Return to Transcripts main page

The Situation Room

Cargo Craft Misses Space Station; Alleged Spies Reveal Real Identities

Aired July 02, 2010 - 18:00   ET

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

SUZANNE MALVEAUX, CNN ANCHOR: You are in THE SITUATION ROOM.

Happening now: More Russian spy suspects come clean about their real identities. The alleged espionage ring includes married couples. Now, authorities must decide what to do with all of their children.

A cargo craft carrying oxygen and fuel to the International Space Station fails to dock and flies two miles past the target.

And we will take you behind the scenes to the set of a movie being made about President Obama's childhood in Indonesia.

Welcome to our viewers in the United States and around the world. Wolf Blitzer is off. I'm Suzanne Malveaux, and you are in THE SITUATION ROOM.

Court documents show that two more alleged Russian spies have revealed their true identities. Now, this time, it is a married couple. They were in court today for a detention hearing, which raises the question of what's going to happen with their young kids.

Our Brian Todd, he is live outside of the U.S. district court in Alexandria, Virginia.

And, Brian, what doe we know about the fate of their kids now?

BRIAN TODD, CNN CORRESPONDENT: That is very unclear at the moment, Suzanne.

You know, in court today, this couple never even made eye contact with each other. Prosecutors say they plan on indicting all of these suspects next week. For now, this couple and most of the others are being held without bail and their children are in real limbo.

(BEGIN VIDEOTAPE)

TODD (voice-over): Emerging from what authorities say was a deep-cover operation, three accused Russian spies appear in federal court. The judge calls each a danger to the community and a flight risk, orders them held without bail.

They include a married couple, Patricia Mills and Michael Zottoli, who have separate lawyers and don't even make eye contact with each other in court, Mills' face showing clear signs of strain. Authorities say she is trying to get their two children, ages 1 and 3, sent to Russia to be with her relatives.

There are at least seven children among four married couples in this alleged spy operation, children struggling not only with sudden separation from their parents...

UNIDENTIFIED MALE: They are both of them innocent.

TODD: ... but also the accusation that their parents weren't who they said they were. The government's complaint says illegals, spies who don't have diplomatic cover, sometimes work under the guise of married couples, and will often have children together. This further deepens an illegal's legend.

I asked child protection advocate Terri Braxton about that.

(on camera): Now, the children might question whether their parents were ever even married, whether their parents actually felt an emotional bond with each other, because they could be spies, they could be set up to do all of this. How bizarre is that?

TERRI BRAXTON, CHILD WELFARE LEAGUE OF AMERICA: Well, I don't have a precedent upon which to base an opinion, but I think it is certainly something that I have not experienced before, but -- and I can't imagine that any of the kids in this situation are going to feel good about this situation.

TODD (voice-over): The kids may not have even known their parents' names until now. Prosecutors say suspect Patricia Mills told investigators her real name is Natalia Pereverzeva and that her apparent husband, Zottoli, said his name is Mikhail Kutzik.

I spoke about that balancing act with Eric O'Neill, a former FBI operative who helped catch Russia's FBI mole, Robert Hanssen, a case dramatized in the Hollywood film "Breach."

(on camera): How hard is it to be a spy when you've got kids of any age?

ERIC O'NEILL, THE GEORGETOWN GROUP: That -- it has got to be incredibly difficult, because when you are a spy, the focus of your life is to be a spy, to accomplish the operation, to accomplish your objectives.

When you are a parent, you are supposed to take care of your kids. You are supposed to put them first in your life, and a spy can't do that.

(END VIDEOTAPE)

TODD: Now, experts say, despite the bizarre nature of this case, the children of all of these spy suspects will very likely be handed over to whomever the parents choose for guardianship, unless there is evidence of abuse on the part of the parents -- Suzanne.

MALVEAUX: And, Brian, do we have any idea where these kids are now? TODD: With many of the younger children, we really do not. Neighbors in the case of the Montclair, New Jersey, couple have said that the two elementary school-aged children of that couple were actually plucked from a pool party on Sunday when the operation was taken down and then placed in the custody, at least temporarily, of a female FBI agent.

So, in the case of some of the younger children, we really do not know where they are. The FBI and other authorities are keeping very close tabs on that, however. Now, some of these children are older. There is evidence that there is one in his 30s, one of college age, and there's one teenager among the Boston couple there. So their whereabouts are more well known, at least by us in the media, but for the younger children, that is being kept very close to the vest by authorities.

MALVEAUX: OK, Brian, thank you so much. Excellent reporting.

