIN: He's not trying to move the law radically quickly. I think Justice Scalia or Justice Thomas really want to get to the end answer as quickly as possible and make the law conform to what they really understand; whereas the chief justice is more incrementalist.

JOHNS: But conservative court watcher Carrie Severino doesn't believe anything will change any time soon.

SEVERINO: Certainly this is not a crusading conservative court. Until we have a shift I think in the membership of the court, it's impossible to call it a court that leans more to the left or to the right.

(END VIDEOTAPE)

JOHNS: And, Wolf, for those opinions that could be close five-to-four decisions, attention will also be paid to Justice Anthony Kennedy who is frequently, as you know, the swing vote in some of the toughest cases.

BLITZER: Going to be some very important cases coming up. Joe, thanks very, very much.

Let's dig a bit deeper right now with our senior legal analyst Jeffrey Toobin. His new book entitled "The Oath" debuts this week at number five on the "New York Times" bestseller list.

Congratulations, Jeff. Good work. Excellent book. Hope a lot of people buy the book, a lot more. But you're doing well already.

Let's talk about what's going on. What do you expect to see in the coming weeks and months as this court -- this new term gets ready?

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Well, I think the affirmative action case out of the University of Texas is really a huge case. It's in part a huge chase just for practical implications. May a university consider race in admitting students? This is an -- a question that the court answered in 2003 in Justice O'Connor's famous opinion out of the University of Michigan law school.

But the court is a different court. The replacement of Justice O'Connor by Justice Alito has really had a profound impact, especially on civil rights cases. And I think it's entirely possible the court may limit or even overrule Justice O'Connor's opinion getting rid of racial preferences more and more.

BLITZER: So this is a case involving a state university, a public university. So if they decide that affirmative action giving a preference to certain students based on race for example is unconstitutional, would it also automatically apply to private universities that get federal aid, for example?

TOOBIN: Not automatically. But this is the way the court works is that they decide one case at a time. And they establish principles that are later applied or not applied. Each case can be somewhat different. But if they say that a university, which is a part of the state , may not consider race, that race is simply impermissible, you can be sure that that message will filter out not just through universities but also to employers and to the government. It could be an enormous change.

We'll only deal with public universities this term.

BLITZER: Yes, all right. Let me read to you from your column you wrote on CNN.com. Very provocative but important as well. "With a little more than a month to go, it's not too late to ask the candidates to take a stand on their plans for the court. What does Obama, a former law professor, think about the court? By the same token, what kind of justices would Romney appoint? Who are his judicial role models?"

It's very important to take a look at who they would name. There could be one, maybe even two vacancies over the next four years that could impact a decision of the court for the next 30 or 40 years.

TOOBIN: You know, Wolf, there are four justices in their 70s. And Ruth Bader Ginsburg is the oldest at 79. Justice Kennedy and Scalia are 76. Justice Breyer is 74.

You know, Supreme Court vacancies historically have tended to come in bunches. Justices -- President Obama had two appointees. George W. Bush had two appointees. Bill Clinton had two.

But there could be a bunch in a hurry. Justice Ginsburg is the most likely to leave. And if President Obama wins, that wouldn't change the balance of five Republicans and four Democrats. But if the five- to-four balance shifts, you could see dramatic changes in the court. It all depends on who leaves.

BLITZER: But do you simply assume President Obama would name someone like Sonya Sotomayor or Elena Kagan once again, and Romney would name someone like Antonin Scalia for example or Clarence Thomas for that matter? Can you just assume those would be the possibilities, the probabilities, if you will?

TOOBIN: That is precisely what I would assume. You know, there's a mythology about the court that presidents often are surprised by how their justices turn out. But you know, that is very much the exception rather than the rule.

If you look at the justices currently on the court right now, every single one of them has turned out more or less as predicted. Sure there are individual cases, there are surprises. I certainly was surprised by Chief Justice Roberts' vote in the Affordable Care Act case. But by and large, presidents what you see is what you get. And when you elect the president, you wind up electing like-minded Supreme Court justices.

