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The Situation Room

Accused Mob Boss in Boston Court; GOP Vote Fails to Cut Off Libya Funding; President Tries to Salvage Debt Limit Talks; New York Gay Marriage Bill Closer to Vote; Robots, ATMs and "Economic Ignorance;" Ten Killed Today in Syria; Casey Anthony Breaks Down; Postal Service Ignores Law to Stay Afloat; Hard Times for U.S. Postal Service; U.S. Military Targeted; 'Strategy Session'

Aired June 24, 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: Brooke, thanks very much.

Happening now, an accused mob boss and his girlfriend face justice back home in Boston after 16 years on the run. This hour, the court appearance on murder charges that "Whitey" Bulger has been dodging for over a decade.

Plus, Republicans fail to launch a major blow to the U.S. military mission in Libya. But House members did sharply scold the president, warning him about the dangers of waging an undeclared war.

And CNN's firsthand look at exploding anger in Syria. Right now, you're going to find out why our correspondent allowed inside the capital, Damascus, why she was warned she may not be safe.

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

We begin with what just occurred. A notorious fugitive back where he started right now. The accused mob boss, James "Whitey" Bulger, in court in Boston. He and his girlfriend facing a slew of charges, including murder. This arraignment day 16 long years in the making.

Let's go to the scene.

CNN's Deborah Feyerick is following this true crime story for us.

She just moments ago walked out of that courthouse.

What happened in inside -- Deborah?

DEBORAH FEYERICK, CNN CORRESPONDENT: Well, Wolf, we can tell you that "Whitey" Bulger returned to Boston in shackles. He was surrounded by three armed U.S. marshals when he spotted his younger brother, prominent Boston politician, Billy Bulger, in the second row.

It was very interesting, the interaction between them. The brother nodded down while "Whitey" sort of nodded up. And both men smiled, almost as if it was sort of an inside joke. There were two separate hearings. When one of the judge magistrates asked whether "Whitey" Bulger could afford his own lawyer, "Whitey" Bulger looked and said, well, quote, "I could, if you give me my money back." He was referring to $800,000 in cash that was seized from his Santa Monica apartment by federal agents when they searched that apartment, confiscating not only the cash, but weapons, including, we are told, an AK-47 and sawed off shotgun. That was -- those were just two of 30 weapons found in the apartment.

Now, Bulger's provisional lawyer said that, in fact, he needs help affording a lawyer, because the government plans on seizing the $800,000. So the government said, look, we believe "Whitey" Bulger has a lot more resources. He said that Bulger's girlfriend, Catherine Greig, has suggested that Billy Bulger was going to help him pay for his defense. And then the prosecutor also said, quote, "He didn't earn $800,000 on a paper route along the Santa Monica Boulevard." So that was a little bit of the tone inside the courthouse.

"Whitey" Bulger waived his right to detention without prejudice. That means that, at some point, if he does want to seek some sort of bail, he can come back to the court. They have to file papers by Monday to see whether, in fact, a -- a -- criminal justice attorney -- sort of a federal defender will be appointed to "Whitey" Bulger or whether he'll be able to maintain the counsel that he has now.

As for Catherine Greig, she followed him in court after he was completed, after he was done. She looked back, smiled at her sister very vigorously. And remember, these are people who have not seen their relatives in some 16 years.

And even as "Whitey" Bulger was looking at a card. He looked back at his famous politician brother and both men had wide smiles on their faces. It was almost like a -- an interesting reunion -- Wolf.

BLITZER: So they're going to be denied bail, I assume, obviously.

So do prosecutors say they have a case, they're ready to move quickly on it?

Or do they need time?

FEYERICK: They are, Wolf. And, as a matter of fact, I sat down this morning. I sat with -- I spoke with the U.S. attorney in Boston, as well as the head of the FBI here. And they said that they are ready to go. All they needed was the body to go with the case. Now they have him here. They say that they are ready to proceed.

We're -- we're sort of hearing some motorcycle engines, Wolf. And the reason I'm pointing that out is we're taking a look -- we believe this might be -- no, no, no. This is -- this is where he came in before, "Whitey" Bulger. He's being taking to a facility -- a secure facility tonight, as well, while he figures out who his lawyer is going to be.

But, yes, they're very satisfied with the case that they've put together.

I said, what does the evidence room look like?

Is it, you know, wall to wall with boxes?

Is it floor to ceiling?

The U.S. attorney wouldn't comment, just saying we're very satisfied with the case that we've put together. They're ready to go to trial -- Wolf.

BLITZER: All right, thanks very much.

We'll have more on this story later here in THE SITUATION ROOM.

Take a look, by the way, at "Whitey" Bulger then and now. On the left, his FBI wanted poster photo from 1994, shortly after he fled justice. On the right, an older, scruffier Bulger in the mug shot taken shortly after his capture in California this week. Then and now.

Let's get to the U.S. military mission in Libya. The House of Representatives today rejecting a bill that would have sharply restricted funding for the U.S. military action. Republicans failed to undercut the president using their power of the purse.

But the commander-in-chief did get a firm slap in the face.

