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The Situation Room

New Twist in Herman Cain Controversy; Stocks Plummet on Wall Street; Safety Concerns at Occupy Protest Site; Bogus Military Parts Threaten U.S. Security; Historic Upset in Recall Election; Cain to Appear at GOP Debate; Cain's Chief of Staff Makes False Claim

Aired November 09, 2011 - 16:00   ET

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

WOLF BLITZER, CNN ANCHOR: We're going to have much more on the earthquake coming up.

Also happening now: a possible new twist in the sex harassment scandal swirling around Herman Cain. One of his accusers wants to team up in the next day or two with the other women, revealing new details of their allegations. Stand by.

Also, counterfeit electronic parts discovered deep inside some of the U.S. military's most sensitive equipment.

And illegal immigration at the center of the biggest political upset in Arizona history.

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

But we begin with the breaking news, political and financial chaos within the European Union, sending fresh shockwaves through Wall Street and world financial markets, stocks plunging in New York today on all three major indices with the Dow tumbling about 400 points, almost 400 points, amid a growing debt crisis in Italy. That's the eighth largest economy in the world and the third largest in Europe.

Let's bring in our own financial expert, CNN's Erin Burnett, the host of "ERIN BURNETT OUTFRONT."

Erin, the markets taking a major tumble today because of what's happening in Italy, I assume, is that right?

ERIN BURNETT, CNN ANCHOR: That really is the reason why.

Europe continuing to not deal with its problems causing concern. I'm just watching here on the side, Wolf, the market settle, as you said, right around 388 points to the downside as the final trades come in. What's happening in Europe is causing all kinds of problems. General Motors today, Wolf, came out and said we can't even put out forecasts for what we're going to do in Europe and as a result, GM shares fell 10 percent.

And that's just one example of what we saw across the market, where all 10 industry groups fell lower today. Greece continues to be a problem and now, Wolf, as you said, it's really Italy. And Italy is important. You mentioned the eighth biggest economy in the world. It is also the third biggest market for government debt in the world. And that means it is incredibly important.

If you look at the exposure that banks have, how much of Italy's debt that they hold, they own, you would have to add up Portugal, Ireland, Greece, and Spain, the other so-called PIGS, to even get close to that total. Italy is a very important economy. And I think it's safe to say if you see real problems with Italy, you will then see problems spread to even bigger economies like France and that would become then a domino effect that would be almost impossible to contain.

BLITZER: It doesn't look like all these new political leaders, in recent months, in Ireland, in Portugal, now in Greece about to happen in Italy, they're stepping aside, but it doesn't seem to make this crisis any better.

BURNETT: No, because it's very unclear who's going to lead. I have to say you have got to give Portugal credit. They really tackled their program head on and have probably been the most successful in dealing with it and keeping leadership and all staying all the same page as a country and going forward with austerity.

Obviously not seeing it with Greece and certainly not Italy, although I do think it's important to make one point here. Italy's situation with its debt relative to the size of its economy, it's really no worse off now than it was when it got into the euro. Its unemployment rate is only around 8 percent. You're going to look at other economies where it's much worse. And by the way, you look at France 9.9 percent.

Italy if you look at it by a lot of measures, although it needs to have serious reforms, is not in a situation where you should see a crisis, but the problem is once the markets lose confidence and they won't lend money, a crisis it just happens by definition. All of a sudden, Italy can't borrow and a crisis happens. This is really a confidence issue that it's not too late to stop.

BLITZER: It's really lack of confidence that so many people have in what is going on in Europe right now.

BURNETT: That's right.

BLITZER: Erin's going to have a lot more 7:00 p.m. Eastern later tonight, "ERIN BURNETT OUTFRONT."

We will be watching, Erin. Thanks very much.

Also this note. Later this hour, an exclusive interview with the treasury secretary, Timothy Geithner. He goes one-on-one with our chief White House correspondent, Jessica Yellin. Stand by for that.

We're also following the breaking news out of Turkey. Another powerful earthquake in the eastern part of the country with multiple buildings now reported collapsed.

Our meteorologist Chad Myers working this story for us.

Chad, what do we know right now? CHAD MYERS, CNN METEOROLOGIST: We know, Wolf, that this is in the same place that we had the 7.1 earthquake about three weeks ago, a little less than three weeks ago.