BLITZER: Jeffrey Toobin is the author of "The Oath", a "New York Times" best seller. Not a huge surprise, an excellent book. Jeffrey, thanks very much.

TOOBIN: Thanks, Wolf.

BLITZER: Many of you complained and, guess what? Apple is now listening. Why the CEO admits to letting customers down and suggests you use his rival software instead.

(COMMERCIAL BREAK)

BLTIZER: Prisoners clash with guards in a dramatic jail break in Northern Iraq. Lisa Sylvester is monitoring that, some of the other top stories in THE SITUATION ROOM right now. Lisa, what happened?

LISA SYLVESTER, CNN CORRESPONDENT: Hi, Wolf. Well, the city of Tikrit remains under curfew. Several gunmen dressed in police uniforms broke into a prison there yesterday setting off car bombs and over powering guards and taking their weapons.

This is the aftermath of a riot at that same prison last year. At least 15 people were killed in this latest attack. Dozens of prisoners escaped and the fighting reportedly lasted for several hours before security forces were able to regain control.

A joke by the satirical newspaper "The Onion" apparently fooled a news agency in Iran. The agency printed a fake news story about a poll saying rural white Americans would prefer Iranian President Mahmoud Ahmadinejad over President Obama. Iran's foreign news agency published it today days after it appeared in "The Onion," it has now been removed.

Apple issued a rare apology over glaring errors in its new map service. Apple recently dumped Google Map in favor of its software. CEO Tim Cook says in a statement, quote, "We strive to make world class products that deliver the best experience possible to our customers.

With the launch of our new maps last week, we fell short on this commitment. We are extremely sorry for the frustration this has caused our customers. And we are doing everything we can to make it better."

He's also suggesting using alternatives in the meantime, even Google Maps on the web. You know, Apple doesn't make many missteps, but that was a big one. A lot of people were complaining.

BLITZER: That one should not have gotten through their quality control. What they were too busy rushing the product? They couldn't check their own maps?

SYLVESTER: I don't know, but it's a big one. When you talk about customer satisfaction, people want to be able to go where they need to go and they rely on that map service.

BLITZER: Certainly do. All right, thanks very much, Lisa.

In today's "Strategy Session," we're taking a closer look at whether the Obama administration's conflicting explanations about the attack on the U.S. Consulate in Libya could become a political problem for the president.

(COMMERCIAL BREAK)

BLITZER: The U.S. intelligence community now officially publicly says this month's attack on the United States Consulate in Benghazi was a deliberate and organized terrorist assault carried out by extremists affiliated or sympathetic with al Qaeda, a flat statement just issued.

Let's discuss the political fallout in our "Strategy Session." Joining us now, the Democratic strategist and CNN political contributor Donna Brazile, along with David Frum, he is a contributing editor at "The Daily Beast" and "Newsweek."

David, a pretty powerful statement just released by the Office of the Director of National Intelligence. It totally contradicts what the administration was saying in the days that immediately followed the killing of Ambassador Stevens and the three other Americans. What do you make of this?

DAVID FRUM, CNN CONTRIBUTOR: Totally supports what my "Daily Beast" colleague, Eli Lake, reported three days ago who was the first with this story.

What it makes is the American ambassador dead, the administration's first impulse was to find ways to cover itself and avoid acknowledging the mistake the ambassador had completely inadequate security in a dangerous place.

And it did that by pitting on this YouTube video of the maker on his way to prison and is being charged under other offenses, but in prosecution, it looked like they are motivated by an act of speech in order to offset the blame for its own failure to protect America's ambassador. It's disturbing. It's really disturbing.

