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THE SITUATION ROOM

Obama Offers "Grand Bargain" on Jobs; Bradley Manning Not Guilty of Aiding Enemy; Growing Pressure to Raise Wages; Money In Your Pocket...Or Job Killer?; Interview With Sen. Bernie Sanders; Interview With Sen. Rand Paul; What's Changed Inside North Korea; New Mystery at Richard III Burial Site

Aired July 30, 2013 - 17:00   ET

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


WOLF BLITZER, CNN HOST: Happening now, President Obama wants a grand bargain on jobs, including a higher minimum wage. We're going to get reaction from Senator Rand Paul of Kentucky, who is in the middle of a family feud in the Republican Party right now. And you may be surprised at who the senator is now calling, quote, "the king of bacon."

Plus, Private Bradley Manning found guilty in the WikiLeaks case, but not -- not guilty of the most serious charge.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

We begin with President Obama offering Republicans a new grand bargain, as he calls it, one the president says will grow good paying jobs for the middle class. Republicans already are complaining the president's ideas aren't new or grand.

Let's start with our chief White House correspondent, Jessica Yellin.

She's got the latest -- Jessica.

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Wolf, President Obama went to Tennessee to unveil this new proposal he's calling the grand bargain. But as you know, Republicans say it's not new and it's not grand.

(BEGIN VIDEOTAPE)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Well, tell me how this works.

YELLIN (voice-over): Touring this Amazon shipping and packing center in Tennessee, President Obama offered his seal of approval. The colossal online retailer is adding 7,000 new jobs nationwide, 5,000 at warehouses like this one.

OBAMA: And what have we got going here?

YELLIN: But all that's just window dressing for the president to deliver this message. OBAMA: If folks in Washington really want a grand bargain, how about a grand bargain for middle class jobs?

YELLIN: I know, another grand bargain already?

But wait, this one's different. There's no fast approaching deadline or late night negotiations yet.

OBAMA: And if Washington heads toward yet another budget debate, the stakes couldn't be higher.

YELLIN: We're in the pre-game and the president is trying to box in his opponent early.

OBAMA: We should be doing everything we can, as a country, to create more good jobs that pay good wages, period. Today, I came here to offer a framework that might help break through some of the political logjam in Washington.

YELLIN: So what's that framework?

OBAMA: A deal that simplifies the tax code for our businesses and creates good jobs with good wages.

YELLIN: Corporate tax reform in return for investment in programs that could create high wage jobs. It sounds like two proposals he's backed before.

In a statement, Speaker Boehner's spokesperson agrees, saying, "This proposal allows President Obama to support President Obama's position on taxes and President Obama's position on spending."

And Senate Minority Leader Mitch McConnell says the proposal --

SEN. MITCH MCCONNELL (R-KY), SENATE MINORITY LEADER: It doesn't exactly qualify as news. It's just a further left version of a widely panned plan he already proposed two years ago.

(END VIDEO TAPE)

YELLIN: Now, Wolf, the White House argues that it shouldn't matter whether these proposals are new, what should matter is whether they help Americans. And the White House argues they do.

So then the question is, why unveil this at an Amazon warehouse?

According to CNNMoney, Amazon pays their warehouse workers about $24,000 a year. That's just above the poverty line, hardly the high paying jobs the president is trying to create for the future, but they are creating some new jobs. You can't have everything -- Wolf.

BLITZER: All right, Jessica.

Thanks very much.

And we're going to get reaction to the president's address later this hour. Senator Rand Paul, he's got some strong views on that, strong views on some of the Republican comments about him, including Chris Christie. That interview coming up.

Now to the afternoon's verdict in the court-martial of Army Private First Class Bradley Manning. A military judge pronounced him guilty of most of the charges in connection with the largest leak of classified information in U.S. history. But Manning was found not guilty of the most serious charge, including aiding the enemy, which carries a maximum sentence of life in prison.

Let's bring in our senior legal analyst, Jeffrey Toobin -- Jeffrey, the charge was he gave intelligence -- classified information -- to the enemy, albeit not directly. Not guilty on that charge, the most serious charge.

Were you surprised?

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Not really. You know, what Manning is not -- has been known for months. The only issue is, what crime was he guilty of?

He's pleaded guilty to some crimes. He was charged with others, including this charge which is somewhat like treason. He was acquitted of that charge. That strikes me as a very reasonable decision by the judge. It seemed like an excessive effort by the prosecution.

But he still faces over 100 years in prison, so Bradley Manning is not going anywhere any time soon.

BLITZER: The sentencing phase will begin tomorrow. And it will be up to the judge to decide how many years in prison he will have to serve.

The whole notion, though, of the message, this not guilty verdict on this major charge, sends to others who -- potential whistleblowers, others who want to leak classified information to the news media, what is that message?

TOOBIN: Well, I don't think there is any message of leniency being sent here. He has been charged with an inc -- a wide variety of crimes, some of which he pled guilty to, some of which he was convinced of. And he is likely to go to prison, not for years, but for decades.