This is a 5.7 aftershock. These are buildings that are made of stone and mortar. These are ancient cities. This is the city of Van in Turkey, originally settled in 600 B.C. You have to understand that the building have around a very long time. And they experienced a big quake three weeks ago. Now the shaking is continuing with this 5.7 aftershock. The city of Van right here on the shore of the lake, Van Lake, and the town kind of spreads on out toward the east.

This 5.7 between the Eurasian plate and Arabian plate is a very common area for earthquakes. In fact, since that 7.1 real quake three weeks ago, Wolf, there have been 1,500 aftershocks. But this is the biggest one. And this is the one that's now putting stress and strain on these buildings that have already been cracked.

They have already been damaged. They were hanging on by a wing and a prayer. Now they are not. These buildings have come down again in places where they were at least standing. About 60,000 people were left homeless out of a total of about 400,000 people that live in this town. So the rest of the buildings were at least standing. This happened at 9:30 at night. Most people were home when these buildings were collapsing -- Wolf.

BLITZER: And this occurred about 90 minutes or so ago? We're getting pictures now in from Turkey and you can see the devastation. Are you seeing those pictures, Chad?

MYERS: Yes, the devastation, I can see. And I have also noticed another thing. There's a lot of heavy equipment already there.

That doesn't happen in a vacuum, Wolf. This heavy equipment was already on the scene from the previous dig-out of the damage that occurred two and a half, three weeks ago, so they really do have a lot of people on the scene. They have had the equipment, but they have a lot of damage and according to Reuters, at least 18 buildings have collapsed. That's considerably less than the 5,000 buildings that collapsed with the 7.1, but it's dark and I'm sure they are still counting buildings, the collapsing continues, and more quakes, more aftershocks will still be possible tonight.

BLITZER: Yes, 5.7, that may be an aftershock, but it's a significant earthquake. Stand by for a moment.

Andrew Finkel is joining us on the phone. He's a journalist in Turkey.

What can you share with us, Andrew? What else do we know?

ANDREW FINKEL, JOURNALIST: Well, we know that two major buildings have fallen down among the many which have collapsed. These are hotels and of course, the people who were staying in hotels were journalists covering the quake, the previous quake at the end of October. One news agency, DHA, which is an affiliate of CNN, is reporting that two of its reporters are under the rubble, have yet to be accounted for. Another news agency has said that its relay truck, its satellite truck was destroyed by the falling hotel building.

And of course, this is an area which experienced this great quake a few weeks earlier, and so there is a great sense of panic in this city. It's cold, there's already people living in tents, and of course, the authorities were gradually trying to encourage people to get back under their own roofs, but now of course people will be nervous about sleeping in a structure that might collapse in another earthquake, Wolf.

BLITZER: Andrew, these hotels, were they high-rise hotels? How many stories? Do we have any idea how big these hotels are?

(CROSSTALK)

FINKEL: One of them we know to have been a five-story hotel. This is an area which knows that it has earthquakes, so people don't build multistory buildings, huge, high-story buildings. It's also a reasonably poor part of the country. So it's not as if it's -- it's not a Manhattan landscape. These are sort of modest size buildings, yet even these five-story buildings weakened by the previous quake are now collapsing, Wolf.

BLITZER: We know that there was international assistance to Turkey weeks ago when the initial earthquake hit. Do they have the means to deal with these collapsed buildings and rescue individuals who may be stuck inside?

FINKEL: Well, the actual rescue operation is probably something Turkey can handle. It's a country that knows earthquakes. There are well-trained civil defense units both official and unofficial.

And we that know these units are rushing to the spot. Some of them have to come from Istanbul, which is the other side of the country. It's a few hours' flight away. It's a one- or two-hour flight away. Some are going by car from the nearby towns, a town, for example, called (INAUDIBLE) where we know rescuers are going from. That's about a three- or four-hour drive away.

But there are people on the spot. And of course there is heavy equipment from the previous quake. The real trouble, of course, is where do you house all the people who have now left their homes? There was already a shortage of accommodation. There was already a huge demand for tents for people to shelter during this cold weather.

And now of course that demand will rise. The international aid will go to help the survivors, as it were, the people who have to pick up their lives after this quake, Wolf.

BLITZER: Another 5.7 magnitude earthquake in Eastern Turkey.

