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The Situation Room

Spy Swap Still Unfolding; Intelligence Chief Nominee in Limbo; Below the Surface of the Oil Spill; Oil Dumping Enrages Communities; Spy Swap Still Unfolding; President Gets in the Ring in Vegas; Independents Turn on President Obama; Avoiding a Blackout in the Heat

Aired July 09, 2010 - 17:00   ET

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

WOLF BLITZER, CNN ANCHOR: Rick, thanks very much. Happening right now, four people convicted of spying for the United States may soon be landing here in Washington, D.C.

Who are they? And did the Obama administration get involved even before the arrests of the Russian spies in New York in a possible swap? The spy drama is unfolding right now. Stand by.

Also, over the next 48 hours or so, there could be some critical developments in the cleanup and containment of the Gulf oil spill. Admiral Thad Allen reveals new information to us about plans to cap the leak.

And a chapter of the NAACP now under fire for supporting the legalization of marijuana. Just ahead the debate over drug laws and whether they unfairly target young minorities.

I'm Wolf Blitzer. You're in "The Situation Room."

They were prisoners in Russia convicted of treason and espionage. Four men left Vienna today completing an international spy swap. We are monitoring a flight coming into the Washington, D.C. area right now. Some or all of those four may be onboard.

Meanwhile, 10 Russian agents who pled guilty to spying on Americans are already back in Moscow. Let's begin our coverage this hour with our Foreign Affairs correspondent Jill Dougherty. Jill, we're also just getting new information coming in to the "The Situation Room" right now. What we've taking up?

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: Yes, Wolf, there is a lot of stuff happening, but let's start with that plane. You know, this afternoon, today in Vienna, Austria, two planes on the ground. One Russian, one American and a dramatic transfer shrouded in secrecy.

You had 10 alleged Russian spies traded for four men held in Russia on charges of spying for the west and right now there are more questions than answers.

(BEGIN VIDEOTAPE)

DOUGHERTY (voice-over): Russia's state television aired video of the men, some in cages at Russian courts traditionally used for defendants. One video in classic Cold War style shows a suspect's arrest several years ago.

The Russian government considers them spies and made them admit their guilt to get out of jail. But the state department doesn't acknowledge the charges against any of them. The Kremlin identified the men by name Thursday. All U.S. officials say is several are in poor health.

MARK TONER, STATE DEPARTMENT SPOKESMAN: I have nothing for you.

DOUGHERTY: The best known prisoner, Igor Sutyagin, arms control expert for a Moscow think tank. The Russians say he gave military secrets to a British company working with the CIA and found him guilty of treason, sentencing him to 15 years in a high security prison.

He has consistently maintained his innocence. Alexander Zaporozhsky reportedly is a former colonel in Russia's Counterintelligence Service. According to Russian media he worked in the U.S. and retired here. When he returned to Russia he was arrested and found guilty of high treason for giving the CIA secret information on Russian agents.

He served seven years of an 18-year sentence and reportedly has family in the U.S. Russian media say the third man released (Sergei Skripal) is a former military intelligence agent. He was serving a 13-year sentence for spying on behalf of British intelligence. He reportedly has diabetes.

And then there (Gennadi Vasilenko) is a former KGB major reportedly arrested 12 years ago for contacts with the CIA and arrested again on illegal weapons charges.

(END VIDEOTAPE)

DOUGHERTY: Again, Wolf, there is some late breaking news, information coming out from a White House official who tells CNN that it was the administration's idea for this spy swap as it's called. They came up with the idea he says before the arrests were made in the United States.

Why did they choose those four men in Russia? Humanitarian concerns, health concerns, and national security interests and then, finally, they presented the names, this official says, to the Russians, within days after those 10 Russians were arrested here in the United States.

The negotiations and discussions were led by the CIA Director Leon Panetta. Finally, Moscow responded very quickly and all of that again according to a White House official, Wolf.

BLITZER: It sounds like what I've been suspecting now for days, Jill that the U.S. has been watching these 10 Russian spies for some 10 years and they really knew what was going on. They decided to arrest them out of fear in part because they thought some of them might be going back to Russia this summer.

But also to set the stage for what they wanted, which was a spy swap to have some bait if you will to get these four prisoners in Russia out of there. So it was all sort of coordinated between Leon Panetta, the CIA director and his counterpart in the Soviet intelligence community.

It looks like it was a very carefully choreographed plot. I assume that's the information you're getting as well.

DOUGHERTY: It seems to be, Wolf, although I'm not quite sure that ultimately they -- the U.S. did this, you know, broke the ring in order to get those four out because that could have happened a very long time ago. Those men have been in prison for quite a while.

