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Gadhafi Defiant; Obama & Merkel United; Weiner Could Face Ethics Probe; Governor Mitch Daniels on 2012 Presidential Race; 'Strategy Session'; Interpol Warns of 'Glaring Security Gap'

Aired June 07, 2011 - 17:00   ET

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

WOLF BLITZER, HOST: Happening now, a formal request for an ethics investigation of Congressman Anthony Weiner. Stand by for new details about his raunchy online contacts with women and whether the New York Democrat broke any House rules or laws.

Also, President Obama insists he isn't worried the country may be sliding back into a recession. But there's new evidence that the economy is a serious drag on his re-election campaign. One rival saying he needs "economic rehab."

And a glaring gap in the securities situation around the world. Why millions of bogus or stolen passports are not being checked, documents that could be used by terrorists.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

All that coming up. But up first this hour, the air war and the war of words over Libya, as NATO bombs fell around Tripoli today, Moammar Gadhafi sounded as defiant as ever. Here in Washington, President Obama stood his ground against Gadhafi with the German chancellor at his side, and with criticism from members of Congress ringing in his ears. Let's go to our White House correspondent, Brianna Keilar, she's following this story for us -- Brianna.

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: Wolf, today at the White House, President Obama and German Chancellor Merkel sounded united in their message that Moammar Gadhafi must step down, but they glossed over their differences in the NATO-led mission.

(BEGIN VIDEOTAPE)

KEILAR (voice-over): As NATO jets bombed Libyan leader Moammar Gadhafi's compound in Tripoli, a defiant Gadhafi said live on Libyan state television he will fight to the death.

MOAMMAR GADHAFI, LIBYAN LEADER (through translator): We will not surrender. We will not give up. We have one option, our country, we will remain in it until the end, dead, alive, victorious, it doesn't matter.

KEILAR: Just a few hours later at the White House, President Obama warmly welcomed German Chancellor Angela Merkel on the South Lawn, and did a press conference in the East Room, he stressed the U.S. and Germany's common goal for Libya.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The chancellor and I have been clear Gadhafi must step down and hand power to the Libyan people. And the pressure will only continue to increase until he does.

KEILAR: The chancellor made a vague commitment to help Libya once Gadhafi is ousted.

ANGELA MERKEL, GERMAN CHANCELLOR (through translator): In the future, when we have further talks on this, we agree that Germany will be showing that it is responsible and committed to the Libyan cause.

KEILAR: But behind the friendly atmosphere, a significant disagreement on the NATO-led mission: Germany was one of five nations to sit out the vote on the U.N. resolution that authorized a no-fly zone and beefed up sanctions against the Gadhafi government. And there are no German troops taking part in the Libyan mission.

As the president looks for more support from European allies like Germany, backing for the operations waning on Capitol Hill, among unlikely bedfellows, Republicans and liberal Democrats.

REP. JEFF DUNCAN (R), SOUTH CAROLINA: This president should not be able to simply have wars of choice.

REP. JERROLD NADLER (D), NEW YORK: If, in this situation, we do not reclaim congressional powers, I can think of no set of circumstances under which the president cannot go to war without going to Congress first.

KEILAR: Many lawmakers say the president should have sought Congress's approval, as spelled out in the War Powers Act, to keep U.S. troops involved in Libya after the initial 60 days.

The White House insists it has acted legally and is keeping Congress informed.

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: We have consulted with Congress every step of the way since we've initiated this policy.

(END VIDEOTAPE)

KEILAR: And the fact remains, Wolf, the end date for U.S. involvement in Libya, for U.S. military involvement, is still uncertain. And as you can see by today, Gadhafi sending a message that he will hold on to power as long as he can -- Wolf.

BLITZER: Serious business now behind them. They are getting ready for a state dinner over at the White House tonight. Set the scene a little bit -- Brianna.

KEILAR: That's right. Well, there's a lot of pomp and circumstance. I think what is really interesting about this state dinner, Wolf, it's going to be held outside today, even though it is a little warm here in Washington, probably going to be in the high 80s for this dinner.

It will be held in the Rose Garden. And I have the menu right in front of me. We're looking at a chopped salad. I know everyone is curious about this, tuna tartar, an entree of petite filet, finishing up with apple strudel.

And we'll be seeing the German chancellor receiving an award, the Medal of Freedom, the highest civil honor given from the U.S. government, predominantly, Wolf, as you know, because she is the first East German chancellor of Germany, but also because she's the first woman to hold that post.

BLITZER: I want to welcome Angela Merkel to Washington, a lovely dinner ahead for her. Brianna, thank you.

A new call today for the International Criminal Court to investigate human rights abuses in Syria. Activists say President Bashar al-Assad's forces should not be allowed to get away with murder, but his regime is trying to turn the tables on anti-government protesters, blaming the opposition for dozens of deaths in one city.