Andrew, we will check back with you. I want to give you some time to get some more information. We will check back with Chad as well.

In the meantime, let's check in with some other news that is unfolding here in the United States, Herman Cain facing a daunting possibility, all four of his accusers lining up in front of the international news media, detailing what they say was sexual harassment years ago.

CNN's Brian Todd is working the latest developments for us.

It's an unfolding drama, Brian. What is happening right now?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, we're learning that we're likely to hear more some time soon from at least two of Herman Cain's accusers.

When we do, they could reveal more detail about what they say happened and the case could blow up yet again.

(BEGIN VIDEOTAPE)

TODD: She says this is no longer a private matter, but a personally embarrassing one. Now Karen Kraushaar wants to organize a joint news conference with other women who have accused Herman Cain of sexual harassment.

Kraushaar tells CNN that's when she might release details of her allegations against Cain, saying "I have kept all of the copies of my allegations." We spoke to Kraushaar's attorney.

What is her reason for wanting to speak publicly and give details about this alleged incident?

JOEL BENNETT, ATTORNEY FOR CAIN ACCUSER: Given all that has come out now, she feels she really has to give the details to make it clear that her complaint was not baseless or a fabrication, as Mr. Cain has stated in his press conferences.

TODD: Cain said this about Kraushaar's 1999 allegations against him while they worked at the National Restaurant Association.

HERMAN CAIN (R), PRESIDENTIAL CANDIDATE: She could not find anyone to corroborate her story.

TODD (on camera): As their attorneys do the media rounds, all sorts of questions are raised about a potential news conference. If and when that happens, it will likely open up these women's lives even further.

Their attorneys are already facing questions about the character of their clients.

(voice-over): For Kraushaar, there are questions about another workplace complaint after her days at the Restaurant Association. Kraushaar tells CNN she did file a grievance with the old Immigration and Naturalization Service because she wasn't allowed to telecommute while recovering from a car accident, as another employee was allowed to do.

BENNETT: The fact that someone has filed another complaint against another employer has nothing to do with the merits of this complaint.

TODD: CNN contributor Maria Cardona hired Kraushaar at the INS, says she trusted Kraushaar so much, she sent her to Miami to deal with the media crush over the Elian Gonzalez case.

MARIA CARDONA, CNN CONTRIBUTOR: I needed the best team player that I had whose credibility again in the media because of her great work was beyond reproach, someone who was nonpolitical.

TODD: As for accuser Sharon Bialek, Cain's campaign suggests she has credibility problems and laid out details of lawsuits she's been involved in, bankruptcy and other issues, which she admits to.

SHARON BIALEK, ACCUSES HERMAN CAIN OF SEXUAL HARASSMENT: I have had bankruptcy, and it was after the death of my mother to help my father pay for medical bills and a custody battle.

(END VIDEO CLIP)

TODD: Through all this, Herman Cain vehemently denies committing sexual harassment and now has hard-hitting attorney Lin Wood in his corner. That means if these women come out in the days ahead with more details, other episodes in their pasts could be exposed as well -- Wolf.

BLITZER: So, where exactly do we stand as far as this joint news conference that at least two of the accusers want to have and maybe there will be others?

TODD: Well, the attorney Joel Bennett says he an his client, Karen Kraushaar, that they have gotten an agreement from the other accuser who we know about, Sharon Bialek, to hold that news conference. Bennett says they are trying contact two other women who are not named to get them to join them. But they have not been able to reach those two women yet.

He says he hopes to have news on this soon. He says he will go ahead with it even if it's just the two who we know about.

BLITZER: So it might just be these two. And it could be as, what, early as tomorrow?

(CROSSTALK)

TODD: It could be. They will give us some notice, though.

(CROSSTALK)

BLITZER: Thanks very much, Brian Todd reporting.

BLITZER: We will have much more on this story coming up later.

Meanwhile, an unlikely new attack dog for President Obama. His Treasury secretary, Timothy Geithner, now going after Republicans full force. We have an exclusive interview with Timothy Geithner. Our own Jessica Yellin sat down with him.

Plus, more than a million counterfeit parts found inside critical U.S. military equipment, get this, many of them traced to China. What's going on? We will explain.

(COMMERCIAL BREAK)

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

JACK CAFFERTY, CAFFERTY FILE: Wolf, Republicans got God.