But I do think the message, if there was a message sent, was that the government has to use the statutes for the purpose for which they're intended. The law that he was acquitted of really involves helping the enemy in war time. And that was really not -- did not fit the crime here. And I think the judge was right to acquit him of it.

BLITZER: Do you think the verdict will impact Edward Snowden, the NSA leaker?

TOOBIN: I do. I think Snowden recognizes that this is what's in store for him. True, he might not be charged with the absolute maximum penalty. Eric Holder, the attorney general, has already said they will not be seeking the death penalty against him.

But he, like Manning, has admitted disclosing an enormous amount of classified information. And if he does return to the United States, he, too, is going to be looking at many, many years in prison. And as we've seen, he's doing everything he can to avoid coming back here to face that.

BLITZER: He certainly is.

All right, Jeffrey Toobin, thanks very much.

Up next, a nationwide push -- workers calling for a much higher minimum wage.

But will that help or hurt the overall economy?

A debate coming up, a major debate.

And later, a family feud in the Republican Party. You're going to hear who Senator Rand Paul is calling the king of bacon.

(BEGIN VIDEO CLIP)

SEN. RAND PAUL (R), KENTUCKY: To lead a nation, you need not only --

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: A lot of Democrats think the president's call for a higher minimum wage is long overdue. It stood at the $5.15 at the end of the Clinton administration. Then between 2007 and 2009, it was raised in stages, until it hit $7.25 an hour. It hasn't budged now in four years.

President Obama would like to raise it to $9 an hour. Some groups think it should be even higher and they're taking their demands to the streets right now.

Let's bring in Brian Todd.

He's got the latest on what's going on -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Wolf, part of this wave of protest is a fast food walkout. It's already occurred in New York, St. Louis and other places. More of them are planned for tomorrow.

With Congress unlikely to address the minimum wage any time soon, these protesters hope their actions will boost the story line and their flat-lining paychecks.

(BEGIN VIDEOTAPE)

(VIDEO CLIP)

TODD (voice-over): They walked off the job in New York. In St. Louis, they told McDonald's what it could do with its fare.

(VIDEO CLIP)

TODD: Fast food employees and their supporters say their wages, averaging less than $9.00 an hour, are too small to live on.

FRANKLIN LAPAZ, MCDONALD'S EMPLOYEE EARNING $7.25: Transportation, high taxes, food. Everything is just so like expensive here, especially rent.

TODD: For many, that pay is below the poverty line, supporters say, and an industry that earns billions can afford to pay workers better. These protesters are part of a nationwide movement to raise the federal minimum wage from $7.25 an hour to between $9 and just over $10 an hour.

Advocates say it would provide a much broader lift to the economy.

JACK TEMPLE, NATIONAL EMPLOYMENT LAW PROJECT: If we were to raise the federal minimum wage to $10.10 per hour, that would generate about $32 billion in increased consumer spending. You put money in the pockets of workers, they're going to spend it, often at the very establishments that they're working at. It's going to fuel a positive cycle.

TODD: Protests this week were planned in seven cities, calling for wages as high as $15 an hour for fast food workers.

(on camera): It could also drive up prices. This Big Mac cost me $3.99 before taxes. But if minimum wage went up to $15 an hour at a place like this, according to one study, the cost of a Big Mac would go up about $0.68 and a Big Mac Meal could jump almost $1.

(voice-over): The other risk, critics say, employers will hire fewer workers or won't expand into cities that need them. In DC, a proposal requiring higher wages at big box real retailers has Walmart saying it will cancel construction on three of its six new stores.

One conservative analyst says that would mean less construction at sites like this one and fewer jobs.

MICHAEL SALTSMAN, EMPLOYMENT POLICIES INSTITUTE: You lose out on those positions for those entry level employees, those teens who are filling those jobs, and maybe actually hurt those people you were intending to help who are living maybe in poverty.

TODD: And Michael Saltsman warns more employers could turn to automation instead of hiring.

(END VIDEO TAPE)

TODD: And he says they could do what the Chile's Restaurant chain is doing and cut out an entire segment of the workforce. In recent years, Chili's started to eliminate the bus boy position, instead, having servers do the bussing. Last year, a top official at Chili's parent company said that saved $25 million in labor costs -- Wolf. BLITZER: Brian Todd reporting.

Thanks very much.

So will raising the minimum wage help workers?

Will it kill jobs?

Independent Senator Bernie Sanders of Vermont would like to see the wage increase.

Economist and former Congressional Budget Office director, Douglas Holtz-Eakin, doesn't think it's a good idea.

Let's have a good debate right now.

And, Doug, let me begin with you.

What's wrong?

It's been four years, $7.25. Inflation has gone up. Cost of living has gone up.

What's wrong with raising the minimum wage?