Let's go to our senior Congressional correspondent, Dana Bash.

She's working the story for us -- Dana, sort of a -- mixed results for the president today.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: That's right. The goal of the House Republicans was to deal a double barreled blow to the president for the way he has handled the Libya mission. But because of I think what is best described as a big oops by the House GOP, there was a mixed message.

(BEGIN VIDEOTAPE)

BASH (voice-over): It was a resounding rebuke. Seventy of the president's fellow House Democrats joined Republicans in voting against giving him authorization for the mission in Libya.

REP. STEVEN LATOURETTE (R), OHIO: Despite my great admiration and respect for our president, a lawful premise for this Libyan operation does not exist.

REP. STEPHEN LYNCH (D), MASSACHUSETTS:

REP. BARNEY FRANK (D), MASSACHUSETTS: Does America have to do everything?

People say we're the indispensable nation. That's a terrible burden to impose on ourselves. We can't afford it and it cannot be done effectively.

BASH: House Republican leaders held this vote because they knew it would be objected -- proof the president does not have Congressional support for military action in Libya, mainly because they say he's failed to make the case for it. But it turned out Republicans failed to deliver on what they hoped would be the real blow to the president's Libya policy, a bill that cut off funds for most U.S. combat operations there.

REP. TOM TANCREDO (R), COLORADO: It would, however, prevent the president from carrying out any further hostilities without Congress' approval. And it would exercise Congress' constitutional power to provide some much needed accountability.

BASH: Despite that, to the surprise of GOP leaders, the House defeated the de-funding measure. Some Republicans concluded the bill actually gave tacit support for the mission by still allowing funding to help NATO with things like surveillance and search and rescue.

REP. TOM MCCLINTOCK (R), CALIFORNIA: Let's not enter a war through the back door when we've already decided not to enter it through the front.

BASH: Others thought it went too far.

REP. ADAM KINZINGER (R), ILLINOIS: I think in 10 years, when we look back, to de-fund this mission, to -- to leave our allies, who have stood up and taken a leadership role, is the absolute wrong thing to do.

BASH: As for Democrats, the White House kicked in an 11th hour lobbying campaign to provide the kind of consultation on Libya many complained was lacking, sending Hillary Clinton for a private meeting with Democrats, even scrambling to invite some to the White House for classified briefings.

REP. GERRY CONNOLLY (D), VIRGINIA: Late last night I got a call, along with a number of my colleagues, to -- an invitation to come to the White House at 7:15 this morning to have a discussion about Libya and war powers. And it was a very fruitful conversation. It's one I wish we had had several weeks ago.

(END VIDEO TAPE)

BASH: Now, Wolf, this debate is far from over. House Republicans say they are going to regroup and they're going to try to hold a different set of votes on trying to take away or cut funding off of the Libya mission probably in the next couple of weeks -- Wolf.

BLITZER: What would really help the president and administration is if Gadhafi were somehow to -- to fall from power, to leave. That would certainly be a major step forward in this whole debate.

BASH: It would.

BLITZER: All right, Dana. Thank you.

Another critical challenge for the president right now, he's getting personally involved in trying to salvage negotiations on raising the nation's debt limit. He and the vice president, Joe Biden, plan to meet with Senate Democratic and Republican leaders on Monday. This, a day after the House majority leader, Eric Cantor, bailed from the earlier talks with Vice President Biden.

Let's bring in our chief political analyst, Gloria Borger.

What's all this about?

We always assumed the president, at some point, would have to get involved.

Is it sooner than expected?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well, I think everybody expected once these talks broke down, certainly, it's time to move it up the food chain, get the president involved.

What's interesting here, Wolf, is that you're not having a huge powwow bringing down all the leaders together. You're having Harry Reid in the morning, Mitch McConnell in the afternoon. It kind of looks like a mediation process with the parties. So you're kind of trying to avoid a divorce, if you will.

BLITZER: A little therapy, right?

BORGER: A little -- a little therapy. Maybe it will work. We -- we don't know. The division --

BLITZER: And then at some point, they've got to meet with Boehner, too. They --

BORGER: Of course. Of course. But he's taking it one at a time. And the divisions, of course, are crystal clear. I don't think the president needs to -- to get an explanation on this. He knows that his own Democrats won't go for -- for any tax hikes and that -- I mean the Democrats, excuse me, want the tax hikes. And the Republicans say absolutely no way. And the Democrats say, you're not going to get the spending cuts.

So there's got to be a way around it. I spoke to one senior Republican today who said maybe, just maybe, we take tax reform, we say we're going to agree to do tax reform at a later date and then maybe we can agree to some spending cuts.

But, of course, the question is, what spending cuts?

Would it include Medicare, which is the big issue?

BLITZER: It's a big issue obviously.

BORGER: Yes. BLITZER: And tax reform could be another euphemism for tax increases --

BORGER: That's right.

BLITZER: -- which the Republicans say they will never support. I write about this on my blog at CNN.com/situationroom today.

Let's say -- and I don't think this will happen, but it's possible --

BORGER: Sure. Sure.