Joining me is CNN national security contributor Fran Townsend. She was homeland security adviser to President Bush and worked in the Justice Department during the Clinton administration. She also is a member of the CIA External Advisory Board.

And, Fran, you know, you and I have talked during the break, because it is really kind of an extraordinary situation here. You worked as a federal prosecutor. Is there any point that you take into consideration when you are going after prosecuting these suspects the well-being of the children, the fact that these couples have kids?

FRANCES TOWNSEND, CNN NATIONAL SECURITY CONTRIBUTOR: You don't take it into consideration in terms of charging. How you treat the parents is not -- whether or not they have children is not a factor.

But you do consider when you are going to take adults into custody who have small children, minor children, as Brian said, of elementary school age, you do take it into consideration in terms of making sure that they are in a safe environment. In other words, whether that -- if it was a U.S. couple, you would make sure they went to child protective services and that they were -- or put with a family member.

In this case, the children's immigration status is very murky. If they had been born to diplomats for example here inside the United States, they would not really be entitled to claim U.S. citizenship, even though they were born here, because that is an understanding in terms of diplomatic protocol.

But it is not clear what these children's status is. Where were they born? Did they claim U.S. citizenship? And what will happen to them? As Brian noted in his report, what the FBI will make sure is that they are in a safe environment until they can be sorted through and it's quite right to say the parents will ultimately have the right to make a decision unless there is some evidence of abuse or neglect.

MALVEAUX: Is it likely that they would be sent back to Russia with potentially a Russian family or relatives there? TOWNSEND: Well, it could be. If there were relatives, that would be a perfectly reasonable solution. If the Russian couple who are under indictment and in custody could prove that there were family members there willing to take them, to come to get them, yes, that would certainly be one option.

MALVEAUX: There is something that we heard today, the court proceedings, some records that I want to show you here, because one of the alleged suspects quoted talking about the mission coming first even before his own child.

He said -- this is coming from one of the U.S. attorneys in these papers filed, saying that after being given his Miranda warnings and waiving them, Lazaro admitted, among other things, that he was not born in Uruguay, that Juan Lazaro was not his true name, and that he although he loved his son, he would not violate his loyalty to the service, even for his son.

That is pretty chilling.

TOWNSEND: It is pretty chilling. But in many respects you have to remember all of these defendants who have children lied to their children about who they were.

These are people -- it shouldn't surprise us that they would not betray their service for their children because after all they have been living a lie with their children and put their very children in harm's way as they did their spying missions without regard to their own safety and long-term well-being

And so while I agree with you, Suzanne, it is really chilling, we see a long pattern of their behavior that that shouldn't -- that kind of statement really should not surprise us.

MALVEAUX: One thing I don't understand is some of these alleged spies are getting bail. Why would that be the case? Why would anybody get bail at this point when you had that one who is missing in Cyprus who got away and nobody knows where he is? Aren't they all a flight risk?

TOWNSEND: I think so, because what we know about spies, after all, is that they have multiple passports and multiple identities. They have access to resource and cash. And as you point out, the defendant in Cyprus didn't even surrender his passport. Now, that is very unusual.

Normally, if you are going to give somebody bail, you have them surrender their passport, but frankly, I don't think any of these people should be given bail, especially given the flight of the defendant in Cyprus.

MALVEAUX: All right, Fran Townsend, thank you so much. Have a great holiday.

TOWNSEND: You, too. MALVEAUX: An unmanned Russian cargo craft carrying fuel and oxygen to the International Space Station failed to dock, as planned Friday, and flew about two miles past its target. Now, NASA is calling it a fluke event.

I want to go live to CNN's John Zarrella.

John, tell us about this spacecraft. It is out of control? Do we know where it is?

JOHN ZARRELLA, CNN MIAMI BUREAU CHIEF: Yes. No, it is not out of control.

In fact, it is basically what is -- it's in a docking orbit, a stationary orbit right now. It is moving further away from the space station now. It did go about two miles underneath the space station this morning when it failed to dock.

Now, what happened was there is a docking port on the Russian side, a docking port on the United States' side, and this is a Progress Russian resupply ship. As you mentioned, it is unmanned and it was going to dock on the Russian side automated. There are no people involved, but for whatever reason, the commands being sent from the space station computers to the Russian resupply ship weren't being picked up, and it just floated on by.

It is important to note the six-member crew on the space station and the space station, itself, never in any trouble. It was as you mentioned carrying water, oxygen. It's also carrying spare parts and some propellant.