DOUGLAS HOLTZ-EAKIN, FORMER DIRECTOR, CONGRESSIONAL BUDGET OFFICE: It sounds great until you ask the question, where does the money come from?

And when an employer has to pay that higher minimum wage and doesn't hire somebody as a result, you basically have said let's transfer money from the unemployed to the employed. I can't favor that.

BLITZER: What about you, Senator?

I know you disagree totally.

SEN. BERNIE SANDERS (I), VERMONT: You know who the major welfare recipient in the United States of America is, Wolf?

BLITZER: All right --

SANDERS: It's Walmart. Walmart Corporation, which is owned by the Walton family, which is the wealthiest family in America, worth some $100 billion, they are paying their workers $7.25 an hour, $8.00 an hour, $9.00 an hour, without benefits.

And you know who's subsidizing Walmart?

The taxpayers of America, because many Walmart workers and their kids are on Medicaid, they're on food stamps, they're in affordable housing.

HOLTZ-EAKIN: Well, Senator --

SANDERS: It is time for employers in America to pay workers a fair wage --

HOLTZ-EAKIN: Senator --

SANDERS: -- $7.25 an hour --

HOLTZ-EAKIN: -- the question --

SANDERS: -- is not a fair wage.

HOLTZ-EAKIN: -- the question becomes, who do you think you're going to help if you raise the minimum wage?

Everyone always thinks that this is an anti-poverty tool, but you're going to give the higher minimum wage to the children of affluent people like me.

Why don't we do something that's targeted on poverty if we're worried about --

SANDERS: Wait, wait, whoa, whoa --

HOLTZ-EAKIN: -- (INAUDIBLE)?

SANDERS: -- what are you talking about --

(CROSSTALK)

SANDERS: -- the children of affluent people?

(CROSSTALK)

SANDERS: The fact of the matter is --

HOLTZ-EAKIN: The minimum wage applies to everybody --

SANDERS: -- (INAUDIBLE) --

HOLTZ-EAKIN: -- and you know that.

SANDERS: That's right.

HOLTZ-EAKIN: So why don't --

SANDERS: (INAUDIBLE).

HOLTZ-EAKIN: -- we have a -- a policy that doesn't hurt jobs?

And let's face it, it's really hurt teenagers. That raise in the minimum wage in 2008 and 2009, you had 24 percent teenage unemployment rate.

SANDERS: OK.

(CROSSTALK)

SANDERS: All right, first of all -- HOLTZ-EAKIN: Forty percent of them black African-Americans.

SANDERS: -- first of all, let's --

(CROSSTALK)

SANDERS: Can I get a word in here?

HOLTZ-EAKIN: Let's be realistic --

(CROSSTALK)

BLITZER: All right, go ahead, Senator.

SANDERS: All right, let's be real.

HOLTZ-EAKIN: Yes, let's be real.

SANDERS: And the real factor is that most people who are working for low wages are not children. That's a bogus argument. The reality is that most low-wage workers are adults. And if you want to help kids, make sure their parents are earning a decent wage.

And by the way, let me take something a step further. Most Republicans now, Wolf, we have reached such a right-wing degree that most Republicans now, they're not only opposed to raising the minimum wage, they want to abolish the minimum wage.

(CROSSTALK)

BLITZER: Let me ask Douglas Holtz-Eakin, do you want to abolish the minimum wage?

DOUGLAS HOLTZ-EAKIN, AMERICAN ACTION FORUM: No, but I see no reason when the national unemployment rate is 7.6 percent, teen unemployment is 24 percent. And, to pick a tool that's likely to hurt job growth doesn't target the right people. This is not targeting on poor people. (INAUDIBLE) does that. We have lots of programs that do that.

And, which in the end, it does not answer the question where does this money come from? The setup was great. It said $32 billion in additional spending. But where does that money come from?

(CROSSTALK)

SANDERS: First of all, let's be clear. What we are seeing now and what raising the minimum wage would do. It's not only people going from 7.25 to $10 an hour. It's people going from $9 an hour to $9 an hour. The great crisis in our country today is income inequality. Top one percent is doing well (ph). Low income workers are doing terribly well.

Now, the gentleman here talks about the need for jobs. Look, I have a proposal, others have proposals to create millions of jobs in many areas including our infrastructure, putting out people back to work. Does our friend agree with that? No, it doesn't probably.

(CROSSTALK)

SANDERS: Let's ask the wealthy to stop hanging their fair share of taxes, put people back to work and raise the minimum wage.

HOLTZ-EAKIN: You and I both spend time in D.C. We know that it could stand a great deal downtown. How does the minimum wage proposal that drove Wal-Mart out of building six stores took low income D.C. residents out of low prices and out of those jobs help develop the center city?

SANDERS: First of all, I don't know what Wal-Mart will end up doing, but we cannot continue to be blackmailed just because they are the wealthiest family in this country. You tell me that you think it's right that their workers, their workers are supported by taxpayers in this country in terms of Medicaid, food stamps -- paying a living wage. You think that's right?

