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Wet Weather Heads East; U.S. Spying On Americans; Mixed Reaction To News Of Data Mining; Stocks React To Jobs Report; Unemployment Rate Rises To 7.6 Percent; Hospitality A Bright Spot In Jobs Report; Growing Government Surveillance

Aired June 07, 2013 - 10:00   ET

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

CHRISTI PAUL, CNN ANCHOR: Happening now in the NEWSROOM, it's not just your phone calls, your e-mails and Facebook account. Now there are reports this hour the government is monitoring your credit card transactions. Did the Obama administration go too far with the patriot act?

Also how safe is your car? After concerns with Jeep Cherokees, do you have to worry about your vehicle?

Plus, flooding, rain, look what Tropical Storm Andrea is dishing out and she's moving up the east coast.

Plus, he's one of the greatest basketball players ever, Dr. J., Julius Irving talking about the finals and the new film that spotlights his hall of fame career. You are live in the CNN NEWSROOM.

And we are wishing you a happy Friday. Thank you so much for sharing your time with us here. I'm Christi Paul in for Carol Costello. We are just a few days into hurricane season, right? Millions of people across 13 states are under flash flood warnings as Tropical Storm Andrea drenches the eastern seaboard.

I want to show you live pictures, too, of the wind and rain that have canceled classes in several schools along the Carolina Coast and prompted warnings from emergency officials over flooding. I want to show you the radar, too. The storm is on a path north. It's expected to drop as much as 6 inches of rain in Washington by the end of today.

Let's go right now to Wrightsville, North Carolina. That's where we find Nick Valencia. OK, Nick, I see some sun. That must be a good sign, right?

NICK VALENCIA, CNN CORRESPONDENT: Well, it would be a good sign if this wind wasn't so furious right now. We have been out here since about 3:00 a.m. this morning. Christi, this is the strongest the wind has felt at least so far. We just interviewed the chief of police here in North Carolina. He said he believes the worst of the storm had passed. I'm not sure if he was entirely accurate. We've seen the waves sort of come up and inch their way closer towards the houses here along the beach. They have since receded.

The sun is trying to make its way out. It's trying to poke its head out here. Residents are still, if you believe it, on the beach to the left of me here. There are folks playing in the water, people taking pictures. You have to remember, just in the context for our viewers here, this is a part of the United States and specifically a part of North Carolina that is very accustomed to severe weather, very accustomed to hurricanes.

Back in the 1950s, there was Hurricane Hazel that ripped through this area destroying a lot of residences here. I have spoken to residents who say because of that, they're not leaving. They have seen a lot worse here. They've decided to hunker down, spend the weekend here, no matter how unpleasant the wet weather might make that weekend.

But folks here are preparing as well as they can. You know, like I said, the sun is out in some parts. You do have clouds in other parts. The residents are willing to weather the storm here.

PAUL: All right, Nick, take good care there to you and your crew and all our people that are braving the beach. You are right, those people foe what they are doing. It's a tropical storm, it's not a hurricane. So I can see, why they think, yes, we will sit back, take this as it comes. Take good care, Nick. Thanks so much.

Let's talk about the other big story today. The president promised transparency, as you know, and that transparency is being questioned. We have been reporting the government is behind a program to mind data from phone records and the internet. Well, the "Wall Street Journal" is now also reporting that the government is monitoring your credit card transactions as well, all in an effort to track suspected terrorists.

Intelligence agencies, too, may have direct access to the central servers of several top U.S. tech companies. Barbara Starr joins us from the Pentagon to explain it all. Do we have any idea, Barbara, truly, how expansive this is?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, I think the answer is we do not. Christi, the government wants to call it monitoring or mining, but the question for so many Americans is very basic, is the government snooping on all of us?

(BEGIN VIDEOTAPE)

STARR (voice-over): A potentially explosive disclosure about how easily the government can collect information online. "The Washington Post" and the British newspaper "The Guardian" are reporting that the National Security Agency, the NSA, and the FBI, are tapping directly into the servers of nine leading internet companies, including Microsoft, Yahoo! Google, Facebook, AOL, Skype, YouTube, and Apple. That's according to a top secret NSA presentation, intercepting data like video, photographs, and e-mails, flowing online.

