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Congressman Charles Rangel Under Fire; Politics of Palin

Aired September 10, 2008 - 15:00   ET

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

(BEGIN VIDEOTAPE)
RICK SANCHEZ, CNN ANCHOR (voice-over): Coming at you now, Joy Behar loves animals, which is why she doesn't like Sarah Palin.

JOY BEHAR, CO-HOST, "THE VIEW": She is very mean to animals.

SANCHEZ: Lipstick on a pig?

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL NOMINEE: You can put lipstick on a pig, but it's still a pig.

SANCHEZ: Them's fighting words. But, hey, didn't McCain say that, too? We will check.

This guy again?

RUSSELL BRAND, ACTOR: Would you have let that retarded cowboy fellow be president for eight years?

SANCHEZ: He finally explains himself.

So does Charlie Rangel, who writes our tax laws, admitting he cannot keep his own books straight.

Did the Bush administration undermine a colossal war on terror investigation?

And look at this.

Your newscast starts right now.

(END VIDEOTAPE)

SANCHEZ: Hi, everybody. This is one of those situations where you get a breaking news story just moments before you go into air and you don't really have a chance to filter through it completely.

I can guarantee you this. All of us at CNN are now moving on this story to try and bring you the very latest details. Here is what is going on.

This is going to involve a federal investigation, at least 10 employees and at least one who is being charged with criminal charges. Investigators are preparing to release a report that details improper relationships between Interior Department officials who oversee offshore drilling and oil executives. This includes, we understand, but not limited, to golf outings, rigged deals, ski trips and even some romantic interludes between some of the employees and some of the members of the oil companies themselves. This is information that is coming to us right now.

We are told, at least according to some of the folks that we are working with right now, that up to 10 employees from the Interior Department's Denver-based Minerals and Management Service, or MMS, have run afoul of the law, at least from an ethical standpoint. They have violated ethics rules, federal ethics rules.

Beyond that, criminal charges are going to be pursued for at least one staffer. Here is what we know right now. We understand there is about to be a briefing. It is going to be held in any moment right now by the secretary of the interior.

However, it is going to be a closed-door briefing. In other words, he is inviting reporters in. Obviously, since this story broke really just moments ago, he has been fielding a bevy of questions from reporters from all over the country. He's going to have them in his office, and he will then be answering their queries.

We have a microphone in that office. As soon as that conference begins, we are going to try and tie into it. Hopefully, we will even be able to ask some questions for you.

Meanwhile, here is what we are going to want you to do while we are going through this, and really as you can see, I am kind of doing it on the fly. If you want to go to Twitter.com/ricksanchezCNN, we're going to be taking your comments on this as well as many other topics. Your comments, your questions, and we are going to be sharing them as well.

Also, momentarily, I understand, we are going to be joined by Mark Preston. And we are also going to be joined by some of our correspondents, Kelli Arena chief among them, who has been following this story, and hopefully will be at that conference that I spoke to you about just moments ago.

Footnote: The soon-to-be-released findings by the Interior office, which hopefully we will get in the next couple of minutes, are going to be from the inspector general. They are expected to help explain the breakdowns in accountability in government energy deals and other questionable activities.

Many Americans are angry. They are angry about their oil prices going up. They will obviously point accusing fingers at many of the people who do these deals with the oil companies. And no doubt that is one of the questions that is going to come out of this, as we continue to share the information with you.

Let's do this now. Let's kind of backtrack now to one of the stories that we're going to be telling you about throughout the course of the day. My producers are going to be talking to me and as soon as they tell me that we are clear to go to Washington, D.C., and get the very latest on this new information, I will take you there immediately.

Meanwhile, here is another story that some people are going to be raising their eyebrows about. How rich is this? The House Democrat who draws up the federal tax code has a problem with the IRS over his own taxes. You know the face, the two big rings and the gravelly New York accent. It belongs to Charles Rangel, chairman of the House Ways and Means Committee, and a man who admitted today that he owes $5,000 in federal back taxes.

Now, to hear Rangel tell it, he made a little mistake you or I might make, says he lost track of the money he made on a Dominican beachfront property. It is a rental. But he is not you or me. But he is literally Mr. Tax Code in the United States of America.

Here is what he said when he was questioned about this just a short time ago.

(BEGIN VIDEO CLIP)

REP. CHARLES RANGEL (D-NY), HOUSE WAYS AND MEANS COMMITTEE CHAIRMAN: As I deal with trillions of dollars, the whole idea of possibly having $2,000 one year, less than that the other year, $5,000 the next year was an omission, an omission that's irresponsible.

I don't think that's the way that a chairman of Ways and Means Committee should cavalierly handle it.

If you're asking should I step aside as a member of Congress, a member of Ways and Means Committee, chairman of the committee, the answer is no.