HOLTZ-EAKIN: Are you proposing that we take people off the social state camp because they're associated with a company you don't like? Is that really your proposal?

(CROSSTALK)

SANDERS: I'm proposing that the wealthiest family in this country, the Walton (ph) Family, that owns Wal-Mart, not be subsidized by the middle class in this country. They've got to start paying their workers a living wage, not starvation wages, provide health care to their workers, not allow them -- not enable them to go on Medicaid. That's what I'm proposing.

HOLTZ-EAKIN: If there was another company in America that wasn't run by the wealthiest family in America, do you think it'd be a good idea for them to raise the minimum wage? Does this work anywhere else?

(CROSSTALK)

SANDERS: Yes. Well, I think our friends at McDonald's and Burger King can start paying a decent wage as well. Bottom line is, in America, we have to have a principle --

HOLTZ-EAKIN: Where will the money come from? Because if you actually look at the numbers, McDonald's and Burger King are not thriving. These are not huge profit margins. It's not like they're sitting on piles of cash.

(CROSSTALK)s

HOLTZ-EAKIN: I understand that people would like to make more money. I'd love to make more money, you would. But you have to answer the practical question, where would it come from and at what cost? And it's going to hurt other low-income Americans. That's a bad idea.

SANDERS: My state of Vermont has, I believe, the third highest minimum wage in the country. It's $8.60 an hour. I want to see the national minimum wage at 10 bucks an hour. But Vermont has the third highest minimum wage in the country. You know what, we have the fourth lowest unemployment rate in this country.

So, this business that if you raise the minimum wage, all these jobs are going to disappear, historically, I don't believe that that's true and I don't believe it's true today. We have massive inequality in America, and it's time to ask the wealthy, "A," to start paying their fair share of taxes, "B," we need a massive jobs program and, "C," we need to raise the minimum wage. That's what we need to do to take -- to protect working families.

HOLTZ-EAKIN: You and I can agree on that. We need structural reforms that will actually get us that, there's no question. Throughout the better income and equality of United States is education and a decent savings system for private citizens and the minimum wage is the wrong tool for these problems.

BLITZER: A quick question and a quick answer to both of you. Doug, first to you, corporations, should they do more to help the workers who are making low-paid minimum wage? We checked. McDonald's CEO, Donald Thompson's, salary in 2012 was $13.8 million. That was the CEO of McDonald's. Is that fair, do you think?

HOLTZ-EAKIN: You know --

BLITZER: Because Bernie Sanders doesn't think it's fair.

HOLTZ-EAKIN: I'm sure he doesn't. And when you hear these big salaries, you have to ask yourself what responsibilities do they bear? And you know, if they make mistakes, what gets lost? Well, the answer is billions of jobs around the globe. And so, there is a market for those kinds of jobs.

I understand the pay looks outrageous, but I think the serious question is whether you want to continue to try to recreate the 1930s and make our corporations the vessels of the social welfare.

BLITZER: And a quick question to you, Senator, then we'll leave it. Are you willing to pay 68 cents more for your Big Mac if the minimum wage goes up if it's double?

SANDERS: We can talk about the health values of a about Big Mac on another time. But the issue is, I think, you touched on, Wolf, what you have is a CEO making $13 million a year paying starvation wages to his workers. That's unacceptable. The Wal-Mart situation is even worse. We need to make sure that nobody in this country is forced to work for starvation wages. We've got to raise the minimum wages.

BLITZER: Bernie Sanders, as usual, thanks very much. Douglas Holtz- Eakin, thanks to you as well. A good solid debate.

Coming up, TV, computers, even tablets all on sale inside one of the most mysterious parts of the world. Just ahead, CNNs Ivan Watson with a firsthand look at North Korea as you've never seen it before.

Plus, alarming new details about what the train driver was allegedly doing only seconds before that deadly crash in Spain. Lots of news happening today right here in the SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: All right. Let's take a quick at some of the other top stories in the SITUATION ROOM right now.

The driver of the Spanish train that derailed last week, killing 79 people, was on the phone with railway staff at the time of the crash, this according to court officials citing information from data recorders. The train was going 95 miles per hour when the accident happened, nearly twice the speed limit for that doomed curve.

Authorities have charged the driver with 79 counts of homicide and an undetermined number accounts of causing injury.

A fire official says equipment failure and human error are likely what caused propane tank cylinders to explode at a Central Florida refilling plant. The blast which one witness said felt like bombs going off injured eight plant workers. According to police, no one else was hurt. An earlier evacuation order for the area has since been lifted. More than 50,000 20-pound cylinders of propane were at that facility.

Health officials in Nebraska and Iowa have linked a recent outbreak of an intestinal infection to prepackage salad mixes. There have been 78 cases of the infection reported in Nebraska, another 143 cases in Iowa. According to the CDC, a total of 372 cyclospora cases as they're called have been reported across 15 states and New York City

Believe it or not, there's plenty of news today about the 2016 presidential race. Guess who had breakfast together this morning? Here's a hint, they didn't even release a picture of it, but we'll have the latest. That's coming up.