So with the space shuttle about to end its service in the next year or so, it is critical that they get these ships up there, these unmanned ships. The Europeans have one. The Japanese have one. And there are a lot of Progress resupply ships with the Russians. So it is not the end of the world right now that it slipped by, but they certainly always want to keep their stocks of supplies up, so they are going to have to try and figure out what they can do next.

The Russians and the American teams, the managers, space station managers, are huddling and will continue to huddle tomorrow to try and figure out what went wrong and what they can do next -- Suzanne.

MALVEAUX: And, John, are they going to try to re-dock?

ZARRELLA: What they are saying now is not before Sunday. They are still trying to understand exactly what happened, and that the next rendezvous point when these two vehicles will come together close enough will be Sunday. That is the next earliest opportunity, if they can figure out what went wrong -- Suzanne.

MALVEAUX: All right. Thank you, John.

There are troubling discoveries on a boat tour of the Gulf oil disaster, broken booms, oiled pelicans and more. We are going to take you there live to see for yourself. Also, GOP Chairman Michael Steele under fresh fire for what he said about the war in Afghanistan -- details of new calls for him to step down.

Plus, a bold and bloody Taliban attack just hours before the new U.S. commander reports for duty in Afghanistan.

(COMMERCIAL BREAK)

MALVEAUX: Hurricane Alex is now just a bad memory, but even though the storm was centered hundreds of miles from the BP oil blowout, cleanup operations are still feeling the impact of the rough weather.

Our CNN senior correspondent, Allan Chernoff, took a boat tour in Louisiana.

Allan, tell us what you saw.

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Well, Suzanne, the fact is, is that the storm is bringing oil this way. We took a boat about 40 minutes into the Gulf of Mexico, looked in the water, and found this.

(BEGIN VIDEOTAPE)

CHERNOFF: We are by Comfort Island, which is more than 60 miles away from the Macondo oil gusher, but has oil drifted here? Absolutely. There is a bit of a sheen right here on the oil. And if I reach over there, I have got what they call a tar ball.

Now, this is basically emulsified oil. It has been in the water here for -- we are by Comfort Island, which is more than 60 miles away from the Macondo oil gusher, but has oil drifted here? Absolutely. There is a bit of a sheen right here on the oil. And if I reach over there, I have got what they call a tar ball. Now, this is basically emulsified oil. It has been in the water here for at least a week, maybe a couple of weeks. This is what happens to it. And that is the reason there is boom surrounding this island, trying to prevent this type of oil from hitting the island and especially hitting those pelicans.

Unfortunately here, it is not quite working. The pelicans, they have got oil on them.

UNIDENTIFIED MALE: All of them, they all have oil on them.

CHERNOFF: All of them?

UNIDENTIFIED MALE: All of them right there, yes, about eight or 10 of them. Yes, it is not good. It's not good at all.

CHERNOFF: This is what Hurricane Alex did to some of the boom, broke it up, and that is the reason there are so many crews surrounding the island right now, bringing out replacement boom. They will have to do that over and over again through the summer, as more storms come in. It is a guarantee. There is going to be a lot of work to be done. Here is a chunk of emulsified oil. It has probably been sitting in the water for a couple of weeks, and you would not really pick it out, but you have to look closely, and that is the reason that these folks are working right behind us.

They are cleaning up the island using what they call pom-poms, absorbent material, as you can see behind us, putting it into the sacks after they use the rakes to try to get as much oil as possible. And you can see, in fact, the oil on the plastic bag right behind us. This is very hard work, because it is extremely hot here.

(END VIDEOTAPE)

CHERNOFF: Coming face-to-face with that oil really makes you acutely aware of the horrible environmental price that we can pay for that precious commodity that we actually all need. And when you are out there, you see the rigs way off in the distance, and then close up, you see this stuff -- Suzanne.

MALVEAUX: Allan, thank you so much. So sad about the birds. We really appreciate your report.

They are calling it the lost summer in Pensacola, Florida, where the region's famous white sand beaches are now stained with oil.

Our CNN's John Zarrella, he is actually there.

And, John, give us a sense of what kind of impact this is having for Pensacola, particularly this holiday weekend.

ZARRELLA: Yes, it is a major impact. You can see here, Suzanne, the beach is pretty much deserted. It should be packed with tourists here this holiday weekend, absolutely not.

And they did come out here, the crews, and they cleaned up this beach today, so, you know, at first blush, when you look at it, it looks pretty good, but, you know, take a look down here. Oil. Tar balls. And you see this all over here, Suzanne, and that is the problem.