(END VIDEO CLIP)

SANCHEZ: But some other people are saying yes. House Republicans say they are furious with Rangel. A GOP spokesperson is saying today that Rangel should take a permanent vacation and trade his vacation chair for his favorite beach lounger.

Speaking of beach lounger, look at this. This is "The New York Post." It had to smart, because late last month, Rangel's hometown tabloid, "The New York Post," tracked the congressman down outside his beach rental in this highly unflattering pose.

A Brooklyn native, though, Glenn Thrush, covers Capitol Hill for Politico.com. And he's joining us now.

I guess nobody really better to talk to than you about this.

Glenn, let me start you off with this. How much of this is a huge story because he is the head of the Ways and Means Committee or because he is Charlie Rangel?

GLENN THRUSH, POLITICO.COM: Well, I think you got a doubleheader right there. It is not quite as good as this oil and sex scandal that we are hearing about. It looks kind of tame in comparison, but Charlie Rangel is really important for a couple of reasons. First and foremost, he really erodes Democratic credibility when they have been whacking the GOP leadership for all their scandals, Tom DeLay, Bob Ney, and Jack Abramoff, really cuts down on the credibility the Democrats have in arguing that they're less corrupt than Republicans.

And the other issue is, like you said before, he is Charlie Rangel, a larger-than-life character. He is a guy I can tell you that the Obama campaign has been trying to discretely distance themselves from. They initially denied him a slot, a speaking slot, at the convention, and then under pressure were sort of forced to reinstate him.

SANCHEZ: Let me ask you this only because you mentioned it a time ago. If I was to tell you that the government is right now investigating as many as 10 different people, I know we are looking at Charlie Rangel's face here, but I know the American people are going to want to know more about this, because they are so angry about the situation with oil.

If I was telling you the government is investigating 10 people, one of them on criminal charges, and that is involved rigging contracts and possible sex liaisons between them, what would you say?

THRUSH: Wow.

(LAUGHTER)

THRUSH: No, I would say a couple of things.

First and foremost, it clearly is eclipsing the Rangel story, as we are finding out here, which is a big Republican talking point for this small, short amount of time we're having back in Congress. And the second thing about it is, the Democrats are up against the wall on oil drilling.

At the Republican Convention, they were chanting drill, drill, drill.

SANCHEZ: So, who does this help?

THRUSH: I don't think it's going to help the Republicans in terms of raising this issue, because it is now connected with a scandal involving the Bush administration apparently.

SANCHEZ: By the way, nothing bigger than the topic of hypocrisy. Certainly what we're talking about now has to do with it, same as the Rangel story, by the way. It is like when people get angry when they see police officers on the take.

Is that what really is the thing that rankles people on this oil story and the Rangel story as well?

THRUSH: Well, I think it is.

What we are dealing with is an election where the mantra is about change, and what we are seeing on the campaign trail is really disconnected from the behavior of politicians and the administration. And I think this is the kind of thing that really increases cynicism about the process.

SANCHEZ: All right, thanks so much, Glenn. We appreciate you taking time to talk to us.

Now let's go to Preston on politics, Mark Preston, our CNN political editor.

Isn't this the third questionable incident if I recall involving Mr. Rangel?

MARK PRESTON, CNN POLITICAL EDITOR: Yes, it is, Rick.

But here is the situation. We're talking 55 days now until Election Day. When you look at the grand scheme of things, it is $5,000. Charlie Rangel is going to be fine. He was first elected back in 1970. He is one of the most powerful people on Capitol Hill. And, yes, Republicans are really pushing this because they really have been hammered by the Democrats pushing the culture of corruption.

That is why Democrats won in 2006. Republicans are trying to scrape back, try to win some seats in 2008. But, look, Charlie Rangel is not going to be the way they're going to get there. And of course, now we are talking about this story that is just breaking regarding the Interior Department. That is clearly going to eclipse what we are talking about now.

SANCHEZ: By the way, we have got a lot of folks already commenting on the Charlie Rangel story as well.

Let's go to the Twitter big board. This is Twitter.com/ricksanchezCNN, if you want to join us. This is no question now established as such an interactive newscast.

This one comes in a while ago. He says: "What the -- he is right. This really stinks. Rangel should step down if this is true."

The next one goes on to say: "Good for you for covering the Charlie Rangel tax fraud story. From the chairman of Appropriations? Outrageous. As a New Yorker, love Rangel. Tax issue does seem very shady, though. Maybe there is something we are missing."

What do you make of these kind of comments from people, especially the first one, who seems to be suggesting he really should step down?

PRESTON: Well, that is what Republicans are asking and they are demanding of that. But, look, again, that's not going to happen.