But certainly when they realized that they had these guys, the 10, and they didn't have -- there was no real reason to hold them anymore, they really weren't going to get more, then they thought, let's use this and get what we want, which is these four guys and at least one of them appears to be sick, so that seems to be the sequence. Again, there is a lot of back story on this one, Wolf.

BLITZER: We're going to have much more on the story coming up. More information, but I want to go to Brian Todd right now. He's out at Dulles Airport right outside of Washington, D.C. in Northern Virginia.

Brian, we assume that plane carrying these four individuals or at least three of them might be landing at Dulles fairly soon. You're getting new information. What are you picking up?

BRIAN TODD: New information, Wolf, that the plane will be landing probably within the next 30 minutes here at Dulles Airport. We were just told that it is somewhere just past the Connecticut/New York area on route to Washington, D.C.

Here is what we know about the leg this of trip. It began in Moscow then it was in Vienna, Austria. It took off from Vienna earlier today, went to Great Britain. "The Washington Post" is reporting that two of the Russians got off the plane, deplaned and stayed in Great Britain. Working to confirm that on our own right now.

The plane now on route here to Dulles and we also know that another leg of this trip has been added to Miami. Now, again, it is not clear if that's connected to whether any of these Russian gentlemen might be getting off here and/or in Miami or not.

Whoever is left on that plane may be getting off here and staying in the Washington area. Not clear which if any of those Russian gentlemen, those Russian agents are getting off here at Dulles airport, but the arrival is imminent, Wolf.

BLITZER: All right, we'll stay in close touch, Brian, within the next half hour or so as you report that plane should be landing at Dulles Airport outside of Washington, D.C. We're going to check back with Brian.

A lot more on the spy story coming up later in "The Situation Room" as well. We're taking a closer look at what happens to the children of those 10 Russian agents who were expelled from the United States. We're getting new information on that as well.

But now to a striking gap in America's homeland security. It's been over a month since President Obama named his choice to become the new director of National Intelligence, but James Clapper still hasn't been confirmed for the job and there is no telling when or if he will be. Our Pentagon correspondent Barbara Starr is working the story for us.

Barbara, what's going on here?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, you know, Wolf, Russian spy swaps, al Qaeda at the door step, and no director of National Intelligence in this country. A lot of concerns about really who is minding the store.

(BEGIN VIDEOTAPE)

STARR: Summer time confirmation hearings for General David Petraeus to run the war in Afghanistan and Elena Kagan to join the Supreme Court quickly planned and carried out. But there's another critical nomination out there that's been anything but.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: I am proud to announce my choice for the next director of National Intelligence, James Clapper.

STARR: It was back on June 5th that the president announced his choice for the new Intelligence chief. The person in charge of overseeing 16 U.S. intelligence agencies.

PRESIDENT OBAMA: Jim is one of our nation's most experienced and most respected intelligence professionals.

STARR: But the Senate Intelligence Committee hasn't even scheduled a confirmation hearing. The last director, Dennis Blair, is long gone. The number two is scheduled to retire within weeks. For now, the Intelligence community appears leaderless.

FRANCIS FRAGOS TOWNSEND, CNN NATIONAL SECURITY CONTRIBUTOR: Like any great orchestra you need an orchestra leader and that's what we're missing right now.

STARR: The holdup? The nomination has become a political football on Capitol Hill in a dispute over which members of Congress get notified about top-secret intelligence activities. While Congress sorts this out, CIA Director Leon Panetta's power is growing especially in dealing with Pakistan insiders say. He is just one player.

TOWNSEND: The single most influential person around President Obama that influences his thinking on intelligence matters is John Brennan.

STARR: Brennan, the White House top counterterrorism official, often meets with President Obama more than once a day and has been deeply involved in dealing with al Qaeda.

JOHN BRENNAN, DEPUTY NATIONAL SECURITY ADVISER: So this is a challenge that every day we have to remain on our guard. They're trying to find vulnerability in our defenses.

STARR: Many have questioned the need to even have a DNI, but now that the job is empty there are worries about U.S. safety.

LAWRENCE KORB, CENTER FOR AMERICAN PROGRESS: I am very, very concerned about it particularly at this time we're trying to figure out what's happening in Afghanistan. What's happening in Iraq? What's happening in Pakistan? What's going on with the Chinese military buildup?

(END VIDEOTAPE) STARR: Now, you know, there still have been those questions since 9/11 whether there even needs to be a director of National Intelligence. Clapper, the president's nominee, is currently the top intelligence official here in the Pentagon.

But get this, Wolf. He wrote a memo criticizing the DNI, the job he is up for, saying it had too much authority over Pentagon intelligence spending, which is what his current job is.

