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The Situation Room

Speaker Slammed Over Jobs Remark; CBS Reporter Attacked in Cairo; Missing Protesters: Dead or Alive?; Islamic Influence on the New Egypt; Vets Allege Rape, Assault in Ranks

Aired February 15, 2011 - 17:00   ET

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

JESSICA YELLIN, GUEST HOST: Happening now, President Obama says he's eager to have an adult conversation about overspending. We're deciphering the main messages of his surprise news conference.

Plus, death chants by Iranian lawmakers -- they're trying to snuff out anti-government protests by calling for the execution of some opposition leaders.

And after months of scandal, Italy's prime minister now facing trial on sex and abuse of power charges. We have an exclusive interview with a woman who is being investigated for hooking him up with young women.

Wolf Blitzer is off today.

I'm Jessica Yellin.

You're in THE SITUATION ROOM.

President Obama faced reporters today after enduring 24 hours of mostly bad reviews about his new budget blueprint. He used a hastily called news conference to defend his spending plan, as well as his response to the revolution in Egypt. And he laid down some new markers for his next two years in office.

Our senior White House correspondent, Ed Henry, was there -- Ed, the president seemed pretty defensive today.

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: He was a little defensive in dealing with the situation, certainly, in the Middle East. But he was trying to push back by saying that Iran needs to stop beating up and murdering protesters. And he also had some tough talk for Republicans. While saying that he wants to work out a deal on the budget, he said he's not going to give in to dramatic budget cuts.

(BEGIN VIDEOTAPE)

HENRY: (voice-over): It was a tale of two news conferences -- a president struggling to deal with the fiscal crisis at home and dramatic change abroad, while pleading patience in both cases.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Let's face it, you guys are pretty impatient. If something doesn't happen today, then the assumption is it's just not going to happen, right?

HENRY: The president insisted he's confident there will be a deal with Republicans on deep budget cuts to avoid a government shut down, even though he continued to be vague on the details about big ticket items like Social Security and Medicare.

OBAMA: What I've said is that if you look at the history of how these deals get done, typically, it's not because there's an Obama plan out there. It's because Democrats and Republicans are both committed to tackling this issue in a serious way.

HENRY: Mr. Obama stuck to positioning himself in the middle of Democrats who think his budget is too lean and Republicans who think it's too fat.

OBAMA: We've got to be careful. Again, let's use a scalpel, let's not use a machete.

HENRY: He walked the same fine line on the growing protests in the Mideast. He said the U.S. cannot dictate to countries, while also prodding nations like Iran, Jordan, Algeria and Yemen to embrace the hunger for freedom.

OBAMA: If you are governing these countries, you've got to get out ahead of change. You can't be behind the curve.

HENRY: Pressed on whether he was behind the curve in Egypt, the president defended his administration.

(on camera): Do you want them to taste freedom or do you want them to taste freedom only if it will also bring stability to our interests in the region?

OBAMA: Well, first of all, without revisiting all the events over the last three weeks, I think history will end up recording that at every juncture in the situation in Egypt, that we were on the right side of history.

HENRY: He offered cautious support for protesters and had tough talk for the government in Tehran.

OBAMA: I find it ironic that you've got the Iranian regime pretending to celebrate what happened in Egypt when, in fact, they have acted in direct contrast to what happened in Egypt by gunning down and beating people who are trying to express themselves peacefully in Iran.

(END VIDEO TAPE)

HENRY: Now, as for what this means for Mideast peace prospects, the president said he's hopeful that this will be an opportunity that will force major progress. But he also acknowledged there could be some major challenges here because of all the instability. He said, at one point, democracy is messy. And that may be the biggest understatement of this whole situation in the Mideast right now -- Jessica. YELLIN: So is diplomacy.

HENRY: Exactly.

YELLIN: Thanks so much, Ed.

Thank you.

HENRY: Thank you.

YELLIN: And now to the revolution in Egypt. As Ed was talking about, it has ripples of unrest across the Middle East. The Muslim Brotherhood announced today that it will apply to become a political party in Egypt. The group is officially illegal, but it's considered one of the most organized forces in the -- in the country and the Brotherhood says it does not plan to run a candidate for president to replace Hosni Mubarak.

The king of Bahrain is responding to protesters demanding change. He promised today that a committee will study government reforms and that two recent deaths during the unrest will be investigated.

Here in the U.S., Secretary of State Hillary Clinton spoke about the influence of social media in the Muslim world, but she said ensuring Internet freedom is not easy.