GLENN GREENWALD, REPORTER, "THE GUARDIAN": What this program enables the National Security Agency to do is to reach directly into the servers of the largest internet companies in the world, things that virtually every human being in the western world now uses, to communicate with one another. STARR: The program appears to be intended to grab non-U.S. intercepts, many of which flow through the robust U.S. internet. One slide in the NSA presentation explains, your targets communications could easily be flowing into and through the U.S. CNN has not confirmed the authenticity of the documents. Several of the companies reportedly cooperating with the government issued denials of involvement.

This follows the stunning news that a secret federal court order directed Verizon to hand over phone records of millions of Americans. Former intelligence officials and privacy advocates say it's reasonable to presume other telephone companies got similar orders.

STEVE AFTERGOOD, FEDERATION OF AMERICAN SCIENTISTS, SECRECY AND INTELLIGENCE: If this is an open-ended and indiscriminate collection process as it seems to be and then logically one would expect it to be much bigger than Verizon business.

STARR: And it all leaves the administration needing to explain this exchange in March.

SENATOR RON WYDEN (D), OREGON: Does the NSA collect any type of data at all on millions or hundreds of millions of Americans?

JAMES R. CLAPPER, RETIRED LIEUTENANT GENERAL: No, sir.

WYDEN: It does not?

CLAPPER: Not willingly.

STARR: That Verizon program, lawmakers say having access to that data helped law enforcement stopped terrorist plots from being carried out.

(END VIDEOTAPE)

STARR: But, look, the controversy has skyrocketed so much in just the last 24 hour to 48 hours here in Washington that James Clapper, the man you saw at the end of that piece the director of national intelligence overnight issued an extraordinary statement.

I want to read some of it, it says, quote, "The unauthorized disclosure of information about the important and entirely legal program is reprehensible and risks important protections for the security of Americans. The program cannot be used to intentionally target any U.S. citizen, any other U.S. person or anyone located within the United States."

But, Christi, you, me, everybody knows the internet does not recognize boundaries on the map, you know the internet is a global entity. So this is going to be a very tough problem and a lot of questions still coming.

PAUL: Yes, a strong point there, Barbara, thank you very much for the update. So from the White House, let's go to Capitol Hill where there does seem to be a real split among members of Congress as to whether this is the right thing to do. Let's bring in chief congressional correspondent Dana Bash with us now. So Dana, when we say there is a split, does it seem to be an even split at this point?

DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT: It is unclear if it is an even split, but what is really fascinating is it is not a split along the party lines at all. For example, we have heard from the Democratic chairwoman of the Senate Intelligence Committee, the top Republican in the Senate and the House Intelligence Committees all say that this is necessary to do, saying that at least one, maybe more terror plots have been foiled thanks to this system.

But on the other hand, you also see something that you don't see very often except when you are talking about privacy or civil liberty issues. You are seeing those from the far right and those from the far left actually coming towing to agree that this is the wrong thing to do, that it is terrible for the government to have this kind of access to American's phone records or even potentially internet records. Listen to again one of the most conservative senators and one of the most liberal.

(BEGIN VIDEO CLIP)

SENATOR MIKE LEE (R), UTAH: They basically said to Verizon give us your call logs. If they involve international calls, give them to us. If they involve domestic calls, give them to us. If they involve purely local calls, give them to us. We want all of them. That's a little disturbing to some of us.

SENATOR BERNARD SANDERS (I), VERMONT: Bottom line is, if we believe in freedom, if we believe you and I have the right the live our lives without the government knowing what we are doing, then we have got to have a serious debate on this issue and, in fact, we've got to change the law.

(END VIDEO CLIP)

BASH: Now, that senator, in particular, Bernie Sanders, he was against the patriot act to begin with and certainly the provisions that were added that allowed this to be done legally by the National Security Agency, by the Obama administration. One thing that is interesting because this is something that has been going on for years that, Congress at least those on the intelligence committees have been briefed on.

We are now learning because we know about it some of what had been going on behind the scenes in a classified way, for example, Mark Udall, a senator from Colorado, told his local paper that he tried so hard to end this that he even went as far as almost letting classified information become public. He said, I knew the NSA was spying. I did everything but leak classified information to stop it.

PAUL: My goodness, all right, Dana Bash, I feel like it's just beginning. Thank you so much.