BLITZER: We'll see if he changes his tune if he in fact is confirmed as the new DNI. All right, thanks, Barbara. Thanks very much.

Let's get to a CNN exclusive right now that's happening beneath the surface of the oil disaster in the Gulf of Mexico. CNN reporter Amber Lyon and CNN contributor Philippe Cousteau just finished a remarkable dive in the Gulf of Mexico.

CNN carried it live when it happened using some state-of-the-art under water cameras and technology. Our crew got an up close look at the tainted water. Listen to Amber describe what she saw.

(BEGIN VIDEO CLIP)

AMBER LYON, CNN CORRESPONDENT: We're about 48 miles away from the deepwater horizon spill and if you look in the water you can see it's cloudy right now. It just looks almost like you shook a tree or some kind of little particles here all across the water.

PHILIPPE COUSTEAU, CNN CONTRIBUTOR: It's a mixture. It's kind of like -- it's little bits of red and this oil chemical dispersant mixed in with all of this organic material floating through the water column. Little creatures and that's what is so concerning about this. The oil isn't going to the surface. It is distributing throughout the water column. It's spring time, a critical time of year, when fish and other organisms are breeding.

(END VIDEO CLIP)

BLITZER: They're looking for another spot right now to dive into. CNN plans to show it to you live once it happens. Stay with us for that.

The president's point man in the oil disaster revealing new information about the critical moves expected this weekend. Stand by for my interview with retired coast guard Admiral Thad Allen on a new plan to shut the leaking well.

And President Obama's heavyweight fight in Las Vegas. Can he help prevent his top man in the senate from being knocked out in November?

(COMMERCIAL BREAK)

BLITZER: Jack Cafferty is here with "The Cafferty File."

JACK CAFFERTY: Wolf, in a ruling that could have far-reaching implications the Boston Federal District Court judge has declared the federal ban on gay marriage as unconstitutional. Judge Joseph (Torro) says the 1996 Federal Defense of Marriage Act, which defines marriage as between a man and a woman denies same sex couples equal protection under the law.

Massachusetts believes the federal ban denied benefits, including Medicaid, to gay married couples and the judge agreed saying that the ban on gay marriage forces the state to discriminate against its own citizens. Same sex unions have been legal in Massachusetts since 2004.

The judge added the federal ban also goes against the long history of allowing states to set their own marriage laws, which they've been doing since before the American Revolution. Judge (Torro) says laws that once barred interracial marriage caused as much debate then as the current battle over gay marriage does now.

Gay rights activists, of course, thrilled with the ruling calling it a landmark decision. But opponents say they're sure the decision will be overturned on appeal. They called the ruling judicial activism and the work of a rogue judge noting that when voters go to the ballot box they consistently reject gay marriage proposals.

Nevertheless, it's really worth watching what happens from here. So far, the Justice Department's only saying it's reviewing the decision and has not decided whether or not to appeal it. But if a higher court were to hear an appeal and agree with the ruling, the impact of the decision could spread. It could encourage other attorneys general in other states who are against the federal gay marriage ban to file suit.

So here's the question. Do you agree with the judge who says banning gay marriage is unconstitutional? Go to cnn.com/caffertyfile and post a comment on my blog. This may be one of those landmark deals we look back at years from now and say, yes, that Judge (Torro), he changed all that.

BLITZER: Yes, I remember - it was back only a few years ago, 2007 when a judge in Iowa said that the ban against gay marriage denies some citizens equal rights under the constitution and they allowed gay marriage to go forward in Iowa. It was upheld by the state's judicial system there, a similar situation could happen in Massachusetts.

CAFFERTY: Yes. But now we've got a federal judge saying it so if his decision is upheld, then that could set the table for all 50 states.

BLITZER: Yes. That's true.

CAFFERTY: They would no longer have a say in this.

BLITZER: That's a huge decision. Thanks very much, Jack. Jack Cafferty with "The Cafferty File."

Let's get back to our top story, that huge spy swap between the United States and Russia. Let's discuss what's going on with our senior political analyst David Gergen.

You've had a chance now to digest -- all of us have had a chance and we're expecting as you heard from Brian Todd at least two of these people the Russians said were spies for the United States to be arriving in the United States within the next half hour or so. This is a pretty big deal what's happened, David.

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: It is a big deal. Wolf, the blogs lit up today with attacks on the Obama administration saying this was a bad deal. We gave up 10. We only got four back.

That the 10 that we picked up never paid any price, they never went to prison, you know, and now being sent back to their homeland. Not even going back to their homeland, many will be received as heroes so a lot of the arguments going against it.