(BEGIN VIDEO CLIP)

HILLARY RODHAM CLINTON, SECRETARY OF STATE: While the rights we seek to protect and support are clear, the various ways that these rights are violated are increasingly complex. I know some have criticized us for not pouring funding into a single technology, but we believe there is no silver bullet in the struggle against Internat -- Internet repression. There's no app for that. Start working, those of you out there. And, accordingly, we are taking a comprehensive and innovative approach, one that matches our diplomacy with technology, secure distribution networks for tools and direct support for those on the front lines.

(END VIDEO CLIP)

YELLIN: Clinton also said, in the end, the Internet was not responsible for the revolution in Egypt, people were.

Now to the unrest in Iran and a chilling response by government officials there -- death chants.

(VIDEO CLIP)

YELLIN: Iranian lawmakers are calling today for the execution of some opposition leaders. It's a dramatic new turn in Iran's crackdown on anti-government demonstrations.

Here's CNN Reza Sayah.

(BEGIN VIDEOTAPE) REZA SAYAH, CNN CORRESPONDENT: On Monday, Iran's opposition movement made a big statement with a comeback.

On Tuesday, it was Iran's hard-line leadership's turn to make a statement and it was an angry one. In parliament on Tuesday, dozens of Iranian lawmakers, angry, seething, fists in the air, calling for the trial and execution Mehdi Karroubi and Mir Hossein Mousavi, the two leading opposition figures in Iran, the two men that called for the rally on Monday in support of the uprising in Egypt, a request that was rejected by the government.

Of course, Iran's opposition movement defied government warnings not to come out. They came out anyway in the tens of thousands, according to witnesses. There were several clashes in areas throughout Tehran. A number of people were detained.

The question now, will Iran's regime heed the calls of its lawmakers and go after Mehdi Karroubi and Mir Hossein Mousavi?

Analysts say if they do, if they put these two men on trial, they certainly risk energizing the Green Movement even more by giving them a rallying cry.

In the meantime, the government says the protesters killed one passerby on Monday. His funeral is on Wednesday. And there's some Web sites that are reporting the Green Movement could show up to this funeral, setting the stage for another possible showdown between government forces and the opposition movement.

Reza Sayah, CNN, Islamabad.

(END VIDEO TAPE)

YELLIN: Thank you, Reza.

President Obama is taking his hardest line yet against Iran and its attempts to silence protesters. We'll talk about the message he's sending about unrest in the Middle East.

And military veterans who say they were raped by people they served with and are now demanding justice.

(COMMERCIAL BREAK)

YELLIN: It would seem President Obama is taking his hardest line yet against the Iranian government for its handling of the anti- government demonstrators.

(BEGIN VIDEO CLIP)

OBAMA: I find it ironic that you've got the Iranian regime pretending to celebrate what happened in Egypt when, in fact, they have acted in direct contrast to what happened in Egypt by gunning down and beating people.

(END VIDEO CLIP) YELLIN: But that might not be the toughest line his administration has taken overall.

Let's bring in CNN senior political analyst, David Gergen, to discuss this -- David, so look, we thought that he took a pretty tough line on Iran. I thought it was tougher than I'd ever heard him go. But it's not as tough, as you say Hillary Clinton went.

So what message is he sending to his allies?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST, FORMER PRESIDENTIAL ADVISER: That's a very interesting question, Jessica.

Yesterday, Hillary Clinton made it clear that we were -- we supported the aspirations of the people in the streets in Iran. And the translation of that was people of the streets, their aspirations are to bring down the government, and the fact that she was -- she was supporting them in that.

President Obama stopped short of that today. He supported the right to protest and their right to protest without being beaten up by Iranian thugs. But he stopped well short of -- of implying or calling for an end to the government.

I can tell you that behind the scenes, there are many in the U.S. government who, of course, would love to see the Iranian government fall. They've been trying very hard to stop those centrifuges from working well. And there is evidence that the United States and the Israelis are working very covertly, have made progress in that regard. And they would like to support the protests. They'd like to see a fall in the government.

But they're worried in the White House that if they go too far in supporting the protesters, the Iranian government will say, aha, the protesters are dupes there -- of the -- of the American government, they're essential -- they're essentially tools of the American government, and, therefore, we and the people in Iran must join together.

And that's what the president is -- that's why he's being a little more cautious.

But he is encouraging protesters in the region. He's -- he's a -- there's no question he's been moving, over the last few days, to align himself overall with what he now calls the hunger for change in the Middle East.

YELLIN: David, you've been in four White Houses. So would you take us a little bit behind closed doors and describe what goes on when -- what must be going on as they figure out how to message this. Because when he talks about Iran, it's not only signaling to Iran, but also to U.S. allies in Bahrain and Yemen, where there are also protests.

