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THE SITUATION ROOM

Michelle Obama Turns 50; Credit Card Alert; California Drought

Aired January 17, 2014 - 18:00   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now: state of emergency. An epic drought is fueling the wildfires and fears millions of people could be affected by the driest and most dangerous conditions in a century.

Plus, credit card alert. After the Target fiasco, other retailers are being warned that their systems may have been hacked as well. Is the security breach even bigger than we know?

And flaunting 50. On Michelle Obama's milestone birthday, the first lady is ready to prove she still knows how to party.

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

First this hour, crisis in California unfolding right now. There's new and growing danger that many more wildfires will break out. The governor declared what's described as a drought emergency today saying this may be the state's worst drought in a century. Right now, hundreds of firefighters are battling a blaze in the Los Angeles area, a blaze that forced several thousand people to evacuate.

CNN's Kyung Lah is joining us from the fire zone right now with the very latest.

What is the very latest, Kyung?

KYUNG LAH, CNN CORRESPONDENT: Well, the very latest is that they are still fighting this. Wolf, if you want to know the true danger of a drought, all you have to do is take a look at this. This is one of the five homes that was destroyed here in this fire in California.

The combination of record low rain, winds, low humidity made this ripe for fire. This was a two-story building that completely collapsed. That's why the state is calling this an emergency.

(BEGIN VIDEOTAPE)

LAH (voice-over): This is what California's drought looks like. The driest year in a century meant a flame-friendly canvas for the Colby fire, 1,700 acres charred, thousands evacuated, five homes gone in an instant. The drought, declared the governor, has plunged California into a state of emergency.

GOV. JERRY BROWN (D), CALIFORNIA: We are in an unprecedented, very serious situation and people should pause and reflect on how dependent we are on the rain, on nature and one another.

LAH: In a state of emergency speech, the governor asked everyone to cut back water use by 20 percent. His declaration does lift some environmental restrictions to allow the state to move water to parched regions more easily.

The challenge? There's not much to share among the state's 38 million residents. Reservoir levels are at record lows, snowpacks this season, 80 percent lower than normal. Los Angeles got just over three inches of rain in all of 2013, about a quarter of what's normal.

More firefighters will be hired and they're on alert for this dangerous drought. As for the Colby fire that's still burning, it started as an accident. Police say these three men set an illegal campfire. They and their attorneys couldn't be reached for comment. The fire rapidly exploded out of control. The challenge for firefighters, more dry winds and a forecast without any rain stretching on into the weekend.

(END VIDEOTAPE)

LAH: To give you some perspective, take a look at these two pictures of California. The one on the left is last year. The one on the right is today. You can see how much more green the picture is on the left vs. the one on the right.

Now, back here live, if you take a look at the hillside itself, you see that brown hillside? That's not burnt. That's what the vegetation looks like here in California. It is normally green this time of the year. Certainly, these firefighters are stating it has been and it will be a very long fire season -- Wolf.

BLITZER: Not happy to hear that. Good luck to all the folks out there. Thanks very much, Kyung Lah.

Here in Washington, the United States Supreme Court is getting ready to take on a major case, a major review of cell phone privacy. The question before the court, do police need a warrant to search phone data of a person under arrest?

Let's bring in our senior legal analyst, Jeffrey Toobin.

Explain the arguments here, what's going on, because almost everyone does have a cell phone.

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Many Supreme Court arguments seem very abstract and off in the clouds. This is such an easily understood case, because it's just obvious. Here you go, you're arrested, right? Everybody knows when you're arrested, you can be patted down for weapons. You can see what's in your pockets, if you're carrying money.

But like most people, the defendant in this case was carrying a phone. And the officers searched the phone. He had been stopped for driving without a license, but they found evidence, photographs linking him to an attempted gang murder. And he's now doing 15 years. And you think about what's in our phones, e-mails, texts, photographs, videos. There are whole lives in there. So it's a really big important question about whether the police need a warrant or they can just search the phone as soon as you're arrested.