But I think the way the argument really points to this being a good deal for the United States, because increasingly it appears that the four people we're getting back were real pros we depended on and that we owed something to. We owed some protection to them, one of them being sick.

We'll have to wait and see what Leon Panetta has to say about it, but I would also add this. Panetta is a tough bargainer. I've worked with him a lot and I would have respect just almost from the beginning. If Leon Panetta negotiated it, I think it's a good deal for us. I'd like to learn more about it, but on balance I think it's been a good deal.

BLITZER: Yes, it looks like the four that the west is getting, the United States and Britain, were true professionals who risked their lives and got important information out of either then the Soviet Union or now Russia and paid a serious price.

And the U.S. watched these 10 guys for almost ten years and concluded they didn't really have much except, you know, some public information that a lot of people can get. It was worth trying to bring these four home, get them out of Russia, because it sends a powerful signal to the potential agents around the world. Don't worry. If you get caught we'll get you.

GERGEN: That's exactly right. Just like leaving your soldiers behind on the battle field. If they work for you and they get caught, you really want to go to bat for them and see if you can get them out.

From what we heard from Jill Dougherty's reporting it appears we wanted these four before we even picked up the 10. So it sounds to be like we got four big people back and we gave them 10 amateurs.

BLITZER: We'll see what else is going to happen on this story, but there is I'm sure a lot more we don't know. We'll go back to Dulles Airport soon. Brian Todd is there. We're waiting for these individuals to return to the United States. Thanks very much, David.

Could we be only days away from capturing all, repeat, all of the oil that's gushing from that ruptured well in the Gulf of Mexico? I'll speak about that with retired Coast Guard Admiral Thad Allen. He has new information that you're going to want to hear.

And the French President Nicholas Sarkozy and others subject of a police probe linking him to a well known heiress. The details of that investigation coming up.

(COMMERCIAL BREAK)

Lisa Sylvester is monitoring some of the other top stories in "The Situation Room." Right now, Lisa, what do you have?

LISA SYLVESTER: Hi, Wolf. The body of a 16-year-old girl pulled from the Delaware River today is identified as one of the two missing passengers after a collision between a tourist boat and a barge.

A second body has just been recovered. Medical examiners hope to determine whether it is that of the second missing passenger, a 20- year-old man. The accident happened in Philadelphia Wednesday.

Police are conducting raids in connection with accusations that the heiress for the L'Oreal cosmetics company illegally funded French President Nicholas Sarkozy's election campaign. A former bookkeeper alleged in an interview this week that she donated almost $200,000 to Mr. Sarkozy's political party in 2007, that's more than $9,000 over the amount allowed. Mr. Sarkozy's office denies the allegation.

White House Budget Director Peter Orszag, he has got a new job. A spokesman confirms that he will be joining the Council on Foreign Relations as a distinguished visiting fellow this summer. Orszag is scheduled to leave the White House July 30th.

He, of course, played major roles in helping President Obama pass the economic stimulus bill and the health care reform bill. He also became somewhat of a sex symbol according to the blogs, Wolf. You probably remember that, but he is now leaving the administration.

BLITZER: Good luck to him. Thanks very much for that, Lisa.

We're standing by for another exclusive look beneath the surface of the oily Gulf of Mexico. CNN's Amber Lyon and environmentalist Philippe Cousteau and their crew, they're spotting out a new spot to try to dive into. CNN plans to carry it live once it happens. Stay with us for that.

And the president's point man in the Gulf reveals to me that crews are moving forward right now with a major new effort to close off the entire leaking well. We'll explain what is going on. Will President Obama help save Senator Harry Reid's job? The Senate majority leader now in a fight for his political life.

(COMMERCIAL BREAK)

BLITZER: In the oil disaster zone, big advances in fighting the spill could come in the hours and immediate days ahead. Right now work is under way to hook up the oil recovery vessel, the Helix producer after weather delays.

A blimp flown in to help the recovery operation has left New Orleans for Mobile, Alabama. It is seen as a valuable tool for spotting oil and getting skimmers to the scene fast.

And in a major development, crews may start removing the current containment cap as early as tomorrow. We've just learned what will happen once that cap is removed. Stand by with my interview with the Incident Commander Thad Allen. He's revealing new information to us. You'll want to hear what he has to say. Stand by for that.

Meanwhile, Gulf Coast residents clearly don't want oil and tar balls washing up on their beaches, but they apparently don't want them in their back yards either. CNN's Randi Kaye takes a closer look at the controversy over where to dump the cleaned up crude.

