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The Situation Room

White House Shakeup; Interview With Bob Woodward

Aired September 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: And you are in THE SITUATION ROOM.

Happening now: the White House on the verge of a new shakeup, as the president's chief of staff prepares to step down. We will talk about Rahm Emanuel's looming departure and much more with the award- winning journalist Bob Woodward. He is here in THE SITUATION ROOM.

Also, shocking video of the Tea Party-backed candidate for governor of New York in a heated confrontation threatening to -- quote -- "take out" a reporter.

And we are digging into a report that tens of thousands of workers could lose their health insurance if -- if McDonald's doesn't get what it wants from the federal government.

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

Just over four weeks before the midterm election, the winds of change in the Obama administration are ramping up to gale-force. After a series of high-profile departures among the president's top advisers, we are now learning that the biggest one yet will be announced tomorrow. Sources telling CNN that Chief of Staff Rahm Emanuel will step down to run for mayor of Chicago.

Our senior White House correspondent, Ed Henry, is already in Chicago. He's working the story for us.

All right. Ed, walk us through what we know right now.

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well, Wolf, you know that Rahm Emanuel's legacy really is going to be a series of high-profile legislative victories from health care to Wall Street reform.

It was fitting that on his last full day basically in the job today, the president was meeting again with congressional leaders there at the White House and some of those grueling fights really could be practice for what is going to be a brutal battle here for mayor.

(BEGIN VIDEOTAPE)

HENRY (voice-over): Not everyone in Washington has liked Rahm Emanuel's combative style, but voters here say it may be perfect for the bare-knuckles world of Chicago politics. SYLVIA ALSTON, CHICAGO RESIDENT: I think if you're going to be mayor of the city, sometimes you have to be nice and sometimes you have to be not so nice, so maybe he's got the personality for it.

HENRY (on camera): Mayor Richard Daley has ruled this city from City Hall here for a couple of decades. Now Rahm Emanuel wants this perch, so he decided to come to the farmers market across the street in order to get a flavor for what people think.

We found a lot of people who think Rahm is too much of a Washington insider, but a lot of people think that he will bring a lot of clout to this job, that his style is brash, but it work here, and they also think he will bring some other characteristics to the table.

HENRY: So what do you think about Rahm Emanuel?

MARGARET YANG, CHICAGO RESIDENT: I think he is very handsome.

HENRY: But what about him as a politician?

YANG: A politician. He has got experience. He has got the ability. I think he should be an awesome mayor. He has all the connections, all the night work, all the money, all the power. He should be fine.

HENRY (voice-over): But friends of Emanuel privately acknowledge this is no slam dunk. The field is wide open with about 10 candidates already running in the February Democratic primary and more than a dozen more mulling it. And critics who charge that Daley has been more focused on courting the powerful than helping the middle class believe Emanuel will be more of the same.

LEALAN JONES, ILLINOIS SENATORIAL CANDIDATE: We don't need another corporate mayor. We need somebody that understand the citizen. He may bring more of the problem.

HENRY: But others here may be swayed by at least the informal endorsement of their former senator's administration.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: There is not an important thing that has happened in this administration that we have been able to accomplish for the American people that has not involved heavily his signature.

(END VIDEOTAPE)

HENRY: Now, losing someone whose signature has been on every one of the president's big achievements obviously is a blow for this president, especially after a series of high-profile departures from that inner circle, but I can tell you there are some Democrats back in Washington who say, look, losing a high-wattage personality like Emanuel in the long run will be OK for the president. You have got a low-key insider like Peter Rouse now going in on an interim basis at least to be chief of staff.

He can steady the ship. But the bottom line is there's a heck of a lot of Democrats all across the country who are saying that when you lose someone of Emanuel's stature, that is going to be difficult for this president, especially since I remember being in this city two years ago basically where then president-elect Obama pounced on the chance to grab Rahm Emanuel.

He knew having someone with that congressional experience, someone of his stature, was going to be big for him. And it was in the first two years, Wolf.

BLITZER: It certainly was. All right, thanks very much for that, Ed Henry, already in Chicago getting ready for the big announcement at the White House tomorrow.

Let's get some more on this with our senior our political analyst, Gloria Borger, CNN's John King. He is the host of "JOHN KING, USA," which begins right at the top of the next hour. And our chief correspondent, Candy Crowley, she is host of "STATE OF THE UNION," which airs Sunday mornings 9:00 a.m. Eastern here on CNN.