GERGEN: Well, I -- I just cannot imagine how busy they are in this White House right now with the -- they've got two wars going on. They've got the -- the rise of China that they have to manage well. And now they've got multiple states that they're having to worry about in the Middle East and sort of follow and try to figure out.

And so they need a strategy. . And some of the criticism of the administration, I think, goes to whether there is a clear strategy. It's not obvious there is one for the overall Middle East.

But I do think, Jessica, the -- that while the president has -- you know, while the outcome in Egypt was what the president had hoped for, that is, it was a quick and now an orderly transition, I do think they've had trouble with their messaging. They haven't quite -- you know, there -- there seems to be no sort of master plan for who is going to say what so they keep it consistent. And there was a fair amount of incoherence during the Egyptian piece. And now there's a little daylight that's opened up between the president and -- and Secretary of State Clinton on Iran.

I would think they would now bear down on how do we keep our messaging straight and simple and consistent?

YELLIN: Yes. We know that's an important theme for this White House right now.

Thanks so much.

GERGEN: Yes, it sure is.

Thank you.

YELLIN: And thank you, David.

On another story, protecting the rights of 700 million airline passengers -- Lisa Sylvester is monitoring that and some of the other top news in THE SITUATION ROOM -- hey, Lisa, what do you have?

LISA SYLVESTER, CNN CORRESPONDENT: Hi there, Jessica,

A California congressman is introducing a airline bill of rights for the third time. Democrat Mike Thompson's bill would require all airlines to provide water, food, working toilets, ventilation and the option for passengers to deplane during an extended delay. An airline industry group says the bill isn't needed and that tarmac delays are declining.

Home Depot is beefing up its work force. In a sign that the overall job market may be improving, the retailer will hire more than 60,000 temporary workers. Home Depot usually sees a big uptick in sales in the spring season, which it calls its own Black Friday, a reference to the year-end holiday rush. It is also hiring new full time and part-time workers.

And you won't have to check the expiration date on your Delta Sky Miles any longer. That's because there isn't any. Under the previous system, Sky Miles expired after 24 months if customers didn't redeem or use them. In making the change Delta says it wanted to reward the loyalty of its frequent flyers. And if you are trying to improve your credit rating, well, then pay your rent on time. That's because Experian is now including residential rental payment info on its credit reports. Until now, it had only recorded mortgages. The change couple pact millions of people across the country, and I'm sure the word is just getting out, Jessica, to all those renters out there. Be careful there.

YELLIN: Wow, wow. That is a major change. It impacts so many people. Thanks, Lisa. See you later in the show.

Oil giant Chevron ordered to pay more than $8 billion to residents of the Amazon rain forest. We'll tell you why, and why the decision is based on fraud.

Plus, it's guarded under lock and key. Now, new indications Coca-Cola's secret recipe may already be out, and you're going to see if firsthand.

(COMMERCIAL BREAK)

YELLIN: Republicans went on a tear about President Obama's budget today, apparently unimpressed by his call to have an adult conversation about taxes and spending. In the process, the House speaker said something that's getting attention and not in a good way.

Here's our Congressional correspondent Brianna Keilar.

Brianna, sounds like he got himself in a little trouble.

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: Well, certainly he got the ire of a lot of Democrats. I don't know if you could say he got in trouble with a lot of Republicans, though, Jessica.

So today, as President Obama was defending his budget for next year, of course, House Republicans are pushing cuts for this year as we speak. In fact, here's a big list of tens of billions in cuts that they are putting on the House floor today and throughout the rest of the week. Cuts to various government agencies, various government programs. Everything from food safety programs to food assistance for low-income women and children to cuts to community policing programs. And Republicans will tell you they are making tough choices while the country is facing a mountain of debt, but you have Democrats saying that a lot of these cuts are very irresponsible.

The comments today that House Speaker John Boehner made were in response to a question about how these cuts affect government workers. Listen to how he answered, and listen to what House Minority Leader Nancy Pelosi said a little later.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), MAJORITY LEADER: Over the last two years since President Obama has taken office, the federal government has added 200,000 new federal jobs. And if some of those jobs are lost in this, so be it. We're broke. It's time for us to get serious about how we're spending the nation's money. REP. NANCY PELOSI (D-CA), MINORITY LEADER: Democrats do not subscribe to Speaker Boehner's verdict that if jobs are lost in this continuing resolution, so be it. Maybe so be it for him, but not so be it for the people who are losing their jobs.