BASH: Thanks, Christi. PAUL: Sure, appreciate it. Good to see you. Our coverage of this story is continuing in just minutes because Wolf Blitzer is joining us and we have two special guests, former George W. Bush Press Secretary Ari Fleischer and national security expert Jim Walsh. Stay close.

The U.S. unemployment rate, by the way is up, just barely, the stock market is reacting. May jobs numbers were released this morning. The Bureau of Labor Statistics reports 175,000 jobs were added last month, in May. That's more than analysts expected. More than what was added last month. But officials say 11.8 million people are unemployed and that is a small increase from April.

CNN's Alison Kosik is at the New York Stock Exchange. So how is it looking there on this news -- Alison.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Investors seem to be focusing on the positive here on Wall Street. Look, this report from May showing that employers added 175,000 jobs. It's not a terrible report. It's an improvement from April's number, which were 149,000. Here's the thing with it. It's not exceptional either because this is just average, when you look at job growth over the past three years.

You talk about the unemployment rate kicking up from 7.5 percent to 7.6 percent. That's because the number of people looking for a job, those discourage workers, they actually jumped into the fray. They're starting to look for work again. But Christi, the problem with that is, a lot of them haven't gotten a job yet. That's why you saw the unemployment rate tick higher -- Christi.

PAUL: Can you kind of specify for us, where are we seeing the biggest job gains and where are we still struggling?

KOSIK: OK, so we're seeing the bright spots. Not a whole lot of surprises. The same places that continued to do well, they continued to do so. Professionals and business services added 57,000 jobs and that includes 5,000 architect and engineering jobs. So there you see the recovery in the housing market coming into play here.

Food service jobs, meaning restaurants and bars, we still continue to see job growth there, adding 38,000 jobs in May. In fact that sector has done pretty darn well adding more than 300,000 jobs over the past 12 months. Here's the problem with it. These are traditionally low paying jobs. It isn't easy paying the bills when you work at these types of jobs.

All right, so now, the not so bright spots, government jobs got hit hard. The federal government lost 14,000 jobs. We know how these automatic spending cuts have been a drag on the economy. Now we can see it in the numbers that it's a drag on jobs. Manufacturing, the manufacturing sector lost 8,000. Now, this sector shrunk in May. It's not a huge surprise to see job losses here.

But this is a sector, Christi, that has taken it on the chin with weakness winding up hitting the entire economy because with manufacturing activity contracting, it means less demand for goods manufactured here in the U.S. -- Christi. PAUL: Right. All right, Alison, thanks for breaking it down for us.

One indicator of the overall strength of the economy is the picture of summer employment and temporary jobs. Hospitality and leisure jobs obviously are a staple of that world. So Scott Berman joins us to talk about the industry. He is with PWC Hospitality and Leisure. Thank you so much for being with us, Scott. Good to see you. Some critics argue --

SCOTT BERMAN, PRINCIPAL PWC HOSPITALITY ANDL LEISURE: Good morning.

PAUL: Good morning. Some critics argue that positions at hotels and restaurants are the wrong kind of jobs to be adding since they're temporary and they are low paying. What is your response to that?

BERMAN: Well, the lodging industry right now is quite robust and there are ample jobs available. I would dispute the report that they are low paying. I think that you look at the various types of jobs that are available in a hotel. They range from certainly management to the front of the house, the front desk clerks and then the back of the house, the house keepers, the food and beverage employees.

So there are also a number of perks that come with those jobs like many hotels offering the ability to have a meal while during their shift. So it's not just about the paycheck itself, but a number of perks that come with 'job in the hospitality sector.

PAUL: Scott, do any of these seasonal jobs end up becoming permanent?

BERMAN: Certainly. I would tell you, I'm speaking to you from South Florida. The summer used to be the low season and I would tell you that the summer months in South Florida represent some of the best months of the year. We enjoy tourists coming from not only the United States, but Europe and Latin America. And when you think about Latin America, it's their winter so many of them are coming north to Florida to vacation.

So the seasonality element still persists, but tourism and particularly hospitality is a year-round business. You're chasing corporate travel, leisure travel, groups and conventions. These are all basic markets that the hotel industry serves. So it's a year- round business. It's 24/7.

PAUL: All right, Scott Berman, a principal, PWC Hospitality and Leisure. Thank you so much, Scott. Appreciate it.

BERMAN: My pleasure. Have a good day.

PAUL: Sure, you too, happy Friday.

