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The Situation Room

France's First Couple Visit the White House; Bogus Energy Star Products; FBI Super-Secret Files Revealed

Aired March 30, 2010 - 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: President Obama says his BlackBerry is his direct line to spiritual comfort. Mr. Obama told NBC's "Today Show" he receives a prayer on it every day. He's the first president to carry a BlackBerry. He says he uses the device to read prayers sent to him by several pastors who prayed for him during the 2008 campaign.

The president says he also gets together with the circle of pastors periodically over at the White House.

Remember, for the latest political news any time, you can always check out CNNPolitics.com.

And, to our viewers, you're in THE SITUATION ROOM.

Happening now: an unemployment crisis seemingly without end, until now. Some leading experts see a light at the end of the tunnel only days away.

Also, a first look at secret files hidden by longtime FBI Director J. Edgar Hoover. What information did he consider so sensitive that he locked it away in a special room?

And false claims of energy efficiency revealed. Some of the bogus products that got the government's seal of approval are hard to believe.

I'm Wolf Blitzer. We want to welcome our viewers in the United States and around the world. You're in THE SITUATION ROOM.

For years now, it's been one of the most dreaded reports coming out of Washington, the monthly employment tally. Throughout the great recession, the U.S. economy has been hemorrhaging jobs, but that may come to an end this Friday in a rather dramatic way. A survey of leading economists is now predicting a gain -- a gain of 190,000 jobs.

CNN's Stephanie Elam is in New York with more on this story.

The jobs number comes out Friday morning. How did these experts come up with this number, Stephanie?

STEPHANIE ELAM, CNN CORRESPONDENT: Well, Wolf, when you take a look at it, the number actually represents a consensus estimate of several analysts who track the employment situation in our country. So, you may have some out there who think the economy actually lost jobs in March and others who think the gain was more than 190,000. But the takeaway here is, if the middle of the road is that high, economists see the jobs markets as improving and that's is what is encouraging.

Now, we will get those numbers officially on Friday, but I have to keep in mind that the markets will be closed on Friday, so the markets won't be able to react to it until Monday, because Friday is Good Friday, Wolf.

BLITZER: If these numbers are true, even if 150,000 jobs, 200,000 jobs, if it's true, it's been a long time since we have had anything like this.

ELAM: Yes. In fact, we had to go back a couple of years to find out when it was, Wolf. It was actually -- the last time we saw growth like this on the jobs front was three years ago. That's before the recession began. And if the numbers do come in line with what is expected, it would mark only the second time since December 2007, and that's the official start of the recession, that the economy has added jobs.

But keep in mind, a lot of this may be temporary workers who were hired to handle the 2010 census. Also, remember all that snow, especially that you got down there in D.C.? It's plagued a lot of the country, though, in February, and that may have suppressed some jobs growth that wasn't able to take root until March.

BLITZER: Still, the Obama administration is already beginning to take some credit for this change.

ELAM: Yes, that's true. And this would also mark the second time since President Obama took office that the employment report has turned positive. No doubt they are aware of that. And in an interview on CNBC, Treasury Secretary Timothy Geithner said the economy is getting healthier. Take a listen.

(BEGIN VIDEO CLIP)

TIMOTHY GEITHNER, U.S. TREASURY SECRETARY: Well, I think you can say generally as the economy is getting stronger, and the economy is getting stronger -- we're probably just on the verge now of what we think will be a sustained period of job creation finally.

And we're going to continue to reinforce that recovery. The financial system as a whole, as I said, is in a much stronger place today. Again, the critical thing we did was to move quickly, not just to stabilize things, but to make sure we recapitalized the financial system with private money.

(END VIDEO CLIP)

ELAM: Now, and to your point, Wolf, you did hear Geithner say the Treasury Department moved quickly to stabilize the financial system. So, it's not going to be surprising, as the economy and the jobs picture improves, that the Obama administration will be pointing to their decisions as the reason behind this change for the better.

Still, economists say we need to see broad-based job creation, not just temporary jobs, but real full-time jobs, to get consumer spending back on track. After all, consumer spending accounts for two-thirds of the economic activity in our country, and if people are unsure about their employment situation, they're not likely to part with their money, Wolf.

BLITZER: Good point, Stephanie. Thanks very much.

Let's assess the political ramifications of this.

Our senior political analyst, Gloria Borger, and our national political correspondent, Jessica Yellin, are here.