(END VIDEO CLIP)

KEILAR: Now while Democrats are pouncing on Speaker Boehner for his comments, the fact is he was talking about government jobs, and in the Republican Party there's a strong appetite to see the size of government reduced. There's a lot of folks, as you know, Jessica, in the Republican Party who don't exactly have a soft spot in their heart when they would be talking disdainfully about bureaucrats. But Democrats will say a job is a job, and they would say Republicans are being callous here.

YELLIN: You're right, where politicians see that comment depends on where they sit.

Thanks so much, Brianna.

KEILAR: Exactly.

Egypt's new leaders, their military leaders, are promising reform but they are still holding some protesters arresting during the revolution, we believe. We're searching for the missing.

And we're digging deeper on the banned Muslim group in Egypt that now wants to become a political party.

(COMMERCIAL BREAK)

YELLIN: You're in THE SITUATION ROOM.

Happening now, their actions were heroic. Four Wal-Mart employees successfully disarmed the alleged shoplifter holding them at gunpoint, but now they are out of a job for doing just that.

Plus, President Obama bestows the country's highest civilian honor on 15 people he calls, quote, "the best of who we are." Among them, a legendary poet, a baseball slugger and a former president.

Wolf Blitzer is off today. I'm Jessica Yellin. You're in THE SITUATION ROOM.

An upsetting story. We are just learning new details about the attack on a well-known journalist on the same day that former Egyptian President Hosni Mubarak stepped down. CBS News released this picture of correspondent Lara Logan in Cairo's Tahrir Square on Friday. Moments after this picture was taken, CBS says a mob surrounded Logan and her team.

In a statement on their website CBS says, quote, "In the crush of the mob, Logan was separated from her crew. She was surrounded and suffered a brutal and sustained sexual assault and beating before being saved by a group of women and an estimated 20 Egyptian soldiers. She reconnected with the CBS team, returned to her hotel and returned to the United States on the first flight the next morning. She is currently in the hospital recovering. Logan and her family respectfully request privacy at this time."

Lara Logan is a war correspondent who has covered the wars in Iraq and Afghanistan, a woman many of us know and we wish a speedy recovery and look forward to seeing her back on the air soon.

Four days after the revolution in Egypt, some protesters who vanished during the height of the unrest are still missing. Are they dead or are they alive? Are they in custody?

Let's bring in CNN's Arwa Damon in Cairo who is working that angle for us.

Arwa, tell us, is the military living up to its promise?

ARWA DAMON, CNN INTERNATIONAL CORRESPONDENT: Well, Jessica, to a certain degree, no, they are not. They have come out and they've pledged arbitrary detention, they've pledged to release activists detained during the protests, but from what we're seeing and hearing that has not quite been the case.

We went and spoke to the family of a 22-year-old detained medical student or at least the family thought he was detained. He was picked up not during the demonstrations but, in fact, the day after President Mubarak stepped down when he headed down to Tahrir Square as part of a cleanup effort.

He did manage to get a phone call out telling one of friends in the neighborhood that he had been put to the side with a group of other young men, and then the family could not get a hold of him for three days. They were completely beside themselves imploring the military for any sort of information and getting absolutely nowhere.

Luckily, he was eventually released on the same day he spoke to the family, today, but others have not been so fortunate. We headed to outside one of Cairo's prison where around 200 people have been sleeping on the pavement waiting for information of their loved ones. They say that they believe they are being held there, but they claim the military is playing a game with them. One day they say they are going to be released. And the next day, they say no, they are going to be held, and then they tell them no, they are actually not being held here, they are being held somewhere else.

We're seeing this rising anger and confusion and frustration among these families towards the military who they believed were out on the street to try safeguard security and uphold human rights, but many of these families are questioning the military's true intentions -- Jessica.

It just sounds horrifying. Arwa, how precarious is the situation on the ground there now?

DAMON: Very. This is an extremely sensitive time for Egypt. The military is fully aware of that. They are in a very difficult position. They have to try to maintain some level or move the country towards some level of stability, but at the same time they cannot afford to be seen by the public as continuing to violate human rights.

We spoke with one human rights lawyer who is basically making the point that the military is part of the old regime, and now it has to make a choice as to whether or not it is going to uphold human rights, stand by its promises, or continue along the path of authoritarian rule that this country has been so accustomed to.

He said their current behavior is growing increasingly disturbing. It could be because it is an indication of the heavy hand they plan on using in the days ahead, or it could just be that they are just trying to navigate a country that has literally just stepped out of a very complex revolution.