Still ahead, millions of Americans now know, we know, right, that the government has been snooping on a phone conversations, a broad program designed to find out who you talk to, when you talk to them. Should we care, though, or should this fine not worry you?

(COMMERCIAL BREAK) PAUL: All right, let's get out to Wolf Blitzer. He has a special panel to discuss the revelations that the government is collecting information from various phone and internet companies. Wolf, I think a lot of people are watching thinking, how worried do I need to be about this?

WOLF BLITZER, HOST, CNN'S "THE SITUATION ROOM": A lot of people are learning that the scope of these surveillance programs is immense. It's been going on for several years, but only now we're beginning to appreciate what's going on.

Let's discuss what's going on with two guests, Jim Walsh, is joining us. He is the international security analyst and research associate for security studies at MIT and Ari Fleischer, the former Bush White House press secretary, also a CNN political analyst.

Ari, this is a case where you think the president of the United States is doing exactly the right thing. I suspect you would tend to agree with "Huffington Post," which had this picture of President Obama having been morphed into President George W. Obama. Take a look at that. Why is the president right?

ARI FLEISCHER, CNN POLITICAL ANALYST: Well, Wolf, when you take a look at the steps he's taken to aggressively fight terror to keep us safe is much of what George Bush started and he's continued, it's wiretaps, keeping Guantanamo opened, drone strikes. I refer to it as President Bush's fourth year, fourth term, I mean. I say that in a positive vain about President Obama.

Look, Wolf, if I thought that this program was reading individual e- mails or listening to individual phone calls, I would be the first one to oppose it. That's not what it is. I think it has been widely misinterpreted and misunderstood. It is much more akin to a satellite taking a picture of the river, if you will, the river of information that flows into this country all the time.

The river has a predictable pattern. That's what we are looking at. All of a sudden a rock is thrown into the river from somewhere else and it disturbs the flow of the river, changes the pattern. We want to see where that rock came from and who that rock has touched. That's what this is about. That's how come they're collecting so much information, not about individuals, but about the flow of the river of communications.

BLITZER: Jim Walsh, the chair of the Senate Intelligence Committee Dianne Feinstein says it's a very legal, perfectly appropriate and absolutely essential. Listen to her.

(BEGIN VIDEO CLIP)

SENATOR DIANNE FEINSTEIN (D), CHAIRWOMAN, SENATE INTELLIGENCE COMMITTEE: I read intelligence carefully and I know that people are trying to get to us. This is the reason why we keep TSA doing what it's doing. This is the reason why the FBI now has 10,000 people doing intelligence on counterterrorism. This is the reason for the National Counterterrorism Center that's been set up in the time we have been active. And it's to ferret this out before it happens. It's called protecting America.

(END VIDEO CLIP)

BLITZER: Do you have any problems with this, Jim?

JIM WALSH, INTERNATIONAL SECURITY EXPERT: I do. And I want to say, I know for Senator Feinstein. I think she is a national treasure. On 90 percent of the reasons I would agree with her. But on this I disagree and with Ari, you know, the government is collecting information about who we are calling. When my children make phone calls, the government is collecting who they are talking to.

Now it's true. They're not listening to the conversation. It hardly seems that that justifies it. If there was a federal agent, an FBI guy who followed me around, knew when I went to work, knew who I met with, didn't sit in on the meetings, they would call that metadata, but that doesn't make it any less disturbing.

The government should not be surveying law abiding citizens who have committed no crime are following who they are talking to. What is really going on here is part of it is called social network analysis, which is a fancy way of saying the government wants to know who they are talking to, what communities they live in, whether they committed a crime or not.

I think that's dangerous. This is the tip of the iceberg. We are going to find out it is not just Verizon. We're going to find out the scope and duration is worse than we thought. What's more, we are all learning there is no transparency. We are seven years into it. I find all of that deeply troubling.

BLITZER: All right, Ari, go ahead and respond. I think that analogy could extent to what took place in Boston recently with the Boston bombings, of course, were TV cameras on the streets following everybody, innocent people, you name it. They were watched by TV cameras. Was that an invasion of our liberties and our privacy? I guess you could say it was. When trouble hit, it was because of that technology we were able to catch the killers.