But it is good to see that people are actually engaged in trying to find out what is going on here in Washington. There is a lot of talk about change on the campaign trail. We are hearing it from John McCain. We are hearing it from Barack Obama, but this is what I would say, Rick. They might be two steps behind because the Department of Justice might already be bringing change to Washington.

There are a number of federal investigations against sitting members of Congress. We have already seen sitting members of Congress being thrown in jail. Look, changes are coming to Washington. It has been slow. This has been an area where, you know, people have gotten away with a lot of stuff. We saw that with the Jack Abramoff trial.

And guess what? It's over.

SANCHEZ: Well, I'll tell you what. If changes are coming, it's coming in many different forms.

Mark Preston, thanks so much for that report. We will keep checking back. Always great to have you on.

If you have not heard, when we started this newscast, I was literally just before handed this piece of paper, this briefing with these reports the government is announcing a major investigation -- 10 government employees are being called out so to speak for running afoul of at the very least ethics rules, at the very worst criminal activity.

Apparently, it is having to do with the government employees who seem to be making some shady deals with oil companies in terms of bid rigging, even in terms of sexual liaisons that seem to be taking place. We are all over that. We are going to giving you more on this story. It literally is, folks, coming in as we speak, and this as well.

Political phrase of the day so far today, lipstick on a pig. Barack Obama actually said it. McCain has given him grief about it. But now guess who else once said lipstick on a pig when referring to Hillary Clinton? I will tell you when we come back.

(COMMERCIAL BREAK)

SANCHEZ: And welcome back to the world headquarters of CNN. I'm Rick Sanchez.

For those of you not familiar with what we are try to do here, we are doing a newscast, like most newscasts, but at the same time we're tying into you. The way with do this is through twitter.com/ricksanchezCNN, also through Facebook and through MySpace.

What it means is we are giving you places where you can go on the Internet and literally talk to us, connect with us. The easiest place is Twitter, because it is very short easy sentences to understand. So, that's the place we recommend. But Facebook and MySpace, we are checking. We read everything you send to us. Don't put it all on the air, but we do read it.

As a matter of fact, let's look at some of the stuff coming in right now about this corruption story we told you just about moments ago, which by the way we are expecting more information any moment now. "Typical high-level corruption in Washington," writes jbvegas. "It won't change because you cannot get there unless you are not rich and with no ethics. Your updates keep me in the know until I can get home to watch TV. CNN is covering the energy crisis. A story about government doing their jobs without scandal and corruption is the only news story that wouldn't shock me."

"Clearly, when Republicans were chanting drill, drill, drill, they were not talking about oil."

Interesting. Lots of people are commenting on this. Interesting enough.

Now let's go to this. As we wait for more information on that story and the investigation of 10 government employees, now to Sarah Palin. She continues to be the new hot ticket and with all that comes a lot of criticism. In fact we checked and we found that World Wide Web is fast offering a treasure trove of information and misinformation against her as well.

Here is the commonsense approach to this. It's a journalistic axiom. Always, always consider your source when you read this kind of stuff.

Watch this piece by one of the best, CNN's Joe Johns. He looks at the into that is out there and then tries to separate for you fact from fiction.

(BEGIN VIDEOTAPE)

JOE JOHNS, CNN CORRESPONDENT (voice-over): Straight from the Internet, which brought you the relentless rumor, completely false, that Barack Obama is a Muslim, now it's Sarah Palin who's getting misrepresented with bogus quotes and facts.

Here's one quote attributed to Palin that we found posted by readers in the comments sections of at least three mainstream political news Web sites.

God made dinosaurs 4,000 years ago as ultimately flawed creatures, lizards of Satan, really. So when they died and became petroleum products, we, made in his perfect image, could use them in our pickup trucks.

Lizards of Satan? It's a pure fabrication. Palin never said it. It was totally made up by a guy named Bob who put it on his blog as a joke. How do we know that?

BOB SALISBURY, OLYMPIA WASHINGTON BLOGGER: My name is Bob Salisbury, and I'm a blogger.

JOHNS: We talked to Bob via the Internet and he admits it.

SALISBURY: I did, I made all of them up one morning, wrote it in about 10, 15 minutes, just threw it up there and figured my usual 20 or so regular readers would see it. I had no idea what was going to happen.

JOHNS: But there's plenty more where that came from circulating on the Internet. One of the first false rumors out about Palin was that she cut Alaska's funding for special needs education by more than 60 percent. The truth is exactly the opposite, says Viveca Novak of FactCheck.org.

VIVECA NOVAK, FACTCHECK.ORG: She's actually tripled funding for special needs children. It has gone from $24,000 per student approximately, which would be this year's amount, in three years it's going to increase to $74,000 per student, which is nearly tripling.

