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U.S. Government Suffers Large Cyber-Security Breach; Suspected Terrorist Dies in Confrontation with Police; Interview with Frances Townsend; Funeral Held for Beau Biden; Clinton Calls Out GOP Rivals By Name. Aired 8-8:39a ET

Aired June 05, 2015 - 08:00   ET

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

[08:00:00] ATHENA JONES, CNN CORRESPONDENT: -- a few years ago, well, the list has only been growing -- Sony, Home Depot, the health insurer Anthem, even the IRS. It's a disturbing trend. And now what could be the biggest government breach in history suggests it's only getting worse.

(BEGIN VIDEOTAPE)

JONES: This morning the U.S. government is struggling to assess the damage. Officials revealing possibly the biggest cyber-attack on the U.S. government ever breached their critical computer networks. Two distinct attacks crept into the federal system, sophisticated and undetectable for months, all the while stealing information from the databases of virtually every government agency, sensitive information from up to 4 million current and former federal employees now in the hands of hackers, including employees of the Department of Defense, the Social Security Administration, and even potentially President Obama. Officials say there could be millions more.

SEAN HENRY, PRESIDENT, CROWDSTRIKE SERVICES: These networks are so vast and they are really geographically dispersed and very, very difficult to be able to protect, and the reality of it is you can't prevent the attacks.

JONES: The suspects, according to authorities, a super power, the People's Republic of China. According to officials, evidence points to hackers working for the Chinese military who may be compiling a massive database of critical information on Americans. Now federal employees being cautioned to check bank statements and get updated credit reports.

MARIE HARF, STATE DEPARTMENT SPOKESPERSON: They continue to update our security, but it is a pretty significant challenge.

JONES: Hackers have targeted the American government before. Just this week investigators say Russia attacked the IRS and made 100,000 tax returns vulnerable to criminals.

(END VIDEOTAPE)

JONES: President Obama has been briefed on the latest breach and the investigation is continuing. Meanwhile lawmakers are saying cyber security has to be a top priority. They are calling for swift completion of legislation already in the pipeline aimed at bolstering the nation's cyber defenses. Chris?

CUOMO: All right, Athena, thank you very much.

Now, China for their part is objecting to the allegations coming from Washington, but they are doing it with one of the most artful non- denials you will ever hear. CNN's David McKenzie is live from Beijing with that part of the story. What are they saying?

DAVID MCKENZIE, CNN CORRESPONDENT: Hello, Chris. That's right, it's a non-denial. They are not saying they didn't do it, but they are saying, well, let's point the finger back at you.

And here's exactly what they say. China resolutely tackles cyber- attack activities in all forms. We ask the United States not to be so skeptical and stop chasing the wind and clutching the shadow." And they also called for cooperation. There has been many accusations against the Chinese of hacking U.S. corporations and the U.S. government, including this massive attack. But the Chinese say that revelations from Edward Snowden showed that in fact the NSA is hacking China and also China's military assets. So a lot of finger-pointing back and forth. The Chinese, though, say, well, let's talk. Alisyn?

CAMEROTA: David, thanks so much for that background.

Also new this morning, the NSA secretly expanding spy operations on the Internet activities of Americans in order to target hackers. CNN Pentagon correspondent Barbara Starr has all the latest on this story for us. What do we know this morning, Barbara?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, good morning, Alisyn. No surprise that these documents apparently came from Edward Snowden shared with "New York Times" and other organizations. What it points to is in 2012 the Justice Department wrote two secret memos authorizing the NSA to begin monitoring Internet cables including into the United States looking for suspicious activity, including malware. They were supposed to be looking, they are supposed to be looking for any indications that can tie back to foreign government. That's what the NSA does -- collect intelligence on activities of foreign governments.

One of the big concerns, obviously, if you are going to start monitoring internet cables, you're going to pick up data about Americans. You are going to pick up perhaps criminal hacking. That's law enforcement criminal hacking. That is not what the NSA is supposed to be doing.

But the director of national intelligence in this entire climate continuing to push back, issuing a statement which says in part, "These operations play a critical role in protecting U.S. networks from disruptive and even destructive cyber threats."

And, of course, the legislation on Capitol Hill really does not touch the basic issue of collecting this kind of information without a warrant, which is apparently what the program was all about. You know, everybody spies on everybody. That's the way it goes, hacking all around. But I think one of the growing questions is can the U.S. defend itself against this, and is all of this really growing so fast and becoming so significant that maybe it's getting out of control? Chris?

CUOMO: Barbara, you are asking the right questions. Thank you for that.