Gloria, there are a lot of White House departures right now and it looks like there's going to be a new chief of staff, as Ed just reported. Pete Rouse. There is a picture of him sitting with the president. The White House just released that picture a little while ago, I guess the sort of confirmation that he has got the job.

(CROSSTALK)

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Right. Yes, he does have the job.

You know, if Rahm Emanuel is kind of an outside guy, who did know how to deal with Congress obviously having been a member of Congress, very prominent, but he also could deal with members of the press and go on the Sunday shows, et cetera, et cetera.

Pete Rouse is an inside guy. He is a consummate insider. He was Tom Daschle's chief of staff for many, many years. He is somebody who knows the Hill very well. He was Barack Obama's chief of staff and then came over to the campaign. He was co-chairman of the transition.

And in talking to people inside the White House, they see Pete Rouse as somebody who can get together competing egos -- and there may be a few of them in the White House...

JOHN KING, HOST, "JOHN KING, USA": Shocked.

BORGER: ... and in Washington -- get them together, get them in a room, and get them to deal with each other. And this is something obviously the president wants. There is a comfort level the president has with him.

And a little unknown fact you might not know, which is that he was among those staffers who got the Grateful Dead to come back together during the campaign and again more recently before they went off on their tour. So if he can get the Grateful Dead together, who knows. BLITZER: And the president got a bunch of Democrats together behind closed doors in the White House right now.

We heard that there were all sorts of ideas, Dana Bash reporting just in the last hour that they want -- at least some of these Democrats -- the president to go out there aggressively and make the case.

Would you -- based on what you are hearing, John, is there a sense of panic though among these Democrats looking towards November 2?

KING: They insist panic is the wrong word, but is there a profound sense of nervousness? You bet, as they look at the math and some of their strategists tell them 35 seats are lost, but maybe it is -- 39 is the magic number for Republicans. But it is probably 35 guaranteed, but maybe we can fight scratch and claw and keep the majority.

Others are saying this could be 55. There are even some who think it could go higher than that. And, Wolf, these are Democrats. These are Democrats I'm talking to. So, are they nervous? You bet.

How do they use the president? Number one, it is almost too late to raise any more money. The president does have some fund-raiser events coming up, but you have got to start buying television ads. We're almost out of time to raise money in any great way.

Rally the base. Everyone in the room with the president said you did a great job on the campus at Wisconsin the other night. That is what we need. However, some also said, don't forget about the independents, so there is an inherent conflict of sorts. If you rally the base with partisan rhetoric, the Republicans are evil, get out and vote, you risk offending independents, who don't like such partisan, highly polarized rhetoric.

And the independents are the people who made Nancy Pelosi speaker in 2006, inflated the Obama margins in 2008, and have largely abandoned the Democrats in this campaign. So it is a risky strategy. But they think, look, he is our best weapon. We might as well use it. Let's see how it works.

BLITZER: John Boehner, the Republican leader in the House and maybe the next speaker of the House, he was speaking today and a lot of people thinking he is getting ready to become the speaker of the House. Is that premature?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, oh, sure, it is premature. We need to at least wait for the elections before he gets the curtains.

(CROSSTALK)

CROWLEY: But the fact is that he is sort of speaking to what John is tacking about here, because Boehner today was all about, I want to give more power to the rank and file. I want to have what we do be a little clearer both to the American people and to others. I don't want to pass these things in the middle of the night without getting a Democratic and Republican.

So it is sort of this kinder, gentler sort of approach to the speakership that he is out there talking about, which I find really interesting, because the president has sort of been going after -- if there is a face of the other party, it is John Boehner, although I'm not convinced a lot people know who he is or could pick him out of a lineup, but at least they have been using him as the punching bag.

So while the president is out there going, they are going to take you back to where they went, Boehner is out saying, here is what we are going to do. I'm going to be much more inclusive.

BLITZER: A lot of Americans didn't know who Newt Gingrich was until he became speaker of the House.

(CROSSTALK)

CROWLEY: Well, speaker is a different thing.

(CROSSTALK)

KING: Newt promised to be different. Not so much. Pelosi promised to be different. We will see what happens. I guess you could say a lot of people say President Obama promised to be different, and we haven't seen enough of it.

BLITZER: We will have a lot more on your show.

(CROSSTALK)

BORGER: ... about Washington.