But human rights organizations are growing increasingly concerned about the military's behavior, and they say that they really need to somehow stick to these promises or else they risk alienating the people and seeing them turn on them as well.

YELLIN: Something we'll all continue to watch very closely.

Thank you so much, Arwa, for all your reporting.

****30 BELOW

YELLIN: Today there is new fuel for concerns that Egypt's drive towards democracy could be derailed by a Muslim group that's now illegal.

Our Mary Snow is looking into the Muslim Brotherhood and its attempt to gain new status in Egypt -- Mary.

MARY SNOW, CNN CORRESPONDENT: Well, Jessica, that new status comes in the form of seeking to become a political party, and since the Muslim Brotherhood has been effectively banned in Egypt for decades, there are a lot of questions about what their new role will look like, and it's being closely watched here in the U.S.

(BEGIN VIDEOTAPE)

SNOW (voice-over): As the Muslim Brotherhood announces it'll apply for status as a political party and emerges as a player in Egypt's political process, some outsiders have raised concerns that the group would push for an Islamic state. Addressing those questions in an interview with CNN last week, a spokesman said the group is looking for a civil and democratic state in Egypt.

ESSAM AL-ARIAM, MUSLIM BROTHERHOOD SPOKESMAN: Islam have many interpretations in the Muslim world. The interpretation of Egypt is a moderate one, and it can give another modernized (INAUDIBLE) in the region.

We are not Iran. We are not Turkey. We are not Saudi Arabia. We are Egypt. SNOW: The Muslim Brotherhood is the oldest and largest opposition group in Egypt, but by not offering a presidential candidate, Jon Alterman of the Center for Strategic and International Studies says the group is being careful.

JON ALTERMAN, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES: What they want to do is they want to reassure people. They want to have a chance to compete, and they think the best way to compete is to not challenge right off and instead to be one of many parties in a much more vibrant political system in Egypt.

SNOW: Before stepping down as president, Hosni Mubarak warned about the threat from the Muslim Brotherhood taking over, and the Muslim Brotherhood has emerged in political debate in the U.S.

Conservatives have urged caution and have criticized President Obama for telling FOX News in early February that the Muslim Brotherhood was just one faction in Egypt, and while some parts of their ideology are anti-U.S., they don't have majority support.

NEWT GINGRICH (R), FORMER HOUSE SPEAKER: The Obama administration is wrong on terrorism, wrong on Iran, wrong on the Muslim Brotherhood.

SNOW: But those who study the group say it's unclear how the Muslim Brotherhood will operate, now that it's competing in an open arena, since there are internal rifts between young and old and differences over the group's religious role.

ALTERMAN: They've never had a sort of unconstrained environment to even air their difference. What they'll look like, in some ways it's like miners coming out of a -- a mine shaft after months underground. They have to sort of blink in the light, and they don't really know how they'll behave.

(END VIDEOTAPE)

SNOW: And Jessica, two Middle East experts that we spoke to for this story say it's impossible right now to answer the question of what the intentions of the Muslim Brotherhood are since they might not even know their own intentions themselves at this point -- Jessica.

YELLIN: Unbelievable. It's so rapidly changing there.

Thank you, Mary.

SNOW: Yes.

YELLIN: Military veterans are suing the Pentagon, claiming they were victims of sexual assault and rape by fellow service members.

Plus, it's no ordinary submarine, and it was found, of all places, in the jungle.

(COMMERCIAL BREAK) YELLIN: A group of U.S. military veterans is now taking the Pentagon to task for allegedly ignoring what the veterans say were incidents of sexual assaults that occurred during their service.

CNN's Pentagon correspondent Barbara Starr is here with the details. Barbara, a remarkable story.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Jessica, the accounts are very disturbing. And, equally disturbing, the allegations that the Pentagon knew and did nothing about it.

(BEGIN VIDEOTAPE)

STARR (voice-over): For these veterans, it's now a search for justice. In a 42-page lawsuit filled with graphic sexual detail, 15 women and two men spell out alleged assaults and rapes by those they served with.

Myla Haider says she was raped while serving in Korea with the army's Criminal Investigation Division, the very unit charged with investigating rapes and assaults.

MYLA HAIDER, PLAINTIFF: The people who commit these offenses are sexual predators who are very good at selecting their victims and tend to offend again and again, and that is a fact that is not recognized within the DOD system.

STARR: The lawsuit against Defense Secretary Robert Gates and former Defense Secretary Donald Rumsfeld alleges the Pentagon failed to prevent the attacks, prosecute offenders and provide an adequate justice system.

Sarah Albertson says that while in the Marine Corps she was raped and then made to work alongside her attacker. She acknowledges drinking the night of the assault, but says the military failed her.