CNN's Arwa Damon has the latest on all of this.

(BEGIN VIDEOTAPE)

ARWA DAMON, CNN INTERNATIONAL CORRESPONDENT (voice-over): "We don't want the military in the city," the crowd chants, carrying what appear to be olive branches. They also shout, "there are no armed groups here or terrorists." "Peaceful, peaceful," they chant.

CNN cannot independently verify the authenticity of this video, but the posting says it was shot in Jisr Al-Shugur, a town in northern Syria that has seen intense violence in recent days.

Syrian state television on Monday reported that 120 members of the security forces had been killed there, describing it as a massacre at the hands of armed gangs. This video appeared on YouTube and was then broadcast by state TV, which claimed that Syrian security forces had entered the area to save residents who were being used as human shields.

We hear a voice taking credit for the killing. One activist we spoke to said that residents had armed themselves and were fighting the security forces, while another said members of the armed forces tried to defect and clashed with loyalists.

This video is said to be of residents of Jisr Al-Shugur who fled to the Syrian-Turkish border. One woman shouts that security forces killed their children, and another yells there were helicopters flying over our heads, tanks were striking us.

(on camera): What actually transpired in this part of northwestern Syria remains impossible to tell. CNN, like most foreign media, has been prevented from entering the country. But one constant that is emerging is that many civilians are fleeing, especially in the border areas, fearing the full wrath of the regime as this uprising enters its third month.

(voice-over): A team of activists, Syrian and international, has presented the prosecutor at the International Criminal Court with the documents on thousands of cases of alleged abuse.

WISSAM TARIF, DIRECTOR, INSAF: The officers for the people who are committing these crimes and following the orders, now they feel that they will be accountable, that justice might emerge.

DAMON: But for now, justice is taking second place to survival for thousands of Syrians whose towns are surrounded or occupied by the security forces, amid signs that the regime of Bashar al-Assad is preparing for an even heavier clamp-down on dissent.

(END VIDEOTAPE)

DAMON: Wolf, those concerns are driving residents outside of that area in northwestern Syria, outside of Jisr Al-Shugur, with residents and activists telling us that hospitals are shut down, private clinics, as well as for those who have been -- remained behind, pretty stark conditions, no power and fuel, and bread shortages taking place since Friday -- Wolf.

BLITZER: What are we hearing, Arwa, about defections by senior Syrian government officials to oppose Bashar al-Assad's regime?

DAMON: Well, Wolf, we've had quite a strange twist of events taking place with initial reports on France 24 that the Syrian ambassador to France defected. They aired an interview, a phone interview with an individual who they identified as being the Syrian ambassador. And in this interview she said that she was resigning effectively immediately.

Shortly there afterwards, less than an hour later, we heard someone also being identified as the Syrian ambassador, coming out both on Syrian state television and on Al Arabiya, denying having given France 24 an interview, saying that this was an impersonation and that she would be suing France 24 and giving the money to the children of the martyrs.

France 24, for their part, though, are standing behind their reporting, saying that they are confident that the individual they reached was in fact the Syrian ambassador to France, saying that they were the ones who called her on a cell phone that they normally use.

At this point, her exact status, we cannot entirely be sure of. But if this is in fact true, it most certainly would signal the first very obvious crack in the regime of Bashar al-Assad -- Wolf.

BLITZER: I know many Syrian officials would like to defect, but they're so worried that the regime would take retaliatory measures against their family members in Syria, so they're reluctant to do anything. It would take a courageous move right now, given the brutality of what is going on. Arwa Damon, reporting for us in Beirut. Let's get to the scandal now surrounding Congressman Anthony Weiner. It has been a little over 24 hours since the New York Democrat admitted to inappropriate online relationships with a number of women. It seems more likely than ever that the House Ethics Committee not only will investigate but they will have plenty of work to do, plenty of unseemly evidence to pore over. Our senior congressional correspondent, Dana Bash, has been all over this story for us.

What are you hearing about the latest about this investigation, Dana?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, Wolf, if there is one thing that Anthony Weiner actually has going for him, it's that the House is not in session this week. And that means that his colleagues are scattered all throughout their districts, and not here in the Capitol trying to answer questions from reporters like myself and others.

Still, I can tell you, talking to lawmakers and their aides privately, especially Democrats, they say they are furious. In the words of one Democratic lawmaker, waiting to see what else may come out.

(BEGIN VIDEOTAPE)

BASH (voice-over): Anthony Weiner's fellow Democrats are largely silent about his fate, but this comment from the Senate Democratic leader spoke volumes.

SEN. HARRY REID (D-NV), MAJORITY LEADER: I know Congressman Weiner. I wish there was some way I can defend him, but I can't.