KING: It does -- it says a lot about Washington. We're out of time here.

(CROSSTALK)

BLITZER: John is going to continue this later.

And we will have more this hour as well, including from Bob Woodward, who is going to be coming in. Stand by for that.

Jack Cafferty is next with "The Cafferty File."

Then, Bob Woodward, the journalist with unrivaled access to what goes on behind closed doors over at the White House, he is here in THE SITUATION ROOM this hour. He will share with us what he knows.

And a report that McDonald's is telling the government it may have to drop health insurance for tens of thousands of its workers. Is it a warning or is it a threat?

Plus, a New York governor -- a candidate for New York governor caught on tape threatening a reporter. (BEGIN VIDEO CLIP)

CARL PALADINO (R), NEW YORK GUBERNATORIAL CANDIDATE: I will take you out, buddy.

UNIDENTIFIED MALE: You're going to take me out?

PALADINO: Yes.

UNIDENTIFIED MALE: How you going to do that?

PALADINO: Watch.

UNIDENTIFIED MALE: So, what are you, threatening me?

(END VIDEO CLIP)

(COMMERCIAL BREAK)

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

JACK CAFFERTY, CNN ANCHOR: It's not exactly breaking news that the American people are fed up with Washington and the politicians who make their living there on our tax dollars and their inability to act on issues that matter to all of us.

Three in 10 Americans is all say things are going well in the country today, 30 percent, according to a new CNN/Opinion Research Corporation poll.

And you can bet, when these disillusioned voters cast their ballots in midterm elections in November, they'll have a lot of things weighing on their minds when they pull those levers.

The same poll shows 49 percent of those surveyed say the economy is the top problem facing the country.

That's followed by 11 percent who say the deficit, 10 percent who say education, 9 percent who say health care and the wars.

And other issues lower down on the list include things like illegal Immigration, terrorism and energy.

When asked what the most important economic problem is, people overwhelmingly say jobs and unemployment. No surprise, the national unemployment rate hovering just below 10 percent.

Other economic issues people worry about include taxes, housing, the stock market and inflation.

These midterm elections are shaping up into some very interesting contests, aren't they now? With the anti-incumbent mood at record levels, people seem to be looking for something, anything different, which has translated into some big victories for the Tea Party.

Many Americans are unhappy with President Obama's policies, which could mean big losses for the Democrats at the polls. You don't have to look any father than the president's signature issue of health care reform.

Fewer than one in five Americans say that the new health care reform law will help them personally, fewer than 20 percent. And almost half the country wants Congress to repeal most of the major provisions of that legislation.

So, here's the question. What issue is most important to you in these midterm elections?

Go to CNN.com/caffertyfile and post a comment.

BLITZER: Jack, thank you.

And it's not often that we see a political candidate nearly come to blows with one of the journalists covering his campaign, but Republican gubernatorial hopeful Carl Paladino did just that yesterday. We have the video that you are about to see.

CNN's Mary Snow is working the story for us.

I assume there is some considerable fallout from this confrontation, Mary?

MARY SNOW, CNN CORRESPONDENT: Yes, and, Wolf, it is only turning up the heat in a race that has turned very ugly.

It is Republican Carl Paladino against Democrat Andrew Cuomo. Now, Paladino is a political newcomer, favored by the Tea Party, a multimillionaire businessman known for brashness.

Now, for instance, he vowed to take a baseball bat to Albany when he won the Republican nomination. And yesterday he suggested Andrew Cuomo had an extramarital affair, but offered no evidence.

Enter veteran "New York Post" political reporter Fred Dicker. Dicker asked him for evidence of the affair. Things got heated, with Paladino bringing up a "New York Post" story about his daughter. Take a listen.

(BEGIN VIDEO CLIP)

PALADINO: You're his bird dog.

UNIDENTIFIED MALE: You made the charge.

(CROSSTALK)

PALADINO: You send another goon to my daughter's house, and I will take you out, buddy.

UNIDENTIFIED MALE: You're going to take me out?

PALADINO: Yes. UNIDENTIFIED MALE: How you going to do that?

PALADINO: Watch.

UNIDENTIFIED MALE: So, what are you, threatening me?

(CROSSTALK)

UNIDENTIFIED MALE: You are out of line. Well, you are out of line.

(END VIDEO CLIP)

SNOW: You can hear Paladino saying there, "I will take you out."