People here, the frustration is growing over what seems to be a never-ending fight.

(BEGIN VIDEOTAPE)

ZARRELLA (voice-over): Cleanup crews pore over Pensacola beaches. Oil stains and tar balls cover what was just a few weeks ago pristine white sand.

Front-loaders literally dump Pensacola's economy into waiting trucks. The virtually empty beaches are now under what the county health department is calling an oil impact notice, warning people to stay out of the water and off of the oil-stained stand indefinitely.

(on camera): Does it worry you that the closure of these beaches might not just be for days; it could be weeks, if not longer?

LARRY JOHNSON, PENSACOLA, FLORIDA CITY COUNCIL: Yes, we have lost this summer. The summer of 2010 is gone for Pensacola Beach, the way that I see it. Our season is from Memorial Day to Labor Day. We are sitting here the week before July 4th, and there is nobody here.

ZARRELLA (voice-over): Disgust, anger. For Councilman Larry Johnson, this show of cleanup force is too little, too late. Day after day, the tides shift the sand. Much of the tar and oil is buried before the crews get to it. Johnson digs down. The oil appears underneath the surface, like the rings of a tree that tell its age.

JOHNSON: John, this has been covered up from the night before.

ZARRELLA (on camera): Now, how many inches down is this? That's got to be four inches, five inches?

JOHNSON: Four or five inches down.

ZARRELLA (voice-over): Pensacola is home to Gregg Hall and Diana Stephens.

GREGG HALL, RESIDENT OF PENSACOLA, FLORIDA: It kills me. I mean, it kills my soul that the Gulf of Mexico is being destroyed.

ZARRELLA: Every day, they walk the beach taking pictures -- iReporters for CNN, they have documented what they see. Not pretty. Gregg puts his hands in the water, when he takes them out, tar. Diana holds a clean fish tank filter, not for long.

DIANA STEPHENS, RESIDENT OF PENSACOLA, FLORIDA: This is it. Just holding it in for a few seconds, you can see you get tar balls. This is the sheen mousse, which is the foamy orange stuff that you see out in the surf.

ZARRELLA: Nearly every day, more oil washes ashore, bringing with it waves of overwhelming frustration felt by most people here.

STEPHENS: You can't get everything. It is kind of like cleaning this beach with a toothpick. It is just -- it's an impossible task.

ZARRELLA: An impossible task with no end in sight.

(END VIDEOTAPE)

ZARRELLA: And, Suzanne, you know, despite the warnings, you can see there's some people just coming out of the water behind me there. They were out there swimming in the Gulf of Mexico, despite the fact that the county is telling people here, Escambia County officials, stay out of the water.

You know what is interesting, though? It's, they are sort of flying by the seat of their pants on this, because there are no EPA guidelines that say the water is safe, the water is not safe. When you have a broken sewage pipeline in the water, they will tell you stay out of the water while we're testing it.

They are trying to come up with guidelines, but they don't have anything yet -- Suzanne.

(CROSSTALK)

MALVEAUX: It's unbelievable, John. Do -- any officials, if they see people in the water, do they tell them to get out? Or is there any kind of enforcement of that or not really?

ZARRELLA: No, not really. I'm looking at the lifeguard stand back there. You can see the lifeguards are kind of just sitting up there, and we saw people in and out of the water pretty much since we have been here the last couple of hours, and you can see how absolutely deserted this beach is. It is just -- just a horrible, horrible shame, what is transpiring here -- Suzanne.

MALVEAUX: Heartbreaking. Heartbreaking.

Thank you, John.

ZARRELLA: Yes.

MALVEAUX: House Speaker Nancy Pelosi defies President Obama with a controversial vote on the war in Afghanistan. Details of deep Democratic divisions are now being revealed.

Plus, the iPhone glitch that stunned Apple itself -- what the company is going to do.

(COMMERCIAL BREAK)

(NEWS BREAK)

MALVEAUX: Republican chairman in hot water. It was something Michael Steele said, again -- why a leading conservative is calling on him to resign.

And for the first time this year, the economy suffers a net loss of jobs, so why is President Obama saying things are heading in the right direction?

Plus, it is the world's biggest skimmer ship, the length of more than three football fields. But will authorities let it start collecting oil from the Gulf? We will take you aboard.

(COMMERCIAL BREAK)

MALVEAUX: Despite an increase in hiring, the U.S. economy lost 125,000 jobs in June. Now, it is the first time this year that net employment has fallen.