BLITZER: -- it could. There is no deal by August 2nd, when the Treasury Department and Timothy Geithner say the debt ceiling is exhausted --

BORGER: Right.

BLITZER: -- and U.S. credit worthiness will collapse.

BORGER: Right.

BLITZER: Who gets blamed for that?

BORGER: Well, everybody is going to suffer. Everybody is going to get blamed. Take a look at this Bloomberg poll that just came out.

And the question was asked, if Congress fails to raise the U.S. debt ceiling and markets fall, whom would you hold responsible?

Republicans, 44 percent; President Obama, 41 percent; not sure, 15 percent. So that's really within the margin of error.

But let me also add this, Wolf, that when you ask voters right now whether they really care about this debt ceiling, most of them say they're -- they don't think it would be such a terrible thing. That's because the politicians have not yet gone to the American public to explain just what would happen to our international credibility -- and to their own personal interest rates, by the way -- if we were to default on our debt.

BLITZER: Yes. Because those doom and gloom scenarios include higher interest rates --

BORGER: Absolutely.

BLITZER: -- collapse of the dollar, double dip recession, if not worse. There's a dire scenario, they say, if this doesn't happen.

BORGER: And I think people are trying to work on a deal before they actually go to the American public and say, OK, we've got to get this done.

BLITZER: Gloria, thanks very much. It's a dangerous assignment -- CNN inside the Syrian capital, Damascus, right now. We're going to tell you what we're learning about the unrest and the bloody crackdown.

We'll also explain what our correspondents -- we have two correspondents in Damascus right now -- what they're up against.

And as floodwaters rise and break records, residents in North Dakota say a tearful good-bye to their home.

Stay with us.

Lots of news happening today right here in THE SITUATION ROOM.

(COMMERCIAL)

BLITZER: It looks like there may be a breakthrough on the issue of gay marriage in the state of New York.

Let's go to Albany.

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

What just happened -- Mary?

MARY SNOW, CNN CORRESPONDENT: Well, after marathon negotiations throughout the day, Wolf, sources familiar with the negotiations tell us that both sides have reached a deal on the language. This is in a -- regarding an amendment having to do with protections for religious organizations. According -- in terms of this same-sex marriage bill.

This was the major holdup for Senate Republicans. And this has been under negotiations for all -- the entire week.

So it's still unclear whether or not Senate Republicans are going to bring the same-sex marriage bill up for a vote. We're still waiting word on that.

But supporters and advocates of this bill see this as a positive sign. They say now this is about -- this is not about content, but right now, this is about process.

What's happening now is there's still some other bills that need to be voted on by lawmakers here. And that's expected to happen shortly. About four bills have to go up for a vote. And then it will be decided by Republicans whether or not they are going to bring this bill up for a vote. So still unclear about that.

But this is a development because it has been the main sticking point for Senate Republicans. And supporters of this bill are just one vote shy of passing this legislation.

BLITZER: We'll stay on top of it with you, Mary.

Thanks very much.

It looks like a deal, a tentative deal, getting gay marriage approved in the state of New York.

Other news we're following. The president now refocusing on the driving issue of the 2012 presidential election, the economy. In Pennsylvania today, he promoted cutting edge technology and he got sliced into, to a certain degree by some Republicans, for his policies and for a recent mark criticized as a show of economic ignorance, in the words of the Republicans.

Our White House correspondent, Dan Lothian, is traveling with the president to a key campaign battleground state.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, this was the president's ninth visit to the battleground state of Pennsylvania since launching his 2012 reelection campaign. His focus was on jobs and the economy and how new technology will help bring down the nation's unemployment rate.

(BEGIN VIDEOTAPE)

LOTHIAN (voice-over): In the shadow of Pittsburgh's rusting manufacturing past --

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: And so what have we got here?

This -- this is a pretty impressive looking, a pretty impressive looking vehicle.

LOTHIAN: President Obama got his hands on cutting edge robots that he hopes will drive job growth in the future.

OBAMA: This -- this is pretty cool. We have not run out of stuff to make. We've just got to reinvigorate our manufacturing sector so that it leads the world the way it always has.

LOTHIAN: But his visit to Carnegie Mellon's National Robotics Engineering Center sparked criticism. Republicans back in Washington were only too eager to rewind comments the president made in a recent interview with NBC News.

(BEGIN VIDEO CLIP FROM JUNE 13, COURTESY NBC NEWS)

OBAMA: A lot of businesses have learned to become much more efficient with a lot fewer workers. You see it when you go to a bank and you use an ATM. You don't go to a bank teller.

(BEGIN VIDEO CLIP, COURTESY YOUTUBE)

SEN. RON JOHNSON (R), WISCONSIN: He recently blamed inventions like the ATM for unemployment. This is a depressing display of economic ignorance.

(END VIDEO CLIP)

LOTHIAN: In fact, the Bureau of Labor Statistics says there are more tellers now than a decade ago, even with the boom of ATMs. A White House official points out that in context, the president was highlighting the need to, quote, "do everything possible to prepare the next generation with the skills needed in a changing workplace."