(BEGIN VIDEOTAPE)

RANDI KAYE: If you've been wondering where all that scooped up, onshore oil ends up, here's your answer. This is Mississippi's Pecan Grove landfill. What cleanup crews gather onshore, tar balls, oiled sand, and vegetation, is hauled away and buried here. That even includes the cleanup crews' gloves, suits, shovels, and rakes, anything that's touched oil.

It's one of nine landfills BP has cut deals with across the Gulf to dump all this stuff. So that must mean the communities are OK with it, too, right? Wrong. Connie Rockco is the president of the Board of Supervisors in Harrison County, Mississippi, where the Pecan Grove landfill is located.

(on camera): How do you feel about this oily mixture coming off the beaches and ending up in your landfill?

CONNIE ROCKCO, BOARD OF SUPERVISORS, HARRISON COUNTRY, MISSISSIPPI: We're tired of being dumped on. We don't want it. It's valuable landfill space and it's hazardous to our citizens. Take your waste somewhere else or please find an alternative.

KAYE: Rockco says the county board passed a resolution not to accept any BP waste in this community, but that didn't matter. That's because Waste Management, which owns the landfill doesn't have to listen to what the country board says. It answers to the state. So it signed a contract with BP and started dumping the oily waste right where Rockco and plenty of others feared they would. What concerns you most about this oil and tar balls and the whole mixture? CONNIE ROCKCO, BOARD OF SUP., HARRISON CO., MISS.: The long-term effects we will have to endure if it, in fact, if, in fact, we do find that it is dangerous.

KAYE: Like if it gets into your water?

ROCKCO: Absolutely. Into the water table.

KAYE: Keeping them honest we asked BP why it's disposing of spill waste in a county that says it's pleaded with them not to. BP wouldn't comment. So we asked Waste Management's Ken Haldin to take us inside the landfill so we could see for ourselves why BP, the EPA, and Waste Management all say it's safe. There are many worried that whatever is going into this landfill from the oil spill is going to end up in their water system and make the community sick.

KEN HALDIN, WASTE MANAGEMENT: It's an understandable concern because there's a lack of awareness about what an engineered landfill is.

KAYE: Haldin says this is a nonhazardous waste site. He says there won't be any liquid oil coming here, just solid oil waste. Before it's dumped it's stored in these huge containers and analyzed. In the last 24 hours, Haldin says they dropped more than 150 tons of BP waste into this landfill. 150 tons. If the county didn't want it why is it here?

HALDIN: That is certainly something they've appealed to the state about and we understand that and we'll do our utmost to be sure they are familiar with what is going on here.

KAYE: Haldin says this landfill has a liner that runs underneath the entire site. In fact, it's under my feet where I'm walking right now. He says that liner is supposed to contain everything that's dumped here at the landfill and protect it from any leaks. He also says the ground water and the air is monitored and if anything goes wrong, they would know it. The EPA told us BP along with the EPA are also sampling the landfills regularly to make sure they are safe. The agency also said it directed BP to keep its waste disposal operations, quote, fully transparent. BP must post information about the disposal of all collected waste on their website along with any community complaints. Connie Rockco is first in line.

ROCKO: If it's not hazardous why would someone be out with the tyvex suits and rubber gloves picking it up and taking it to the landfill?

KAYE: Randi Kaye, CNN, Mississippi.

(END VIDEOTAPE)

WOLF BLITZER, CNN ANCHOR: Let's get back to our top story. The major spy swap between the United States and Russia, let's go back to Dulles airport outside Washington, D.C. Brian Todd is standing by. I take it, Brian, the plane carrying what; two of these four individuals released by the Russians has now landed where you are?

BRIAN TODD, CNN CORRESPONDENT: That's right, Wolf. Very strong indications that has happened. A Vision Airways plane with red and white markings which is what we're told carried these four Russian spies has just landed here at Dulles Airport runway 19 left on the eastern side of the airport. We just saw it come in. Not clear where it's going to taxi to at this point, where it will take the people who are still on it. "The Washington Post" reports that two of the Russian gentlemen got off and stayed in Great Britain. We do know it went from Moscow to Vienna, to Great Britain, to here at Washington Dulles. We know there is another leg of the trip to take the plane to Miami. Vision Airways not a commercial flight. This is likely a contractor, booked by the U.S. government carrying them. So it's going to shuttle them probably to a building right behind me run by a private airline company that will probably take these gentlemen in. We're monitoring the situation now to see who gets off that plane and see if we can maybe talk to them. The names of course we know of the people who the Russians accused of being spies were just released, Igor Sutyagin, Gennady Vasilenko, Sergei Skirpal, Alexander Zaporozhsky. Again, we know they're probably -- at least probably two of them are on that plane that just landed and we're told by a report in "The Washington Post" that two of them got off in Great Britain, Wolf.