That's how these programs are designed to work. Yes, they initially begin with a sweeping overreach, not aimed at any one individual or person, not any one person's children calling somebody else, but because it exists, we are able when something goes wrong to try to prevent it in the case of terror or quickly apprehend somebody, which happened in Boston.

So there is a balance to our civil liberties. I don't like the fact that I have to go through a metal detector to board an airplane. I don't like the fact that for ten years I have to take off my shoes. These are the balances that we as Americans have to decide whether we are comfortable to preserve our way of life, uncomfortable with these decisions? I am comfortable. I think they are safe and protect us.

BLITZER: I will let Jim Walsh respond with that. Go ahead, Jim.

WALSH: Yes, first of all, it would be great to see evidence for this. Senator Feinstein was asked can you name incidents that were stopped because of these laws. She was unable to name any of them. We need to know if they help in these cases, a terrorist attack would not have prevented, it was this and only this that would have saved the day. We can do all sorts of things if we want to stop terrorism.

You know, in other countries, I have been to North Korea. I have been to Iran. If someone commits a crime, they punish that person, kill them, imprison them and then they punished the families and tear family's families. So if all we care about is stopping crime, we can do all sorts of things, we don't live in a country like that. This is not about taking your shoes off. It's not about the Boston bombing.

That MIT cop was killed two blocks from where I work. I lived through this. I'm sitting in a studio in Watertown where this whole thing went down and to compare that to this is unacceptable in my view. Those under surveillance cameras did not say who they were. They did not say who they were talking to or who they knew or their community was. That is totally un-analogous.

FLEISCHER: The bottom line is --

BLITZER: Very quickly.

FLEISCHER: Those cameras are watching more than who did it. If you want to be pure about it, you have to shut down those cameras. It was because of that program we were able to be successful.

BLITZER: We're almost out of town, very quickly, Jim, I think the point that Ari is trying to make is those closed circuit cameras at the Boston marathon. They were filming everybody there, but they certainly help pinpoint the two suspects who were eventually identified thanks to those cameras. I guess the argument Ari is making is what the NSA is now doing with this metadata collection. They are going through a lot of stuff. They might be able to pinpoint some of that stuff and prevent another 911. A lot of folks say, you know what, if they can do that, fine.

WALSH: First of all, again, we have no evidence that that, in fact, is the case or these attacks couldn't be stopped through other information. I think this is deeply flawed. Those were cameras in a public space. The government is monitoring private phone calls, your children and my children's private phone calls and tracking who their associates are. Public under surveillance was not tracking names or who I was talking to and who I consider a friend or don't consider a friend. I think this is a stretched analogy.

I work in international security. This is what I do full time every day and I worked and I lived through the Boston bombing. I have written about terrorism. So I typed second to none in terms of concern about preventing terrorist attacks and reducing violence, but there is a way here and what I see is there has been no way.

The government is given a blank check to do whatever it wants, it has been doing it for seven years, no one knows about it. We are only finding out about it now. I don't see the balancing process is. I see it as people going off dock their own thing. BLITZER: Do you think the government should d be more transparent, Ari, let the American public see this, if, in fact, Mike Rogers, the chairman of the House Intelligence Committee is right and he says that a terrorist attack in the United States was prevented by all this NSA under surveillance, at least give us the evidence to back that up? Should we be entitled to that information?

FLEISCHER: Look, I think now this is out if public and being debated. There is a heavy burden on President Obama's shoulders to explain it. He needs to walk us through, this does balance civil liberties, why he authorize it and allowed it to take place, knowing, of course, this has been approved by three branches of government, the Congress, the judiciary and the executive branch. It was passed under the laws as the patriot act. The president does need to go forward and explain it. People don't know they have questions. It sounds scary. This is what a democracy should do. He should put it on the table. Work it through the public so the public comes to a deeper and better understanding of it.

BLITZER: I'm sure the president will be speaking out on this sooner rather than later. Guys, thanks very much, Ari Fleischer, Jim Walsh. I appreciate a good discussion as always. We will have a lot more coming up throughout the day, Christi, certainly, later today in "THE SITUATION ROOM" 5:00 p.m. Eastern as well.

PAUL: We are looking forward to that as always, Wolf, thank you so much.

Something else I know you are watching. In light of this week's news of dangers of gas tanks and jeep liberties, we will ask an automotive expert how you can tell if the car you are driving is safe.

(COMMERCIAL BREAK)