A new poll suggests Republicans are much more likely to go to church than Democrats. This is fascinating to me.

A Gallup poll shows that 40 percent of Republicans say they attend church weekly, 21 percent say they attend nearly weekly, and 38 percent say they seldom go to church. Only 27 percent of Democrats go to church every week, 20 percent they go monthly, and 52 percent of Democrats say they seldom or never go to church.

These polls also show that Democrats are less religious than the average American, and Republicans are more religious.

Consider this. Almost one in five Democrats identify with no religious faith, about 20 percent, compared to only one in 10 Republicans who feel that way, just 10 percent. This might explain why religion often seems to play a more prominent role when it comes to Republican politicians, especially during the primaries.

This time around in the GOP horse race for president, Texas Governor Rick Perry held a major prayer session in Houston at the Astrodome before he announced his candidacy. He's also been known to pray for President Obama. And last April, Governor Rick Perry designated a three-day period as days of prayer for rain in his drought-stricken state of Texas.

Faith also plays a large role in Michele Bachmann's candidacy. While giving an economic speech just yesterday, Bachmann suggested the U.S. return to its Judeo-Christian roots to bring about economic responsibility. Quote, "Cry out to holy God, it's not too late. He can save us," unquote.

As for Mitt Romney, it's unclear yet what impact if any his Mormon faith will have on this run for the White House.

Anyway, here's the question: Why are Republicans more likely than Democrats to go to church?

Go to CNN.com/CaffertyFile, post a comment on my blog, or go to our SITUATION ROOM'S Facebook page.

Interesting stuff.

BLITZER: Very interesting. I don't know the answer to that, but or viewers will have some thoughts.

Thank you, Jack.

CAFFERTY: They will.

BLITZER: "Occupy Wall Street" protestors are taking action to keep criminals out of their encampment.

Here to tell us how the activists are keeping themselves safe, let's go to CNN's Mary Snow. She's live from the park in New York.

What's going on over there now, Mary?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, you know, activists have been down here in Lower Manhattan for 54 days now and they say as their numbers grow, they're having concerns about security, particularly when it comes to the safety of women.

(BEGIN VIDEOTAPE)

MARY SNOW, CNN CORRESPONDENT (voice-over): Police maintain a presence outside Zuccotti Park, the home base of the "Occupy Wall Street" movement. But inside, protesters who don't trust the police handle security themselves. And they're adding new safety measures like this women's only tent. It follows an arrest last week of a 26-year-old man charged with sexually abusing a female protester.

(on camera): Have there been problems with women?

CHRISTINE, OCCUPY WALL STREET: We have had a few incidents. We have encouraged people to report those incidents. But again, I feel like we haven't had a higher level of problems here than in lots of other communities.

SNOW (voice-over): Twenty-three-year-old Christine, who does not want to give her last name, says she and other volunteers walked through the park overnight to help with security.

Chris Reider does the same.

CHRIS REIDER, OCCUPY WALL STREET: We do patrol. We do have a wave system of letting know there's a problem down that way or a problem over here and we do focus on it. But, overall, it's very peaceful.

SNOW: Police say there have been several crimes reported inside the park. Some are sexual in nature. Others are assaults.

The protesters here insist crime is no more prevalent here than in other places where there are large numbers of people. And as the number of protesters grow, Jeff Smith says, small tents that now fill the park are a problem.

JEFF SMITH, OCCUPY WALL STREET: Smaller tent allows people, whether it's drug use that's going on or simple crime or any kind of violence, any anti-social behavior is not really tolerated out here. So, I think we're obviously having to deal with the same societal pressures that everyone does in a city at large.

SNOW: In a move to address security and space issues, Smith says the movement has $20,000 in donations to put up larger army tents like these where the people inside can be better monitored.

(END VIDEOTAPE)

SNOW: And more of those big army tents. Wolf, are expected to be going up down here. On another note, some of the protesters here left for the nation's capitol earlier today. A small group is going to walk to Washington, D.C. They expect to get there in about two weeks and take their message to the nation's capital -- Wolf.

BLITZER: Those tents at the park there, Mary, are they legal?

SNOW: You know, I checked with the city and they said they don't violate any building codes, but this park is privately owned. And when I asked the owners of that park whether or not they allowed tents to be pitched out here on this private property, they declined comment.