BLITZER: And the Republicans, Donna, not surprisingly they are really going after the president right now on this specific issue. Listen to Eric Fehrnstrom, a senior advisor to Mitt Romney. (BEGIN VIDEO CLIP)

ERIC FEHRNSTROM, SENIOR ROMNEY ADVISOR: Well, I think President Obama, bill, needs to be held accountable for his administration's attempts to mislead the American people about what happened in Benghazi.

(END VIDEO CLIP)

BLITZER: And they're repeatedly referring to statements that Jay Carney made at the White House, that Hillary Clinton made at the State Department, and that the U.S. Ambassador Susan Rice made on five Sunday talk shows here in the United States. They're making this a big issue. Does it have political legs as they say?

DONNA BRAZILE, CNN POLITICAL CONTRIBUTOR: Well, first of all, I wouldn't be surprised the Romney administration -- I mean, the Romney team make hay out of anything. Look, they're looking for an issue.

And they're the last people that we should hear from on foreign policy given all of the missteps that Mitt Romney has made. But look, Wolf, beyond the political nature of this whole inquiry.

We need to look at the fact that al Qaeda leaders posted a video a day before the attack on September 10th, which Mr. Alzari, you know, these names better than me, said that he wanted to avenge the death of one of his deputies in Libya.

He called upon Libyans to, you know, try to provoke unrest. So look I think one of the things we should do right now is to let Congress -- members of Congress investigate this. They will investigate this.

Senator Kerry along with Senator Coons has sent a letter to the administration requesting answers to some very important questions that I think the American people will want to know.

On the short end of this, I doubt very seriously that the administration will try to mislead the American people at a time when as we all know that this administration has been hunting down al Qaeda leaders all throughout the Middle East and Northern Africa as well.

BLITZER: I don't know if you heard, David, Mike Huckabee suggests this could be worse than Watergate. Watergate he points out no one was killed. Here four Americans were killed. He's suggesting there was a cover-up.

FRUM: Well, there was certainly a lot of rear end covering. That's for sure. That seems to be the administration's first imperative after the death of Ambassador Stevens.

But here's why I think this will have political power. The economy obviously issue one in this election, but national security is issue two. President Obama was elected in great part because of his promise to change America's relationship with the rest of the world.

He made a point of this. His very first TV interview after being inaugurated was with the network and he traveled to Cairo in June of 2009. He didn't go to Israel on that same trip as would seem logical, in order to send a message but how he was doing a reset of America's relationship with the Muslim world.

And he had an attitude of great confidence that he in his own person would somehow transform everything. That may have been one of the reasons that there was kind of some sloppiness of the situation in Libya that the administration did not take seriously enough the security challenges that its predecessor had to grapple with.

BLITZER: Well, there's going to be full scale investigations as Donna points out. The State Department, Congress, a lot of people will be investigating certainly the news media will continue to investigate as well.

I want both of you to standby. We're going to continue this conversation. I'm also going to ask about some eye opening new comparisons of Mitt Romney's favorability ratings with former President George W. Bush.

(COMMERCIAL BREAK)

BLITZER: Let's get back out to Democratic strategist and CNN political contributor Donna Brazile and David Frum of "Newsweek" and "The Daily Beast," and also contributor to CNN.

Look at these "Bloomberg News" national poll numbers, favorability ratings, George W. Bush, the former president, 46 percent, Mitt Romney 43 percent, Joe Biden 43 percent, which raised the question in my mind, David, maybe you want to tackle it.

We see a lot of Bill Clinton out there campaigning for President Obama. George W. Bush MIA right now on the campaign trail. Is it because he doesn't want to campaign for Mitt Romney or Mitt Romney doesn't want Bush campaigning for him?

FRUM: Well, I have to assume it's because the former President Bush does not want to because there are things he could very usefully do. He remains a controversial figure. A lot of Americans blame him for the economic crisis.

So it would be most likely unwise to have him on a big stage doing big rallies, but he could be a powerful fundraiser. One of the challenges that Mitt Romney has had is he's spending a lot of time still raising money in person.