QUESTION: What advice would you give him if he asked you?

REID: Call somebody else.

BASH: Weiner's Democratic leader in the House, Nancy Pelosi, sent this letter to the House Ethics Committee, formalizing her call for an investigation, something she did not technically have to do. A senior Democratic aide tells CNN Pelosi's move "certainly adds pressure for him to go."

Still, despite what Democratic sources describe as deep anger and frustration with Weiner, neither Pelosi nor any other fellow Democrat has called on him to design. But Eric Cantor, the number two House Republican, did, saying "I certainly don't condone his activity and I think he should resign."

Meanwhile, the House Ethics Committee will not say if it's investigating Weiner, but an open question is, what ethics rules could Weiner have broken?

REP. ANTHONY WEINER (D), NEW YORK: To be clear, the picture was of me and I sent it. BASH: The most obvious potential violation is the code of conduct for House members that says a lawmaker "shall conduct themselves at all times in a manner that shall reflect creditably on the House." But ethics experts say lawmakers are never punished for violating that rule alone.

STAN BRAND, ETHICS ATTORNEY: That clause read broadly would make it an offense to spit on the sidewalk.

BASH: Then there's the question Pelosi and other Democratic leaders raised: Did Weiner use official government resources to send lewd photos or make inappropriate phone calls to women? Weiner says he used his own BlackBerry and home computer.

But --

WEINER: I don't have the knowledge of every last communication, but I don't believe that I used any government resources.

BASH: Still, even if Weiner did use government resources, experts say it doesn't necessarily mean he violated House rules.

BRAND: I think people all over the House and Senate use in a de minimis way sometimes their official resources for things that are not official. The House has never taken a position to discipline someone for that incidental use.

(END VIDEOTAPE)

BASH: And, Wolf, I talked to several ethics experts who say that actually the technology today, especially social media, has far outpaced the rules and the things that people need to go by in this ethics manual, which is kind of interesting, because it was just put out in 2008.

Still, Democratic sources say that his political problems really do far outweigh his potential ethics problems. And, Wolf, I can tell that Weiner, as you know, is an outspoken Democrat. He has criticized his own leadership very often here and that means that he doesn't have a big reservoir of support going into this.

And, privately, again, not a lot of people are speaking publicly but privately we are told by some Democratic lawmakers and their aides that they just don't know if he can survive this.

BLITZER: Has Weiner or his staff in Washington, or in New York, for that matter, said anything today in response to this flood of very raunchy e-mail and texting -- "sexting," we should call it, that has become -- going out there on the Web?

BASH: Wolf, as is in keeping with my attempts over the past week to reach his office, the e-mails and calls went unanswered.

BLITZER: Dana, thanks very much. We're going to have more on this story coming up later. A decade after 9/11, a shocking gap in travel security. We're taking a closer look into millions, yes, millions of stolen and bogus passports and why they aren't being even checked.

And we'll meet the Republican Senate candidate who would have taken a bullet for President Obama.

(COMMERCIAL BREAK)

BLITZER: Jack Cafferty is here. He has "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN CONTRIBUTOR: Wolf, the continuing struggles of the U.S. economy are becoming a big problem for President Obama and his campaign for re-election next year. Economic reports show an unwelcome slowdown in what had been a few months of encouraging job growth as well as new lows for home prices.

The president's top economic adviser, Austan Goolsbee, is leaving, the latest in a string of top economic minds the president recruited after he won the election, who have now abandoned ship.

A Washington Post/ABC News poll out today says about six in 10 of those Americans surveyed give the president poor marks on the economy and on the deficit. Nearly half say they strongly disapprove of the way he's handling both issues. And the same poll found that if the election were held today, President Obama would lose to Republican Mitt Romney.

Romney, who is far from an overwhelming favorite among members of his own party, has said that jobs and the economy will be central issues in his campaign.

Democratic strategist James Carville, who first coined that phrase "it's the economy, stupid," back in 1992, says that if job creation stays down, the 2012 race could be "very rough for President Obama." Carville said the economy is so bad there's a heightened risk of civil unrest in this country.

For now there's little a president can do short term other than try to say the right things on the campaign trail. Reducing the deficit, cutting spending are top priorities on Capitol Hill, but so far nothing has been done about either one. Rising gas prices, declining home prices are crimping consumer spending, so expect to hear the president highlight modest gains in the economy since the worst days of 2008 and 2009.

Strategists say he'll also make the case that things would be far worse if Republicans had been in charge. Well, if that's all he has got, it's not going to be enough. Here's the question: How will the economy force President Obama to change his campaign strategy for 2012? Go to CNN.com/caffertyfile. Post a comment on my blog.