Jessica, if, in fact, 150,000 or 200,000 jobs have been created, if they announce it on Friday, and if at that level, as Geithner seems to suggest, it continues between now and the rest of the year, that's a game-changer potentially for the Democrats.

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: Potentially. But here's what you need to keep in mind.

We talked to Mark Zandi, who is one of the most respected -- on both sides of the aisle -- economist. It's his take that let's say there are about 175,000 new jobs created in March. About 100,000 of them are temporary jobs due to the census, which aren't going to sustain in future months, really. Then another 50,000 are because we undercounted because of weather.

So, there are only 25,000 new jobs this month. And the problem the administration has is, if they overemphasize that this is a huge trend up, then it will be a disappointment next month if you see a similar, only a 25,000 job growth the following month.

BLITZER: So, they have got to be careful, these political types at the White House, in not gloating if it's 150,000 or 200,000 jobs this month.

(CROSSTALK)

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: They will be smiling, though. And they will be smiling for a couple reasons, one of which is, Wolf, when you look at the polls, you will see that the people who tend to be the most negative about the Obama administration right now are middle-class voters, believe it or not, those earning between $50,000 and $75,000 a year.

If middle-class voters start getting some jobs, that's going to be very important to this administration. Also, in terms of their future agenda, as they plan what they can do, if they can say that we are growing jobs, it gives them an opening to say, you know what, we can do two things at one time. Maybe we're going to do climate change. Maybe we're going to do Wall Street reform, so we can walk and chew gum at the same time. BLITZER: Because, when all is said and done, and all of us have covered politics for a long time, health care, and financial reform, energy, in the stuff, unless there's a major war, they're all significant, but the economy and jobs are issue number one.

YELLIN: Exactly. And, you know, this administration has had a bit of a problem in the past at taking too much credit when there's improvement in the jobs picture, and then they get excessive blame when there's a dip.

You know, this is cyclical, and these economists are warning us that there are a lot of disaffected workers who aren't even bothering to get off the couch and look for a job because they don't think they can find one. When the job picture improves, they will start to go out, try to look for a job, and then the numbers will fall again.

So, we're in for another dip as the economy improves, and they have to be careful, because this is -- it's up and down in the next...

(CROSSTALK)

BLITZER: We will get the March numbers on Friday, and then we will wait the next month and the month after. We will watch it all. We will watch it, but the American people will be watching very closely.

BORGER: Very closely.

BLITZER: All right, guys, thanks very much.

It's been weeks, months since Toyota issued its recall of millions of vehicles for sudden acceleration issues. To date, the cause is still a mystery, so the Transportation Department has called in some space-age reinforcements.

Brian Todd's here in THE SITUATION ROOM working this story for us.

NASA, can it offer some help?

BRIAN TODD, CNN CORRESPONDENT: Apparently so.

The transportation secretary thinks so, Wolf. There's enough uncertainty about what caused the unintended acceleration in Toyotas that the government is appealing to NASA for help. Transportation Secretary Ray LaHood announced today that the auto safety agency under his umbrella, NHTSA, has enlisted engineers from the space agency to look at complicated features in those cars, the software, the computer-controlled electronics systems, the possibility that electromagnetic interference could have caused some of the acceleration problems.

Now, James Lentz, president of Toyota's U.S. arm, said the company welcomes the expertise of NASA in this investigation. Lentz said the more we can talk about science and not theories in all of this, the public will be better off. But he again contradicted the idea that electronics are part of Toyota's problem.

(BEGIN VIDEO CLIP)

JAMES LENTZ, PRESIDENT AND CHIEF OPERATING OFFICER, TOYOTA MOTOR SALES USA: Well, we have got 40 million of these vehicles that we have produced. And we have not found a problem with the electronics. There are other issues. There are surges that take place from transmissions. There's pedal misapplication. There is cruise control. There are other issues that may cause it, but it's not an electronics issue.

(END VIDEO CLIP)

TODD: And NASA isn't the only component that's going to be involved here. The transportation secretary said that the Academy of -- the National Academy of Sciences will be looking at electronic vehicle controls and their effect on the acceleration problems, not just on Toyotas, but all make and models, Wolf.

So, this is a big day. He announced two major investigations.

BLITZER: All right, so two major investigations. How long is this going to take and how much will it cost?

TODD: Well, the NASA component of it with NHTSA could be finished by late rights year, possibly by the summertime. The National Academy Sciences part is going to last about 15 months.

LaHood says both studies total will cost about $3 million. That involves also purchasing the vehicles that experienced problems.