The overall unemployment rate declined to 9.5 percent, but that may indicate that some have given up looking for work.

President Obama is taking a positive approach. (BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: This morning, we received the June employment report. It reflected the planned phase- out of 225,000 temporary census jobs. But it also showed the sixth straight month of job growth in the private sector.

All told, our economy has created nearly 600,000 private sector jobs this year. T hat's a stark turn around from the first six months of last year when we lost 3.7 million jobs at the height of the recession. Now, make no mistake, we are headed in the right direction. But, as I was reminded on a trip to Racine, Wisconsin earlier this week, we're not headed there fast enough for a lot of Americans and not headed there fast enough for me.

The recession dug us a hole of about 8 millions jobs deep, and we continue to fight headwinds from volatile global markets. So, we still have a great deal of work to do to repair the economy and get the American people back to work. That's why we're continuing a relentless effort across multiple fronts to keep this recovery moving.

(END VIDEO CLIP)

MALVEAUX: Joining me, John King of CNN's "John King, USA" and chief political correspondent, Candy Crowley, host of CNN's "State of the Union. I guess, if you take a listen to the president, everything is just fine. But it depends on who you ask. Could they both be right?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, it depends on how you add it up. I mean, listen, no way is a net loss of jobs a good thing. I mean, you can pretty it up, but I think that, you know, we sort of miss it in the weeds. The 50,000 foot view is 9.5 percent unemployment. There is no way to make that good. A president who goes into these fall midterms with 9.5 percent unemployment is in trouble.

JOHN KING, CNN ANCHOR: He is trying to do the best he can in saying it's better now than it was a year or a year and a half ago, but to Candy's point, the only reason the rate went down, Suzanne, is because more than 650,000 Americans gave up. They got so discouraged they couldn't get a job, they stopped looking. And that's how the government counts. Otherwise, the rate would be 9.9percent. The long-term unemployment the number of Americans who've been unemployed for six months or more is the highest it has been since they started keeping that statistic that was 1948.

This is a tough economic climate mostly for the people at home who don't have a job and politically for the president and his party.

MALVEAUX: One of those things that also happened is that a lot of people lost their unemployment benefits so that were not extended, and therefore, they decided to stop looking because they didn't even get the benefits to begin with. I want to show you -- this is what one of the Republicans described, Representative Kevin Brady of Texas. He was talking to the Bureau of Labor Statistics, Keith Hall, and here's how he put it.

(BEGIN VIDEO CLIP)

REP. KEVIN BRADY, (R) TEXAS: I can't believe you just said a bright spot is that unemployment rate fell. Do you realize that's because 652,000 Americans gave up looking for work?

KEITH HALL, COMM.., BUREAU OF LABOR STATISTICS: Absolutely. The labor force did decline by that much.

BRADY: So next month, another 600,000 people give up looking for work, should we organize some parade to cheer it? It seems to me that like that's not good news.

(END VIDEO CLIP)

MALVEAUX: He's so dead pan, and I love he's able to deliver those zingers. But to the more serious point, what does the president need to do? Does there anything he can do at this point before the midterms to show for it that there's something better that's going to come out of this?

KING: Well, it's a hard one. The president said at that event in Racine, Wisconsin the other day, 14.2 percent unemployment in the city. He was in a Wisconsin of state. He carried last time and he said, look, there's not much any president or any politician can do, and yet, a lot of people going to tell you, otherwise, between now and the election. And you will have people telling you otherwise between now and the election. And despite over unemployment benefits, you mentioned, to me, it's a fascinating task of which party is right.

The Democrats want to say the Republicans are cold hearted. They want to approve this money. The republicans have come to the conclusion that people care more about the bigger picture, deficit spending, the long term, that they've had to make tough choices, and Washington has to make tough choices. That's a good election debate to have.

CROWLEY: It is and will be an election debate. Look, the president can do what he's doing now is just trying to pretty it up in some way looking at half-full instead of half empty. And he can do what they're doing which is it would have been much worse. If we haven't acted, it would be really terrible, and it's George Bush's fault.

MALVEAUX: I want to turn to the Republican, obviously, the RNC chair, Michael Steele, he's in trouble again. We have seen this before play out, but I want you to listen to this date because he said - and it was caught on YouTube, a fund-raiser, that this was Obama's war, Afghanistan. Take a listen.