[08:05:00] So what exactly does a data breach of this magnitude mean for our security? Let's bring in Fran Townsend. She's CNN national security analyst and former Bush Homeland Security and counterterrorism advisor and a member of the CIA external advisory board. So, the obvious question, why would they want all of this information? What can they do with it?

FRANCES TOWNSEND, CNN NATIONAL SECURITY ADVISOR: Well, this is part of a pattern, Chris, right. A year ago, OPM had a massive data breach, and that was to the most sensitive information. When I and others like me when we are in government and even when we leave, we continue to have to file forms with OPS.

CUOMO: What sensitive information?

TOWNSEND: My e-mails and your social media accounts, your financial information, including your bank accounts, your Social Security, your passports, all of your foreign travel, all of my family members' foreign travel.

CUOMO: So what do they do with it? Do they identify a Fran Townsend and say she's one of their -- and they find out your designation or whatever and they use it later?

TOWNSEND: So a year ago they got into those sorts of files. This time the federal government is telling us it wasn't the most sensitive database. It was a database that was sort of run by the Department of Interior. What most people on the outside don't realize is the Department of Interior is responsible for things like the accounting, literally your paycheck is at the Department of Interior even if you are at the Justice Department.

CUOMO: So that's why we have it. So how much of this is boasting, how much of this is to show they can do it? Is it really just about the practical application of what they get or is a little bit of this a macho thing?

TOWNSEND: No, there's real intelligence value. You sweep up more than you need. You get into one of the data bases, and you're sweeping up secretaries and clerks as well as senior level people. One, it is a little bragging right to say you can do it. But remember the Chinese view in terms of the intelligence value --

CUOMO: You're that sure it's the Chinese, by the way?

TOWNSEND: I think we have to wait and see. Look, I think we have not heard the government make a direct connection to the Chinese government. They believe based on the tactics, techniques, and procedures that were used to make the breach that it is the Chinese. Now they're going to have to do the hard word -- CUOMO: You are not chasing the shadow and clutching the wind?

TOWNSEND: I'm not. And I know I think they have to do the hard work of having to prove it really is the Chinese government that's behind it.

CUOMO: Here's what I don't get. This is the biggest question for me. I feel that you, and I am using you as the symbol of the American government now, sorry -- you don't care enough about these things. Every time we hear about them, the biggest ever, 4 million of this, 500,000 of that, if they came in and broke a window and took paper files out of an office building of 10 people, it would be like maybe an act of war, but it seems like there is a nonchalance about it. Is it because everybody is doing it? Where does this casualness come from?

TOWNSEND: I will tell you, Chris, across two administrations, so in the Bush administration of which I was a part, and the Obama administration, more time, money, resources, and effort has been put against this problem than any other time in the history of the country, so it's not for a lack of effort. But we haven't made enough progress.

To your point, I don't think it's a nonchalance. Remember, Leon Panetta when he was secretary of defense told the American people he believed the next 9/11 would be a cyber Pearl Harbor. And so there is a lot of time and attention. But let's remember, Congress has tried multiple times to get legislation passed on cyber-security and they can't get their act together.

CUOMO: Can you keep it safe?

TOWNSEND: Look, I think it's not a matter of building higher walls and better perimeters. It's the whole. It is active defense. It is chasing your enemy. It's understanding it. And It's the ability, when will we treat a cyber-attack as an act of war. The federal government continues to wrestle with that policy question and they haven't answered it yet.

CUOMO: What's the thought of why not? Is it just because they're not comfortable enough if the Internet is part of reality? Are they still dealing with it like it's not as real as it is as if they broke a window in a place and stole things?

TOWNSEND: Well, the question really becomes, when you treat it as an act of war? It's a question of is it only when there is physical destruction? Your example, when you break the window and steal something it's bad enough, or do people have to die via a cyber- attack, shutting off the lights, shutting down the FAA system before we'll treat it as an act of war. Those are very serious policy questions that have real consequences and diplomacy geopolitics. And so, understandably, they are working their way through that.

CUOMO: Now, if you can do this, you can do those types of things also. What's your read why we don't see those things? TOWNSEND: Well, it's interesting. We have not seen those sorts of

attacks where there is actual destruction inside the system. They are more about stealing it and collecting the intelligence, because I think just as we are trying to work through the policy question when it's an act of war, the Chinese don't want to miscalculate and trigger a potential physical reaction by the U.S. government. And I think that's what stops foreign governments for actually taking destructive power via cyber. Nobody wants that missed calculation, that potential cyber Bay of Pigs.