BLITZER: Mary Snow on the scene for us -- thanks for covering this story, Mary. Appreciate it.

Counterfeit military parts are putting U.S. troops at risk right now and most of it can be traced back to one country. We have the story straight ahead.

But first, a mission to mars that isn't going as planned. We'll explain.

Stay with us here on THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: I'm Wolf Blitzer.

Here are some of the stories we're working on for our next hour:

Penn State's legendary football coach Joe Paterno announcing he's retiring after a former assistant coach is accused of molesting young boys.

A two-star general in the United States Army is sacked simply for criticizing the Afghan President Hamid Karzai and a new directive by President Obama aims to cut billions in wasteful spending on government employees, starting with their prizes perks.

Stand by. You're in THE SITUATION ROOM.

(MUSIC)

BLITZER: Right now, potential threat to America's security is being exposed right under the noses of U.S. troops and members of Congress say China is to blame.

Let's go to Lisa Sylvester. She's looking into this story for us.

What are you finding out, Lisa?

LISA SYLVESTER, CNN CORRESPONDENT: Wolf, this is in fact a shocking story. There are about 1,800 cases from 2009 and 2010 of counterfeit components being discovered in military equipment and hardware. These counterfeits are hard to detect with the naked eye, but they have a very high failure rate.

(BEGIN VIDEOTAPE)

SYLVESTER (voice-over): These may look like the real thing, but deep inside some of the military's most sensitive equipment are counterfeit electronic parts. A congressional review of just a sample of the defense industry's supply chain found about a million bogus components, 70 percent of the counterfeit goods were traced to China.

SEN. CARL LEVIN (D), MICHIGAN: We cannot allow our national security to depend on electronic scrap salvaged from trash heaps like Chinese counterfeiters.

SYLVESTER: And they were found in critical equipment, on a U.S. Navy anti-sub helicopter. The night vision and targeting system contained a counterfeit transistor. Its failure could have compromised the pilot's ability to identify targets.

On the C-27J military aircraft, suspected counterfeit memory chips were discovered. And on the PA8 Poseidon airplane, an ice detection module has fallen out of its socket, a part that on closer inspection appeared to be a fake.

A Government Accountability Office investigation found that many of the counterfeit electronic parts can be bought on the Internet.

RICHARD HILLMAN, GOVERNMENT ACCOUNTABILITY OFFICE: We consider the problem itself to be a very serious one, possibly affecting the lives of our military personnel and the capabilities of the systems that they utilize.

SYLVESTER: Counterfeiters have become more sophisticated. These are voltage regulators for an automotive air bag and brake system. They appear virtually identical. But bogus parts are subject to a much higher failure rate.

BRIAN TOOHEY, SEMICONDUCTOR INDUSTRY ASSOCIATION: In many cases, these counterfeiters are remarketing these products so they may appear as if they were made in the United States, and so that is clearly part of the problem.

SYLVESTER: Another problem, counterfeiting has become almost a cottage industry in some parts of China, where fake electronic parts are openly obtained from trash heaps and serial numbers scrubbed off.

Thomas Sharpe works for a company that authenticates electronic parts. He recently visited China.

LEVIN: Did you see any evidence, when you were there, of any Chinese government action against what was openly being sold as counterfeit?

THOMAS SHARPE, SMT CORPORATION: When we got into the city of Xintao (ph), the entire business purposes of everything that we saw there was very obviously to harvest components from a scrap and go through complete refurbishment right there in the open. There was nothing that was hidden.

SLYVESTER: How do fake Chinese parts get into American military equipment? The supply chain is so complex one part can change hands eight times before it ends up being sold to the Pentagon. The Missile Defense Agency is taking steps to prevent and detect defective parts, including extensive ground testing and ensuring defense contractors use original equipment manufacturers.

LT. GEN. PATRICK O'REILLY, DIRECTOR, MISSILE DEFENSE AGENCY: We do not want a $12 million interceptor's reliability compromised by a $2 counterfeit part.

(END VIDEOTAPE)

SYLVESTER: The Chinese embassy gave us a statement saying, quote, "The Chinese government takes a zero tolerance attitude towards faking counterfeit products for the purpose of providing safe and sound products to consumers both at home and abroad.

But many lawmakers are not convinced. They say China still has a lot more to do to shut down known Chinese counterfeiters, Wolf.