Drew Greenblatt, who was invited to hear the president speak, agrees. He's the owner of this Baltimore-based company that makes industrial steel baskets. He says robots and other technologies may cost jobs in the short-term, but it is the only way his company can survive.

DREW GREENBLATT, PRESIDENT, MARLIN STEEL: We had old, outdated equipment. And the only way we could transform and come to be viable in -- in the -- with this crush of Chinese competition, was to be extremely efficient, very effective. And that's with robot technology.

(END VIDEO TAPE)

LOTHIAN: Realizing the importance of this battleground state, the GOP went after President Obama. The RNC chairman saying that in 2008, Pennsylvania went for Mr. Obama based on his, quote, "rhetoric," but that in 2012, it would be based on, quote, "results" -- Wolf.

BLITZER: Dan Lothian traveling with the president.

Thanks very much.

To Syria now, where one group is reporting at least 10 new deaths in a mass outbreak of demonstrations following Friday prayers. The European Council also strongly condemning what they call the shocking violence that the government in Syria is committing against its own people.

Let's go to Damascus right now.

CNN's Hala Gorani is standing by -- all right, I know you've just been there a little while, Hala.

I know there are restrictions. But set the scene for us.

What are you seeing in the Syrian capital?

HALA GORANI, CNN CORRESPONDENT: Yes, you mentioned restrictions there, Wolf. We need to preface this by saying that government minders do accompany us on shoots. That is when we film outside of the hotel we're staying in.

But today, they took us to a small pro-government rally that happened outside of the Omayyed Mosque in Old Damascus. There you had men who had just come out of the Omayyed Mosque, streaming out after prayer, praising Bashar al-Assad and also accusing the international community, including the West, including news channels, of orchestrating the crisis in their country.

Now, why are we being let in at this point in time, Wolf, is interesting. It could be because several months into this crisis, most of the images that we're seeing on television screens across the world are amateur YouTube videos of protests that are happening in rather isolated pockets across the country. And the government here might be wanting to take control of the message, especially by not letting us go report on protests that we are hearing of.

And it's also interesting to note that foreign officials are going to make themselves available, we understand, over the next few days, to talk to CNN.

So it's going to be interesting to see what they tell us, especially after the foreign minister, Walid Muallem, was so annoyed with Europe for slapping more sanctions on his country, that he decided that he was going to consider that the world existed without Europe altogether -- Wolf.

BLITZER: So the bottom line is that you're seeing, basically, the Damascus area relatively normal. The demonstrations, the violence, the brutality, those are in smaller cities and towns and villages outside of the Syrian capital, the ones we've seen on -- ongoing for these past several months, is that right?

GORANI: That is -- that is correct. The two largest cities, Damascus and Aleppo, have seen smaller pockets of protests. But the city center, where the merchant class lives, where some of those who, in some way or another, have benefited from the regime, have not erupted in protest.

It's very much a two speed Syria. It's the one we see on amateur videos with protests, activists telling us they're being fired upon, they're being fired upon by security forces. And then there's the other Syria, Damascus, for instance, where things are functioning pretty much as normal. It's a bit quieter. There are no tourists. It's a bit more tense in some places. But otherwise, life is going on as normal in the capital, as far as we've been able to see -- Wolf.

BLITZER: We're going to stay in close touch with you, Hala.

Thanks very much.

Hala Gorani is now inside Damascus for CNN.

Glad she finally got there.

Hala Gorani, thank you.

Meanwhile, there are new fears that homegrown terror could be on the rise here in the United States in the wake of just two new cases this week targeting the U.S. military.

How safe is the United States?

Stand by for that.

And Casey Anthony breaking down in another day of dramatic testimony in the murder trial of her daughter.

Up next, we'll go live to the courthouse for the latest. (COMMERCIAL BREAK)

BLITZER: Another day of tears and dramatic testimony in the case of -- in the Casey Anthony murder trial.

CNN's David Mattingly is standing by at the courthouse in Orlando with details.

So what happened today -- David.

DAVID MATTINGLY, CNN CORRESPONDENT: Wolf, the defense pushing very hard today, trying to make two points. One, that Casey Anthony drowned in the family swimming pool and was not murdered. Also, that this family has some real problems.

And to do that, he brought two people to the stand who knew Casey Anthony best.

(BEGIN VIDEOTAPE)

MATTINGLY: (voice-over): Could this be the photograph of a tragedy in the making?

A young Caylee Anthony, assisted by her grandmother, climbing the ladder of the family's above ground pool. The defense would like the jury to believe that later in 2008, the child drowned accidentally. And they used her grandmother's tears to drive the point home.

CINDY ANTHONY, DEFENSE WITNESS: It's a picture of Caylee walking up the ladder. And I'm behind her holding her.

MATTINGLY: Casey Anthony herself getting emotional during testimony and while watching this video -- memories of happier times. The pain of an entire family on display. Casey's brother, Lee, apparently still upset about being left in the dark during his sister's pregnancy six years ago.

LEE ANTHONY, DEFENSE WITNESS: I was -- I was very angry at my mom. And I was also angry at my sister. I mean, I was just angry at everyone in general, that they didn't -- that they didn't want to include me and -- and didn't find it important enough to tell me, especially after I had already asked.