CUOMO: That's interesting. If this had been an actual attack, and again, I am not comfortable with that phrase, I think it is an actual attack, the Chinese would not respond with a proverb, a non-denial denial, kind of playing this game that we have on cyber-security. Fran Townsend, thank you so much. Appreciate your perspective on all of this. Alisyn?

[08:10:08] CAMEROTA: OK, Chris, there are new details this morning of that Boston terror plot. U.S. officials tell CNN at least one of the men linked to the attack was encouraged by ISIS. This as the suspect's family watches the surveillance video of police shooting the suspect. Let's get right to CNN's Alexandra Field. She is live for us in Boston with the latest. Good morning, Alexandra.

ALEXANDRA FIELD, CNN CORRESPONDENT: Good morning, Alisyn. The Rahim family had a private viewing of that video that shows the moment that their son was shot to death by police officers after authorities say that he lunged at them with a military style knife. In the aftermath of the shooting, Rahim's brother had posted on Facebook that he believed that his brother was shot three times in the back. After watching the video the brother now says those are in fact not the facts of the case, he was not shot in the back.

However, the Rahim family says they are calling for a thorough and federal investigation of Rahim's death and the allegations that he had been planning to attack police. He had been under 24 hour surveillance for at least 10 days before his death. Authorities say that they moved in stopping him in the CVS parking lot after he made a phone call to his father in which he said his goodbyes. A spokesperson for the Rahim family says that they are aware of a phone call between father and son the morning of his death, but they say the content of that conversation isn't clear to them. Chris?

CUOMO: All right, Alexandra, thank you very much.

I want to tell you about devastation in northern Colorado as a pair of tornados just tear through the state. Several homes are destroyed. The good news, no injuries reported.

Here is one interesting moment that you're going to want to check out. There's a twister bearing down on a storm chaser. There is the storm. The guy shooting it is a storm chaser, obviously. Intense winds, debris. He sits alone on this dirt road. The chaser thought he was out of the storm's path, but that wasn't the case. Take a look at how close everything gets to this guy. Luckily he wasn't hurt.

CAMEROTA: Look at that hail. That's incredible.

Remembering Beau Biden. Hundreds of mourners paying respects to the vice president's son in Delaware. Beau Biden died last weekend at the age of just 46, losing his battle with brain cancer. President Obama set to deliver a eulogy tomorrow at Biden's funeral. CNN's Sunlen Serfaty is live for us in Wilmington, Delaware. Good morning, Sunlen.

SUNLEN SERFATY, CNN CORRESPONDENT: Good morning, Alisyn. Well, this is such a painful time for the Biden family and for Delaware. There are three days of ceremony to mourn Beau Biden's loss. And today there will a public viewing here at this church the same church where the Biden family has been huddled as they grieve.

(BEGIN VIDEOTAPE)

SERFATY: His casket cloaked in red, white, and blue, former Delaware attorney general Beau Biden was honored Thursday as an American hero, a selfless husband, father, and son. Surrounded by wife, grieving grandchildren, and widowed daughter-in-law, Vice President Joe Biden was overcome with emotion over the loss of his eldest son.

UNIDENTIFIED MALE: This is a painful and somber time.

SERFATY: Inside the Delaware legislative hall the governor presented the vice president's late son with a Delaware conspicuous service cross for his heroism and outstanding achievements.

UNIDENTIFIED MALE: Beau had an extraordinary heart, and from that heart he lived a life that is a model for us all.

SERFATY: The vice president's heartbreak evident during talks of Beau's legacy.

GOV. JACK MARKELL, (D) DELAWARE: Natalie and Hunter should know that even when you weren't around your dad beamed with pride and love for you. A model for what a son should be, his attachment to his parents is now a part of history. Never has a son's love been so genuine and so deep.

SERFATY: A touching moment, Biden wiping away a tear from his granddaughter's cheek, comforting the two small children and wife his son leaves behind. Hundreds of mourners lined up to pay respects to the former Iraq veteran, the Biden family graciously greeting them one after another. In addition to serving a tour in Iraq, Beau Biden was also a member of the Delaware Army National Guard for more than a decade.

(END VIDEOTAPE)

SERFATY: And yesterday, the vice president when he was greeting all the mourners hour after hour, he said to them, quote, "You guys are holding me up." And President Obama, Alisyn, will deliver the eulogy here tomorrow morning.

CAMEROTA: OK, Sunlen, thanks so much for that. Gosh, looking at these pictures, they are all so poignant. In part it's because Vice President Biden is such an emotional guy on a normal day. He's an emotional guy, and watching him in his grief here, it's really powerful.