BLITZER: And they're also looking at NHTSA, this agency, and its effectiveness.

TODD: That's right. Specifically, LaHood said his inspector general is going to take a look at NHTSA's Office of Defects Investigation -- that's essentially the arm that looks at all these recalls -- and assess whether it performed adequately, not just in the Toyota case, but also dating back to about 2002.

He's also going to look at whether that group had the resources to do its job correctly in that period. There's been some question about that.

BLITZER: The stakes are enormous indeed.

TODD: That's right.

BLITZER: All right, Brian, thank you.

BLITZER: President Obama just signed the fixes to the health care law, but back in their home districts, some members of Congress are paying the price for supporting that bill. Also, it's one of the FBI's best-kept secrets, a hidden room filled with hidden files. For the first time now, we're learning what was in it.

And appliances that are supposed to save energy and money, why that Energy Star label could be bogus.

(COMMERCIAL BREAK)

BLITZER: Jack Cafferty's here and he has "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Wolf, this Thursday, April the 1st, is national census day, the day the once-a-decade U.S. head count officially begins.

It may not be a coincidence that it's also April Fool's Day. But the joke here is more sad than it is funny, because, you see, even though the agency has had 10 years to work out the kinks in this cumbersome process of counting all of us, men, women, and children, in this country, it hasn't.

Information technology problems are a top concern going into this census, in particular two software programs that manage the maps and workloads for census-takers who will make those door-to-door follow-up visits, and there are a lot of them. It's estimated 50 million households out of a total of 120 million will likely require some sort of follow-up visit.

The Census Bureau says there's still time to fix the problems. They have had 10 years to get ready for this. But they say time's running out. Really? The Census Bureau has already shelled out an extra $88 million for a technology glitch last fall that paid $300 to a reported 15,000 temporary hires who did little or no work updating the bureau's maps.

The entire census is expected to cost taxpayers more than $14 billion, but that number will likely be higher. And then who knows how reliable the results will be at the end. This is our government at work, the same government that wants to now manage health care.

Here's the question. What does it mean that the Census Bureau can't be ready for this year's count? Go to CNN.com/caffertyfile. Post a comment on my blog.

It would seem 10 years in between censuses would be enough time to prepare for the next one, but apparently it's not.

BLITZER: You would think. And it's not as if it's going to be a surprise. You know it's -- you got to get ready for it, Jack.

(LAUGHTER)

CAFFERTY: Yes, it's on the schedule.

BLITZER: Yes, every 10 years, we do this. We have been doing this for a long time.

CAFFERTY: Yes. And -- well, what can I say?

BLITZER: All right. All right. Jack, thank you.

CAFFERTY: Sure.

BLITZER: Some congressional Democrats who voted for health care reform are now finding their jobs are on the line, including the first-term Congressman Steve Driehaus. He's one of them. In 2008, he beat a Republican who held his Ohio seat for 14 years, but now he's fighting to hold on and fighting big time.

He spoke with our congressional correspondent, Brianna Keilar, who is joining us now from Cincinnati.

Brianna, what did he say?

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: Wolf, he did what he thought was right for his constituents.

In this first week of recess, that's really his first chance to try to convince voters here in the Ohio 1st Congressional District of that. But if it were not for a last-minute agreement that Driehaus and a handful of other anti-abortion Democrats struck with the White House and with Democratic leaders in Congress, then the health care reform bill would not have passed the House.

And we spoke with many voters here in this district who say that they are upset by that. They are fearful that federal funds may still go to pay for abortions. They're upset Driehaus' central role in moving this bill, and they say they're going to make their discontent known at the polls in November.

(BEGIN VIDEO CLIP)

KEILAR: Have you come to grips with the fact, that considering the environment, this could be it for you?

REP. STEVE DRIEHAUS (D), OHIO: Every election I run in is a tough election. If you're looking for job security, politics is not the place to be. But you get in because you want to serve the community and you want to make change in a positive way. And you do what you believe is the right thing to do.

KEILAR: Why was voting for health care the right thing for your district?

DRIEHAUS: Because I have talked to so many people in this district who will benefit from this legislation, you know, seniors who are really making a decision between food and pharmaceuticals, you know, kids who are sick whose families can't get insurance because of the illness of the child.

So, I think it's absolutely the right vote, and I'm going to run on it, and I'm going to help people understand why it's the right thing for the country.