BLITZER: They certainly do, Lisa, have a lot more to do. But the problem, China is going to continue doing it. They always do this. The problem is, there aren't enough controls at the department of defense to stop this from going on. So the question is, what are they really going to do to prevent this down the road. Because so much is at stake. You're right, this is shocking.

SYLVESTER: One of the things that they are looking at is putting the onus on the contractors and the subcontractors. So ultimately, it's going to be up to the contractors to make sure that the products that they are getting from their subcontractors, and what the subcontractors are getting from their suppliers are the real deal. That they're not counterfeit and not fake, and if there is a problem, if there has to be a fix down the line, it will be the contractors and subcontractors who will have to pay money to make everything right and fix to those parts to get the legitimate parts in, and not the counterfeit parts. And that is what they are hoping will really make a difference here Wolf.

BLITZER: They should do more than just pay money. If they continue buying these counterfeit parts, they should be arrested, they should go to jail. They should lose their ability to deal with the United States Government because so much is at stake right now. That's just me. As a former Pentagon Correspondent expressing my personal opinion.

All right-thanks for very much Lisa for that. Money is his usual game, but these days, the Treasury Secretary, Timothy Geithner is increasingly playing politics. He's going on the attack against Republicans. Our chief White House correspondent, Jessica Yellin sat down for an exclusive interview with Timothy Geitner.

All right Jessica, what did you learn?

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Hi Wolf, well you know with the president's low approval numbers on the economy, the usually softer spoken treasury secretary seems to be stepping into another role. Pit bull. He is pressing the president's jobs message and taking aim at Republicans who are blocking the administration's agenda.

(BEGIN VIDEOTAPE)

YELLIN (on camera): These days, the president's top economic adviser is delving into raw politics.

TIM GEITHNER, U.S. TREASURY SECRETARY: Unless Republicans willing to do more things to help the economy right now, then unemployment will stay too high and if Congress, Republicans in congress come together with the administration and do things to help the economy, then we'll be stronger. They hold the key to whether this economy is stronger or weaker in the next three months, next six months, next nine months.

YELLIN: We caught up with Timothy Geithner at an Intel manufacturing plant in Chandler, Arizona. A target state for the Obama campaign. The treasury secretary took a break from negotiating Europe's financial future to Selling the president's jobs bill and the president's political message with unusual force. He slammed house Republicans' economic proposals.

GEITHNER: I don't think there is a Republican plan for tax reform and there's no Republican plan to create jobs and economic growth.

YELLIN: And didn't shy away from campaign politics. Here on Mitt Romney's debt reduction plan.

GEITHNER: You can't cut your way to growth. We're in the middle (inaudible) what the government can do and should do to help make the Economy stronger, but it would make us weaker as a country for us to go out and try to cut our way to growth.

YELLIN: Secretary Geithner defended the president's stewardship of the economy.

(on camera): Bottom line remains that the unemployment rate will be higher at the end of the president's first term in office.

GEITHNER: That's not a fair way to think about it. There is improvement. The economy's in a much stronger position today than when he took office because he was able to put out the financial fires and restart economic growth. YELLIN (voice over): As for the anger toward Wall Street and the fact that a few fat cats have paid a price.

GEITHNER: Stay tuned. The final chapter of what's going to happen has not yet been written.

(END VIDEOTAPE)

YELLIN: Wolf, we covered a lot more topics, including the collapse of MF Global, Occupy Wall Street and of course, the outlook for the U.S. economy, but the bottom line for Secretary Geithner, he says the biggest obstacles for the U.S.'s economic recovery are the financial crisis in Europe and congress's inability to pass the jobs bill.

BLITZER: Are we going to see a new and more politically assertive Timothy Geithner out there in the coming weeks and months?

YELLIN: I think you're seeing it already. It was a very different Secretary Geithner than we have been seeing to date.

BLITZER: Jessica thank you.

It may be the biggest political upset in Arizona history. The state senator who wrote the controversial law cracking down on illegal immigrants tossed out by Arizona voters.

Then coming up on our next hour, a major new fallout from the child sex abuse scandal that's rocking Penn State University. A legendary coach is on his way out.

(COMMERCIAL BREAK)

BLITZER: Difficult day for Russia's space program. Lisa Sylvester is back. She's monitoring that story some of the other top stories in "The Situation Room" right now. What happened?