The very biggest donors want to see their candidate. But they would be just as happy or almost as happy with the former president as they would be with a possible future president. If George Bush were doing those events, that would be a great load off Mitt Romney's shoulders.

BLITZER: What do you think, Donna, on this? You're a close observer of what's going on. I just want to point out, correct one thing, Biden's favorability in this "Bloomberg" poll 42 percent, not 43 percent. There's the right number right there. Why aren't we seeing George W. Bush in a similar way we're seeing President Clinton out there?

BRAZILE: Because I'm sure he doesn't want to be a distraction in this campaign. But I have to tell you I was with Karl Rove the other day in Jackson Hole, Wyoming. Karl Rove and many of his other key lieutenants are out there raising money for Mitt Romney, raising money for the Republican Party.

Ed Gillespie's a senior advisor to the Romney campaign and Jeb Bush, his brother is out there helping Mitt Romney. Laura Bush I believe helped the other day. So while President Bush is not out there personally, his surrogates are, his wife, his brother, and of course, many of his top lieutenants from his administration.

BLITZER: David, there's a debate emerging now on whether Paul Ryan, the vice presidential nominee, has actually helped Romney's efforts to win the White House or wound up hurting Romney's efforts to win the White House. Where do you see it?

FRUM: Well, I've been a big alarmist on the Ryan question from the beginning. I thought it was a mistake to choose him. I thought it was a mistake even before choosing him to bolt this campaign to the Ryan plan.

The Romney campaign needs to be about jobs and growth. The decision to make this campaign about Medicare and Medicaid, which is what you do when you adopt the Ryan plan much less put Ryan on the ticket is a big mistake. I think the campaign is really suffering for it.

BLITZER: You think Democrats down ballot as they say, senatorial candidates, congressional candidates, are happy, Donna, that Paul Ryan is on the ticket with Romney?

BRAZILE: Absolutely. He gives definition to what the Republicans actually stand for. I mean, basically they want to, you know, create another system for Medicare and as President Obama and the vice president today spoke out also about Social Security.

So Democrats are along the Ryan budget plan. By putting him on the ticket, I think the Republicans took a huge risk because they have to explain exactly what his budget would do to domestic program and future growth.

And of course, many people understand that the Ryan plan it doesn't add up. The math is just not there.

BLITZER: I looked, David, at the president's schedule today, President Obama's schedule. He's here in Washington, D.C. 9:45. He received a presidential daily brief, met with senior advisors at 10:15. At 4:20, which now he's out there on the campaign trail.

He's got an event at 4:20, 6:05, another campaign fundraising event, one at 8:25 tonight. But he had until 4:00 basically, he was in the White House, as you know, Benjamin Netanyahu's been in New York all day.

I'm told if he'd gotten a call to come on down to Washington, we'll get together at the White House. He would have been on a plane coming to Washington. What do you think about all this?

FRUM: Well, it's just amazing. It's amazing that the president not only didn't choose to talk to Benjamin Netanyahu --

BLITZER: They did speak on the phone.

FRUM: But he didn't choose to be visible with him. The big part of why you do these kinds of meetings in person is to show the world you are consulting people.

And I just try to imagine back during the Bush years when there was so much accusations that President Bush was high handed and isolated that if he voluntarily said I'm not going to meet anybody, what would people have said?

BLITZER: Donna.

BRAZILE: Well, as you know, Wolf, I'm one that believes actions speak louder than words. Since coming into office, President Obama has committed more than $1 billion to Israel's security.

This president has strong cooperation, strong -- has built a strong alliance with the state of Israel. Israel is very important. I have to believe that the white house made a strategic decision not to hold any meetings but to continue to speak out and stand firmly where we are now as it relates to Iran.

So that's where I'm putting a lot of my emphasis. Not on who sat down who are had a one-on-one, who had coffee, who had tea, where do we stand on Iran getting a nuclear weapon? The president has been firm that Iran will not get a nuclear weapon.