I'll also be joined by Senator Rand Paul of Kentucky. He's calling one of his potential Republican rivals the king of bacon.

(COMMERCIAL BREAK)

BLITZER: Happening now --

(BEGIN VIDEO CLIP)

BLITZER (voice-over): A family feud in the Republican Party. You're going to hear who Senator Rand Paul is calling the king of bacon. He's here in the SITUATION ROOM. Senator Paul, my interview, coming up,

Plus, shopping for TVs, computers, even tablets inside one of the most mysterious parts of the world. We're going to show you a side of North Korea you have never seen before.

And an extraordinary discovery in a parking lot just a few feet from where the long lost remains of England's King Richard III were found.

I'm Wolf Blitzer. You're in the SITUATION ROOM. (END VIDEO CLIP)

BLITZER (on-camera): Hillary Clinton continued eating her way through the political headlines today. She followed up on Monday's lunch with President Obama by having breakfast with Vice President Joe Biden this morning. Since plenty of people think 2016 is on both of their menus, let's bring in our national political correspondent, Jim Acosta. He's been looking into the menu, shall we say. What are you finding out?

JIM ACOSTA, CNN NATIONAL POLITICAL CORRESPONDENT: Talk about a power breakfast, Wolf. That's right. And about that breakfast, people close to both Hillary Clinton and Joe Biden like to say the two are close friends. But there are more than enough signs that both of these friends want the same job promotion.

(BEGIN VIDEOTAPE)

ACOSTA (voice-over): It was a meeting so cloaked in secrecy that both aides to Joe Biden and Hillary Clinton would only disclose what they had for breakfast at the vice president's home. But on CNN's "NEW DAY," former Clinton strategist Paul Begala said that doesn't mean Democrats should be walking around on eggshells.

PAUL BEGALA, FORMER CLINTON STRATEGIST: They are actually friends, and they do get together.

ACOSTA: Still, Clinton's meals with both Biden and the president are fueling more speculation she's announcing another run for the White House.

UNIDENTIFIED MALE: We're putting together a lot of envelopes with bumper stickers. We've had 65,000 requested across the country.

ACOSTA: She's already inheriting a volunteer army in form of the staffers and volunteers over at the independent Ready for Hillary Super PAC --

UNIDENTIFIED FEMALE: I jumped at the chance, and I'm here.

ACOSTA: -- who sprang out of nowhere in recent months and just announced they've raised more than a million dollars this year to support a Clinton 2016 campaign.

SETH BRINGMAN, READY FOR HILLARY PAC SPOKESMAN: We don't know what's going to factor in. We do believe if she knows the support she has, if she knows how many people are behind her, how could you say no?

ACOSTA: Biden has repeatedly hinted he also has his eyes on the presidency, recently telling "GQ" magazine, "I can die a happy man never having been president of the United States of America, but it doesn't mean I won't run."

There is one potential complication for Clinton in the form of her long-time aide Huma Abedin, whose husband Anthony Weiner is running for mayor of New York City despite his history of sexting raunchy pictures to other women. Abedin was spotted having dinner this week with another top Clinton aide, Phillipe Reines, at the popular D.C. Chinese restaurant Ni Wa, where the owner, Larry Lah, has welcomed the political elite for years.

ACOSTA: Would you like to see the Clintons be back, back in the White House?

LARRY LAH, RESTAURANT OWNER: Well --

ACOSTA: What do you think?

LAH: That's very political question.

ACOSTA: At that moment, the owner spotted Reines making a return visit.

LAH: Had to come back. You see who's that guy come in?

ACOSTA: Reines declined to talk on camera about the dinner but reiterated what others in Clinton world are saying about the Weiner saga.

BEGALA: This is personal, this is not political. We love Huma, and she's going through pain.

(END VIDEOTAPE)

ACOSTA: Democrats still like how they stack up in 2016 against Republicans who are having their own internal battles, like the one between New Jersey governor Chris Christie and Kentucky senator Rand Paul over domestic surveillance and other issues. And then there's the growing sense among key Democrats that if Clinton runs, Biden won't.

BLITZER: A lot of people believe that. Jim Acosta reporting for us. Thanks very much.

And as Jim just mentioned, those Republicans internal battles are heating up, including one of the favorites of the Tea Party, Senator Rand Paul and the New Jersey governor, Chris Christie.

(BEGIN VIDEOTAPE)

BLITZER: And Senator Rand Paul of Kentucky is joining us right now. He's a member of the Foreign Relations Committee, Homeland Security, Government Affairs. He's got a busy job up there on Capitol Hill.

Senator, it looks like the war of words between you and Governor Christie heating up once again today. I want you to listen to what the New Jersey governor said about you today.