SYLVESTER: Wolf, an unmanned Russian probe headed to Mars blasted off today, but never made it out of Earth's orbit. The Russian space agency said there were tense moments when the spacecraft couldn't be located. When it was found, officials determined its engine had failed to start. Technicians now have three days to jump start the onboard engine to send the probe into full orbit before its batteries run out. And one of the most powerful Bering sea storms on record is pounding Alaska's coast west right now. Ferocious winds combined, with heavy snowfall are creating blizzard conditions there. Sea levels are ten feet higher than normal and waves are expected to hit 30 feet. Severe coastal flooding is also a major concern. And today, the alleged master mind of the USS. Cole bombing appeared at a U.S. military commission hearing at Guantanamo Bay. Abdul Al-Rahim-Hussein Mohamed Al Nashiri, is charged with killing 17 American sailors in the 2000 Bombing of the Navy destroyer in Yemen.

The government is seeking the death penalty, but no trial date has been set. BLITZER: Thanks, Lisa. We'll check back with you in just a few moments. Herman Cain goes into tonight's Republican presidential debate under a serious cloud of scandal. Can he overcome it with a strong performance? We'll talk about that and more in our strategy session stand by. and clothing, coffee mugs, even mouse pads, President Obama ordering government agencies to cut to eliminate the sweat.

BLITZER: The law made headlines for its tough new approach to illegal immigrants in the United States, but now, in a stunning turn around Arizona voters have tossed out the state senator who wrote it. CNN's Thelma Guttierez is joining us from Phoenix right now with more.

Thelma what's the reaction there? Tell our viewers what happened.

THELMA GUTIERREZ, CNN CORRESPONDENT: Well, I can tell you, Wolf, that it depends on who you ask. Some people are stunned, some people are claiming victory, and went into the night in celebration. But I can tell you, that this is definitely the biggest political upset in Arizona history. We're talking Republican versus Republican in the most conservative district in the entire state. And last night, it was the newcomer, the newbie who actually pulled ahead. The moderate, who pulled ahead, of the incumbent. He unseated the incumbent, who is the father of the anti illegal immigration movement.

(BEGIN VIDEOTAPE)

RUSSEL PEARCE, ARIZONA STATE SENATE: I want to make something very clear. If being recalled is the price for keeping one's promises, then so be it.

GUTIERREZ (voice over): Just ten months ago, Russell Pearce, president of the Arizona Senate, was the most powerful man in the state. Tuesday night, his political World came crashing down in his first defeat ever in 16 years. For as bitter as it was for the Pearce camp, it was sweet for challenger, Jerry Lewis, a political newcomer.

JERRY LEWIS , ARIZONA STATE SENATOR ELECT: We can be civil in our politics. And we can work together to attack issues.

GUTIERREZ : What made this special recall election interesting to watch is it was an election of firsts. The first time two Republicans both fiscal conservatives and both Mormon, faced off in the most conservative district in the state. The major difference between the two, their approach to immigration.

LEWIS: I think they saw in me a hope, someone that would definitely work towards real issues in the immigration issue, but would do so in a way that bespeaks our humanity.

Making sure we have a secure border but also making sure that we don't separate families.

GUTIERREZ: But it was a small grass roots movement in the district that paved the way for the historic recall election. It was led by Randy Parraz, a community organizer who mobilized Republicans, Democrats and Latino's to unseed a political titan. And it happened in just ten months.

RANDY PARRAZ, COMMUNITY ORGANIZER: This is about (inaudible)creating room for politicians on both sides to maneuver. And that's the specialness of this particular moment. It was about citizens stepping forward and taking action, to hold someone as powerful as Russell Pearce accountable.

GUTIERREZ: On the day after his victory. Lewis told me he has a new message for Arizonans and the country.

LEWIS: Start your businesses here. Expand your businesses here. Bring your tourism and your conventions back to Mesa, and to Arizona. This is a great place.

(END VIDEOTAPE)

GUTIERREZ: Jerry Lewis says that he realizes he has a big job and he has three priorities, jobs, education and immigration. He's expected, Wolf, to be sworn in on the 21st of this month.

BLITZER: Very few thought this would happen. As you say, the biggest political upset in Arizona history. Thelma, thanks for that report.