BLITZER: There's no question, if they had a warrant, they could search the phone, right?

TOOBIN: Absolutely.

BLITZER: The only question is if you need a warrant to go ahead and search the smartphone. Is this the first case that the Supreme Court is hearing involving smartphones?

TOOBIN: Not exactly. There have been cases involving texts, involving pagers. You know, it's funny how quickly the technology changes.

There was a case a couple of years ago involving pagers. Nobody uses pagers anymore. And the justices weren't exactly sure what a pager was. There was a case last year about putting a tracking device on a car. This is how technology always reaches the court. And, you know, what's interesting about a court where, you know, most of the justices are pretty old. They're often unfamiliar with this concept. But even, I think, understand what a smartphone is at this point.

BLITZER: What kind of precedent might this set?

TOOBIN: Well, this is an enormously important case, because, you know, this is going to involve searches of individuals all over the -- every time they're arrested, because most people in this country carry cell phones. And the question of whether you can go through it right away or do you have to wait for a warrant, that's come up in a lot of cases. The courts are sort of all over the place. The Supreme Court will settle this once and for all.

BLITZER: We will know before the end of June, before they go into their summer break. Right?

TOOBIN: Indeed, before the end of June.

BLITZER: What other cases are you looking at right now?

TOOBIN: Well, there's not super-blockbusters like there were last year with the DOMA case and the same-sex marriage case. There's a very important campaign finance case, sort of a son of Citizens United.

There's a case that was just argued about whether the president can make recess appointments and under what circumstances. There's a case about abortion protesters, how close they can be restricted. But they're still adding cases this year. And so you never know. There could be a big one on the horizon.

BLITZER: You never know, for example, if those cases in Oklahoma and Utah that have just come up involving same-sex marriage, if they may eventually go all the way up to the U.S. Supreme Court. They haven't yet, but they might.

TOOBIN: You know, it's seeming more and more likely that the Supreme Court is going to have to decide, do all 50 states have to allow same-sex marriage? And that will be a very big case.

BLITZER: And you will be watching it together with all of us.

TOOBIN: I will.

BLITZER: Jeffrey, thank you.

Still ahead, there are growing concerns that Target was just the tip of the iceberg. Stand by for a new warning from the government about hacking and the threat to your credit card information.

And two political veterans are duking it out on the ultimate campaign battleground. You're going to find out why the Florida governor's race may be the contest to watch this year.

But, first, an Academy Award-winning actor who's impacting your world.

(BEGIN VIDEOTAPE)

CHRIS CUOMO, CNN CORRESPONDENT (voice-over): This celebration in India has a very special guest, Matt Damon. But the Oscar-winning actor isn't the big news of the day. The new water pump is stealing the spotlight. And Damon's charity made it happen. Water. org helps bring water and sanitation to those in need.

MATT DAMON, ACTOR: Water really underpins everything. Every 20 seconds, a child dies because they lack access to clean water and sanitation. Every 20 seconds.

CUOMO: This hits home for Damon, who has four daughters.

DAMON: Once you have kids, it's impossible not to see their face in every child you see.

CUOMO: Water. org provides small loans to help people get access to water.

DAMON: People were paying money for water already. Sometimes 15, 20 times what you or I pay for our water, right, to a local water mafia. If you can just front them the money to connect to the municipality, so if you'd give them their time back so they could work at their job and pay the loan off.

They are now in control of their destiny in a way that they weren't. So it's not only about the millions of children who actually die every year, it's about the quality of life that somebody can have if they have access to clean water.

(END VIDEOTAPE)

BLITZER: A new warning that another massive hacking fiasco like the one at Target could soon be unfolding. In fact, it might be unfolding right now. There may be good reason for you to worry about using your credit cards when you shop.

CNN's Rene Marsh is here in THE SITUATION ROOM with these shocking details.

What have you learned?