JOHNS: And then there's the rumor that as mayor of little Wasilla, Alaska, Palin demanded that certain books be banned from the library; didn't happen. The truth is that she did ask some questions about banning books, even informed the librarian she's being fired, but later relented under pressure.

But for the record, no books were banned. So what was she up to?

NOVAK: You could draw an inference, many people have drawn an inference; all we know is that we have no evidence one way or the other.

JOHNS: And then there's an Internet claim that Palin pushed for teaching Creationism in Alaska schools, also not true. Palin said students should debate both sides, but she did not make teaching Creationism part of the official curriculum.

So if you're seeing a trend here in the kinds of Internet rumors, it sort of looks like they're trying to portray her as a little extreme which made us ask our polling expert whether this kind of thing helps or hurts the candidate.

KEATING HOLLAND, CNN POLLSTER: The people that are most susceptible to that message are Democrats and Liberals who already have a bad impression of her simply because she's on the Republican ticket.

JOHNS: Joe Johns, CNN, Washington.

(END VIDEOTAPE)

SANCHEZ: And right now an immediate response on Twitter.com.

In fact, let's go to it. It comes from MarilynM. She says: "Rick Sanchez, did you do a similar piece on about all the fictional B.S. about Obama floating around on the Web?"

As a matter of fact, Marilyn, I did. And if want to see it, go to YouTube. It's all the place there.

All right, let's talk about something else now. The big story that we are following now really came to us just moments before I went on today air today. It is a story about the government investigate as many as 10 different employees for ethics violations, one of them apparently on criminal violations for their association with big-wigs from the oil company. It apparently has to deal with corruption and a lot of sexual liaisons going on between some of these folks as well. That is what is going to be announced in a news conference at the office of the inspector general any moment now.

We do have a reporter there. We hope to be able to have a microphone in there too. And if we can in there and you can hear it just as it is going, I will try to ask questions as well. We will have it, we guarantee you, before the end of this hour.

Meanwhile, he called the president a retarded cowboy. If you didn't hear it. Here it is.

(BEGIN VIDEO CLIP)

BRAND: Otherwise, you know, would you have let that retarded cowboy fellow be president for eight years?

(END VIDEO CLIP)

SANCHEZ: Russell Brand and all his hair made an appearance last night to talk about it. Did he finally come on an American television show and apologize? Did he? That is right after the break.

(COMMERCIAL BREAK)

SANCHEZ: All right. Thank you very much, Alex Whitaker.

Even some who don't like President Bush say that they still don't want somebody from another country dissing him. It is the respect for the office thing. So, when a British comedian and the host of the MTV Awards got personal with Americans in the news, it got a lot of Americans furious. Here it is.

(BEGIN VIDEO CLIP)

BRAND: Could I please ask of you people of America to please elect Barack Obama, please, on behalf of the world?

Some people, some people -- I think they're called racists -- say America is not ready for a black president. But I know America to be a forward-thinking country, right, because otherwise, you know, would you have let that retarded cowboy fellow be president for eight years?

I feel most sorry for that poor teenaged father. Boy, one minute, he's just a teenage lad in Alaska having joyful, unprotected sex. The next minute: Get to the Republican Convention! I think that is the best safe-sex message of all time: Use a condom, or become Republican.

(END VIDEO CLIP)

SANCHEZ: So, last night, Brand goes on Craig Ferguson's show. Does he apologize? Here it is.

(BEGIN VIDEO CLIP) BRAND: I haven't had to apologize to anybody, because, it is just jokes. If your job is a comedian, you're often under a lot of pressure to do jokes.

CRAIG FERGUSON, HOST: I know.

(CROSSTALK)

FERGUSON: And, sometimes, you say that, and people say, well, that is not true. And they go, I know. I said it for comedy reasons. I know it's not true.

(CROSSTALK)

BRAND: Yes. I don't live my life according to these principles.

FERGUSON: Right. Exactly.

BRAND: This is not even my real haircut.

(END VIDEO CLIP)

SANCHEZ: There you have it.

By the way, here we are, 55 days until America votes, and today the campaign for the presidency is trudging through some real serious hog slop, with the McCain campaign demanding an apology from Senator Barack Obama over this. Let's watch this.

(BEGIN VIDEO CLIP)

OBAMA: You can put lipstick on a pi pig, and it is still a pig. You can wrap an old fish in a piece of paper called change. It is still going to stink. After eight years, we have had enough.

(END VIDEO CLIP)

SANCHEZ: All right. The lipstick on a pig comment is the one that is causing the fury.

Obama says he was not being sexist -- sexist -- pardon me. He says that he was trying to make the point that his message is being hijacked by McCain and Palin. That's what he says. He says they are not really for change, and that he is.

Either way, the McCain camp is seizing on this comment by putting out a Web video that is all but viral already. It questions Obama's judgment and ability to lead as a result of saying that.