(END VIDEO CLIP)

KEILAR: On the upside, Driehaus says that his name recognition is certainly way up by how much attention he's gotten over the last couple of weeks.

But, Wolf, a big concern for his campaign is that his '08 win was very much buoyed by urban and black voters who were energized by President Obama being on the ticket. There are no coattails this time around, but Driehaus says he's hopeful that President Obama will campaign for him in Cincinnati and give him a little boost and rev up the Democratic base here -- Wolf.

BLITZER: I suspect he will, and probably will do that.

All right, thanks very much, Brianna, out covering politics for us. Thank you.

The president makes a big announcement in his meeting with the French president today. New sanctions against Iran are expected, President Obama says, in the coming weeks -- why the alliance between France and the U.S. is so important for both presidents. Stand by.

Plus, it's being called a major breakthrough at understanding the universe, success at a large particle collider in Switzerland. You are going to find out what happened.

Lots of news happening today -- right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: A big announcement from President Obama. In his meeting with the French president today, he promises to take action against Iran, and he imposes a deadline and a timetable. Stand by. We have details.

And deep inside an FBI building, a secret room filled with files dating back to J. Edgar Hoover. Now, for the first time, what's inside is being revealed. We have the details -- right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: The French president, Nicolas Sarkozy, is meeting at the White House today with the president of the United States, among the items on the agenda, tougher sanctions against Iran over its nuclear program.

Afterwards, the two leaders held a joint news conference, only one question from each side, if you could call it a news conference. Sarkozy says his country fully supports harsher punishment for Iran. He also emphasizes the closeness and the strength of U.S./French relations.

(BEGIN VIDEO CLIP) BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We said we would engage Iran and give them an opportunity to take the right path, a path that would lead to prosperity and opportunity for their people and a peaceful region and one in which they would allow themselves to become a full-fledged member of the community of nations.

The alternative path was further isolation and further consequences.

We mobilized the international community around this approach, including partners like Russia that in the past might have been more hesitant to take a firmer stance on Iran's nuclear program.

What we said, though, was that there was going to be a time limit to it, and that if we had not seen progress by the end of the year, it was time for us to move forward on that sanctions track.

My hope is that we are going to get this done this spring. So I'm not interested in waiting months for a sanctions regime to be in place, I'm interested in seeing that regime in place in weeks.

And we are working diligently with our international partners, emphasizing to them that, as Nicolas said, this is not simply an issue of trying to isolate Iran. It has enormous implications for the safety and the security of the entire region.

We don't want to see a nuclear arms race in the Middle East.

(END VIDEO CLIP)

BLITZER: Now, let's discuss what we just heard with Guillaume Debre. He's a correspondent with the French television channel TF1.

Guillaume, thanks very much for coming in.

This is a significant development, the president of the United States saying, within weeks, there will be a sanctions regime imposed against Iran. Is there any daylight, any difference at all towards Iran between Sarkozy and Obama?

GUILLAUME DEBRE, TF1 REPORTER: Less and less.

There were a year ago when President Obama wanted to talk and they wanted to try dialogue with Iran. The French have always said, enough is enough. Time is up. We need to go on sanctions. And now it seems that the gap between the position of Washington and Paris is diminishing, and now they are on board, both of them, to try to impose sanctions at the U.N.

They are trying to convince Russia, which is less hard than it seems that the Chinese, who are still...

(CROSSTALK)

BLITZER: The Chinese are still a huge question, although the Russians seem to be moving, from the U.S. and French perspective, in the right direction.

Talk a little bit about the relationship between these two presidents.

DEBRE: Well, it's funny, because it has evolved over time.

They met -- four years ago, when Sarkozy came, Obama was still senator. The character, the personality are very different. Sarkozy is hyper. He's hyper-dynamic. He always moves, moves. He's frantic. Obama is very calm, almost aloof.

And Sarkozy tried very hard to be his friend, to be his allies, to show signs that he was very close to Obama. And for a few months, he felt that -- ostracized in a way. He felt like Obama was not giving him what he wanted, which was closeness, friendship. It's now starting to move again towards a relationship where the two leaders are closer.

And they are closer on many issues. Never, ever in the past 50 years France has been so aligned with the United States. It's striking.

BLITZER: And this is significant in France right now, as well, that Sarkozy is seen as having a strong relationship with President Obama.

DEBRE: Yes, he needs to play it up on the internal domestic politics, basically, because he's having a tough time right now.