(BEGIN VIDEO CLIP)

MICHAEL STEELE, CHAIRMAN, REPUBLICAN NATIONAL CMTE.: (INAUDIBLE). This is a war of Obama's choosing. This is not something the United States actively prosecuted or wanted to engage in.

(END VIDEO CLIP)

MALVEAUX: There are some conservatives who are absolutely livid about this, you know. I mean, I don't know whether or not it even makes much sense what he said here.

CROWLEY: Look, he's wrong on the facts. This is not -- I mean, look, Republicans have been saying or others have been saying this is Obama's war insofar as he's put in more troops than George Bush ever did. He did say all along the war we should be prosecuting is Afghanistan. That was his entire campaign, but Steele is wrong that, you know, it's Obama's war that he started it. And I tell you what, he's really ticking off Republicans and that is the suggestion that it can't be won, because Republicans are the one behind this war. The Democrats are getting cold feet.

MALVEAUX: And John, I want to point out this here. This is Bill Kristol who sent an open letter to Michael Steele today saying, I ask you to consider over this July 4th weekend doing an act of service for the country you love, resign as chairman of the Republican Party. Your comment is more than an embarrassment. It's an affront both to the honor of the Republican Party and to the commitment of the soldiers fighting to accomplish the mission they've been asked to take on by our elected leaders. Is there anything Michael Steele can do?

KING: Well, he issued a new statement tonight in which he didn't apologize, and he didn't even try to take back what he said. He just tried to clean it up by saying, I support the troops. I support their mission, and this is President Obama's strategy. He didn't use the word he's choosing anymore. He's trying to clean it up. We'll see if this one builds or not. He's exhausted the patience of a lot of people who have supported him through these gaffes, Suzanne.

The question is, is that a distraction down the road? The Republican actually put a chairman (ph). He doesn't decide whether the Republicans win the race for California governor or Ohio Senate, but if you have the top guys out raising money for candidates, the chairman goes to some of the lower to your raises, helps to raise money, help to generate -- do you two or three races here or there because you have a chairman people won't invite in? Who knows, but there's a lot of - they're just very frustrated with this guy.

CROWLEY: They are, but there's an election coming as John mentioned. It's a distraction. This man's term runs out in January. If they can hold on, they will. It does depend on how much this builds, but it is a huge process to get rid of the chairman. They have to bring in the party, which is the state party chairman and two or three other people in the state. It's really a lot of trouble, and politically, it's probably not the brightest idea this close to an election.

MALVEAUX: And we should let our audience know that we did invite Michael Steele to come on the SITUATION ROOM if he wanted to explain for himself, but we do know we have his statement. So, thank you, Candy and John. KING: He's welcome here anytime for all of our shows.

MALVEAUX: Oh, absolutely, the weekend, welcome to be here.

Former President Bill Clinton says when it comes to fixing the economy, the U.S. should look to banks and more than $1 trillion in uncommitted loans that could help get many unemployed Americans back to work. He talked about it in South Africa with Wolf Blitzer at the fortunetimes/CNN global forum which compensated the former president for his appearance.

(BEGIN VIDEO CLIP)

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: If there is a way out of this, I would say it is this, I don't think we should move to austerity too quickly because you could trigger a second recession. That's what happened in 1937 with Roosevelt. And I hate these deficits. You remember, I had four surplus budgets out of my eight. I'm a very fiscally conservative person, but you can't get milk out of a turnip, you know. It won't -- you got to have -- somebody has to be there making money to pay the taxes. So, here's America could -- in my opinion, could lead the world out of a lot of this if we were more like Willie Sutton who robbed the banks because that's where the money was.

Our budget is broken, but we have more than $1.5 trillion in American banks uncommitted to loans. So, what I think government policy should be designed to do is to make it easier and more secure for banks to make legitimate loans. I'm not talking about subprime mortgages. For example, we got 25 percent unemployment rate in America among construction workers, 2.5 times the national average, for obvious reasons, right, because this whole thing started with the housing collapse. So, what should we do? We all to have a loan guarantee program for anybody who will do energy retro fits on big buildings that aren't about to close.

And it won't cost the taxpayers anything, really, because all those big projects are already guaranteed by the energy service companies who put in the technology. So, we could get half of our greenhouse gas reductions in America through efficiencies, most of them in buildings starting with big buildings that are certainly going to be here five years from now, and you'll get savings between 20 percent and 45 percent, all of which will be paid off within five to six years.