So, is this really even about sexism? Ladies?

That is Rachel Campos-Duffy from MTV fame and now a conservative blogger. And Joanne Bamberger is a liberal blogger on Blogspot.

All right, let me take both of you back to my -- this would be May 1 of this year. That's when Senator Hillary Clinton was still in the political mix. Senator McCain was still fighting for his party's nomination. Now, take a listen to this.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL NOMINEE: In 1993, we rejected the then Clinton universal health care proposal. It was rejected by the American people. I don't like to use this term, but the latest proposal I see is putting lipstick on a pig.

(END VIDEO CLIP)

SANCHEZ: It would appear that the person who is doing the protestation has actually used the same term before, Joanne.

JOANNE BAMBERGER, PUNDITMOM BLOG: Yes, I would say so.

One thing I do want to point out about the arguments that are being made about -- by the McCain campaign right now is they are not showing the full video. They just took one that one little clip. If you watch the whole video, he was not talking about Sarah Palin. He was talking about the policies of the Bush administration being similar to the policies of the McCain administration.

But, even so, he has used that same phrase himself. And again, this is just a distraction. Why are we talking about pigs and lipstick?

(CROSSTALK)

SANCHEZ: Well, because they bring it up.

And is it fair, Rachel? Is this a fair criticism for the McCain camp to be leveling at Barack Obama? Because what they are really ultimately saying, isn't it, that he is sexist?

RACHEL CAMPOS-DUFFY, PARENTDISH.COM: I have to say that I agree with Joanne. If you look at the full clip, it is really not fair. I don't think that Barack Obama is a stupid enough politician to think it is a good idea to call Sarah Palin a pig or a stinky fish. It's just really obvious that that is not what happened.

(CROSSTALK)

BLITZER: But, just to be clear, you don't think Barack Obama is sexist?

CAMPOS-DUFFY: No, I don't think that. And I think that it is stupid to bring this up on the part of the McCain campaign, and certainly to make a commercial about it.

But I will say that, it is a little bit hypocritical on the part of Barack, because he has been using race to his advantage other times, whether it is the governor of New York who said that the use of the word community organizer during the speech with Giuliani and Palin was code for black.

Those are his surrogates. He needs to come out and say the same thing. We are tired of this sort of racial and gender hypersensitivity. It is one of the things that I hate about the Democratic Party and liberals in general. I hope that, as Republicans, we are not going to start getting in on that game, too.

(CROSSTALK)

BAMBERGER: That is not a liberal thing. I mean, there's plenty of sexism and racism in the coverage by the conservative media in this campaign as well. So, I don't think you can hang that hat on the liberal media.

(CROSSTALK)

SANCHEZ: Who is worse? Who is worse?

BAMBERGER: Nobody is worse.

(CROSSTALK)

SANCHEZ: Nobody is worse?

(CROSSTALK)

SANCHEZ: So, when you hear Democrats say you have just been Roved, what do you think they trying to say?

CAMPOS-DUFFY: Good point.

BAMBERGER: Well, they are saying that Karl Rove has a reputation for doing this sort of thing.

But you know what? Is it possible for us to even move beyond this? It would be so great, whether the candidates or the surrogates or whoever are saying these things. Let's move beyond it and talk about the real issues, as opposed to all these distractions about pigs and lipstick.

SANCHEZ: Well, and when you have these distractions, you don't get people talking about the issues. Who loses when we don't talk about the issues the most? Quick, because we're down to 10 seconds. I want an answer from both of you. Who loses, the Dems or the GOP?

(CROSSTALK)

BAMBERGER: We lose. We lose. We all lose.

SANCHEZ: Everybody.

CAMPOS-DUFFY: The people lose.

BAMBERGER: Yes.

SANCHEZ: OK. We will let it go at that. Thanks, guys. We appreciate it. We will do this again. Great conversation.

Hurricane Ike is out there, by the way, it seems like forever now, but it is not going away. It's actually getting stronger, now a Category 2 and building.

And then there is the story of the investigation we told you about moments ago. We are hoping to be able to hook up with Kelli Arena at any moment. As soon we get that information, we will turn it around for you.

Stay with us, breaking news forthcoming and your involvement.

We will be right back.

(COMMERCIAL BREAK)

SANCHEZ: And we welcome you back. Plenty of comments coming in from folks here, including information about one of the stories that we have upcoming as well. We will be sharing some of those with you in a little bit. If you think that you are sick of the hurricane season, imagine the Bahamas and Haiti and Cuba. Now, look at this, Los Palacios, Cuba, this is just west of Havana, and they got a one- two punch from Hurricanes Gustav and Ike. Roofs ripped off, trees thrown around and Cuba's vice president said the latest storm, Ike damaged at least 27,000 homes in Cuba and four people died in Cuba as the hurricane slowly went across the entire length of the island.