He lost hugely a big regional election. And he needs to basically show that he is dealing with Obama, which is hugely popular in France. And that's new, too. George Bush, as you know, was not popular. Obama is extremely popular, so he needs to play up the relationship with Obama for the core domestic politics or domestic consumption.

BLITZER: They had a meeting in the oval office, then they had this sort of a statement and brief news conference. I guess you could call it that.

One question from an American journalist, one question from the French journalist in the East Room, and now they're about to sit down for a private dinner in the residence at the White House. This isn't a state dinner. But it's a private one.

DEBRE: The embassy palace, the French government, is extremely ecstatic about that. They're bragging about the double date, if you will, between Carmela Bruni, you know, Nicolas Sarkozy, and the Obamas.

No leader has ever had that. Of course, the embassy palace is saying it. They're playing it up. They're extremely ecstatic.

It's important for Obama. There weren't cameras, there weren't pictures. There won't be any. Only the White House will take pictures. It's a little bit of a bummer for the French press, but still it's sort of cool for Sarkozy.

BLITZER: I assume the White House will release some still photos. There is a still photo we got earlier in the day when President Sarkozy and his wife, Carla Bruni -- they went to lunch at the recommendation of the president at a popular place here in Washington. A place called Ben's Chili Bowl, and they both had some delicious food.

Let's listen to the president describe it.

(BEGIN VIDEO CLIP)

OBAMA: Now, I have to point out that the French are properly famous for their cuisine, and so the fact that Nicola went to Ben's Chili Bowl for lunch I think knows -- shows his discriminating palate.

My understanding is he had a half smoked, so he was sampling the local wares and we appreciate that very much.

(END VIDEO CLIP)

BLITZER: I think he had two of them, and more surprisingly, Carla Bruni had two half smoked hot dogs at Ben's Chili Bowl. That's not exactly French cuisine.

DEBRE: Not exactly. We're stunned. Because we didn't know about it. The French press didn't know about it. They -- they -- yes, they went there. You know, Sarkozy doesn't drink wine, which is quite amazing for a Frenchman. And he had that.

I'm not sure -- I don't know if he liked it or not. He hasn't shared that with us yet, and we'll, of course, ask him. But it was a bit of a stunner and -- but it was a good PR move for him to have done that.

BLITZER: A little American cuisine while he's in America.

Thanks very much for coming in.

DEBRE: Sure.

BLITZER: She's a former model, now France's first lady, but today Carla Bruni also had a new role.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Hello. One, two, three.

CHILDREN: Bonjour!

CARLA BRUNI-SARKOZY, FRENCH FIRST LADY: Bonjour.

(END VIDEO CLIP)

BLITZER: Reading to children here in Washington, D.C. You're going to hear what the kids asked her, her answers. That's coming up a bit later.

And the Energy Star label means you're going to save energy and money. Isn't that right? Well, not always. A new investigation reveals no one's checking.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: When an appliance is stamped Energy Star, you would assume it meets higher energy efficiency standards sanctioned by the federal government. Not necessarily.

Lisa Sylvester is back with us, working the story for us.

I guess it's true that not everything you see is necessarily true.

LISA SYLVESTER, CNN CORRESPONDENT: Absolutely, Wolf. You know, for consumers out there, who are shopping for a new appliance, one of the things they're going to want to look at is how much energy does it use?

Well, products with the Energy Star logo, they are supposed to be the most efficient, sometimes beating industry standards by 20 percent or better. But an under-the-cover investigation found that may not always be the case.

(BEGIN VIDEOTAPE)

SYLVESTER (voice-over): Refrigerators, microwaves, stoves, products with this Energy Star logo are touted as the most energy efficient. Consumers buying these products can be eligible for tax credits and rebates.

But a new report by the Government Accountability Office found the government-run Energy Star program can easily be defrauded by manufacturers.

GREGORY KUTZ, GOVERNMENT ACCOUNTABILITY OFFICE: This is something that the American public needs to consider as a kind of buyer beware, that they may have assumed that the federal government was validating these products before they made the shelves when, in fact, in most cases, we've found that they are not.

SYLVESTER: The GAO set up four phony companies and sent in 20 bogus products to the Energy Department and Environmental Protection Agency to get the coveted Energy Star certified label. Only two products were outright rejected by the program. Three didn't get any response.