(BEGIN VIDEO CLIP)

GOV. CHRIS CHRISTIE (R), NEW JERSEY: So if Senator Paul wants to start looking at where he's going to cut spending to afford defense, maybe he should start looking at cutting the pork barrel spending that he brings home to Kentucky, um, at $1.51 for every $1.00 and not look at New Jersey, where we get $0.61 for every $1.00. So maybe Senator Paul could -- could, you know, deal with that when he's trying to deal with the reduction of spending on the federal side. But I doubt he would, because most Washington politicians only care about bringing home the bacon so that they can get reelected.

(END VIDEO CLIP)

BLITZER: All right, so are you going to take his advice, Senator?

SEN. RAND PAUL (R), KENTUCKY: This is the king of bacon talking about bacon. You know, we have two military bases in Kentucky. And is Governor Christie recommending that we shut down our military bases? He wants to be this great champion of national defense. What does he want to do, shut down military bases in Kentucky?

No, what this debate really is about is that in order to have enough money for national defense, which I think is a priority for the government, you have to be willing to cut spending in other places. And Governor Christie and others have been part of this gimme, gimme, gimme, gimme all this money.

And the thing is is that we could have done the relief for Sandy in a responsible way. I proposed that we do it year by year, $9 billion in the first year. And I would have offset that with spending cuts in foreign aid. I think we can take care of our country after a national disaster, but only if we're not sending billions to Egypt and Pakistan.

So really, the question is, where is the money going to come from that the governor wants? Gimme, gimme, gimme, all this federal money, but where is it going to come from if he's not willing to cut anywhere?

I am willing to cut. So for him to accuse me of pork barrel spending, I'm probably the most fiscally conservative member of Congress. I have a budget that balances in five years and I actually am allowed and able to provide some money back for the military and avoid the sequester because I eliminate several departments of government.

He's making a big mistake picking a fight with other Republicans, because the Republican Party is shrinking in -- in New England and in the Northeast part of our country. I'm the one trying to grow the party by talking about libertarian ideas of privacy and the Internet. And attacking me isn't helping the party. He's hurting the party.

BLITZER: He's obviously angry at you for twice voting against the supplemental assistance package to New Jersey residents as a result of the Sandy super storm, as you will, even though you -- you would support federal assistance to Kentucky residents who suffer from a tornado or from a flood, for example.

PAUL: Well, where he's mistaken is, is that I did vote for Sandy assistance. I voted to make it year by year. I had my own amendment, in fact, to Sandy, which would have given it year by year, which would have had adequate oversight, which would have eliminated, you know, fisheries in Alaska and all of the other pork barrel stuff they stuck on the bill. BLITZER: Are you willing to take the same position, Senator, when it comes to emergency assistance --

PAUL: Absolutely.

BLITZER: -- to residents of Kentucky?

PAUL: Absolutely. If we have a disaster in Kentucky, I'll vote for the aid, but I will vote to offset the aid with spending cuts from another part of the budget.

BLITZER: He went after you the other day, earlier, by suggesting that you were only interested in what he called these esoteric debates.

Here -- I guess here's the question.

PAUL: (INAUDIBLE).

BLITZER: Are we on the --

PAUL: (INAUDIBLE).

BLITZER: -- are we on the eve of a -- of a Republican contest right now, for the prop -- for the presidential nomination, let's say, between you and Christie?

PAUL: You know, who knows?

I -- what I would say is that I want to grow the party bigger. And so I don't think The Bill of Rights is esoteric. I don't think the Fourth Amendment is esoteric. And I think the idea that we should have a right to privacy is not esoteric to a lot of people in our country.

Ask, uh, any people who have cell phones whether they want the government to willy-nilly be going through all of their records without a warrant. I think most Americans would say hey, I'm OK with spying on terrorists, but I'm not so excited about them spying on Americans.

So I think he's on the wrong side of history here. And I think they're getting desperate because, actually, our movement within the Republican Party is growing and the old stale, moss-covered, you know, let's go bomb everybody into oblivion, that kind of attitude in the Republican Party, I think, is actually shrinking.

BLITZER: Well, Peter King, the congressman from New York, who's also thinking of running for the Republican presidential nomination, he goes after you on many of the national security and international issues. And he -- he said this. I'm going to play the clip and then you can -- you can respond.

(BEGIN VIDEO CLIP)

REP. PETER KING (R), NEW YORK: He said the party will go in the right direction, the country will go in the right direction and we can have a healthy debate with two legitimate candidates, not the fringes, like Rand Paul in, uh, 2016.

(END VIDEO CLIP)

BLITZER: Fringes --

PAUL: Yes --

BLITZER: -- that's what he's calling you.

PAUL: Well, what I would say is, you know, it's a similar wing of the party, if not the same of the wing of the party. It's the tax-and- spend liberal wing of the Republican Party. They're all for blowing up stuff. They're all for getting involved in wars. But they're not too conserved with -- concerned with fiscal responsibility and balanced budgets.