He is not in an enviable position at this point. Things could turn around but no sign they are going to any time soon. BLITZER: Yes, he was sort of trying to be upbeat today at that news conference with Angela Merkel, Jack. He said he didn't think we were heading towards a double dip recession. I hope he's right, but I'm not sure he necessarily is. But he's trying to put a positive face on what is going on.

CAFFERTY: That's all he can do at this point.

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

Let's get to a critical Senate race now that's drawing new national attention because of an unexpected Republican candidate, President Obama's own former Secret Service agent. Brian Todd is here. He finds there could be some excitement going on right now.

What is going on?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, Daniel Bongino is going from one top job to another. As a Secret Service agent on the president's detail, he saw firsthand the personal toll that politics takes. But he's diving headfirst into it right now as an underdog Republican in a Democratic state.

(BEGIN VIDEOTAPE)

TODD (voice-over): It wasn't long ago that Daniel Bongino would have taken a bullet for President Obama, literally. Now --

(on camera): Are you disappointed in him?

DANIEL BONGINO (R-MD), SENATE CANDIDATE, FMR. SECRET SERVICE AGENT: I want to say personally that I have enormous respect for him. He treated me with dignity and respect, and he is a wonderful man. His family was great to me. But I just disagree with the ideology. It's a simple ideological play, that's it. The country is going on the wrong path.

TODD (voice-over): Bongino says it repeatedly. This isn't personal. As part of the Secret Service's presidential protective detail until 2010, Bongino literally shadowed President Obama for nearly two years, and President Bush before that. He has got nothing but compliments for both men personally.

But there's a political fire in Daniel Bongino, and he has quit a rising career as an agent to make a run for the U.S. Senate in Maryland. The odds don't favor him.

Bongino is a Republican in a state that hasn't had a GOP senator since 1987. If he wins the nomination, he will challenge Democrat Ben Cardin, who has been in Congress for a quarter century.

When we questioned whether he has enough experience, Bongino talks health care and economic recovery in tea party terms, which he says he agrees with.

(on camera): People might be wondering, what are you going to be able to do coming from the Secret Service policy-wise that will make you legitimate?

BONGINO: I've done an enormous amount of research on macro- economic policy. We've got to get government out of the way. They are in the way. They are standing in front of the American entrepreneur. We've done this before. We know how to get out of this.

TODD (voice-over): Aside from saying that they don't agree with Bongino's politics, Cardin's office would not comment on his candidacy. As we walk just a few feet from the White House, I pressed Bongino on the toll he has seen politics take on families as an insider.

(on camera): Why drag your family through this?

BONGINO: It was a tough decision, you know, a really tough decision. My wife and I thought about this for a very long time. I had never thought about jumping into politics, but I had always followed the issues and when I left the job, we said, we're going to take a week and we're going to calmly think about this. And she was willing to get in with me. She really was. We had that Rocky-Adrian moment in "Rocky II" when Adrian wakes up from the coma tells him to win.

(END VIDEOTAPE)

TODD: Bongino says he and his wife have no illusions about how hard it is to be in politics. He says he has had to travel 27 countries as a Secret Service agent, that it has been tough on his family, but they've stuck it out. And, Wolf, they are ready to do it again.

BLITZER: What is the Secret Service saying about all of this?

TODD: You know, the agency is notorious for being fiercely anti- political. They don't want to get involved in it at all for obvious reasons. The agency would not comment on his candidacy when we contacted them. A former Secret Service agent though said as long as Bongino doesn't ever reveal any privileged information that he might have overheard while he was on the detail, there's really no issue with him running.

There have been other people to hold elective office who have been Secret Service agents, the lieutenant governor of Oklahoma, Mr. Lamb, is one of them.

BLITZER: (INAUDIBLE) Democratic power in Maryland, he has got an uphill struggle ahead of him.

TODD: He does.

BLITZER: All right. Thanks very much, Brian, interesting.

President Obama going head to head with GOP presidential candidate Mitt Romney. In a brand new match-up poll, the results might surprise you. Stand by. And it's now potentially the deadliest E. coli outbreak ever seen. Are scientists getting closer though to determining the cause? New details just coming in to THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Seven Republican presidential hopefuls will square off in New Hampshire just six days from now. And you can bet that the economy will be a major topic of the CNN debate. Candidate Tim Pawlenty isn't waiting until them to hammer President Obama on these bread and butter issues. Listen to what the former Minnesota governor had to say in the president's hometown of Chicago today.

(BEGIN VIDEO CLIP)

TIM PAWLENTY (R), PRESIDENTIAL CANDIDATE: Gas is $4 a gallon. Home prices are in the gutter. Our health care system, thanks to "Obama-care," is more expensive and less efficient. Unemployment is back over 9 percent. Our national debt has skyrocketed. Our budget deficit has grown worse. And the jobs in manufacturing ports are grim. Now, if that was a recovery, then our president needs to enter economic rehab.