We're going to be going to Chad now to find out what is going on with the hurricane now. Yesterday, you and I were talking about this thing looking like it was going to be a Texas storm, still the same thing?

CHAD MYERS, METEOROLOGIST: Absolutely. Still a Texas storm. The computer models are kind of getting closer together and not that big fan out, because that fan out happens after three or four or five days. No we know it is getting closer, so that the time difference is getting smaller for it to actually hit the Florida coast. This is a model, Rick. This is what a model really looks like and it is hard to see, but I am going to kind of point you out Florida. There is Maine and there is California and there is the Gulf of Mexico. It is not hard to find the storm right there. I am going to have to move this ahead, and this big red area here is the high pressure that won't allow it to get to Georgia and Florida, but eventually the high pressure moves away and there it comes on the Texas coast. What is coming down here? Another high pressure from the northwest which will stop it from moving right over Oklahoma, and we will have big time flooding problems in Oklahoma in the days to come after we make landfall.

So what do we do with landfall? Well, let's do some work here and make this bigger here. Here is the storm. Many more models than that one. Down north of Cuba and it drives it out to the Galveston and Corpus Christi and Brownsville. This is what we are worried about. All of the models coming together very closely, either Corpus Christi, Port Lavaca and now the new one, a brand new, very reliable model brings it up to Galveston Bay at 125 miles per hour Saturday morning. It is not confirmed where it is going, but if you are on the Texas coast, don't turn away from this storm. Never turn your back on the ocean, don't turn away from this storm. SANCHEZ: I'll tell you. It is amazing with the models, because most of them are shown to us as lines, but when we see the other things, the other systems up there as you call them that affects the storm to push it left or right, that is interesting.

MYERS: And that is why you don't know whether it is going to go left or right sometimes, because the high may be stronger or it may be weaker and you know, it is not a perfect world. It is not an exact science as the medical people say.

SANCHEZ: All right, Chad. Thanks so much.

I know it is about 34 minutes after the hour, so let me try to catch you up on what we are covering for you that we think is a significant story, in fact I am going to read it to you off of my laptop. Federal investigators are now saying that government officials handling billions of dollars in oil royalties have engaged in illicit sex with employees and this is in energy companies and received improper gifts and this is information coming in.

The Interior Department has been investigating and we are expecting a news conference and more information on this in just a little bit. At least ten employees are being named, and employees who have violated ethics rules. It has to do with rigs and contracting oil companies and as you can see as well, receiving improper gifts and sex with employees of energy companies. We want to be able to hash this out and get more information. Stay with us. We broke this story as we began here today at 3:00. We are getting your comments on it as well.

A police chase ends with a crash, and we have been working that. We have the story.

In fact, this is an amazing scene. It unfolds as a driver takes a shot at police, and then the police start to shoot back and shooting and shooting. Also, I am going to sit down with author Ron Suskind to talk about his allegations that the United States actually got into the way by big footing a big, huge British terrorism investigation this would have made a huge dent they say in al Qaeda. We will be right back.

(COMMERCIAL BREAK)

SANCHEZ: Welcome back. We are going interactive for you. As a matter of fact we can read to you some of the things going on now. Here is part of the report. It is now on MySpace and people are talking about it. Expect big discussion threads on this one, if you are following either MySpace or Facebook. It has part of our story, the inspector general claiming that the former head of the Denver office which markets oil to energy companies was having sex and using illegal drugs with subordinates as well of some as the other claims of corruptions and attributions that are going on today.

The immediate response here from Agent Al says, does this surprise anyone? Money can turn anyone over to the dark side. So obviously, a lot of response going on in the story. Meanwhile, let's get on some of the other stories we are following.

Watch this. I want to set it up for you. This is an alleged robbery suspect who is running from the police and finally they catch up with him. What happens next? Here it is.

You can see the officer firing there, but what actually happens is, and I think we are going to see it in slow motion here coming up in a little bit if I have it on the image maybe I can telestrate it for you. There is guy. Did you see the gun? The gun opens and that when the officer immediately has to start firing. He is hit with barrages of bullets, one after the other, until finally he is able to get the perp, as they say, out of the car.

By the way, the shootout occurred in Sandpoint, Idaho in July and video was obtained by a CNN affiliate, we thank KERM for getting that information for us.

All right, let's catch up on some of the other stories we are following including a story about the Bush administration actually trying to big foot a British investigation that may have caused many al Qaeda members to get away unnecessarily. It is really a huge development in the war on terror. We are going to break this down for you in a bit with best selling author Ron Suskind.