And if you have a loan guarantee like the SBA, the Small Business Administration loan guarantee for 90 percent of it, then banks will loan money to do that and you could put a million people to work in six month in every place in America. That' the sort of thing we need to be thinking about. What other things that we need to do to get the business community to invest and people to borrow and make the banks feel comfortable doing what they could normally do, not doing great speculative stuff? That's the answer. That's the best policy we could follow that would help lead the world out of this recession.

(END VIDEO CLIP) MALVEAUX: It's an oil skimmer that is so big, it is called a whale. What it can do to help the Gulf oil disaster?

And a bloody Taliban attack marks the arrival of the new U.S. commander in Afghanistan.

(COMMERCIAL BREAK)

MALVEAUX: A giant ship called "a whale" is on Louisiana Coast. Now, it can process hundreds of thousands of barrel of oily water each day. Our CNN's Ed Lavandera is on board.

(BEGIN VIDEOTAPE)

ED LAVANDERA, CNN CORRESPONDENT: This is how you get on the world's largest oil skimmer. Quite a feat and quite an adventure. So, now we're on board a massive vessel called "a whale" and this is a giant cargo ship that has been retrofitted to skim oil out in the Gulf of Mexico. This kind of technology retrofitting has never been done before, so right now, the coast guard hasn't given this ship permission to go out and skim oil in the Gulf of Mexico. We're on the navigation deck of this vessel, and from this perch, you can really get a sense of the magnitude of this ship.

It is almost four football fields long, and one football field wide, and as you look at those other massive ships out there on the water, they look small from this vantage point, but underneath this massive deck that you see right here below us, underneath there is where the crucial work will take place if, indeed, the technology aboard this vessel does work. Underneath there is where the containers and where the oil could be skimmed into is being held right now. So, we're going to go to check that out.

Those slits that you see on the side of the ship are called the jaws, and that is the critical component that has been retrofitted to help this ship collect oil. So, the oil is going to come through here into these valves and then into a series of five tanks.

UNIDENTIFIED MALE: Yes.

LAVANDERA: And that's the process of separating the oil from the water.

What you see here is called the jaws. It's, essentially, when this ship gets the clearance to go out and start skimming oil, the oil will come into here and then get brought into these valves and get processed where they will begin the process of separating the water from the oil. Right now, the crew of this ship is waiting on final permission from the unified command to start skimming oil in the Gulf of Mexico. There's a couple of issues there being looked at right now. First of all, one of them is safety issue of ship this big out on the Gulf of Mexico needs about a half mile radius all the way around to operate safety.

So, they're trying to figure if that's possible. There are also some environmental concerns. Part of the way this ship works is that it brings in oil and water, it separates that, and the water gets thrown back out into the Gulf of Mexico and they keep the oil. They're also looking as to into whether or not that water that's going to be discharged, what are the environmental impact of that? So, that's one of the things slowing it down, but everyone aboard here thinks that it's just a matter of time before this vessel is put into fight the oil disaster in the Gulf of Mexico.

(END VIDEOTAPE)

MALVEAUX: Just before the new U.S. commander's arrival in Afghanistan, the Taliban sends a bloody message.

And President Clinton remembers Senator Robert Byrd.

(COMMERCIAL BREAK)

MALVEAUX: Hours before the new U.S. commander arrived in Afghanistan, that is what happened, a bold attack on the compound of a U.S. aide subcontractor. CNN's Atia Abawi is in Kabul.

(BEGIN VIDEO CLIP)

ATIA ABAWI, CNN CORRESPONDENT (voice-over): The new top NATO commander of Afghanistan, General David Petraeus made his way to NATO headquarters in Kabul Friday evening local time. This comes on the same day where there was a grim morning attack in Northern Afghanistan's Kunduz province. That's where the governor says that six Taliban gunmen wearing suicide vest around 3:00 in the morning attacked a compound used by a subcontractor for USAID. The governor said one of the gunmen detonated his vest by the gate leading the way for a car to come in, a car with explosive that was detonated inside as well.

The four remaining gunmen stormed the building, but the governor says that the people inside, many of them had enough time to make their way on top of the roof where they locked themselves. And that's what he says saved a majority of their lives, but still, at least five people were killed, including three foreigners and two afghan nationals. The foreigners included a German citizen, a British citizen, and a Filipino citizen. As for the Afghans, it was an Afghan police officer and a local guard. This attack in Northern Afghanistan a reminder for General David Petraeus and the NATO forces here that the Taliban are gaining strength.

And as President Obama has said in the past, they are gaining momentum in Afghanistan as well. Northern Afghanistan was once considered one of the safest parts of the country just a couple of years ago, but in the last year alone, we've seen many brazen attacks by the Taliban in the area and a growing insurgency which includes Hezbollah as well as the Taliban.