(END VIDEO CLIP)

BLITZER: Just a few days ago President Obama was trying to put the best possible spin on the economy while appearing in the key battleground state of Ohio. Now we go in-depth back to Toledo and the restaurant where the president had lunch to check the pulse of the people. CNN's Ted Rowlands is on the scene for us there.

What are you seeing, Ted, what are you hearing?

TED ROWLANDS, CNN CORRESPONDENT: Well, Wolf, we are at Rudy's Hot Dogs, and this is an institution in Toledo. We have been here all day and we've been eating a lot of hot dogs. But we've also been getting a lot of opinions from people, Republicans, Democrats across the spectrum, getting a lot of voices as we go on this listening tour for the week.

This is Harry, he has got a job in the health care industry. He has got a 26-year-old son, is it?

HARRY DOWNS: Yes.

ROWLANDS: Who does not have a job. That's your biggest concern is jobs, jobs, jobs.

DOWNS: Exactly.

ROWLANDS: And for your son, how difficult is it for young people, not only in Toledo, but I guess across the country feeling the same thing, but here specifically for your son and in Toledo, how bleak is it for him trying to get gainful employment?

DOWNS: I think we have one of the highest rates, especially for young people, for unemployment.

ROWLANDS: And that's your biggest concern?

DOWNS: That's my biggest concern, jobs, yes.

ROWLANDS: Well, a lot of people have said that, Wolf, that getting jobs and for young people.

This is, of course, a town -- an auto town. And Christie here actually works at the Jeep plant down the street here. She works on the line. She has got three kids.

Your biggest concern, Christie, also the economy and jobs, but you also are sick and tired of politicians not getting things done. Explain.

CHRISTIE NORDHAUS, JEEP EMPLOYEE: Absolutely. I think that they spend a lot of time keeping us in the dark and they knit-pick over little things instead of getting to the big issues that affects the rest of our nation that a lot of people that are working class, like myself, my husband has a small business, and it's tough with the economy, with the grocery bills going higher and the gas is outrageous and trying to raise a family. Just not knowing where anything is going.

ROWLANDS: What would a candidate have to do to get your support looking forward to the next presidential election?

NORDHAUS: I would definitely say faith has a lot to do with it, I'd like a strong backbone to stop the big picture of everyone kind of waving around --

ROWLANDS: Battling between each other?

NORDHAUS: Yes, absolutely. I would kind like -- I would just like people to go down to the nitty-gritty of your main beliefs instead of --

ROWLANDS: The waffling back and forth?

NORDHAUS: Exactly. Exactly. Thank you for putting the words in my mouth. Yes, I think we need someone strong and we need someone who has a good backbone and isn't afraid to fight for what's right for this country.

ROWLANDS: All right.

Wolf, our listening tour will continue all week long. We're hearing a lot of opinions like Christy's. The main thing is jobs, the economy in general, and the bickering in Washington. People here in Toledo seem to be sick of it.

BLITZER: Yes, I think a lot of people are sick of it all other over the country.

We'll check back with you, Ted. Thank you. And to our viewers, don't forget CNN's New Hampshire presidential debate, less than a week away. Join us Monday night as the Republican hopefuls square off on the issues, only here on CNN.

A high-profile Republican who has decided not to run for president has a lot to say about the race right now. We're talking about the governor of Indiana, Mitch Daniels.

Our chief political analyst Gloria Borger spoke with him, went over to Indiana.

Does he believe there's a Republican out there who can beat President Obama?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: He does. He says in fact that if he had run, he would have been able to beat President Obama. I asked him who specifically and he mentioned three names, the usual suspects, Pawlenty, Huntsman, and Romney.

But I asked him on a scale of one to 10, 10 being the most vulnerable, how vulnerable is Barack Obama? And he said at this point he would have to say a 7 or an 8 because of the issues we were just talking about and in that last piece, which is jobs and the economy. He thinks the president is very, very vulnerable on that.

BLITZER: If unemployment stays at 9 percent, he will be vulnerable.

BORGER: Exactly.

BLITZER: Now, what did he say about the Republican's decision, Paul Ryan, the chairman of the House Budget Committee, and others to take on this really politically sensitive issue of Medicare?

BORGER: You know, I asked him whether it was a political mistake or a substantive mistake, and he said that it was not a mistake at all. He said the problem is, the way the parties, both parties treat the issue of Medicare, that it's been demagogued on both sides, and he says that is the bickering that the public doesn't like.

Take a listen to what he said.