RENE MARSH, CNN CORRESPONDENT: Well, you know what? I'm guilty of it, almost never have cash, always using the credit card.

But you know what? Consumers may really want to think before they swipe. The federal government has an urgent call out to all retailers across the country to be on high alert. The reality is other retailers' systems may have been hacked, too.

(BEGIN VIDEOTAPE)

MARSH (voice-over): Up to 110 million Target customers' personal information may have been compromised. As staggering as it is, it may only be the tip of the iceberg.

The Department of Homeland Security this week warned retailers nationwide to be on high alert as they investigate what experts call the largest hack against retailers. And experts say the attacks are not over.

JOHN WATTERS, CHAIRMAN AND CEO, ISIGHT PARTNERS: When we have seen these types of attacks before and they create their attack methods and all the associated tools, they don't just target one or two companies. They say, how many companies are susceptible to this? Let's go after all of them.

MARSH: John Watters' company, iSIGHT, is helping federal investigations analyze the sophisticated malicious software that has infected credit card scanners.

WATTERS: What makes this unique is very well-executed and orchestrated, get on a point of sale system, get access to the credit card before it is encrypted, get that information out of your environment without being detected.

MARSH: And for that reason, many retailers may not even know their credit card scanners are infected; iSIGHT says part of the code they named Kaptoxa was written in Russian, suggesting whoever wrote it speaks the language.

Cyber-security consultant David Kennedy says it has all the signs of the Russian mob.

DAVID KENNEDY, FOUNDER, TRUSTEDSEC: Russia's organized crime market is the largest even in Eastern European areas. It's the largest market that they have there because they have a lot of the advanced technology. They have a lot of extremely intelligent people working in the black market. And it's a very profitable area for them. (END VIDEOTAPE)

MARSH: Right.

Well, many of these cyber-experts say hackers are targeting the U.S. more than ever and will continue to because the rest of the world has moved to what's commonly called chip cards, similar to the one I have right here. And this chip right here, it ensures that your data remains encrypted.

Different from what we see on the majority of credit cards here in the United States -- you usually just have that magnetic strip and it's much easier to skim off the personal information that way.

BLITZER: Yes, I'm worried, like I'm sure a lot of people are worried right now. Let's hope they can fix this and fix it quickly.

Rene, thanks very much.

Now to one of the most important and colorful political races of the year. We're talking about the battle for Florida governor. This will certainly get a lot of attention this weekend when the Republican incumbent, Rick Scott, gets some fund-raising help from a controversial Republican superstar. We're talking about New Jersey Governor Chris Christie.

Our senior Washington correspondent, Joe Johns, is here with more on this race that keeps getting more interesting.

What's going on?

JOE JOHNS, CNN CRIME AND JUSTICE CORRESPONDENT: It really does, Wolf.

Chris Christie is one of many nationally known politicians who will be making the trip to Florida this year to try to help out in a race that's likely to feature two of the most fascinating characters in American politics.

(BEGIN VIDEOTAPE)

JOHNS (voice-over): Incumbent Governor Rick Scott and the likely Democratic challenger, former Governor Charlie Crist, are facing off in the mother of all battleground states, famous for close elections and hanging chads.

This race is the one to watch in 2014.

NATHAN GONZALES, THE ROTHENBERG POLITICAL REPORT: I think the race in Florida is going to be one of the most expensive, one of the nastiest, one of the highest-profile state races that we will be looking at even at the national level.

JOHNS: Scott and Crist have a lot in common. Both have lived in the governor's mansion. Both know how to irritate their voters. The sitting governor, Scott, did it by supporting things like purging voter rolls, drug-testing of welfare recipients, cutting spending for the poor, though for Scott this race is about the economy, which has improved since he took office.

GOV. RICK SCOTT (R), FLORIDA: I work every day trying to get jobs going, improve education. So, I like to try and solve problems each and every day.