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SANCHEZ: All right. We now have more information on the breaking news story. Just now during the break, I was told by a couple of my producers that Kelli Arena has become available. Just to catch you up on the story. Essentially federal investigators are saying that government officials who have been handling billions of dollars in oil royalties are engaged in illicit sex with employees and receiving improper gifts. It looks like some kind of minor or major corruption issue, but because it involved oil at this particular time, you know that Americans' ears are perked. Kelli Arena was just in a meeting with the secretary of Interior or deputies from his office. Kelli, thanks for joining us. What are you finding out?

KELLI ARENA, CNN CORRESPONDENT: Rich, I'll tell you. Interestingly the department has not made that I.G. report available, but as you said I did just get off of a conference call where officials briefed reporters and not very well either, I might add. It seems that about a dozen employees who worked for the Interior Department are accused of rigging contracts, working part-time as private oil consultants and as you said, they had sexual relationships according to this report with oil company employees. So why do we care?

Well, because these people worked in the division of the Department of Interior that is responsible for marketing the oil and gas that energy companies barter to the government instead of paying in cash, and then that oil is then either made available on the open market, you know, and resold to companies, or it is put in the Strategic Petroleum Reserve.

Now, officials say that this activity actually happened before 2006 and they were alerted to this, because an employee from the division called and said this place is going crazy and we have got a problem here. And then officials said, OK, inspector general, you need to investigate.

Now, on that call, officials say that about half, and they didn't have an exact number, but about half of the employees who were allegedly involved in this activity are gone. They are retired. The department says that it is considering what administrative action to take against the employees who are remaining, and we think there are six or seven of those. They also say that the Department of Justice, as part of the case is referred to the Department of Justice which took a look at it and refused to prosecute. So when we did ask, well, what could possibly happen to the people who retired, and the answer was, well, we don't have any recourse gains them if it is administrative action.

Unfortunately, the people doing to debriefing for all of the reporters didn't have in-depth knowledge of this report and couldn't answer a lot of the press questions, but the bottom line is that lots of people kept hammering and saying, what does this mean for taxpayers? And what does this mean for taxpayers and they looked back at the year and actually the division made money for the government that year, so it doesn't look like there was a loss. Maybe we didn't get as much as we were supposed to in oil, you know, bartering, but -- they couldn't put a dollar figure on that either.

SANCHEZ: You know what this strikes though as, Kelli, and people watching this newscast have a credibility issue with the government and the oil company, and when you do a story like this that involves both of them together, you have people asking like this fellow right here writing to us now on Twitter, and he says, "Sex, oil, money and politics the four branches of our government. People will say if these guys were allegedly able to violate the rules ethically, then what is to stop them from doing other things that is going to mess me up in the pocketbook and maybe make me pay more for gas." You know that is what they are thinking.

ARENA: Exactly. And especially in the environment, you are right. Department officials from the Department of the Interior say there are a dozen employees in one division and we've got thousands of employees who are doing their jobs every day and the inspector general was not asking them these questions, but it did seem to be an office run by someone who obviously let things get out of hand, but you are absolutely right, when you have employees of the federal government getting involved in stuff like this, particularly when it involves the oil company and allegations to how powerful that lobbying, and their lobbyists are, it makes people crazy.

SANCHEZ: Questions, questions, questions. Kelli Arena as usual, she is on the spot for us as this story developed at the top of the story. Thanks Kelli And let us know if you get anything else, and we will get back to you.

Meanwhile, Ron Suskind if you have not read his book, you probably should. Maybe one of the best I've read in a long time about what is going on in the government right now and really in the world, not to mention some breakthrough allegations that he needs to discuss openly, and he will because we have him next. That's coming up.

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SANCHEZ: All right. You ready to hear heavy allegations? How about this? President Bush two years ago was so desperate for approval ratings and for a win in the midterm elections that he actually went behind Great Britain's back, swooped in on a terrorism case, and basically blew the biggest al Qaeda investigation since 9/11 wide open.

Heavy information, right? Well, it's an accusation but it's all carefully summed up in a book along with a lot more in a book that really reads like a novel. I was reading it the other day, I was really astounded by the information and it's called "The Way of the World" by Ron Suskind.

You've heard about the book before because other people have been talking about other issues of it. I'm interested in this one issue. The Brits had 1,000 agents on 40 men, all apparently members of al Qaeda and these guys you write in the book couldn't sneeze without the Brits knowing about it. Then what happened?

RON SUSKIND, JOURNALIST: The Brits came to us in July of 2006 and said look, we've got this under control. Be patient. There was some intelligence that these planes that the liquid bombers were about were going to be coming to the United States. The White House was alerted. The White House said snap shut the trap immediately. The British said look, we do it differently. We wait until we get real evidence and try them in public courtrooms and get long sentences rather than deal with Guantanamo Bay or secret prisons. The United States heard that, they said thank you very much and sent behind the British -- behind their backs and snap shut this investigation. What happened was that ...