SARAH ALBERTSON, PLAINTIFF: Nobody wants to say that there's been a rape in their command. It just looks bad on paper.

I know from my case, even -- I'm not trying to get into specifics, but people who did believe me and who had my back and were supportive of me were still telling me don't tell anybody about this. Don't go to the public.

STARR: Some of the women reported their attackers broke into their rooms. One says she was assaulted in a bathroom.

Anu Bhagwati is consulting on the lawsuit.

ANU BHAGWATI, EXECUTIVE DIRECTOR, SERVICE WOMEN'S ACTION NETWORK: The DOD has had decades to prove -- you know, to fix the system, and they've proven that they can't. They haven't done anything to change it so far. That culture of intimidation prevails.

STARR: Last year, more than 2,400 military women openly reported sexual assault. Commanders were notified, investigations began. That's a four percent decline from the previous year, but there were nearly 900 additional assault reports filed confidentially by women so traumatized they want their identities kept secret, an increase of five percent.

The Pentagon wouldn't comment on the lawsuit. Press Secretary Geoff Morrell told CNN the department is doing all it can, adding, quote, "This is now a command priority, but we clearly still have more work to do."

(END VIDEOTAPE)

STARR: And there are two men who are also party to this lawsuit. They say they were sexually, viciously assaulted while they were on duty. They detailed those incidents, and commanders who they say failed to respond to them -- Jessica.

YELLIN: And Barbara, bottom line, they're doing this outside the military chain of command because they're veterans now?

STARR: Well, right. Except for one person involved in all of this, they are all outside of the U.S. Military. But even inside the U.S. Military, I can tell you that there are people who say this still goes on, still a problem --

YELLIN: And the claim isn't --

STARR: -- Jessica.

YELLIN: And the claim is not just that they're assaulted but that the military does nothing about it?

STARR: That the military fails on -- on a unit level, on a commander level and at the Pentagon to really address these issues.

YELLIN: Thanks so much, Barbara. Barbara Starr at the Pentagon.

President Obama says it is time to have an adult conversation in Washington, but are both sides -- is either side ready to be a grownup?

Plus, Wal-Mart employees fired for disarming an alleged gunman? Ahead, the surprising outcome of a heroic act.

(COMMERCIAL BREAK)

YELLIN: There's lots of talk now about having a, quote, "adult conversation" in Washington.

Joining us today to discuss whether there are any adults here are two CNN political contributors, Democratic strategist Donna Brazile and Republican consultant Alex Castellanos. Thanks to both of you for being here.

This is a refrain we've actually heard before. We've put together a funny little montage. Listen to who wants is to be adults.

(BEGIN VIDEO CLIP)

REP. PAUL RYAN (R), WISCONSIN: I'd like to get to an adult level conversation, but apparently we're not having that these days.

REP. DEBBIE WASSERMAN SCHULTZ (D), FLORIDA: An adult level conversation to invest social security in Wall Street.

RAND PAUL (R), SENATOR-ELECT, KENTUCKY: Jack is a major ticking time bomb, and we have to have an adult conversation how we're going to get rid of the debt.

REP. JOHN BOEHNER (R), MINORITY LEADER: It's time for us as Americans to have an adult conversation with each other about the serious challenges that face our country.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: My hope is that what's different this time is -- is we have an adult conversation where everybody says here's what -- here's what's important, and here's how we're going to pay for it.

(END VIDEO CLIP)

YELLIN: Donna, I'll start with you, because the president began the conversation yesterday by presenting his budget, talking about it today, but the conversation -- his conversation didn't include tackling the debt with Medicare, Medicaid or social security. Is there a plan?

DONNA BRAZILE, CNN CONTRIBUTOR: Well, first of all, I want to let you know that I'm -- I'm proud to be part of the best adult team in American politics. All right.

But, look, the president has put forward a responsible balanced, approach to cutting the deficit while still keeping his eye on the number one goal, I think, of the American people, and that is job creation. The plan has to be fiscally sound, but also the budget must also contain opportunities to invest in the future and grow the economy.

Now, I agree that we need to put everything on the table. We cannot just focus on the 14 percent of the budget, the 12 percent that involves discretionary spending, that will hurt the poor and hurt the elderly. We have to put the entitlements. We have to put defense. Everything needs to be on the table.

YELLIN: Alex, I heard in the president's comments today echoes of some of the words and phrases that both Speaker Boehner and Leader McConnell, the leading Republicans, have used in talking about the deficit and the debt, and I'm wondering if they're trying to echo each other because they're behind the scenes having a different conversation.