Now, here is the backstory. It's that "The New York Post" ran a story about Paladino's 10-year-old daughter, who born out of wedlock. Now, Paladino later said in a statement he is angry about a photographer who tried to take photos through a window. Now, "The New York Post" is insisting that it was not their photographer -- Wolf.

BLITZER: Wow. What a story. All right. Mary, thanks very much for that.

A White House insider targeted by a gunman -- today, a stunning new report about a deadly Washington shooting last year. The real target may, repeat, may have been one of the president's closest advisers.

And he has had unparalleled access to the White House and his new book already a major bestseller. We're talking about Bob Woodward. He's here in THE SITUATION ROOM. I will ask him why the Obama presidency is in trouble right now, among other questions.

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

(COMMERCIAL BREAK)

(NEWS BREAK)

BLITZER: McDonald's is reportedly telling the government it may have to drop health insurance for tens of thousands of workers, but why? We have details of what the company may really be after.

And an embattled president and a White House in flux. We're going to find out what is going on behind closed doors. The award- winning journalist Bob Woodward, he's walking into THE SITUATION ROOM right now. We will talk right after this.

BOB WOODWARD, "THE WASHINGTON POST": Thanks.

BLITZER: Good to have you here.

(COMMERCIAL BREAK)

BLITZER: Bob Woodward is here in THE SITUATION ROOM. And we are going to be speaking in just a moment, but here are five things you should know about Bob Woodward.

(BEGIN VIDEOTAPE)

BLITZER (voice-over): One word: Watergate. Woodward was half the reporting team that exposed the biggest White House scandal in U.S. history and brought down the Nixon presidency.

If you aren't old enough to have seen Watergate play out live, maybe you caught the movie version. After almost 40 years and two Pulitzers, he Woodward is still at "The Washington Post" as an associate editor. But now he makes his biggest impact on journalism, government and politics through his books.

Woodward has written over a dozen bestsellers, including fly-on- the-wall accounts of the administrations of Bill Clinton, George W. Bush, and now Barack Obama.

WOODWARD: This is the first unvarnished view of Obama.

BLITZER: Critics often seize on Woodward's heavy use of unnamed sources...

UNIDENTIFIED FEMALE: Can I ask who you were meeting with today?

BLITZER: ... and his "You are there" style of storytelling.

For better or worse, presidents and their top aides keep opening up to Woodward. His new book, "Obama's Wars," describes a national security team deeply divided over its strategy in Afghanistan.

(END VIDEOTAPE)

BLITZER: Bob Woodward is here in THE SITUATION ROOM right now.

Bob, thanks very much for coming in. Congratulations on this excellent new book.

WOODWARD: Thank you.

BLITZER: When President Obama was elected in 2008, he was adored by so many people. So what went wrong?

WOODWARD: Well, the economy has not been fixed. He's learned he is not the commander in chief of the economy.

There is an unsettled state everywhere. I find, in focusing on the war in Afghanistan, the war on terror, the secret war in Pakistan, which is really -- you know, Pakistan is going to be remembered in the history books because of what might happen during this period.

BLITZER: Like what? What do you mean?

(CROSSTALK) WOODWARD: Well, I mean, there are terrorist attacks being planned now against our country that are being hatched in Pakistan by all kinds of groups, not just al Qaeda.

And the people who know, including the president, are alarmed, is about as alarmed as you can be. So...

(CROSSTALK)

BLITZER: Well, speaking of that, you interviewed the president of the United States for your book, "Obama's Wars." And there is audiotape of one clip that is chilling, the president speaking to you. You raise the subject. Let me play the clip.

WOODWARD: Certainly.

(BEGIN AUDIO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: A potential game- changer would be a nuclear weapon in the hands of terrorists, blowing up a major American city, or a weapon of mass destruction in a major American city.

And, so, when I go down the list of things I have to worry about all the time, the -- that is at the top, because that's one area where you can't afford any mistakes. And, so, right away, coming in, we said, how are we going to start ramping up and putting that at the center of a lot of our national security discussion, making sure that that occurrence, even if remote, never happens?

(END AUDIO CLIP)

BLITZER: Did you get a sense, though, that he was really on top of this, that he knew the nature of the threat, that he appreciated, he was all over it, or was he sort of a reluctant warrior?

WOODWARD: No. This is exactly the right question.