(BEGIN VIDEO CLIP)

GOV. MITCH DANIELS (R), INDIANA: The enemies of Medicare and Social Security are those people who say don't touch them because they are not only going to ruin those programs, they are going to ruin the American dream. So --

BORGER: Well, let me take you back to 2010, though, the midterm election in 2010, when the tables were turned and the Democrats had made changes in Medicare as part of health care reform, as you know, savings in Medicare, and Republicans were out there on the campaign trail saying they are going to hurt granny, your phrase.

Same thing?

DANIELS: Well, a fair point. I did not think it was an especially proud moment for our party. I couldn't help but savor the turnabout being fair play after decades of Democrats ruthlessly misrepresenting Republican positions and misleading people that somehow we can really afford these things exactly the way they are.

(END VIDEO CLIP)

BORGER: So, Wolf, he kind of says tit for tat, but also says, OK, the Republicans were wrong in using this issue to scare seniors in 2010.

BLITZER: Does he think the Ryan Medicare plan went too far?

BORGER: No, he doesn't. And what's really interesting is he actually thinks the Ryan budget didn't go far enough.

He says that what Ryan should have done -- he gives him credit for going as far as he went, but he says Ryan should have put Social Security on the table, and that he should have tackled the tax side of the debate, that you can't just do everything on the entitlement side, Medicare, Social Security. He says on the tax side he doesn't want to take away the Bush tax cuts for the wealthy. What he wants to do instead is reform the tax system and lower the rates by taking away some of those deductions that the wealthy often use.

BLITZER: And the full interview airs tonight, 8:00 p.m. Eastern, "IN THE ARENA," only here on CNN.

We'll look forward to watching that.

BORGER: Thanks, Wolf.

BLITZER: Thanks very much. And I think he will explain then why he eventually decided not to run, which was a surprise. Don't tell us now.

We'll save that for 8:00 p.m. later tonight, Gloria Borger's interview coming up with Mitch Daniels.

Meanwhile, a new 2012 match-up poll is putting President Obama up against Mitt Romney, and you're probably going to be surprised who wins this poll right now.

Plus, emotions running very high in New York, especially in Congressman Anthony Weiner's district, just a day after that bombshell news conference. We're going there. We're going to Queens and Brooklyn to hear what his constituents are now saying.

(COMMERCIAL BREAK)

BLITZER: That fast-moving wildfire ravaging Arizona right now has become even more dangerous.

Lisa Sylvester is monitoring that and some of the other top stories in THE SITUATION ROOM right now.

What do you have, Lisa?

SYLVESTER: Well, Wolf, hundreds of firefighters are now struggling to contain the blaze which has already burned more than 230,000 acres. Smoke is disrupting flights, and parts of New Mexico are now under an extreme fire warning. An air quality alert has also been issued on the other side of the border.

A top EU official now says the deadly E. coli outbreak that has killed 23 people and sickened hundreds is limited to an area around the German city of Hamburg and doesn't require Europe-wide controls. This, as scientists don't appear to be any closer to determining what sparked the infection. Health officials suspected sprouts were to blame, but those test results have been inconclusive.

And New Zealand is mourning the loss of its own sheep. Shrek gained notoriety after his massive fleece was clipped on live television. The ship had gone missing from his herd back in 1998. He was found six years later, sporting so much wool -- take a look there -- he looked three times his size.

A memorial will be held for Shrek, and his ashes are expected to be spread over the country's highest mountain. It's a sad story from New Zealand -- Wolf.

BLITZER: A lovely sheep. Thank you very much.

We're learning more about the women who exchanged racy e-mails and tweets with Congressman Anthony Weiner. Stand by. We're getting new details.

Also, another member of the president's economic team over at the White House is ready to call it quits. Is it simply personal or a statement about White House economic policies?

Stand by.

(COMMERCIAL BREAK)

BLITZER: Let's get right to our "Strategy Session" right now.

Joining us, the Democratic strategist Jamal Simmons, here in Washington. Also, CNN political contributor, the Republican strategist, Mary Matalin.

Fascinating new poll numbers, Jamal -- let me start with you -- coming in from "The Washington Post"/ABC News poll. It looks like the president lost that bump he got right after the killing of bin Laden back in May. His approval number was 56 percent. It's now down to 47 percent. His disapproval has gone from 38 percent in May up to 49 percent right now. That's on the general question, "How is the president handling his job?"

Are you surprised that it's going down like that so quickly? It seems like bin Laden is ancient history for a lot of folks out there. JAMAL SIMMONS, DEMOCRATIC STRATEGIST: Bin Laden is very important for the national security picture, but the jobs picture is just devastating. It really is hurting the president right now.

I've got to say, these are bad numbers, but we're so far out from Election Day, the president does have time to recover. I think he's got to do three things.