The ones that were approved included this air purifier. Its Web site claims that it's 35 percent more efficient than other models. But the GAO says this is nothing more than a space heater with a feather duster taped to the top. Yet the product was awarded the Energy Star label. Another bogus product? A gasoline-powered bedroom alarm clock radio that according to the phony GAO Web site approximates the size of a small portable generator for increased ease while traveling. Again, no one at the Department of Energy asked any questions.

MARK CONNOLLY, CONSUMER REPORTS: The whole Energy Star program was self-certifying by the manufacturers, so no one, in fact, was out there checking, say, for us, the actual numbers behind the program that they were reporting to the government could, in fact, be fictitious.

SYLVESTER: The independent "Consumer Reports" says the vast majority of products with the Energy Star logo are in fact energy efficient. But there are products with the logos that do fall short.

The Energy Department and EPA in a joint statement to CNN defended the Energy Star program saying, quote, "Energy Star saved Americans $17 billion on their energy bills last year alone. And a recent review found that 98 percent of the products tested met or beat the program's requirements. We will continue to eliminate loopholes and strengthen this program, but consumers should have no doubt that products with the Energy Star label will save them money and reduce carbon pollution."

(END VIDEOTAPE)

SYLVESTER: And it may seem like we're not talking about a large amount of money, but, in fact, the tax credits from purchasing Energy Star products can really add up. Take a look at this. Each person can receive a tax credit on 30 percent on the money spent for Energy Star certified appliances, up to $1,500.

The credit is available over a two-year span, so if you spent $5,000 on energy appliances in 2009 and 2010 combined, you get $1,500 of it back. Items include biomass stoves, some heating and air- conditioning systems, insulation, metal and asphalt roofs, non-solar water heats and many windows and doors.

And, Wolf, a few less common items don't even have a tax credit limit like geothermal heat pumps, for instance, so you can get 30 percent back on these appliances and there is absolutely no limit.

It's especially big when you're talking about program that largely goes unchecked.

BLITZER: Yes. People have to have confidence in the government giving these labels out, and apparently there's a little bit less confidence now than there should be.

SYLVESTER: Yes, you know, when people are shopping, they do look for that Energy Star label --

BLITZER: I know.

SYLVESTER: -- and they believe, you know, they go on faith that the government is backing it up. Not necessarily the case, Wolf. BLITZER: I think you and I, we're among those consumers.

SYLVESTER: Yes, we are.

BLITZER: Lisa, thank you.

It's been one of the FBI's best-kept secrets until now. A hidden room filled with files dating back to J. Edgar Hoover. And now for the first time, we're learning what's inside. You're going to see it right here.

And good news for everyone who's always wanted an iPhone, but doesn't have AT&T.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: It's an FBI room so secret, so top secret, I should say, that many inside the agency didn't even know of its existence. But now for the first time, the door is being cracked open, revealing some of the information that was deemed even beyond classified.

Brian Todd is working this story for us.

Brian, what are we learning about these super secret files?

TODD: Well, Wolf, we're learning that even if you were an FBI agent during J. Edgar Hoover's time, you might not have necessarily known about this file room. It was where information on the most sensitive cases in law enforcement was kept, and it was all the brainchild of the bureau's legendary director.

(BEGIN VIDEOTAPE)

TODD (voice-over): The notoriously secretive J. Edgar Hoover, ahead of his time in believing knowledge is power and always adept at covering himself politically and legally.

One of his most effective tools was recently revealed, a super secret room of files. A room with bars on the windows that agents could only access on a need-to-know basis. Files kept separate from the FBI's standard dossier.

SUSAN ROSENFELD, FORMER FBI HISTORIAN: This was information that they did not want your coy ploy normal FBI clerks or even, I suppose, your regular agents on simple -- non-supervisory agents to look at.

TODD: Former FBI historian Susan Rosenfeld saw these secret files while she worked at the bureau. Known as FBI's special or confidential file room, it contained files on teamster's boss Jimmy Hoffa, who disappeared in the 1970s. Entries on atomic smuggling and highly charged cases of those accused of betraying America's nuclear secrets.

(On camera): Can you tell us what were in some of the files you read?

ROSENFELD: Well, for example, files on the Rosenbergs. A lot of that material was top secret, and that was the kind of files you would have to find out for.

TODD (voice-over): She's referring to files on Julius and Ethel Rosenberg, executed for selling nuclear secrets.

Memos discussing the special file room, but not the files themselves, are on governmentaddict.org, a Web site which posts officially released government documents. A researcher with that Web site got the memos through a Freedom of Information Act request and first passed them to "The Boston Globe."