Intellectually, totally engaged, considering the options and the consequences and so forth, but it -- what he said there -- one of the things I have to think about all of the time. You know, the phone rings at 3:00 a.m. or at noon or something like that, is this the moment when something like that can happen?

And so it puts the president on edge. He set up a system and process. It is laid out in detail here. There are some glitches. There are some things that -- they did a secret exercise, hypothetically, a nuke going off in Indianapolis, Indiana, and that -- to see how the government responds.

And it was all the government. It was kept secret. They didn't let the media in. They didn't let Congress in. They didn't let the public in.

Well, if something like that happens in this country, it's going to be chaos. BLITZER: So, it looks like that exercise was a little dysfunctional; is that what you are saying?

WOODWARD: Yes.

And the people who were there just said, you know, this is off in Disneyland. This is not connected enough now. You know, how do you actually have a real simulated exercise with something like that?

BLITZER: That isn't very -- it is a war game, but it's not very realistic; is that what you're -- that's what you are saying?

WOODWARD: Yes. And it -- it's -- it is a giant problem.

But, you know, you asked at the beginning, what has happened to this beloved man or this -- he's sincere. He's engaged. He's -- he's doing so many things.

What I found out in the wars is he's smart. And he gets all the intel, and he gets all of the assessments, and he realized that his war, Afghanistan, not a lot of good news coming out. In fact, he comes out a couple of months ago one of these secret meetings where they're getting an update, and he literally says to his aides, said, given that description of the problem, how do we design a solution?

So, his mind is there. He's commander in chief. He's got to be leader. Got to be the man who's, you know, kind of yes, we can. But, you know, he doesn't use the word "victory"; he doesn't use the word "win." He wants to be successful. There is the question: does he have that will to win?

BLITZER: Because if you read the book, it sounds like he's a very reluctant warrior.

WOODWARD: Yes, he is.

BLITZER: Very different from President Bush?

WOODWARD: Yes, sure. Absolutely. Now that here is the question. He's designed his own strategy in Afghanistan; 30,000 more troops. We begin withdrawal in July of next year, nine months from now. It's very vague what that means. If it turns out to work, you know, he's going to go in the geostrategic hall of fame as somebody who figured it out, because what his -- what he did is what he designed. There was no general. There was no CIA director. There was no chief of staff saying this is the way to do it. He's the man.

BLITZER: That's why you call it "Obama's Wars." Here's what was chilling to me. Let me read a line from the book, because it says a lot of what is and is not happening right now.

"Rahm Emanuel was astounded that the intelligence on bin Laden was not better. 'What do you mean you don't know where he is?' the chief of staff asked. 'Some $50 billion a year spent on intelligence, and you don't have a clue where the most wanted man in the history of the world is?'" It's pretty shocking when you think that that they -- is that true? They don't have a clue where bin Laden is?

WOODWARD: I mean, that's what they say. Maybe they've got some secret project where they do, but everyone I talked to is really -- turns the cards face up, and we just don't know. There are things that bin Laden is able to do. He's not just a psychological force, but he communicates with some of his troops. They are plotting, and they are recruiting. It is -- it is a very dangerous time.

BLITZER: You paint a picture of the White House chief of staff Rahm Emanuel is being very much involved in all of these issues, and he's leaving, as you know. What impact will that have?

WOODWARD: Who's his replacement going to be?

BLITZER: Pete Rouse. Might be permanent.

WOODWARD: Could be permanent. Well, then that's, that, you know, lowers the decibel level significantly.

BLITZER: Because he's so different from Rahm Emanuel.

WOODWARD: Rahm Emanuel is a hammer. He calls the CIA director, Leon Panetta, regularly and says, who have we killed today? He is pushing this. Of course, as the book shows, the people who are doing these drone attacks realize that it's not going to change the conditions on the ground. It's not going to win the war. It's -- you have to get -- Panetta is quoted in the book saying, "You need boots on the ground." Pakistani boots or our boots. We have to do something with those safe havens. The president, himself, says at these secret meetings Pakistan is the cancer.

BLITZER: Stand by, because I want to continue this conversation. When we come back Bob Woodward as he shares more information on the Obama White House. We'll have much more of this interview.

And fresh fallout from health-care reform. The fast-food giant McDonald's is now considering some very tough choices about health coverage for tens of thousands of workers.

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

(COMMERCIAL BREAK)

BLITZER: We're back with Bob Woodward, the journalist. His new book entitled "Obama's Wars." The relationship that the president has with the military and the intelligence community, for that matter. Let me read from the book.