ALEX CASTELLANOS, CNN CONTRIBUTOR: It may be because they're having a conversation behind the scenes, but it's also because of the politics of the 2012 election. Both are headed to the same place. Why is everybody talking about an adult conversation? Because America feels that we've had a spending party, and now they want the grownups to show up and be responsible. We're fighting over the word responsibility, who can be the responsible adult. That's who's going to win the 2012 election.

So that's what's --

YELLIN: Do you think there is a plan --

CASTELLANOS: -- drawing them together.

YELLIN: -- to be responsible?

CASTELLANOS: No. Not right now.

YELLIN: No?

CASTELLANOS: Not right now.

Can there be? Can they achieve something together? Yes.

The president needs to go agree with the House first, not the Senate. If he agrees with the Republicans in the House on some kind of budget compromise, he can then go to the Senate and peel off enough conservative Democrats like Manchin to get it. But if he goes to the Senate first, it'll be the same story that happened in the House last year. He'll be too far left.

BRAZILE: I think it would be a mistake for the president to go to the far right of the Republican Party in order to reach the middle. The president has to go to the Congress saying I have a plan that will help preserve -

YELLIN: Wait, is Boehner the far right of the Republican Party -

BRAZILE: Well, you know why -

YELLIN: -- Speaker Boehner?

BRAZILE: I'm -- I'm referring to the -- to the members of the Tea Party -- I think he's part of the mainstream caucus, but the mainstream caucus is in a minority in the House Republican Party.

YELLIN: Can the president negotiate with Boehner -- Speaker Boehner -

BRAZILE: Well, he should be able to -

YELLIN: -- and cut a deal?

BRAZILE: -- negotiate with Mr. Boehner. Bring all of the handkerchiefs and napkins he can find and let's make sure that we can put cuts on the table that will make everybody cry, not just the poor and elderly. CASTELLANOS: The president has scored -- the president has scored some good political points this week. Let's give him credit. He has put himself in the position of the reasonable adult. It looks good politically.

He says, look, I've cut community organizing funds. I have a community organizer. I've cut education and heating fuel. I've given Republicans something. What are they going to bring to the table now?

Now, what he's not saying --

BRAZILE: And remember we pay them tax cuts last December to the wealthy and the middle class should not have to bear the cost of these cuts alone.

YELLIN: I want to -- I want to shift the prism just a little bit because we're right now talking about the budget debate over 2012's budget. There's a debate going on right now on the Floor of the House over 2011, this year's spending plan, and the White House has just issued a veto threat saying if this plan that they pass cuts too deeply into our key priorities, we'll veto this. Are we headed for that -- what are we headed for?

BRAZILE: Well, look, we're months into the fiscal year. March 4th is that day that everybody is looking at. The Republicans came up with --

YELLIN: Because we run out of money then.

BRAZILE: That is correct.

YELLIN: Got to have a deal by then.

BRAZILE: Once again, I do think that we need to do everything, cut these -- these budgets in a more fiscally responsible way. I think the Republican cuts are draconian.

YELLIN: The veto on the one hand threaten from the White House, potential of shutdown by the Republicans?

CASTELLANOS: It could be. It could be, but it's not by the Republicans. The Republicans are not forcing a shutdown by any means. If you're spending too much as a family, I think as the president said today, what do you do?

The first thing you do is you stop spending more than you take in. The president doesn't do that at all. He adds $1.6 trillion to the deficit. We have -- he is scheduled by his own numbers to take us to a $21 trillion debt by 2016. That is not cutting up the credit card.

BRAZILE: We got on this fiscally irresponsible path, because Republicans took their eyes off the books and off the path -

CASTELLANOS: Come on now.

BRAZILE: No. We have to -

CASTELLANOS: I don't know if you're aware of this -

BRAZILE: Hypocrisy should not -

CASTELLANOS: -- but Barack Obama has been president now quite a few years.

YELLIN: Let me tell you something -

BRAZILE: I'm just saying and that's why he inherited 1.3 trillion from the Republicans.

YELLIN: -- what (INAUDIBLE) Speaker Boehner said today. He's talking about the spending for this year, they'd made some pretty steep cuts, the Republicans have, letting go 200,000 federal workers, if their -- if their spending plan passes. This is what Speaker Boehner said.

(BEGIN VIDEO CLIP)

BOEHNER: Over the last two years since President Obama has taken office, the federal government has added 200,000 new federal jobs, and -- and if some of those jobs are lost in this, so be it.

(END VIDEO CLIP)

YELLIN: If people's jobs are lost, so be it. Is that a little too callous at this moment?