He's got to get back on message and talk about winning the future. He's got to have a victory on the debt ceiling. And then he's got to get some jobs. And I'm not sure what the government has left in its arrow quiver to be able to pull that off, but until we get some more jobs moving, it's going to be tough for the president to move some of these numbers.

BLITZER: And as bad as that overall number is, how is handling his job, look at this. When it comes to the economy, same poll, "How is the president handling the economy?" Only 44 percent approve of the job he's doing, 59 percent disapprove.

All right. You're a strategist, a political strategist, Mary Matalin. How does he turn that around?

MARY MATALIN, REPUBLICAN STRATEGIST: Well, he's going to have to change his policies. I'm going to update the old adage, "It's the economy, stupid." In this case, it's the economic policy, stupid.

People understand, disapprove, and have for some time now -- these are not new numbers -- his economic policies. They haven't worked and, in fact, people believe they've made the economy worse. They've thwarted the recovery.

BLITZER: So what does he need to do? Give me an example of what he needs to do.

MATALIN: He needs to -- and Jamal is right about this debt ceiling. He made a big mistake by calling for a clean debt ceiling, which was roundly rejected even by Democrats.

At this point he needs to get serious and quit attacking George W. Bush and blaming the Republicans and get serious. It's not just spending cuts, but real entitlement reform and debt reform and tax reform, and get in the game and let's compare the programs. So right now people think he's just playing politics.

SIMMONS: Well, Mary, on that note, I will say that the Republicans have to get serious, too, and they've got to start talking about revenues. I mean, we heard that in a piece a few minutes ago from Governor Mitch Daniels. We've got to start talking about not only what programs we're going to cut, but also how we're going to raise some money to really close this debt.

BLITZER: Well, when you talk about revenues, you mean raising taxes.

SIMMONS: I mean raising taxes. BLITZER: But the Republicans, you know the Republicans are not going to go along with raising taxes even for millionaires or billionaires, Jamal. So why even raise that at this point?

SIMMONS: Well, if the Republicans expect the Democrats to go along with cutting Medicare, they expect the Democrats to go along with cutting social programs that real people are dependent upon, why don't the Republicans have to go along with cutting -- with getting some tax revenues back in and getting tax rates back to where they were in the 1990s, when the country was doing well?

BLITZER: What's the answer, Mary.

MATALIN: Because that's an old, stale argument. Republicans are talking about it, and they are serious, they have been serious. The only serious plan on the table is Paul Ryan's, and it's the only one that will save Medicare.

It's entitlement reform, and the only way to grow revenues is something along the lines of what Governor Pawlenty put out today where you have massive overhaul of the tax code -- tax reform, lower rates. Cut out all the loopholes.

We'll be for cutting out corporate welfare. We want to cut out all energy subsidies. We want a flatter, fairer, cleaner, tax code, and that will raise revenue. That's the way to do it, not just to keep raising taxes so Democratic Congresses can keep spending more.

BLITZER: Here's -- if I'm in the White House right now, Jamal, look at these numbers. This is, I think, really alarming for the president and his political advisers.

In a hypothetical match-up, Romney versus Obama, among all adults in this new poll, Romney gets 47 percent, Obama gets 47 percent. But among registered voters, choice for president if the election were held today, Romney gets 49 percent; Obama, 46 percent.

Wow. That is a pretty surprising number given where Romney is right now and where the president is supposed to be.

SIMMONS: You know, it actually is not that surprising a number, because what usually happens is presidents -- the American people are optimists, and they're always looking at for a new deal. What's going to be a better deal? Who is going to be a better candidate?

Right now, Mitt Romney is in the public eye. People are taking a look at him.

Bob Dole at this time in 1995 was ahead of Bill Clinton at this point. So people look for somebody who is going to be new and different. So I wouldn't throw that out.

Mitt Romney's problem is he's got to get nominated. And when I take a look at the field, I see a lot of great VP candidates. I mean, these candidates look like they'd make great vice presidents. I don't see a lot of presidents. But the one person that I am paying attention to is Tim Pawlenty. I think he's got a really great story. I think he comes from the Midwest, the son of a milk driver.

BLITZER: But quickly --

SIMMONS: You know, all of those other things. So I give Romney a little bit of a B plus or a B minus right now.

BLITZER: Well, Romney, in the hypothetical match-up among all the Republican candidates, at least right now, Mary, does much better than all the other Republican candidates in a one-on-one contest with the president.

So, question: How much does this help Romney get the nomination, the fact that he's perhaps more winnable?

MATALIN: What's helping Governor Romney right now is -- if there's one thing people know about him, it's that he's a manager. What's hurting him -- and there are some good numbers in this poll on this subject -- is Romneycare. Massachusetts care, by 2 to 1, Republicans don't like it. It's a real albatross.