"Dennis Blair, who was the intelligence chief, saw a fault line in the administration. Rahm Emanuel's 'us' meant Obama and his team of political advisers at the White House. The military leaders and former four-stars such as General Jones, the national security adviser, and himself were outsiders."

Talk a little bit about this "us versus them" mentality.

WOODWARD: Look, any White House is political, and this is no different, and they measure the political impact of everything. And somebody like General Jones or retired Admiral Blair, who was in charge of all intelligence for about 15 or 16 months, you know, they didn't think politically.

At one point, Blair sends in the top secret presidential daily brief, and it has a warning about al Qaeda people are being trained to come to North America and the United States, and Rahm calls Blair in afterwards and says, "Why did you put that in? Is it you're trying to say it's our fault if something happens?"

And Blair went ballistic and said, "Look, it's my job to tell the president, to warn the president, and that's maybe one of the problems in the past before 9/11." And so, he's going to be in there doing it, but Rahm is looking at the political impact. And if you remember in the very famous PDB, before 9/11...

BLITZER: Presidential daily brief.

WOODWARD: Yes, in which it said "bin Laden determined to strike in U.S.," and much criticism of Bush that "You got this warning. Why didn't you stop it?"

BLITZER: So, let me get back to it, that worst case fear that the president has terrorists coming to the United States with some sort of nuclear device. You've checked with all your sources, intelligence community and elsewhere. Is that realistic? Is that a fear that viewers out there should have?

WOODWARD: It's -- it's a long shot, and it would be hard, but look, you know, these people who want to kill and want to wreak havoc in this country know that if they did something like that, you know, it would be a ten on the Richter scale. You know, there is evidence that some people are working on it. We have massive efforts made to disrupt and stop these things.

But look at the Times Square bomber. Last May, May Day, came in with a SUV. It didn't go up. It didn't blow off. And it could have, and Leon Panetta went to Pakistan and said it could have killed hundreds or thousands of people. The U.S. intelligence, Pakistani intelligence, didn't know, didn't track that guy, didn't see it coming. And they went to the Pakistanis, the United States officials, and said, "For practical purposes, we have to consider this a success, because it evaded the screening that we have in our country."

BLITZER: The book is entitled "Obama's Wars." It's his 16th book. I'm sure it's going to be a huge best seller. Bob Woodward, thanks for writing it. Appreciate your coming in.

McDonald's is reportedly seeking a waiver from the federal government right now, and says if it doesn't get it, tens of thousands of its employees may lose their health insurance. We're digging into the story.

And turning down to volume of TV commercials. Details of what Congress is doing that could change your viewing experience.

(COMMERCIAL BREAK)

BLITZER: McDonald's may be considering some big changes that could, at their worst, mean an end to health-care coverage for a large bloc of its workforce. CNN's Brian Todd has been looking at the warning from the fast food giant -- Brian.

(BEGIN VIDEOTAPE)

BRIAN TODD, CNN CORRESPONDENT: Wolf, tens of thousands of hourly employees at McDonald's restaurants like this one may be facing an uncertain future, at least as it relates to their health care. That's after a report came out saying their corporation may have to make some tough choices on whether to keep them covered at their current levels.

(voice-over) It sounds like McDonald's is telling the government it needs a waiver from a new health-care mandate or else. The "Wall Street Journal" reports it obtained a memo from McDonald's to federal officials, saying if the company doesn't get an exemption, its hourly employees may lose the minimal benefits they have.

The company is talking about a rule expected to take effect that will tell insurance companies to use at least 80 percent of the money they take in to pay for treatment, not overhead or salaries.

"It would be economically prohibitive for our carrier to continue offering basic coverage," McDonald's says. "And it would deny our people this current benefit that positively impacts their lives and protects their health."

McDonald's workers don't belong to unions, but I asked Damon Silvers of the AFL-CIO what he thought about the McDonald's warning.

DAMON SILVERS, POLICY DIRECTOR, AFL-CIO: McDonald's is saying we want to leverage the administration by not enforcing the law, by threatening them to cut off health care to these low-wage workers who paid for it with their own money.