MATTINGLY: Under cross-examination, prosecutors wanted to know why Lee Anthony was so emotional today when he told them the same story, much more composed, back in 2009.

Perhaps the prosecution trying to make the point that this family does not want to see Casey Anthony get the death penalty. Perhaps they're doing everything they can on the stand to make sure that doesn't happen -- Wolf.

BLITZER: It was, indeed, a very emotional day.

Any indications -- a two part question -- how much longer this trial is going to continue and whether Casey Anthony will actually take the stand?

MATTINGLY: That's the big question, about whether or not Casey Anthony will take the stand in her own defense. There's a lot of legal arguments on both sides about that. No indication whatsoare -- whatsoever from the defense so far that that is going to happen.

We're looking at court -- the attorneys and the judge were just going over this a few minutes ago. The judge wants this wrapped up by the end of next week so the jury can start deliberating next Friday or Saturday -- Wolf.

BLITZER: All right.

Thanks very much.

We'll stay in touch with you, David.

David Mattingly on the scene for us.

What if -- what if the U.S. Postal Service simply went bankrupt?

The agency expects to be $8 billion in the red this year -- $8 billion. And that shortfall could skyrocket over the next decade.

So the Postal Service is taking unprecedented action. It's stopping legally required payments to its employees' retirement fund.

Tom Foreman is over at the data wall.

He's got more on what's going on.

Explain all this situation. It's pretty bad news over there.

TOM FOREMAN, CNN CORRESPONDENT: Wolf, this is terrible news for postal employees. And it is really an earthquake in this country in a way, when you think about it.

The U.S. Postal Service does not get taxpayer money. They fund themselves. But this problem is building over time.

Look at this. This is a map of the United States. These are all the postal facilities all over the country. Up to 3,000 of these could be closing, of these 36,000 or so, because half of them are operating in the red.

Let's talk about why that is happening. It's a series of things here.

First of all, pricing is part of it. If you look at our stamp prices compared to other people, look at this. We're down here below Canada, the British system, the German system. We're cheaper than other people. That makes a difference.

Delivery frequency -- we're still delivering pretty much all week long. There has been talk about saying, what if you knocked off Saturdays? Could that save money? Yes, that could save some money. Here's another thing to look at over here, the workforce, one of the concerns. Here we have the annual rate of increase. Look what happened here. Wages, not so much. Workers compensation, a bit. Health insurance premiums, we've heard it over and over again, this is also helping eat them alive.

But this is the big one down here, retiree health benefits. By law, they're required to pay into it. That's the very thing you were talking about, Wolf.

And look at what's happened over here. Over time, if they weren't required to do this, they would be operating at a slight advantage here. But now this has pushed them down here, and this is the part I want you to look at.

You take all of this together, and look what happens to the pattern of profit and loss here. Here we are today. And if nothing is done, look what happens by 2020 -- $33 billion lost then, $238 billion lost cumulatively.

The reason this is all happening, Wolf, is because health costs, retirement costs have stayed up there. They have a big surplus in that retirement fund, but they're required to pay into it. Now they're out of money for that.

But also e-mail. The simple truth is, most of us aren't using this anymore. But we still -- not most of us. We're not using it the way we once did.

And yet, the whole system has to be supported coast to coast for it to work at all, and that's the reason the Postal Service is in trouble. And that truly is a problem that can come right to your door -- Wolf.

BLITZER: And the other competition, not just from e-mail, is from FedEx and from UPS. There's a lot of other competition to the Postal Service.

FOREMAN: Yes, there's competition out there in many forms. But e-mail is the one thing that just really has driven this notion that people can stay in touch. They don't have to write letters, they don't have to send packages the same way, and they can connect and ship it some other way, you're right, through FedEx or through UPS, from a company that they've ordered from.

Nonetheless, big concerns at the Postal Service. And they're watching this line very closely.

BLITZER: A huge number. A huge number. All right. Thanks very much, Tom.

Meanwhile, new fears that homegrown terror could be on the rise here in the United States in the wake of two new cases just this week targeting the United States' military.

Plus, shocking allegations of prostitution and sexual slavery right in the shadow of the White House. Stand by for a special CNN investigation.

(COMMERCIAL BREAK)

BLITZER: Internet giant Google now the subject of a government probe.

Lisa Sylvester is here. She's monitoring that, some of the other top stories in THE SITUATION ROOM right now.

What's going on, Lisa?

SYLVESTER: Hi there, Wolf.

Well, the company announced the news in a blog post today, but says it's unclear exactly what the Federal Trade Commission's concerns are. It has been subject to antitrust investigations in the past, so there is speculation this could, again, be the case. Though, on a wider-reaching scale, Google now controls about two-thirds of the U.S. Internet search market and is facing increased regulatory scrutiny as a result.

Venezuelan President Hugo Chavez is breaking his nearly two-week silence while recovering from emergency surgery for a pelvic abscess in Cuba. Chavez, who's been receiving visits from Cuban President Raul Castro and his brother, Fidel, took to Twitter with encouraging words for his beloved people, but did not mention his health. There's been growing speculation Chavez is battling other illnesses including cancer.