BLITZER: We'll stay on top of the story. Let us know if you catch up with these two individuals and if they want to say something to us and indeed to the world. Thanks very much for that.

As the spy exchange drama comes to a close we're learning what happens now to the children of the ten Russian agents who have just been sent back to Moscow.

We're standing by for another exclusive look below the surface in the oily waters of the Gulf of Mexico. Our CNN reporter Amber Lyon is hoping to make another dive into those tainted waters.

(COMMERCIAL BREAK)

BLITZER: President Obama now returning to the white house after a sort of political rescue mission he attempted in Nevada. He campaigned for the Senate majority leader Harry Reid who is in the political fight of his life right now against a tea party backed Republican. Our white house correspondent Suzanne Malveaux traveled with the president to Las Vegas.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Hey, Wolf. This is President Obama's third trip to Vegas to help campaign for Senate majority leader Harry Reid. First lady Michelle Obama, the former President Bill Clinton have also been here. The big question is whether or not these high profile visits will make any difference in a city that loves a good fight.

(BEGIN VIDEOTAPE)

MALVEAUX: Shaquille O'Neal versus Sugar Shane Mosley tonight at Caesar's Palace the fight pitting the NBA superstar against the former four-time world boxing champion. It's the event everyone's talking about. After all, brawls are big in Vegas. But the president is stepping into the ring to support a fighter of his own. PRES. BARACK OBAMA (D), UNITED STATES: He's taken his lumps.

MALVEAUX: In one corner his guy, former boxer and embattled Democratic senator defending his title, Harry Reid.

OBAMA: He is a fighter. And you should never bet against him. That's just what we need right now. That's what Nevada needs right now.

MALVEAUX: In the other corner Reid's challenger and tea party favorite, Sharron Angle, the woman who took down 12 opponents in last month's Republican primary.

SHARRON ANGLE (R), NEVADA SENATE CANDIDATE: I say, Harry Reid, you failed Nevada. You failed America. Not only has he failed America, but he's failed Nevada.

MALVEAUX: The stakes couldn't be higher. Nevada has the highest unemployment rate in the country at 14 percent. Home foreclosures and bankruptcy rates are at record highs. In the sweltering, so-called sin city of Vegas, the heat is on for politicians to deliver.

OBAMA: They spent a decade driving the economy into a ditch. And now they're asking for the keys back. My answer is, no, you can't have the keys. You can't drive.

MALVEAUX: The president is framing this key battle as the economic policies of past Republicans versus the current policies of Democrats. Republicans are countering. It's about fighting big government, spending, and deficits. Today Angle and the RNC launched new ads blasting the Obama/Reid duo.

UNIDENTIFIED MALE: Bailouts, handouts, and takeovers giving us a $1.5 trillion budget deficit. A $13 trillion national debt. 14 percent unemployment for Nevada. When it comes to Nevada's economy, Obama and Reid are a bust.

(END VIDEOTAPE)

MALVEAUX: The challenge for the Democrats now is to get out the base. The record number of voters who came out and supported Obama in 2008 to get them back to the polls for the mid-term elections. As for the Republicans they're already revved up trying to convert the independents that make up 32 percent of the voters here in Nevada. Wolf?

BLITZER: All right. Suzanne, thanks very much.

What's prompting the head of California's NAACP to argue that marijuana should be legalized for civil rights purposes? Mary Snow will have the details.

(COMMERCIAL BREAK)

BLITZER: Let's get right to our strategy session. Joining us two CNN political contributors, Democratic strategist Paul Begala and Republican strategist Ed Rollins. Guys, thanks very much for coming in. I want to put some numbers on the screen and we can discuss what they mean politically. The most recent Gallup daily tracking poll numbers. President Obama's job approval rating. Among Democrats right now it's an 81 percent which is very good. Still, from a year ago it was at 90 percent in July of 2009. Among Republicans, it's only 12 percent. That's down from 20 percent a year ago, July, 2009. But look at this, Paul. Among independents, only 38 percent approve of the job the president is doing. A year ago, 56 percent approved. Almost a 20-point drop among independents. How worried should Democrats and the president be about that number involving independents?

PAUL BEGALA, DEMOCRATIC STRATEGIST: Oh, it's the most important number. You're right to single it out. Barack Obama got 52 percent of the independents in this last election. That's why he's President Obama today. But to give it a little context, when I was working for President Clinton in 1994 his second year I was one of his political advisers. He went down to 36 percent among independents and the story had a happy ending for Democrats. He carried 33 states.

BLITZER: Didn't have a happy ending in the mid term elections.