JOHNS: Crist switched parties. He's now a Democrat, was once the Republican governor here. Under his watch, the job market tanked. This hug with President Obama irritated conservative voters and:

NARRATOR: Today, too many politicians embrace Washington's same old broken ways.

JOHNS: It came out to haunt him in attack ads the last time he ran for office.

CHARLIE CRIST (I), FORMER FLORIDA GOVERNOR: I'm excited about running for governor, really excited about it.

JOHNS: It won't be a cakewalk for Crist. After switching parties he's now switched his stance on gay marriage, apologizing for opposing it. Both candidates are polling at under 50 percent. Both have high unfavorable ratings, leaving many to have to choose between who they like the least.

GONZALES: I think that the Democratic distrust and disdain and hate for Rick Scott will probably trump some of the distrust they might have for Charlie Crist.

JOHNS: Scott has pledged to spend huge sums of his own money was earned in part at a health company which was slapped with enormous fines for fraud after he left.

ADAM SMITH, "THE TAMPA BAY TIMES": Rick Scott will probably spend $100 million basically making Charlie Crist so unpalatable that Charlie Crist won't want to vote for himself by the end.

(END VIDEOTAPE)

JOHNS: So, why should the rest of America even care about the Florida race? Because whatever happens there will likely be a blueprint or at least a template for the presidential election next time in 2016. Florida is always a factor.

BLITZER: Yes, a lot of electoral votes in the state of Florida, third largest, right?

JOHNS: Absolutely, third largest.

BLITZER: New York, what is it, Texas, California. Florida, fourth largest maybe.

JOHNS: Yes.

BLITZER: All right, thanks very much for that. Maybe it's third. Maybe it's getting bigger. We will check.

JOHNS: Yes.

BLITZER: Thank you, Joe. Thanks very much.

Other news we're following, Secretary of State John Kerry is getting ready for another challenging diplomatic mission. He will fly to Geneva, Switzerland, next week to try to reach a political solution to the Syrian civil war.

Let's bring in our foreign affairs reporter Elise Labott.

A political solution to this civil war, it sounds like mission impossible, Elise.

ELISE LABOTT, CNN FOREIGN AFFAIRS CORRESPONDENT: It does, Wolf. And already the administration is lowering expectations. If you remember, they wanted to try to get a post-Assad government at this conference. Now they're just talking about getting the regime and the opposition in the same room talking about things like maybe a local cease-fire, agreement on delivery of humanitarian aid, maybe some prisoner exchanges.

Take a listen to Secretary of State John Kerry today now talking about Geneva now being the beginning of a process.

(BEGIN VIDEO CLIP)

JOHN KERRY, U.S. SECRETARY OF STATE: It will become clear that there is no political solution whatsoever if Assad is not discussing a transition and if he thinks he's going to be part of that future. It's not going to happen. The people who are the opponents of this regime will never, ever stop.

(END VIDEO CLIP)

LABOTT: Wolf, if you will take a look at the situation on the ground, the opposition is on the verge of collapse.

They haven't even agreed yet to come to Geneva, let alone who to send. The regime is talking about -- not talking in Geneva about a political transition, but fighting terrorism and these jihadi groups that are gaining large swathes on the country, so Assad feels more powerful than ever. It's really hard to see how they can make progress at Geneva no matter what Secretary Kerry says.

BLITZER: What about Iran's participation, Elise? A lot of folks obviously know that Iran is backing the Bashar al-Assad regime. That potentially is very significant.

LABOTT: The United States and the conveners of the conference have said that Iran had to agree on the principles of this conference, which is they would be discussing a post-Assad Syria. They refused to do that, so they might be on the sidelines of the conference. They are not going to be participating. But, as you said, Iran is Syria's key backer. They have intelligence operatives on the ground, fighters on the ground. So it's really hard to see how this could be a peace conference without Iran there, because they're a de facto party to the fighting, Wolf.

BLITZER: They certainly are. All right, thanks very much, Elise, for that report.