SANCHEZ: Didn't President Bush have a meeting with Tony Blair and said please, Blair, release it. He said no, we can't and they promised each other they would respect the investigation?

SUSKIND: Yeah, but that promise wasn't kept. And ultimately this dissatisfaction, the president's under a lot of the pressure for a political delivery for the midterms especially in the area of terror, he considers it his long suit.

And what happens is, after that meeting with Blair, a few days later, the head of operations for CIA, he is a boss, a top guy, slips into Pakistan, engineers the arrest of this guy Rasheed Rau (ph) who's a friend and associate of the British plotters. Of course, an alert gets sent right up the chain. The British plotters start running around wild-eyed. The whole operation gets snapped shut and British police have to run through the night in a panic arresting people.

Ultimately the British fear that we're not going to have enough evidence unless this thing is ripe is exactly what occurs this week in the trial where they get no serious convictions. They get three guys convicted on lesser charges and five acquitted and the Brits are livid, and they have a right to be. SANCHEZ: This was a story for just to catch viewers up, this is a story that you heard this earlier this week about the convictions, but three convictions out of a possible 20 I believe and the convictions were all for conspiracy charges where they actually could have nailed these guys for life and probably gotten about 20 of their friends, right?

SUSKIND: Yeah. It's about the way we do tear and the wait Brits do terror. Actually they're better at some things than we are. And we don't want to recognize that.

And what's interesting here is it wasn't just about the investigation and the convictions. The British also said for a big plot like this, the plotters have to get permission from al Qaeda chiefs, bin Laden and the rest and if we're patient, we can run this thread as they said right to Zawahiri's beard. Ultimately, we are impatient. The president decides I'll have a political deliverable. Interestingly, Rick.

SANCHEZ: Go ahead, we're down to the last bit of this.

SUSKIND: The media plans were written in the White House before the arrest as to how to capitalize politically on this.

SANCHEZ: Was it Cheney or Bush?

SUSKIND: Cheney was involved, CIA at the top was involved and frankly, everyone was shocked up and down the ranks and the United States would do this.

SANCHEZ: And the British weren't happy. I wish we could spend more time talking about this. But because of breaking news, we're following, we weren't -- we'll get you back. Is that all right? ?

SUSKIND: I'm up for it.

SANCHEZ: Just to be fair, we've been -- we spent most of the day calling or trying to call the White House to try and get their response on it. Unable to do so throughout the course of the day. At least definitively and to be fair, we'll continue to do so tomorrow if we're able to get a proper response, we'll then bring it to you to let you know how they respond to Mr. Suskind's accusations in his book.

Big story. Also, big tease. Clashes in Bolivia. We'll check on CNN Espanol in just a little bit.

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SANCHEZ: We made a promise on this show that we're going to keep up with things in Latin America which is often not covered enough in my humble opinion. Let's go to CNN Espanol.

We're looking at pictures. This is Bolivia, I believe. Glenda Umana I believe is joining us now from Santa Anna. (SPANISH)

GLENDA UMANA, CNN ESPANOL CORRESPONDENT: Let me tell you some areas in Bolivia are in flames today. The Bolivian government is accusing opponents of an attempted coup and also attacking natural gas pipelines. Now Rick, let's remember that natural gas is the country's number one export. Once again, there have been clashes between demonstrators as we can see in this video and police, radical regional groups have seized some government offices, and national oil fields. This has been a fight between the original government and the central government.

SANCHEZ: Glenda Umana from CNN in Espanol. Muchos gracias.

Thanks so much for being with us. Now let's go to CNN's Wolf Blitzer. We won't do this one in espanol but we will find out what's going on in the world of politics. Wolf, over to you.

WOLF BLITZER, CNN ANCHOR: Lots going on today, Rick, as you know, we're continuing to follow this latest scandal involving government workers allegedly having illicit sex with oil company employees.

Also Republican Congressman Ron Paul has a message for John McCain and the message is no. Ron Paul won't endorse his own party's nominee and he urges what some think is a radical idea. Congressman Paul is here together with independent presidential candidate Ralph Nader. They'll be here together to explain what's going on.

Barack Obama is mad as ever and apparently won't take it anymore. He's now accusing John McCain's campaign of lies and of swift boat politics after Republicans accused of Obama of making a sexist comment.

And the presidential battle boils down to what happens in the states. We have new poll numbers we're about to release where things stand in four key battleground states, exclusive numbers coming up right here in THE SITUATION ROOM.

SANCHEZ: That is worth sticking around for. Sanchez Blitzer. I like it. Every day, 3:00 and 4:00. Thanks, Wolf. We're going to be right back. Stay with us.