BEGALA: No it didn't and I think that is what Democrats are concerned about but I don't think the problem is Barack Obama. I have to say he is the most popular political leader in America. Contrasted say to Sarah Palin who is at 29 percent overall even lower than that I'm quite sure among independents. So it's not that Obama is pulling the Democrats down. It's that the economy is dragging the Democrats down and it's going to, they're going to have to move the needle on jobs. I've been saying that for two years.

BLITZER: Ed, you worked in the Reagan white house. How worried should Democrats be about that number involving independents?

ED ROLLINS, REPUBLICAN STRATEGIST: They should be really worried about it. The president is out there trying to help Harry Reid, a guy with a 44 percent, 45 percent approval rating needing the president trying to help a guy with a 36 percent rating. It isn't going to move the needle because the independents have moved away from this president and that is the critical vote. Unless you get back 54 percent of those independents supporting you, Democrats are going to get slaughtered and I think Paul knows that. I know that. I think any smart Democrat knows that.

BLITZER: How do they turn that number around, Paul?

BEGALA: By making it, as David Axelrod says the president's counselor, making it a choice not a referendum. If Democrats only go around and say look at me, look how wonderful and precious my accomplishments are they'll get slaughtered. Ed's right. But it's like the old comedian, they'd ask him, how is your wife? He'd say compared to what? Okay. Compared to the Republicans. Attack, attack, attack the Democrats. You saw Harry Reid and Barack Obama doing that in Nevada. Yesterday President Obama was doing it in Missouri. Drawing that contrast gives you a fighting chance but if all they do is play defense you are losing. BLITZER: So you really have to go negative. That's what I'm hearing Paul say. Ed, what do you think?

ROLLINS: You obviously have to go negative individual races. I think the president going negative only drives his numbers down. He is sitting here, 45 percent, even our good friend Mr. Carville's poll the democracy poll has him at 45 percent approval, 51 percent disapproval. So he's in trouble and his numbers are going to continue to drop as long as unemployment --

BLITZER: That's a good point that Ed makes and let me get you to, Paul, weigh in on that. Does it diminish the president of the United States to be out there on the campaign trail delivering fiery rhetoric against the Republicans and making him look like just another politician?

BEGALA: Not in the least. Voters understand this. Part of the president's job is to lead his party and also conduct this great national debate between the two philosophies. I went back and re-read believe it or not almost every major speech Ronald Reagan gave in 1982 going into the mid terms when Ed Rollins was his political adviser and later campaign manager. Reagan attacked my party at every turn and people didn't hold it against the gipper. They actually thought, wow, maybe he really believes in this stuff. I think people are looking at Barack Obama, wow, he is actually willing to fight for his principles and even people who disagree respect you for that.

BLITZER: Do you agree, Ed?

ROLLINS: We never attacked anybody personally. Ronald Reagan never mentioned his opponent by name. He was never out there attacking the speaker or any of the rest. He talked about policies that failed and I think that's legitimate but the bottom line here is the policies that have failed over the last two years that have us trillions of dollars in debt are the Democrats' policies. Let them go defend that.

BLITZER: So what I hear you saying Ed is that what the president did yesterday is singling out the Republican leader in the house John Boehner and going after him and you're saying Ronald Reagan would never have done that?

ROLLINS: Ronald Reagan never, ever mentioned his opponent by name. Go back through all the speeches you want, Paul. You won't find it happening. It certainly never happened in '82 when I was there.

BLITZER: Paul?

ROLLINS: Or '84. Or '86 when I was there.

BEGALA: I think Ed makes a very valid point that Reagan wanted to have a philosophical debate. But in that debate he was hammering the Democrats. And I think President Obama is now beginning to engage in a philosophical debate between a philosophy that says deregulate wall street, cut taxes for the rich and everything will trickle down which drove us into the ditch and ran up this 13 trillion in debt after my party balanced the budget. That is the debate President Obama wants I think is the debate he is beginning to engage in. I love seeing him do it.

ROLLINS: Part of the problem the president has is the image. Let's take James' poll. 55 percent say socialism is a good term and describes this president either as a socialist or a liberal. The good news is there are a few Democrats out there who think socialism is bad but the vast majority of Americans today think this president is off the track and the Democrats are off the track.

BLITZER: We'll continue this discussion. Good discussion indeed. Good politics. Paul, Ed. Thank you. Jack Cafferty is asking do you agree with the judge who says banning gay marriage is unconstitutional? Jack will be back in a moment with the Cafferty file and your e-mail.

And their parents were sent back to Russia in a spy swap. What happens though to the kids? Some of them still in grade school here in the United States. We have new information on the children of the spies.

(COMMERCIAL BREAK)

BLITZER: Jack is back with the Cafferty file. Jack?