A spokesman for Yemeni President Ali Abdullah Saleh says doctors want him to stay in Saudi Arabia a while longer to recover. He was taken there after being wounded in an attack on his palace earlier this month.

Meanwhile, thousands took to the streets today protesting the government, and five people were killed in an explosion at a military checkpoint.

And get a load of this. Take a look at this picture.

It's a 14 pound -- a 14 foot, rather, 900 pound alligator. That's pretty big there.

It was reportedly captured and killed by a lawyer in Texas. The man tells CNN affiliate WFAA, he spent two days stalking the reptile, and then he took him out with one shot to the head.

He says he plans to mount it on his wall. The creature is so big -- we have got a picture of it back here on our wall. It barely fits on the wall. Look at that thing, 14 feet, 900 pounds.

BLITZER: That's a big, big alligator.

SYLVESTER: A big gator there.

BLITZER: But I want to go back. Did you see Hugo Chavez' outfit that he was wearing today? Did you see his sweat suit?

Can we get that back up on the screen for a second? I just want to -- yes, look at that. He looks pretty casual meeting with Fidel Castro.

SYLVESTER: Colorful there and comfortable. He's definitely going for the comfortable look.

BLITZER: Yes, a nice little sweat suit. Did not get dressed up for that meeting.

Thanks very much.

President Obama apparently decided he can't hold out any longer. Will his late involvement in the talks on raising the nation's debt limit really make a difference? Stand by for our "Strategy Session."

And the accused mob boss Whitey Bulger in custody. Bin Laden is dead. So who's on America's Most Wanted list now?

We'll tell you. Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: New fears right now the United States could be facing an escalating war against terror, not only on the front lines abroad, but also right here at home.

Our homeland security correspondent, Jeanne Meserve, is working this story for us.

And there's a lot of nervousness, I suspect, now in the aftermath of these most recent arrests.

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: That's right. And I just want to mention to you that one of the people picked up in Seattle had on his YouTube channel some videos of Anwar al-Awlaki, the U.S.-born Yemeni cleric who's cropped up in several other cases.

That was one of two cases this week that had some common elements. They are homegrown, they were inspired by Internet, and they targeted the military.

War makes enemies, and U.S. military engagement in Iraq and Afghanistan is no exception. Just listen to Abu Khalid Abdul-Latif, charged this week for planning an attack on a military recruiting station in Seattle.

ABU KHALID ABDUL-LATIF, CHARGED FOR PLANNING ATTACK ON MILITARY RECRUITING STATION: Now we've degraded ourselves, and now Muslims are killing each other instead of defending their religion. And the enemies of Islam, like the United Snakes, are taking advantage of that. MESERVE: It may be reference to rogue elements within the U.S. Stryker Brigade unit charged with killing Afghan civilians. Court documents say Abdul-Latif intended to retaliate by striking Fort Lewis where the Stryker unit is based with machine guns and grenades. He later allegedly shifted his target to the recruiting center in this building.

UNIDENTIFIED FEMALE: I think it's a sad commentary. Our military puts itself on the line and risks their lives abroad. They should be safe at home.

MESERVE: Since 2009, there have been attacks at Fort Hood and at a recruiting station in Little Rock, and purported plots against military facilities in Maryland, Virginia and New York.

Then there's the case of Yonathan Melaku, himself a Marine reservist who's accused of firing at multiple military targets in northern Virginia last fall before his arrest at the Pentagon last week, allegedly with bomb ingredients. Officials are not speculating on his motive, but a U.S. official says he apparently self-radicalized by visiting jihadi Web sites.

One expert equates the World Wide Web to the ungoverned tribal areas of Pakistan.

FRANK CILLUFFO, GEORGE WASHINGTON UNIVERSITY: The Internet is arguably the most undergoverned space, and it provides the opportunity for individuals not only to radicalize, but like-minded individuals to come together the world over from corners everywhere.

(END VIDEOTAPE)

MESERVE: Cilluffo warns that no one should be misled by the similarities among some of the recent terror cases. Not all plots are homegrown. They do not all involve military targets. The threats are many and the threats are varied.

Wolf, back to you.

BLITZER: Thanks very much, Jeanne. Good report.

In a cell phone revealing new links between Bin Laden and Pakistan intelligence, what's going on? We're getting details of a new report just coming out.

And, the first lady of the United States, Michelle Obama, sits down with CNN in South Africa. You're about to find out about what she says about raising her young daughters in the fish bowl of the White House.

(COMMERCIAL BREAK)

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

Joining us, our CNN political contributor, the Democratic strategist, Paul Begala. He's a senior strategist for the Democrat fund-raising groups Priorities USA and Priorities USA Action.

And joining us as well, Republican strategist John Feehery. He's the president of Quinn Gillespie Communications. Jack Quinn still there; Ed Gillespie, not there anymore.

JOHN FEEHERY, REPUBLICAN STRATEGIST: Not there anymore.