Many of these files have document numbers and historians say some of them could still be accessed through Freedom of Information requests.

One memo refers to sensitive FBI files on "highly placed persons in the field of Chicago law enforcement as well as city, county, and state political figures and their relations with the hoodlum element."

Athan Theoharis who's written books on Hoover and the FBI said the memos on the confidential file room showed the extent to which Hoover wanted to protect information about the bureau's activities.

ATHAN THEOHARIS, AUTHOR, "THE FBI & AMERICAN DEMOCRACY": And everybody not simply to very sensitive investigations, but investigations, which if were known, would raise questions about the FBI's abuses of power, sources legal in nature, or monitoring private individuals.

(END VIDEOTAPE)

TODD: Now, on that front, the FBI's current historian, John Fox, told us, quote, "The reason many of these documents were kept so secret was not to hide information from the courts or Congress, but to provide additional protection to especially sensitive intelligence information like signals intelligence and confidential human sources.

These protections, he said, were being implemented across the government's intelligence agencies, Wolf.

BLITZER: Is this file room, Brian, still in business?

TODD: We're told that there's no central kind of super secret room. There are areas where secret files were kept on a need-to-you know basis, files that require clearance, but no central room now involved on this.

BLITZER: Historians are going to have a field day with this.

TODD: It's fascinating stuff.

BLITZER: Brian, thank you. Let's go back to Lisa. She is monitoring some of the other top stories in "THE SITUATION ROOM" right now. What else is going on, Lisa?

SYLVESTER: Hi, Wolf. Well, heavy rain and wind are battering the northeast this hour, prompting fears of flooding for the second time in two weeks. The storm could dump more than half a foot of rain on parts of the region over the next several days.

Flood watches have been issued in some states and a state of emergency is in effect in Massachusetts.

The storm is also delaying flights at Boston, New York, and Philadelphia's airports.

The NTSB is launching an investigation into what caused two planes to nearly collide in midair over the weekend. Investigators say a United Airlines' jetliner bound for Beijing, China came within a few hundred feet of a small aircraft over San Francisco on Saturday.

The planes, in fact, were so close that a collision avoidance system sounded. Officials say it's still too early to determine who is to blame.

And AT&T could be losing its exclusivity with the iPhone in the not-too-distant future. "The Wall Street Journal" reports apple plans to release a new iPhone that could work with Verizon, Sprint, and some other smaller -- smaller carriers.

Now Apple did not immediately return a call from CNN today for a comment. Apple has had an exclusively relationship with AT&T in the United States since 2007.

And I know a lot of fans of the phone -- they're looking to see for that change. I know a lot of people want to see it broadened out to Verizon --

BLITZER: Yes.

SYLVESTER: -- and some of the other carriers. So we'll see if that happens, Wolf.

BLITZER: That could be a significant, significant development. Thanks, Lisa.

The Obama administration wants to crack down on universities. Get your graduation rates up, or you won't get to play in the NCAA tournament. The education secretary explains why this is a personal mission. That's coming up.

Plus, the first lady of France is a fashion icon around the world. So you might be surprised to hear what her favorite store is.

(COMMERCIAL BREAK)

BLITZER: Let's check back with Jack for "The Cafferty File" -- Jack.

CAFFERTY: The question this hour, Wolf, was: What does it mean that the Census Bureau can't be ready for this year's count? They only do this every 10 years, you know?

Isabella writes: "Can't be ready? How can that possibly be? The government has conducting the census every 10 years for hundreds of years." Well, that might be exaggeration. "They've spent millions advertising so Americans are ready to be counted. Now the Census Bureau's not ready?"

Steven in New York: "It means the Census Bureau is suffering the same malaise that all other government agencies suffer and businesses for that matter. Our education system is cranking out people not bright enough to do the jobs or honest and conscientious enough to put in the effort. The tubes are greased and we're just slip sliding away."

MD writes: "It probably means that health care will be down for the count, as well. Your government at work. What a farce. If it isn't the handwriting on the wall, we are so blind and we don't want to believe it. Maybe it would be better if the private sector would handle the census. At least we could hold their feet to the fire if they weren't ready to begin on time."

Jessie in Canada writes: "It means it's time for the Census Bureau to be closed and all the staff fired. I have more faith in Microsoft, IBM or Google to gather up all the information and make sure that people are not counted twice."