JACK CAFFERTY, CNN CORRESPONDENT: The question this hour is do you agree with the judge who says that banning gay marriages is unconstitutional?

Erin writes, "From the legal standpoint the judge's ruling is correct. It makes an artificial distinction between married heterosexual couples and married homosexual couples. It treats one set as inferior to the others and that is a distinction that the constitution does not recognize."

Mike writes, "No, I don't agree, at what point do we undermine every last bit of tradition to make sure every nontraditional want and desire is fulfilled? Hell, we have watered down Christmas and Easter so much that there is no mention of Christ or god, and now we want to water down marriage that there is no mention of a husband or wife. To erode this away, we are in danger of watering down the entire ethos of American culture, but maybe that the goal."

Doyle writes, "I agree with the court ruling. My husband and I have been married since 2004 and yet since we have the same type of marriage licenses as other couples in Massachusetts, we still don't have the same treatment of other married couples that others have in Massachusetts have. It is a two-level system."

Carry in Maine says, "The nature has been religious in nature because those who oppose gay rights do so based on a few passages in the Old Testament. Religion should never be the basis for law, especially constitutional law. Freedom of religion also means freedom from religion."

Neil say, "I'm a married gay man in Massachusetts and to have state recognize and welcome my marriage while the federal government rejects it seems like an impossible contradiction. I want my husband to have all of the rights of any other married spouse."

Linda says, "Anybody crazy enough to be married should be allowed to."

If you want to read more on this, we have a lot of e-mail go to CNN.com/Caffertyfile.

BLITZER: I'm not surprised. Jack, thank you.

The gulf spill as we have not seen it before. Our on correspondent diving below the surface. You saw it live on CNN and standby for more exclusive look at the disaster.

And what if a heat wave caused a major blackout in the entire east coast of the United States? We will tell you why it is a real threat right now.

(COMMERCIAL BREAK)

BLITZER: Many states in the northeast are some getting relief today after suffering a deadly heat wave most of the week. Despite a vulnerable power grid, the country avoided a major blackout, but what if, what if the next time we are not so lucky? Let's bring in our senior correspondent Allan Chernoff who is looking at the story for us. Is the current grid, Allan, up to the task?

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Well, Wolf, most of the time it is, but when we get intense heat, inevitably some areas do lose power and the reason is that our grid is not nearly as advanced as it could be.

(BEGIN VIDEOTAPE)

CHERNOFF: Sizzling temperatures this week as much of a strain on the power system as on the public. Though utilities avoided widespread blackouts, thousands of customers through the northeast did lose power.

UNIDENTIFIED MALE: You wake up and you are sweating and like in a puddle of sweat.

CHERNOFF: Why is the power system always strained when the temperature soars? It is the electricity grid system which was not designed for today's demands. Matthew Cordaro, a former chief executive of two power companies warns that the system is at risk.

MATTHEW CORDARO, ENERGY EXPERT: We are nowhere near the certainty to avoid a major outage or disturbance and not that it will happen everyday, but indeed a strong possibility that that could occur.

CHERNOFF: When the heat is on, and air conditioners are on full blast to fight it, power demand can overburden circuits and transformers that allow electricity to travel from power plant across transmission lines and into your home.

ARSHAD MANSOOR, ELECTRIC POWER RESEARCH INST.: The circuits and the transformers don't have the time to cool down, so they get overload. An overloaded circuit could cause an outage.

CHERNOFF: President Obama aware of the problem last year committed $3.5 billion in stimulus money to modernize the grid. But it is only about 2 percent of what the power industry would have to invest for a smart grid. And much of the government money has yet to be spent. New York's Con Edison recently put off a plan to install smart grid equipment in part of Manhattan and it is a disappointment to a Massachusetts company that supplies high capacity power cables, superconductors that can protect against dangerous power surges.

JASON FREDETTE, AMERICAN SUPERCONDUCTOR CORP.: Super conductors are a key component of those smart grids in Korea, in China and here in the U.S. we need to do the same thing, and we urgently need to update our grid.

CHERNOFF: Smart grid technology would allow the utilities to see precise, real-time demand from every customer, so they could take action to minimize the risk of an outage, but most of the power companies have only begun such an upgrade. In fact, the North American Electric Reliability Corporation says that two regions are especially vulnerable this summer. Colorado, suffering from drought conditions that are reducing power output from the Hoover dam power plant, and south central Louisiana where transmission lines need upgrades to improve reliability.

(END VIDEOTAPE)

CHERNOFF: Power companies have increased the infrastructure spending, but the bottom line is that utilities still remain vulnerable to outages, especially when people need power most.

BLITZER: Allan Chernoff, thanks very much.

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