BLITZER: Donna Brazile, David Frum, guys, thanks very much.

A ride to school literally turned onto its side for dozens of middle school students. We'll tell you what happened when we come back.

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BLITZER: Dozens of children are hurt in a school bus accident in Kentucky. Lisa's back. She's monitoring that story and some of the other top stories in THE SITUATION ROOM right now. What happened?

SYLVESTER: Hi, there, Wolf. Well, the bus filled with middle school students collided with a Mustang at this Louisville intersection and rolled on its side. You can see it there.

Fifty people were taken to the hospital including three people in the Mustang. None of the students was seriously hurt. That's the good news. Officials say wet roads and speed may have played a factor.

And Bank of America has agreed to pay more than $2.4 billion to settle class action lawsuit over its acquisition of Merrill Lynch. Investors sued in 2009 claiming the bank misled them over the financial health of both companies prior to the merger. Bank of America denied the allegations, but said it agreed to settle to avoid an expensive legal battle.

And kids in New Orleans have a new place to play thanks to rapper -- Wolf Blitzer's favorite rapper, Lil' Wayne. He opened a new eco- friendly skate park in his hometown this week.

It's in the Lower Ninth ward, one of the hardest hit areas during Hurricane Katrina. The skate park was built using recycled material and runs on solar energy. We all know now, Wolf Blitzer, you are a fan of Lil' Wayne.

That's right. For all the viewers who tuned in yesterday, you corrected me on that, Wolf.

BLITZER: Once corrected Brooke Baldwin who kept calling Rihanna Rihanna.

SYLVESTER: It's good to know that one too.

BLITZER: You're not the first CNN person I corrected on the air.

SYLVESTER: And you know what, from now I'm just going to call you Lil' Wolf.

BLITZER: Thanks, Lil' Lisa.

A woman thought she stumbled on a rare find at a flea market. She bought this painting for $7, planned to sell it to the highest bidder. But why the FBI is now saying not so fast.

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BLITZER: A stunning development to a story that made big headlines. This painting sold for $7 at a West Virginia flea market. It was supposed to be sold to the highest bidder tomorrow, but the auction's been canceled and now the FBI is in on the case. Our Brian Todd explains.

BRIAN TODD, CNN CORRESPONDENT: Wolf, this is the Sadie May Room of the Baltimore Museum of Art. Sadie May was a well-known donor in this area, a patron of the arts in Baltimore. She lent a painting to this museum many decades ago.

In 1951 that painting was stolen from this museum, the circumstances around that are not clear. But it made its way somehow from 1951 to a flea market in West Virginia a couple of years ago where it was sold for $7, where it was actually bought at a flea market with just some other kind of trinkets in a box.

It is worth up to or possibly over $100,000 and we're here with the director of the Baltimore Museum of Art, Doreen Bolger. Can you tell us how you think it made its way from being stolen here in 1951 to being sold in West Virginia at a flea market two years ago?

DOREEN BOLGER, DIRECTOR, BALTIMORE MUSEUM OF ART: Certainly, it's an amazing mystery and we may never know exactly the course of the painting over all those years. In 1951, 61 years ago, we didn't have computers, we didn't have digital images. Things were recorded by hand on index cards, things were mimeographed or carbon paper.

Very different from how we record information today so we'll be very lucky, I think, to find out the whole story.

TODD: Well, good luck in trying to find that story and thank you for joining us.

DOLGER: Thank you.

TODD: The museum is working with the FBI and others to try to piece together what happened to the painting, how it made that journey. Then they're going to have to determine custody of it, Wolf.

Whether it belongs to the museum, the estate of Sadie Mae or the woman who bought it at a flea market in West Virginia, that woman wants to remain anonymous. That's being investigated right now.

We're going to hopefully determine how a painting bought for $7 in West Virginia now worth about $100,000 at least Renoir painting, determining now who gets custody of that painting -- Wolf.

BLITZER: Brian Todd, thank you.