This person writes, they're anonymous, we'll see why: "My wife is a crew leader for the 2010 Census. She's trained her crew and they are awaiting their cases. Every day it's one computer problem after another, with the end result that no work is being readied and they are stalled out. Obviously I can't give you her name. She would probably lose other job."

And Ellie in Minnesota writes: "I'm an old lady, Jack, and I'm not opening my door for the government to pry into my affairs. I'm going look out the window at them and not answer the door. Just like I do when the Jehovah's Witnesses show up."

(LAUGHTER)

CAFFERTY: If you want to read more on this, you can go to my blog at CNN.com/caffertyfile -- Wolf?

BLITZER: All right, Jack, we'll do. Thank you. See you tomorrow.

The Education Secretary Arne Duncan has put college sports programs on notice. Duncan wants standards raised so that more of the athletes actually leave with a diploma. Tonight on CNN's "JOHN KING, USA," Duncan talks about why that's so important to him.

(BEGIN VIDEO CLIP) JOHN KING, CNN ANCHOR: You think if they don't graduate 40 percent of their students the NCAA should say, you know, you can't be involved in March Madness and in other tournaments like -- but you don't you say you don't want to enforce that. You can't make it mandatory.

How do you make it work?

ARNE DUNCAN, EDUCATION SECRETARY: Well, we're working with the NCAA and it's really up to them. But I just think, John, if universities can't graduate 2 out of 5 of the student athletes, how serious they are about their core mission.

Their core mission isn't to win games. It's to make sure student athletes get that -- graduate, get that piece of paper, get that diploma at the back end. I was lucky enough to have a phenomenal college athletic experience.

The vast majority of student athletes get that. I worry when athletes are simply used by the universities to produce revenue, to make money for them. Nothing to show at the back end.

I grew up with a lot of player who had very, very tough lives after the ball started bouncing for them. And that's what I'm going to continue to fight.

(END VIDEO CLIP)

BLITZER: Watch the interview, that's coming up on a few minutes on "JOHN KING, USA." Stand by for that.

The first lady of France is here in Washington. While her husband huddled with President Obama, she spent some time with some D.C. first graders. What they talked about when we come back.

(COMMERCIAL BREAK)

BLITZER: One of the top performing public middle schools here in Washington, D.C. had a special visitor today, the first lady of France. Carla Bruni-Sarkozy visited the Kipp D.C. Key Academy where she read from a classic French children's series "Madeleine" to a first grade class, and then took questions from a sixth grade class.

The first question, what are her favorite museums in France.

(BEGIN VIDEO CLIP)

BRUNI-SARKOZY: It's probably the Louvre. There are many beautiful museum in Paris but the Louvre is so fantastic. And you get in by a pyramid? Pyramid?

UNIDENTIFIED FEMALE: Yes.

BRUNI-SARKOZY: And in the Louvre you have so many paintings that you have very famous painting from Leonard Da Vinci called "La Joconde". You know, this lady, it's a portrait of a very beautiful, quiet lady. But she always looks at you no matter where you are in the room.

You can move around the room and for some strange reason, no one could ever figure out why or how. But she always looks -- she's just like this. And if you go there, she still looks at you for, like, a very strange reason.

So I hope that you kids can come to Paris one day. And I'll bring you to the Louvre and show you "La Joconde".

UNIDENTIFIED FEMALE: That would be great. I'll chaperone.

BRUNI-SARKOZY: Yes. And we go to the restaurant.

(LAUGHTER)

UNIDENTIFIED FEMALE: What's your favorite store to shop in in Paris?

BRUNI-SARKOZY: My favorite store. Well maybe my favorite store would be like grocery store. You want me to tell you what my son's, who is 7 years old, his favorite store is. I think you'd be more interested in that.

Well, there is -- how do you call in English when in between classes there is a minute of rest.

UNIDENTIFIED FEMALE: Recess.

BRUNI-SARKOZY: Recess. OK. So my son's favorite store is called the Great Recess. (Speaking in foreign language." And it's a toy store full of, you know, everything from balloons, you know, games for little children, games for children of your age and games for children of your age. And games for children of our age.

(END VIDEO CLIP)

BLITZER: The first lady of France, Carla Bruni-Sarkozy. By the way, the painting she was referring to, "La Joconde", is known to most Americans -- you probably guessed it -- as "The Mona Lisa."

Thanks very much for watching us. I'm Wolf Blitzer in THE SITUATION ROOM. Up next, "JOHN KING, USA."

KING: Thanks, Wolf. You know the old saying, if it sounds too good for true, it probably is?