BLITZER: Gone, but Quinn is still there. Most important, you're there.

FEEHERY: Jack's the man.

BLITZER: Let's talk a little bit about the president's decision now. Biden, rebuffed by Eric Cantor, Jon Kyl, over these debt ceiling talks. So, Monday, the president has to roll up his sleeves. He basically, according to the Treasury Department, has a month before the U.S. creditworthiness collapses.

PAUL BEGALA, CNN POLITICAL CONTRIBUTOR: Well, there's no doubt the president wants a deal. The question is the Republicans.

I have to say, it looks really bad that Eric Cantor stormed out of the bipartisan deficit talks. I don't think it helps Mr. Cantor or his party. More importantly, it doesn't help our country.

But we have a serious problem. It looked like serious people were making a serious effort to solve it. And then Eric Cantor just has a hissy fit and pouts and screams and --

(CROSSTALK)

BLITZER: Because he argued, Eric Cantor, that the Democrats kept saying, the vice president kept saying, you have got to increase taxes as well. And the Republicans are saying under no circumstances in this economy will they increase taxes.

FEEHERY: For four weeks they've been at this wall. They've been at this wall. The president has got to step in. It's the president's turn. He's the president.

They've got to come in, they've got to have a conversation. You're right, he's got to roll up his sleeves.

And you know what? They have got to take taxes off the table right now because we can't afford -- if the president wants to get re- elected, you've got to get jobs. Raising taxes will kill jobs.

BEGALA: So the Republican position, just so we have it clear, is we're going to essentially end Medicare. That's how "The Wall Street Journal" describes it.

FEEHERY: No.

BEGALA: That's "The Wall Street Journal," not me. You want to talk --

(CROSSTALK)

BLITZER: They say they want to reform it.

BEGALA: They say it because they lie. They want to essentially end Medicare -- that's what "The Wall Street Journal" says -- in order to preserve tax breaks for oil companies and billionaires. That is untenable position.

FEEHERY: Raising taxes kills jobs.

BLITZER: Let me press you on this point about raising taxes, because there's a definition of tax increases. I wrote about this on my blog today at CNN.com/situationroom if you're interested. You can go read it.

It's one thing to raise income tax rates from 35 percent for the highest brackets right now to 39.6 percent, which existed during the Clinton administration. That's a tax increase for people earning more than $250,000 a year. Everybody understands it.

But what if you have tax reform that eliminates some of the subsidies for Exxon Mobil, for example? Is that a tax increase?

FEEHERY: I am all for tax reform that removes all kinds of subsidies.

BLITZER: Is that a tax increase to eliminate subsidies for Exxon Mobil?

FEEHERY: There is a big debate on tax subsidies. And I think that if you talk about ethanol or any kind of other tax breaks, which may include or may not include tax subsidies for Exxon and every other corporation, by the way -- but if you do that right now -- and the president decided last December that we can't do it. We can't raise taxes because it will kill jobs.

And that's why, don't do it right now. If you're going to do taxes, you have got two years when all these tax cuts expire. Hopefully jobs will come back.

BLITZER: But would Grover Norquist consider that a tax increase?

FEEHERY: Of course he'll call it a tax increase. He has before.

BLITZER: What about if you force a company like General Electric -- in 2010, they made $14 billion in profit around the world, $5 billion of which in the United States. They paid zero in federal income tax.

What if you came up with some sort of reform that required at least a minimal amount of federal income tax for big corporations? Is that a tax increase?

BEGALA: Well, it's tax fairness.

BLITZER: Is it a tax increase? Is that something Republicans -- (CROSSTALK)

BEGALA: I sure hope it is on these big corporations. They have to.

BLITZER: Could Republicans support that?

BEGALA: Do you guys want to live in a country where a janitor at Exxon pays more --

BLITZER: Forget about the corporate tax rates. I'm talking about subsidies and tax breaks, loopholes.

(CROSSTALK)

FEEHERY: I'm all for --

BLITZER: Will the Republicans get rid of a lot of these loopholes? But Grover Norquist, you know who he is.

FEEHERY: I'm all for that. I'm all for tax reform.

BEGALA: He's an anti-tax crusader. And he runs a special interest group, and good for him. He has a right to petition for even the most extreme --

(CROSSTALK)

BLITZER: Does he regard that as a tax increase, removing those loopholes? Would he regard that as a tax increase?

FEEHERY: Yes, but I'm for tax reform. I'm for increasing --

(CROSSTALK)

BLITZER: Because there is an opportunity for a compromise between the president, the Speaker, Mitch McConnell, the mainstream Republican leadership, if they agree --

FEEHERY: The president's go to get engaged.

BLITZER: He's getting engaged on Monday.

FEEHERY: Finally.

BEGALA: But the Republican position is to gut Medicare, Medicaid, student loans to keep welfare for Rex Tillerson. Rex Tillerson is the CEO of Exxon Mobil.

FEEHERY: Save Medicare. We've got to save --

BEGALA: Let me finish here. Exxon Mobil is the most profitable corporation in the world, and yet, janitors pay taxes to subsidize Exxon Mobil. That's crazy.