Just ahead, it's Michelle Obama's 50th birthday today. She's showing off her AARP card. We will take you behind the scenes of an amazing party she's planning for tomorrow night.

(COMMERCIAL BREAK)

BLITZER: Check out Michelle Obama flaunting her brand-new AARP card. The first lady turned 50, 50 years old today. And while some people might want to play down that milestone birthday, the first lady seems determined to celebrate.

CNN's Athena Jones is watching what's going on.

I take it there's a nice little party planned for her tomorrow night.

ATHENA JONES, CNN CORRESPONDENT: That's right, Wolf. And a lot of people are wishing they could score an invitation to this big celebration tomorrow.

From what we hear, it will be a pretty memorable event.

(BEGIN VIDEOTAPE)

JONES (voice-over): If you're a fan of the first lady, it's the hottest ticket in town, an invitation to a White House dance party Saturday night to celebrate Michelle Obama's 50th birthday. And if you're picturing something like this...

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: My better half and my dance partner.

JONES: ... instead think a little "Saturday Night Fever."

After all, while the first lady may be tweeting about joining the AARP, she's known for her dancing prowess, and the party's host, the president, has told guests to wear comfortable shoes, because even with two Ivy League degrees...

KATHERINE SKIBA, "CHICAGO TRIBUNE": She's got a really fun loving streak, she loves to dance, she loves music. And why not, you know -- you only turn 50 once, so why not make the most of it?

JONES: We have seen some of the first lady's moves before. Here he is doing the Dougie on "Late Night With Jimmy Fallon" last year and showing more moves with talk show host Ellen DeGeneres back in 2008.

Saturday's celebration is set to last from 9:00 p.m. until midnight and it is being dubbed Snacks and Sips and Dancing and Dessert.

LYNN SWEET, WASHINGTON BUREAU CHIEF, "THE CHICAGO SUN-TIMES": My guess is it won't be a cast of thousands. It might be big, but not super big.

JONES: The White House is making a special request that will affect how much guests can share about the event.

SWEET: Here's what's interesting about the invite to this late- night party for Mrs. Obama. The invitation does say no camera, no photographs. Well, I have covered many receptions at the White House and even big shots like to take pictures.

JONES: The Obama's inauguration after-party last year drew the likes of Usher, Katy Perry and Beyonce, who is rumored to be performing at Saturday's event.

(END VIDEOTAPE)

JONES: Now, one guest who is going to tomorrow's party told me these events are a lot of fun. You feel like you're with family because the Obamas really want their guests to get comfortable and enjoy themselves. A "New York Times" report today gave us a little taste of some of what's expected to be on the menu tomorrow night, macaroons and fine American wines -- Wolf.

BLITZER: They were told, the people who were coming, to have dinner before the dance party because you're just going to get some snacks and some dessert. It's not going to be a full-scale buffet dinner or a sit-down dinner along those line, right?

JONES: Right. They want to focus on dancing, Wolf.

BLITZER: So, everybody is going to bring comfortable shoes. Maybe they will bring some socks and they will get out there. She's an excellent, excellent dancer, you have got to admit.

JONES: Well, certainly, we have seen a lot of video of her dancing and people say that she can really cut a rug. I think there is going to be a lot of fun had tomorrow night -- Wolf.

BLITZER: My friend Doug E. Fresh told me he likes the way she does the Dougie. She can teach me to Dougie whenever she wants. We will see how that party goes tomorrow night.

I'm not invited. I suspect you are not invited either, but a lot of folks are. And I hope they have a really good time.

Let me wish on behalf of all us here at CNN a happy birthday to the first lady of the United States.

And later tonight, stay tuned for our special report, "Extraordinary Journey: Michelle Obama Turns 50," 10:00 p.m. Eastern only here on CNN.

That's it for me. Thanks very much for watching. Have a great weekend.

I'm Wolf Blitzer in Washington.