There's nobody up here who's more fiscally conservative or who's produced more balanced budgets than I have.

And I also, in doing so, have set out that national defense is the number one priority of our country. It is constitutional. And I've said absolutely, without question, I'll do everything within my power to save money in other parts of the budget in order to have a strong national defense.

(END VIDEOTAPE)

BLITZER: We'll going to hear much more from Senator Rand Paul in just a minute. I'll ask him if he's willing to accept President Obama's so-called "grand bargain" on jobs and taxes.

And later, I'll compare my trip to North Korea with the CNN correspondent Ivan Watson, who is just back from a rare visit himself. So, has anything changed over the past two-and-a-half years?

(COMMERCIAL BREAK)

BLITZER: Now more of my interview with Senator Rand Paul of Kentucky, including his reaction to a new offer to Republicans today from President Obama.

(BEGIN VIDEOTAPE)

BLITZER: I want you to respond to what the president said today in Chattanooga about a grand bargain. Listen to this.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: So, again, here's the bottom line. I'm willing to work with Republicans on reforming our corporate tax code as long as we use the money from transitioning to a simpler tax system for a significant investment in creating middle class jobs.

(APPLAUSE)

OBAMA: That's the deal.

(END VIDEO CLIP)

BLITZER: Are you with him on that deal?

PAUL: Well, you know, I've got a counter-proposal for him. I've -- I've said that we should reduce the taxes on corporations doing business overseas. And I'm willing to put all that money into infrastructure.

If we would tax corporations at five percent on their foreign profit, let them bring it home and put that tax revenue into the transportation fund, I have an amendment that would do that. If he'll come to the Hill today, he could help me pass my amendment, and it would double the amount of money left over for infrastructure. And I think that would be a great thing for the nation.

I don't see him coming to us on these issues. Lowering the corporate income tax is good, but if he wants to expand government, government is already too big. We have a trillion-dollar deficit.

I'm willing to lower the corporate income tax. It's absolutely the right thing to do. But we shouldn't have to trade something really bad, like expanding government. I don't know what he means by helping the middle class. I want to help the middle class. Lowering the corporate income tax would help the middle class. So if that's what he's for, I am. But I have no idea what his speech making means (INAUDIBLE) --

BLITZER: I -- I think what he wants to do is spend more money in investments to help the middle class. That's the -- the main point of his speeches over the past few days.

But let me -- get your thoughts -- you and a few other Republican senators came out with a new initiatives -- initiative today to help poor minority students, uh, get into charter schools, if you will, have a little -- uh, move away from some of the public schools. What exactly are you seeking?

PAUL: Well, I'm excited about school choice. I think every kid in Washington, D.C. should have the same choice that the president has for his children.

The president has a lot of money so he can send his kids to a very elite private school in D.C. I think a poor kid in the poorest neighborhood in D.C. should have the same choice. And so I would let them have vouchers.

And I would hope that the president would come out and say that it can only be fair that every kid in the community should get the same choice that his kids get. So I think vouchers that let kids choose where they go to school would be great. I'm for attaching Title 1 funds, the federal money, and saying let the kid take that to the school of their choice.

I'm for charter schools which are public school are able to have more innovation. So I'm for all of the above on school choice.

BLITZER: Senator Paul, thanks so much for coming in.

PAUL: Thanks, Wolf.

(END VIDEOTAPE)

BLITZER: Coming up, shopping for TVs, computers, even tablets inside North Korea of all places. It's a side of this mysterious nation you've probably never seen before.

Plus an extraordinary discovery in a parking lot just a few feet from where the long lost remains of a king stood.

(COMMERCIAL BREAK)

BLITZER: North Korea certainly one of the most mysterious and reclusive parts of the world. I got a rare opportunity to go there about two and a half years ago.

Our senior international correspondent Ivan Watson was just there. Take a look at some of what he saw.

(BEGIN VIDEOTAPE)

IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT (on camera): This is the first time we've been brought to a shop here in Pyongyang. There are optometrists here fixing glasses. And this store has a remarkable variety of goods for sale.

Look over here. There's stationery and makeup on this side. More glasses over here. We've seen customers coming in. And we're going to swing around to the high-tech side of things. A lot of TVs for sale. This is a famous North Korean girl band being displayed on the television here.

We've got some portable computers, some tablets as well. Apparently for sale. And something that really came as a surprise for us, there is a certain kind of cash card here in North Korea that has been exhibited to us. I had no idea there was anything like that working here.

We don't know who exactly gets to come and shop typically of the North Koreans in a store like this, but if they need it, there are diesel generators for sale as well as Honda motorbikes.

I'm now taking pictures of the Arch of Triumph with my cell phone. And this is something that's completely new, completely new for foreign journalists traveling to North Korea. Our cell phones were not taken away from us. In fact, we were allowed to purchase local SIM cards that provided data access. So we were able to tweet photos out and send out pictures as well. And that's completely new for foreign visitors.