FEEHERY: Wait. You're missing billions and trillions. If we don't reform Medicare, which is trillions of dollars, we are going to go bankrupt, Paul. And you know that. We have got to reform Medicare.

BEGALA: Reform. OK. That reminds me of -- we reformed my dog. But, you know, what used to work real well doesn't work no more. The dog didn't like the procedure.

When he says reform, he means cut it off.

FEEHERY: If you want to save Medicare, you have got to save --

(CROSSTALK)

BLITZER: Hold on a second. If you're going to deal realistically with the huge national debt and increase that debt ceiling, the Democrats are going to have to bite the bullet on entitlements. The Republicans are going to have to bite the bullet on what Democrats call revenue, which really is tax reform or tax increases.

BEGALA: The deal is obvious but politically difficult. It's what we did with President Clinton.

BLITZER: Did the president wait too late?

BEGALA: No, not at all. No. He has --

BLITZER: Because they've only got a month now.

BEGALA: I can't imagine anybody better to have in that room than Joe Biden, except Barack Obama. OK?

He has had the best possible person, the guy with 36 years experience in the Senate, been part of every major deficit reduction approach that we have had over the last 30 years. Biden is a terrific guy to lead this. If the president now needs to step in, then I think that's fine, that's the right time.

(CROSSTALK)

FEEHERY: You've got to bring in a big man. You've got to get the die who's going to cut the deal. It's going to be the president of the United States and the Speaker of the House and the majority leader.

BLITZER: And they will be there.

(CROSSTALK)

BEGALA: Congressman Cantor wet his pants and ran home to his mother.

BLITZER: They've got to cancel their July 4th vacations, their holidays. They've got to make a deal.

FEEHERY: Let's get the president to do a deal. Absolutely. BLITZER: All right, guys. Thanks very, very much.

A new fuel for speculation that Bin Laden got help from Pakistan during his years in hiding. The source, a cell phone.

Stand by.

And record flooding and a wave of emotion. Evacuees in North Dakota fear they may never be able to live in their homes again.

(COMMERCIAL BREAK)

BLITZER: In North Dakota, the flooded Souris River is the highest it's been -- get this -- in 130 years, and it's still rising. Thousands of residents who evacuated their homes don't know if they'll have a home to come back to when the water recedes.

CNN's Ted Rowlands is covering the flooding crisis for us in Minot.

This is a horrible story. What's the very latest, Ted?

TED ROWLANDS, CNN CORRESPONDENT: Well, the latest is that the water levels continue to go up, and it is a horrible story. It's an excruciating process, especially for all the people that have been removed from their homes as they sit and they watch this water level continue to go higher and higher, and cause more and more damage.

(BEGIN VIDEOTAPE)

ROWLANDS (voice-over): As she watches the river rise from a bridge in downtown Minot, Jody Stoppler knows her home must be under water.

(on camera): How long have you been lived there?

JODY STOPPLER, EVACUEE: Twenty-four years. Raised all three of our kids there.

ROWLANDS (voice-over): More than 12,000 people, about a third of this North Dakota city, are homeless. Steve and Teresa Glascock took what they could before saying goodbye to their house of 16 years.

STEVE GLASCOCK, EVACUEE: It hits home. It really does. And I never knew it could affect me in this way. It's terrible.

ROWLANDS: Some are staying with friends and family. Others are in shelters.

Linda Alexander moved into this RV, leaving her home of 42 years. She says having her grandchildren around helps

LINDA ALEXANDER, EVACUEE: As long as we have each other, the rest is property.

ROWLANDS: Few, if any of these homes, are insured for flooding, because what's happening here was considered to be impossible.

North Dakota Governor Jack Dalrymple says he is counting on getting individual assistance from the federal government.

GOV. JACK DALRYMPLE (R), NORTH DAKOTA: We are anxious to have it approved as soon as possible so we can get our recovery centers open and we can start helping these folks.

ROWLANDS: Meanwhile, crews are trying to save buildings like City Hall and the police station. They have given up on the rest, including schools.

Jason Gartner (ph) has an 11-year-old son.

JASON GARTNER (ph), EVACUEE: He's having a real hard time because he doesn't have any sense of security right now.

ROWLANDS: The water level is expected to reach its highest point late Saturday or Sunday. It may be weeks before people like Jody Stoppler can get back to see what's left of their home.

(END VIDEOTAPE)

ROWLANDS: And the numbers really have been all over the place on this. But right now, the experts, Wolf, say that they do expect the crest Saturday -- late Saturday, early Sunday -- and they expect the high level to stay for at least three days. It could be weeks before these people get back to see what's left of their homes.

BLITZER: What's the federal government doing, Ted, to help out?

ROWLANDS: Well, there is an application in Washington for personal assistance which basically will allow people to get housing on the short term. There was an application already filed by North Dakota that was denied in Washington. However, that was before what happened this week in Minot.

It is expected that the feds are going to kick in some money fairly soon. They say they'll have an answer by tomorrow.

BLITZER: I'm sure they will.

All right. Thanks very much, Ted, for that report.