TODD (voice-over): Contacted by CNN, neither McDonald's nor administration officials deny a memo was sent, but McDonald's in a statement to CNN says, "No decision has been made and media reports saying that we plan to drop coverage for our employees are completely false. These reports are purely speculative and misleading, regardless of how the regulations evolve over the next several months, McDonald's is committed to providing competitive pay and benefits and the strongest employment opportunities possible."

How do McDonald's workers feel about this?

(on camera) I got a cheeseburger and fries, but what I don't have are any employees of McDonald's to talk to us about their health-care benefits or how they feel about potentially losing some of them. This is the fifth McDonald's in the D.C. area where we've gone to try to get comment from any McDonald's employees, any hourly employees about that prospect. Each time we go into one of these places, they tell us that they can't let us film inside, that the managers can't talk to us. We can't talk to the employees without getting permission from some regional or corporate managing office of one of these facilities. When we call them, they say either no or "We'll get back to you," and so far, none of them have.

(voice-over) A number of other major companies with hourly employees offer the same kind of health plan as McDonald's, but ad ministration officials tell CNN the rules McDonald's asked about haven't been finalized yet. And if McDonald's does request a waiver, officials say, they are committed to finding a solution.

One group at the center of all this is the insurer that McDonald's uses to cover its employees. We called that company, BCS Insurance Group in Illinois, and they wouldn't comment on any of this -- Wolf.

BLITZER: Brian Todd, thanks very much.

Let's go back to Fredricka Whitfield. She's monitoring some of the other top stories in THE SITUATION ROOM right now -- Fred.

FREDRICKA WHITFIELD, CNN ANCHOR: Hello again, Wolf.

Hello, everyone.

BMW of North America says it's preparing to recall 198,000 Beamers and Rolls Royces because of a leak that can develop in their power brake systems. The recall involved several BMW models for a range of years from 2002 to 2010, depending on the model, and 2002 to 2010 Rolls Royce phantoms. The Rolls Ghosts are not included. BMW says the leak can cause a reduction in power braking assistance.

And a newly-released study has found direct evidence that attention deficit hyperactivity disorder, or ADHD, could be inherited. Researchers discovered genetic abnormalities that could lead to development of the condition, but experts say the genetic markers signal only a susceptibility to getting ADHD, and they don't rule out environmental factors. They hope to one day to develop a test but say it's unlikely to be any time soon.

And former president Jimmy Carter is out of the hospital and on the mend. Carter left Metro Health Medical Center in Cleveland, Ohio, after two days of treatment for a viral infection. The Carter Center said he would resume his schedule this week in Washington.

Carter got sick during a flight to Cleveland to promote his new book, "White House Diary." He turns, by the way, 86 tomorrow. So happy birthday to him.

And Congress is taking steps to stop those TV ads that blast you with sound that's a lot louder than the program that you're actually watching. Before leaving town for midterm elections, the Senate today unanimously approved a measure aimed at turning down overly loud commercials. The House passed a similar bill last year. Final action is expected when Congress returns after the November election.

Wolf, that's one of those things that drives people batty.

BLITZER: Yes. It's sort of annoying. There's one level for us and then all of the sudden the commercials start, and it goes to a higher level. And then you turn it down. Then you've got to turn it back up. It can be a little bit annoying.

WHITFIELD: They get your attention, and that's the whole strategy, right?

BLITZER: Yes, they want people to pay attention to those commercials. Thanks very much for that, Fred.

What issue is most important to you in the midterm elections? Jack Cafferty is standing by with your e-mail.

Then look at this, the Naked Cowboy. Guess what? He's running for president of the United States. CNN's Jeanne Moos takes a "Most Unusual" look.

(COMMERCIAL BREAK)

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

JACK CAFFERTY, CNN ANCHOR: What issue is most important to you in the midterm elections?

Paul in New Mexico writes, "Tipping the balance in Congress and ensuring that Obama's agenda is stopped cold."

Mario in Phoenix: "It's imperative in the next ten years that we deliver the green alternative energy infrastructures that will enable us to effectively manage the existing financial, employment and growth deficits that we face today. If we don't make that commitment, we are doomed to repeat history as the Greek, Romans, Spaniard, British and Soviet empires were decimated by wars. The forever wars in the Middle East and the thirst for oil will claim us, too."

Mike in New Hampshire writes, "Getting a Republican majority, even if a few nut cases from the Tea Party are needed to do it."

Frank in Indiana, "Running the Republicans who created this mess out of office. They've blocked bills. They do nothing. They don't care about the U.S., only money for the rich."