CUOMO: When people mourn, they are at their most real, political, nonpolitical. Two things. Beau came up big for his father in 2008 when he gave that speech at the convention. I was talking to him about it, and I was looking at him, how are you feeling yourself out here. And he grabbed my arm and he looked at me, and it was total Beau. "You do what you think is right, that's all. I just say what I think is right."

[08:15:00] And he was one of those guys, when he said that, he actually meant it. The reflection of being his father's son, well, my pop passed, as you guys know, he passed a few months ago, Joe Biden left a message for me on my voice mail where he said, "Your father was one of the only guys I met that when I looked across the room, I thought that guy can take me." That's the kind of people the Bidens are.

Politics are not, whether you like his politics or not, doesn't matter at a time like this. They feel deeply and real, and they loved each other so much. The love was so real. This guy was only 46 years old, he's got a young wife, young kids, and he had so much promise he could have brought to this country. That's why he is getting so much attention.

ALISYN CAMEROTA, CNN ANCHOR: I see it. These pictures tell a story. So, they're they are, and we will obviously be covering this tomorrow as well.

All right. Well, Hillary Clinton slamming her Republican rivals and calling them out by name. Michael Smerconish is here to explain why.

Plus, Rick Perry jumping into the 2016 race for president. What do you think? Does he stand a chance? Experts weigh in.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE: Today, Republicans are systematically and deliberately trying to stop millions of American citizens from voting. What part of democracy are they afraid of?

(END VIDEO CLIP)

CAMEROTA: Well, that was Democratic frontrunner, Hillary Clinton, accusing the GOP of launching a crusade against voting rights.

[08:20:02] CUOMO: This is a heady topic. It needs a supple mind, and we have one right now.

CNN political commentator, host of CNN's "SMERCONISH", Michael Smerconish.

This sounds good. Everybody should vote. It should be easy, should get registered automatically.

MICHAEL SMERCONISH, CNN POLITICAL COMMENTATOR: Right.

CUOMO: But it hasn't happened. So, when you hear her say this, does this sound like, wow, that's something that she can really stick a claim to, or is it a little bit more show than go?

SMERCONISH: When I heard her say this, I thought to myself, if you build it, will they come? Because to give everyone an automatic registration at age 18, does it mean they'll exercise the franchise? I don't think that the problem is, oh, getting registered. I think the problem is getting people who are registered to get out and actually vote. I mean, it's abysmal what goes in this country.

CUOMO: But the problem of the system of whether or not we can vote easily enough here. We do everything with our lives online, Chinese hacking aside.

SMERCONISH: Sure.

CUOMO: But we don't vote online. Is that something that you think people could get behind, like, yes, that should be easier?

SMERCONISH: I'd get behind it. I think it's really an embarrassment. I think we look third worldish when I reflect on just the recent 2012 cycle, and watching television in Florida, and seeing people standing in line for hours. I remember the president upon proclaiming victory coming out on the stage in saying, first thing he said, we've got to fix that. Well, it hasn't been fixed and I think it's embarrassing.

CAMEROTA: I mean, of course, what she is really trying to do is show the difference between herself and what she says her Republican opponents are doing, and she says they are trying to block people from voting. For the first time on the campaign trail, she used their names. She called out her foes, her rivals by name. So, listen to this.

(BEGIN VIDEO CLIP)

CLINTON: Governor Perry is hardly alone in his crusade against voting rights. In Wisconsin, Governor Scott Walker cut back early voting and signed legislation that would make it harder for college students to vote. In New Jersey, Governor Chris Christie vetoed legislation to extend early voting, and in Florida, when Jeb Bush was governor, state authorities conducted a deeply flawed purge of voters.

(END VIDEO CLIP)

CAMEROTA: What do you think the strategy is there?

SMERCONISH: Well, I can't overlook the fact that if I'm Perry, Christie, if I'm Governor Perry, or Governor Christie, I am elated, I am on the third tier right now, I'm not on the debate stage, the frontrunner just mentioned me. So, whatever she said, I'll take it.

CAMEROTA: Right. So, why would she do that? I mean, why would she elevate them to be part of the discussion? That's the strategy, right?

SMERCONISH: The story here I think is all about race. If demographics stay the way that they have been trending in this country, the Republicans need an increase boost of the white vote, the Democratic Party, if it's Hillary Clinton at the top, needs to maintain that Obama share of the minority vote. And this is really about who comes out to vote, 14 states I think you've noted have new laws for a national election kicking in for the first time in the 2016 cycle, and the Democrats are very, very concerned that their base won't be able to come out given these new impediments.