However, it's very important to note that while we're seeing that North Koreans have cell phones, they do not have any access as far as we know, ordinary North Koreans, to either e-mail, Internet, or international calls.

(END VIDEOTAPE)

BLITZER: And Ivan Watson is joining us now. He's outside of North Korea, back in Istanbul, Turkey.

Ivan, a fascinating trip. We covered your visit there every step of the way. Some major changes. When I went there, they confiscated cell phones, all that stuff, as soon as you got to that airport.

There you see picture of me at the Pyongyang airport.

Did they explain why all of a sudden they're letting reporters come in with cell phones?

WATSON: No -- no, not at all. And that's part of what I guess -- it's like North Korea, is that there are a lot of decisions that are made, sometimes they seem arbitrary, sometimes not. And very little explanation as to the reasoning or the reasons why behind it. For instance, every day our trips were very strictly controlled.

And we would only find out minutes before we'd get on the bus where it is we'd be going and what it is that we would be seeing. Even when these were major organized government events. They just were not really telling us a lot during these couple of days that we were in the country.

BLITZER: I take it they gave you no opportunity to get close to the new leader Kim Jong-Un. This was no opportunity like, for example, Dennis Rodman, the former NBA star. He hung out with Kim Jong-Un. The journalists who were allowed in in the past few days, you were kept pretty far away, right?

WATSON: Initially we weren't even allowed to film him. But that changed as the days progressed. And we started Kim Jong-Un at events after government event commemorating the end of the Korean War. And then at one moment, I mean, this was kind of odd. He had just opened a new museum that he had built. It looked like a multimillion-dollar installation dedicated to the history of the Korean War or the North Korea's version of that history.

And while I was kind of wandering the halls looking for a bathroom, suddenly I came across Kim Jong-Un about a distance of 15 to 20 yards from me walking directly towards me. It was the last thing I expected to see after all of this government control, after these security guards really treated us like children and pushed us around for the previous days.

And I ran to get our camera man David Holley who managed to get his camera up in time and this appeared to be a new thing, certainly for a North Korean leader taking a tour right through a gaggle of foreign journalists. Someone called out a question to him, what is your message for the rest of the world. He declined to answer, but he did get very up close and personal with the camera lens for a period of about 20 seconds. And that was really unprecedented for a North Korean leader -- Wolf. BLITZER: Interesting stuff. Good work in North Korea. I know you enjoyed the visit. We'll see what comes next on the Korean Peninsula.

Ivan Watson reporting for us.

Just ahead at the top of the hour, a jumpstart for Middle East peace talks here in Washington with U.S. hopes for a major deal in a matter of months. But is that a realistic goal? I'll ask the Israeli ambassador to the United States.

Plus an extraordinary discovery in a parking lot just a few feet from where the long lost remains of England's King Richard III were found.

(COMMERCIAL BREAK)

BLITZER: An extraordinary discovery in a parking lot just a few feet from where archaeologists found the long lost remains of England's King Richard III. Now they found a mystery coffin.

Here's CNN's senior international correspondent Dan Rivers.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: What we're about to tell you is truly astonishing.

DAN RIVERS, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): This was the moment the world learned that this skeleton found in a parking lot in the English city of Lester was King Richard III. The last English monarch to die on the field of battle in 1485.

UNIDENTIFIED MALE: Now is the winter of our discontent.

RIVERS: Immortalized by Shakespeare, popularized by Sir Laurence Olivier. Now a sword throw away from Richard's final resting place, another burial. This time a stone coffin. Inside alleged casket. The whole thing shrouded in mystery.

RICHARD BUCKLEY, PROJECT MANAGER, UNIVERSITY OF LEICESTER: This coffin is actually lined in front of a high alter and so it's probably a very high status burial. There are three potential candidates. Two of them are called provincials who are heads of the Grey Friars of England. One of them is Peter Swynsfeld and William of Nottingham. The other possibility is it's somebody called William de Moton of Pendleton, a village in Leicester.

RIVERS: None that names the tip of the tongue like Richard III, although if this burial contains organic material, it might be a treasure-trove of scientific information about the medieval world. But it's Richard III's discovery that's really captured the world's imagination. His bones are still being carefully tested for clues about his life.

BUCKLEY: At the moment Richard is still at an undisclosed location in the university as we finish all of the scientific analysis associated with this discovery. And the plan next year, in May of next year, we hope, the remains will be handed over to Leicester Cathedral for the reburial there.

RIVERS: His reconstructed face, a window onto the past from the grave that continues to yield incredible discoveries after hundreds of years forgotten under an English city.

Dan Rivers, CNN.

(END VIDEOTAPE)

BLITZER: Also out of Britain, by the way, the new royal baby, Prince George Alexander Louis, may soon have a nickname. According to reports, his grandfather Prince Charles hinted the week-old heir to the British throne may soon be called Georgie.