CASTELLANOS: That's not what he said. Let's correct that. That's not what he said. He said if federal government jobs are lost, people that have been added.

YELLIN: Those are people.

BRAZILE: They're old workers (ph).

YELLIN: Federal government workers are people.

CASTELLANOS: No -

BRAZILE: They are people who maintain our highways, our roads, our businesses, come on.

CASTELLANOS: If the Democrats want to be the party of creating government jobs in Washington and growing the bureaucracy, Republicans want to be the party -

BRAZILE: We want to be the party. We want to be the party.

CASTELLANOS: Excuse me. Republicans want to -

BRAZILE: OK.

CASTELLANOS: -- Republicans want to be the party that grows America's economy, not Washington's economy. This is a fight that Speaker Boehner will win. It's a mistake politically for the Democrats.

BRAZILE: No, I don't think -- we're fighting to preserve every American job. What Mr. Boehner is --

CASTELLANOS: So why don't you create two million Washington jobs?

BRAZILE: What Mr. Boehner is saying is basically federal workers, federal employees -

CASTELLANOS: Yes.

BRAZILE: People who have devoted their life to protecting the public health and safety, he's saying so be it. No way. That's 800,000 jobs that Mr. Boehner might be talking about.

YELLIN: I think that didn't add (ph) -- that sound bite didn't add that sound bite.

BRAZILE: That was a bad sound bite. That was politically wrong.

CASTELLANOS: No, I think -- I think growing Washington's economy when people are really losing their jobs because there's not enough money in the private sector and you're taking that money out to grow bureaucrat jobs in Washington.

BRAZILE: The last time I checked we have federal -- federal employees reside all over the United States of America.

CASTELLANOS: Big political mistake.

BRAZILE: They protect our borders.

YELLIN: (INAUDIBLE) the Republican voters -- OK.

BRAZILE: They protect our borders. They protect our food safety. They protect our public health.

CASTELLANOS: Ask Independents if we should have added 200,000 jobs.

BRAZILE: And you know what, you and I both got off the plane.

YELLIN: We've got to leave it there.

BRAZILE: We got off the plane, they protect our skies. God bless you federal employees.

CASTELLANOS: We're pretty well protected -

YELLIN: You guys are going to continue this discussion I can see out there.

CASTELLANOS: We're pretty well protected two years ago. BRAZILE: And the private sector employees as well.

YELLIN: Donna, Alex, thanks so much.

BRAZILE: Thank you.

YELLIN: It could be the most sensational trial ever in Italy. We'll look at the explosive sex crime charges against their prime minister.

And it's a stunning discovery in more ways than one. The submarine found in the jungle.

(COMMERCIAL BREAK)

YELLIN: First, an American student is imprisoned in Italy. Now, her parents face big trouble there.

Lisa Sylvester is monitoring that and some of the other top stories in THE SITUATION ROOM right now. Hey, Lisa. What do you have?

SYLVESTER: Hi, Jessica.

The parents of Amanda Knox have been indicted, accused of libeling Italian police. And Knox, you may remember, is an American convicted of murdering her British roommate back in 2007. The charges against her parents are the result of a 2009 newspaper interview in which they accused police of abusing their daughter while she was in custody.

A judge in Ecuador has awarded $8.64 billion to Amazon residents who sued Chevron for pollution. But both sides say they will appeal the verdict. Chevron says the ruling is based on fraud and the plaintiffs say the amount of the award is too small to clean up years of crude oil pollution.

About 20 Greenpeace activists breached security at a nuclear power plant in Eastern Spain. A spokeswoman for the Spanish government says no vital parts of the plant were affected, but a security guard was injured slightly. The environmental group is opposed to nuclear power. The power plant is one of eight in Spain and its operating license is set to expire in about a month.

And take a look at this, Jessica. It is a homemade submarine, 100 feet long, two diesel engines. It seats a crew of four and has sophisticated navigational equipment and reportedly can cruise 30 feet underwater between Colombia and Mexico. Colombian authorities say it's also capable of carrying eight tons of cocaine.

The Colombian military found it in the jungle on Sunday. That is an unreal piece of equipment. You know, there were rumors that something like this existed and now we see it there.

And take a look at these pictures. It's just pretty stunning all the way around. Very, very creative, I guess. YELLIN: A homemade submarine, something I never heard of before. Thanks, Lisa.

SYLVESTER: Thank you.

YELLIN: An ominous new threat to protesters in Iran. Members of parliament want some opposition leaders executed. We'll take a closer look at the call to arms.

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