CUOMO: You're good on this? You want to move on to Perry?

CAMEROTA: Yes, sure.

CUOMO: All right. So, Perry is coming out. He's got the glasses on and, you know, I joked about it --

SMERCONISH: Yes, and the loafers.

CUOMO: But it's good to change -- you want to change how I see you, change how I see you, you know? So, he is coming with a look and he gives a big speech. If you hear the speech, sounds good, everybody is talking about him sweating. Is this a sign that the media is not going to give this guy a break?

SMERCONISH: I don't know. I watch the speech. I'm not talking about him sweating. I'm talking about the fact that those are the Luttrell brothers. At least I know that's Marcus --

CUOMO: Right.

SMERCONISH: -- on the left side of the screen. And I found interesting that -- look, where is the oxygen in the room for Governor Perry? I think the oxygen in the room --

CUOMO: Tell me who the Luttrell brothers are, too, by the way?

SMERCONISH: Oh, we're talking of lone survivor fame, two Navy SEAL brothers. They look the same. I know Marcus, and I think that's his brother. So, this is Rick Perry. I think boosting and appropriately so of his military bona fides. Because apart from Lindsey Graham who I think served as an attorney in the Air Force, among that enormous field, only two have military service in his background, and so, rightfully, he's touting that. He wants to be the military candidate and that's how he is approaching this.

I happen to think it's all about redemption. I mean, he entered the 2012 cycle really as a frontrunner. People thought this was, you know, a different incarnation of George W. Bush, without some of the frailties, and then it all went to hell in a handbasket, he embarrassed himself in those debates, and he wants to re-establish his credentials and his credibility.

CAMEROTA: And more than just him sort of renewing his own image. I mean, people said he does bring a lot to the table. He is the candidate reportedly who can bring conservatives and evangelicals and military and people who want a governor. I mean, he has a lot of stuff that people say they want in a candidate.

SMERCONISH: It's -- all that was said about him in the last cycle, and then he had the oops moment and, you know, unfortunately we fixate on that, because you can run that on a loop in a 20-second sound bite, and that's what we know him best for -- probably unfairly to Governor Perry.

CUOMO: Now, a little bit playing against the narrative right now.

SMERCONISH: Sure.

CUOMO: We believe that the intrigue going forward is going to be on the GOP side, right, because there's so many of them, what do you think about actually flipping that, and saying, no, it's going to be on the Democratic side, because if Hillary Clinton's trustworthy numbers stay where they are, it's unsustainable proposition?

[08:25:05] You do hear those whispers. Do you think that that maybe the surprise here?

SMERCONISH: I like it. I like this thought process -- 57 percent regarding her as untrustworthy in that CNN survey. That's a stunning number. You expected her numbers would decline. But not to this extent once she formally declared.

And in the internals, Chris, what I took note of, is that she had an 11 point drop in independents in the last three months. You know, the R's and D's, you can run this election tomorrow, you know what they're going to do with regard to Secretary Clinton. But the I's, they are up for grabs. If she lost double digits in three months, I think the alarm bells ought to be running.

I have to say this -- you just showed this tragic story about Vice President Biden, and like you, you know, my prayers are with this family today, I wonder if he is not watching the decline of her numbers, and thinking to himself, not today, that's not what I am saying, but going forward, keeping a close eye on her tumbling numbers.

CAMEROTA: That would be a real upset.

CUOMO: Well, I'll tell you what, though, even more on that, knowing what we know about Joe Biden, it's not about numbers. The loss of his son could mean two things, I've got to just stay home, stay focused, this is heartbreaking and that would be completely understandable. But he's got a fire in him that Beau had, really the whole family has, that could also ignite something where it says it's time for me to do what I think I should do, that he can't care about the numbers at all.

SMERCONISH: I agree with you.

CAMEROTA: Michael Smerconish, great to see you.

SMERCONISH: Thanks, guys. Always. CAMEROTA: And, of course, you can check out "SMERCONISH", Saturdays at 9:00 a.m. Eastern, here on CNN. And hear him weekdays on Sirius XM, also at 9:00 a.m. Eastern. Great to see you.

CUOMO: So, the jobs report is coming out and it's going to be a big deal especially this month, because they are saying it's tougher to read, because of the disconnect in the jobs and wages, are we growing or not, it's getting tricky. So, we're going to take it to you as soon as we get it.

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