Jamal is right, he has to win the nomination. And that's a big cross to carry.

But four out of 10 Republicans don't have an opinion. He has to quickly refrain -- his good PowerPoint speech was a good start, but he has to make it crystal clear that he would not impose on the nation what he did in Massachusetts and just keep slogging through. It's a long way from here to the nomination.

BLITZER: It certainly is, guys.

SIMMONS: On that we agree, it's a long way.

BLITZER: Jamal, Mary -- guys, thanks very much.

Congressman Anthony Weiner calls his online exchanges with women inappropriate. You may call them something else. Stand by. New details on the raunchy messages, the photos, the women involved.

And why are millions of fake and stolen passports in circulation right now? The glaring security gap that could be a boon for terrorists.

(COMMERCIAL BREAK)

BLITZER: Interpol is scolding the international community and the aviation industry for not closing what it sees as a big hole in security.

Our homeland security correspondent, Jeanne Meserve, is here with the details -- Jeanne.

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: And Wolf, this could surprise some people.

Ten years after 9/11, only half of international travelers are having their documents checked against databases to determine if they are stolen or fraudulent. Ronald Noble, the head of the international law enforcement agency Interpol, calls it a "glaring security gap" and a matter of serious concern because terrorists and criminals use stolen and fake passports to conceal their true identity and travel freely from country to country.

Interpol estimates there are 28 million stolen passports and national identity cards in circulation, but last year only 40,000 airline passengers were caught using them. According to Noble, that's because the vast majority of countries are not running passports against the Interpol database which includes records of lost and stolen documents from around the world. He estimates that one out of every two air travelers crosses borders without having their documents checked.

Noble says governments and airlines should step up at and address the problem, but most of them haven't done so yet -- Wolf.

BLITZER: Is the U.S. making these checks?

MESERVE: Well, in fact, they are. Customs and Border Protection does check documents of travelers arriving by air through the Advanced Passenger Information System, or APIS. APIS is what it's called for short. Passengers have to provide their travel data including passport numbers before boarding, and it is checked against the Interpol database before their plane takes off for the U.S.

The system at land borders, not so tight. A DHS official says only if someone is referred for a secondary inspection can officials check if a passport is lost or stolen -- Wolf.

BLITZER: It's a serious issue. All right, Jeanne. Thank you very much.

We're getting new reaction from Anthony Weiner's home district about the scandal surrounding him. Stand by for that.

And the Libyan capital takes a fierce new pounding. Is NATO doing enough to help the rebels hold on?

(COMMERCIAL BREAK)

BLITZER: Let's go right back to Jack. He's got "The Cafferty File" -- Jack.

CAFFERTY: The question this hour, Wolf, is: How will the economy force President Obama to change his campaign strategy for 2012?

Pat in Idaho writes, "I don't think Obama can do anything to change his strategy at this point. He made his bed. Now he's got to sleep in it. He's done."

Mark in Arkansas says, "No American president has been re-elected with unemployment over 9 percent. If Mr. Obama hopes to break that record, he needs to stop touting meaningless success snippets and begin making meaningful changes in our economy. Start by throwing the Wall Street bankers in jail."

Adam in Oakland writes, "The resignation of his economic adviser today indicates his economic policy has done little to improve the economy despite the bailouts and QE2. However, he is in good shape for re-election as long as House Republican opponents keep missing fourth grade history questions."

Rich in Texas writes, "The election cycle Obama this time around will have no President Bush to blame for the economy. The president owns it. He ran and won. And, therefore, he is responsible for the economy, warts and all."

The hard sell to the American people is that when he took office, we had a national debt of $10 trillion. Now the debt is over $14 trillion in just two years. When Bush left office, unemployment was 7.2 percent. Now it is over 9 percent two years later."

"Gasoline, when Bush left office, $1.83 a gallon. Today, it's over $3.50."

"The numbers don't lie. And there's no fairytale that Obama can spin to explain his failure to grow this economy."

Brian in San Diego writes, "It will force the president to make his case by focusing more on how much worse things were when he took office, rather than any obvious signs that the salad days have returned. Unfortunately, while true, this will be far more difficult. Things are worse is a much stuffer sell than things are good now."

And David in Virginia writes, "He ought to rewrite his campaign slogans to read: 'No change, no hope, no kidding. We're broke.'"

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

BLITZER: This is the issue, Jack, going into the election, the economy and jobs.

CAFFERTY: Yes. I mean, if they accelerate their withdrawal from Afghanistan and can show some signs that we're going to try and save a little money on these wars that we are involved in overseas, I suppose that could help some. But there is no sign that jobs are going to start suddenly booming or that this economy is -- the housing market is not going to recover for probably two, three more years.

BLITZER: Jack Cafferty, thanks very much.