Atia Abawi, CNN, Kabul.

(END VIDEO CLIP)

MALVEAUX: A lifetime of redemption for a long ago mistake. Former President Bill Clinton's eulogy for Senator Robert Byrd.

Plus, a new movie about President Obama's childhood in Indonesia. And we'll hear from its young star.

(COMMERCIAL BREAK)

MALVEAUX: The Fourth of July weekend got off to a somber start in Charleston, West Virginia, where a memorial was held for Senator Robert Byrd. He died Monday at age 92, the longest serving member of Congress in U.S. history. President Obama and Vice President Biden were there along with Congressional leaders and former president Bill Clinton who touched on Byrd's long-ago association, the Ku Klux Klan.

(BEGIN VIDEO CLIP)

CLINTON: He did as good a job for you as he could. As far as he was concerned, there was no such thing as too much for West Virginia. But, the one thing he would not do, even for you is violate his sense of what was required to maintain the integrity of the constitution and the integrity of the United States Senate so that America could go on when we were wrong as well as right. So, we would never be dependent on always being right. Let me just say finally, it is commonplace to say that he was a self-made man, that he set an example of lifetime learning. He was the first and as far as I know might be the only member of Congress to get a law degree while serving in the Congress.

But he did more learning than that. And all you got to do is look around this crowd today and listen to that music to remember. There are a lot of people who wrote these eulogies for Senator Byrd in the newspapers and I read a bunch of them. And they mentioned that he once had a fleeting association with the Ku Klux Klan and what does that mean? I tell you what it means. He was a country boy from the hills and hollows of West Virginia. He was trying to get elected. And maybe he did something he shouldn't have done, and he spent the rest of his life making it up. And that's what a good person does.

(END VIDEO CLIP)

MALVEAUX: Senator Robert Byrd will be buried Tuesday after a funeral service in Arlington, Virginia.

GOP chairman, Michael Steele, causes an uproar with controversial remarks about the Afghan war. John King digs deep at the top of the hour.

(COMMERCIAL BREAK)

MALVEAUX: President Obama's childhood in Indonesia is a subject of a new movie that is now in production. Our CNN's Arwa Damon takes us on the set.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Action!

UNIDENTIFIED FEMALE: It's not about me. It's about guy. ARWA DAMON, CNN CORRESPONDENT (voice-over): We're on the set of the movie "Obama Anak Menteng." Which translates into Obama Menteng kid. Menteng was the area of Jakarta where he lived.

DAMON (on-camera): Jakarta has changed significantly in the decades since President Obama lived there which is why this movie is being shot here in Bandung about two hours east of the capital. This is an old Dutch colonial home that has been converted into the movie set. So, we're going to take a look inside.

DAMON (voice-over): It's the story of Barack Obama's last year in Indonesia when he was 10.

DAMON (on-camera): The scene that they're shooting right now is one where Obama walks into the living room and overhears his mother speaking on the phone about how perhaps he should move back to Hawaii.

DAMON (voice-over): The young Obama is played by American, Hasan Faruq.

HASAN FARUQ, ACTOR: It feels great. I feel really excited to be playing one of the most powerful men in the world right now.

DAMON: Faruq's family moved to Indonesia back in 1999. He was 3 years old, younger than President Obama was when he made the journey.

UNIDENTIFIED FEMALE: It's an interesting part for my son to play because it is something that is -- whether we like it or not, they stand out as different because they don't look like the average Indonesian.

DAMON: Nasim (ph) says she's watching her son blossom as he plays the young American president.

FARUQ: I feel like I can understand him. Do I know him? I don't know, but I feel like I can understand what he felt.

DAMON: Damian Dematra wrote a screenplay and the book about Barack Obama's years here, which he describes as part fact, part fiction. He didn't interview the president himself, and the film avoids politically sensitive subjects.

DAMIAN DEMATRA, EXECUTIVE PRODUCER: So, they were discussing and making controversy (ph) about Obama's praying, yes, in a Muslim way.

DAMON: In his memoir, President Obama makes no mention of praying as a Muslim when he lived in Indonesia. Dematra says the point of the movie is to show that as a boy, the future president benefited from his multicultural surroundings.

Arwa Damon, CNN, Bandung, Indonesia.

(END VIDEOTAPE)

MALVEAUX: I'm Suzanne Malveaux in the SITUATION ROOM. "John King USA" starts right now.