Ron in Maryland, "Most important to me in the midterms, electing money-savvy congresspersons. If the government can rein in uncontrolled spending, stop borrowing from Asia at all with the killer death service costs and start investing in business and projects that employ people, our economy will grow healthy again."

Joe writes, "Taxing the wealthy. Tax breaks for the wealthy is like building a dam upstream. The rancher upstream gets more than enough water while the rest of us have to make due with what little bit of water leaks through the dam. It's time to blow up the dam and let the water flow. There is plenty for us all."

Carl in Illinois: "The economy and the illegal immigration, say no to amnesty of any kind. Come to the front door legally or don't come at all."

John writes, "Reversing the path to socialism and national bankruptcy."

And Tom in Maine says, "Sanity. I agree with Jon Stewart. I don't want a mediocre bunch of politicians replaced with a bunch of hysterical flakes. What the hell is in that tea anyway?"

You want to read more on this, go to my blog, CNN.com/CaffertyFile.

BLITZER: I always do, Jack. Thanks very much. Appreciate it. See you back here in THE SITUATION ROOM.

A rise in anti-government extremism and militia activity right here in the United States. It's all detailed in a brand-new article in "TIME" magazine. John King speaks with the journalist who wrote it on CNN's "JOHN KING USA." That's coming up at the top of the hour.

And we first came to know him as the Naked Cowboy. Now he wants to be President Naked Cowboy. CNN's Jeanne Moos checks out his White House aspirations right here in THE SITUATION ROOM. the power and versatility of six tools packed into one.

(COMMERCIAL BREAK)

BLITZER: The man whose claim to fame is entertaining New Yorkers and tourists in Times Square as the Naked Cowboy now has his eye on the White House. CNN's Jeanne Moos checked out his "Most Unusual" candidacy for president.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): Instead of running around in his underwear, he's running for president.

ROBERT BURCK, THE NAKED COWBOY (singing): I'm the Naked Cowboy.

MOOS: And if you don't think he's serious, check out his new presidential look.

UNIDENTIFIED MALE: I got to be honest, you are the Naked Cowboy, still, right?

BURCK: Hey, how are you doing?

MOOS: Hard to believe that's the half-naked tourist magnet of Times Square, minus the hair.

UNIDENTIFIED MALE: And going for president?

BURCK: Absolutely. Obama's going down. MOOS: Don't let the underwear puns fool you.

BURCK: I like to keep things brief.

MOOS: Robert Burck has a degree in political science from the University of Cincinnati. He wouldn't be the first cowboy president. He's already run for mayor or New York.

BURCK (singing): No one's ever done more with this (ph) than me.

(speaking) If I can literally build a global brand with a pair of underwear, boots and hat, think what I can do for the city of New York.

MOOS: What he did was drop out of the race, fed up with the red tape and a $250 fine he had to pay for failing to file a required form.

Except in his attire, he's a conservative.

BURCK: Unapologetic commitment to our borders, our language, and our culture.

UNIDENTIFIED MALE: Wow.

MOOS: Confirmation that he's running came on celebrity-chasing TMZ. He scheduled a press conference, but when almost no one showed up, it was rescheduled. Only they got the month wrong on the Naked Cowboy's Web site and had to correct it.

(on camera) Back in the '08 campaign, there were designer Obama underwear. But no one's ever actually run for president in their underwear, and his campaign manager says that the Naked Cowboy will not be campaigning in his undies.

(voice-over) At least no one will ever have to ask the Naked Cowboy this question.

UNIDENTIFIED FEMALE: Is it boxers or briefs?

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: Usually briefs. I can't believe she did that.

MOOS: Now the guy who used to walk into a parking garage to change in his car and come out dressed in his tighty-whiteys is hanging up his briefs, at least while campaigning. Vote for the Naked Cowboy...

BURCK: For a real change.

MOOS: ... of underwear.

BURCK (singing): Coming to a town near you

MOOS: Jeanne Moos, CNN...

BURCK: Don't touch the squishy parts.

MOOS: ... New York.

(END VIDEOTAPE)

BLITZER: Remember, you can always follow what's going on behind the scenes here in THE SITUATION ROOM on Twitter. You can get my tweets, @WolfBlitzerCNN, all one word.

Thanks very much for watching. I'm Wolf Blitzer in THE SITUATION ROOM.

"JOHN KING USA" starts now.