Herman Cain's chief of staff makes a false statement about one of the women who's accusing the candidate of harassment. So is it time for Mark Block to go? Roland Martin and Mary Matalin are both getting ready to weigh in our "Strategy Session."

And tough rhetoric from Israel about the likelihood of an attack on Iran. We have new information coming into THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Another Republican presidential debate tonight, Herman Cain will, of course, participate. Let's discuss what's going on with that cloud hanging over his campaign.

Joining us in our "Strategy Session" right now, Mary Matalin, CNN political contributor, a Republican strategist and Roland Martin, our CNN political analyst as well.

Mary, you thought he was pretty good yesterday in his news conference, didn't you?

MARY MATALIN, CNN POLITICAL CONTRIBUTOR: I thought he was unequivocal and it was a solid and was a high stakes gamble. He put everything out there and if he is the -- if the grievance girls cannot come up with anymore, he'll be heroic.

If they come up with something then he's completely finished. You don't see that kind of high stakes gamble, so I had to take it as authentic. I did not think - and he needs to stop doing it.

And he shouldn't do tonight the political operative stuff, blaming other campaigns. Let his campaign do that, but he needs tonight to be as strong, as unequivocal as he was yesterday and he can get over this hump.

BLITZER: What he did say, Roland, was that the, quote, "Democrat machine" in his words, the Democrat machine found this so-called troubled woman to raise these accusations against him.

ROLAND MARTIN, CNN POLITICAL ANALYST: I think it's ridiculous for him to try to assess it or lay it at the theme of the so-called Democrat machine. Also, I don't believe he should be making such comments ridiculing any of the women who have made these kinds of allegations against him.

What he should do is focus on what his message is and be very clear in terms of as he says, nothing happened. Now, one of the issues that he has is, the woman who came up the other day, the woman with Gloria Allred, he says he doesn't recall ever meeting her or seeing her before.

Yet today in the "Chicago Sun Times," when he was at the Tea Party event in Chicago, just a month ago, apparently, she walked up to Cain, they greeted each other and so he has to be clear.

If you are unequivocal, it must be consistent. You can't have any chinks in your statement. If so, that's where his problem will be.

BLITZER: You want to respond to that, Mary?

MATALIN: Well, for all of us could say the same thing. People come up to us all the time. We pretend like we know them. He's seeing thousands of people at thousands of events. He's on a book tour. He's on a campaign.

That doesn't mean anything that they were seen together. I think it's more incriminating to her. She was so appalled by his behavior 14 years ago, why is she running up to him at Tea Party events?

BLITZER: She had said at that news conference in which she initially made the allegations against Herman Cain that she was going to that Tea Party event. She says she's a Republican and she only learned that when she was there.

Herman Cain was there. She then confronted him and she said he seemed squirmy, anxious, and not very receptive. She said he knew who she was. That's what she said, Roland, at the time she made the initial allegations.

MARTIN: Right, also in the "Chicago Sun Times" piece, Annie Jacobson, a former television reporter who now works in a radio station in Chicago. She witnessed this taking place. A lot of people are spreading this e-mail around saying that is the woman in the photo.

No, that was actually Annie Jacobson in the photo sitting next to Herman Cain. But look, at the end of the day, Mary was right what she said earlier and that is, unless more information that can really show something happened comes out and Herman Cain will continue. He is not going to drop out.

He'll be focused on running the race, but what he has to do is tell his campaign, stop running around saying that one of the accusers is the same, is the mother of a political reporter. Look, just shut up and focus on your campaign. Stop trying to blame everybody else.

BLITZER: You know, Mary, Mark Block who's the Herman Cain campaign chief of staff, he initially blamed operatives for Rick Perry's campaign. He backed away from that. Listen to what he said and Roland just brought this up. What he told Hannity last night, Sean Hannity on Fox.

(BEGIN VIDEO CLIP)

MARK BLOCK, CAIN CHIEF OF STAFF: Karen Kraushaar had come up as one of the women and we've come to find out that her son works at "Politico." The organization --

SEAN HANNITY, HOST, FOX'S "HANNITY": Have you confirm that had? I've been hearing that all day, rumors about that. You've confirmed that now, right?

BLOCK: We confirmed it with -- that he does indeed work at "Politico" and that's his mother, yes.

(END VIDEO CLIP)

BLITZER: Well, Mark Block was wrong. Two very different individuals not related at all. They happen to have the same last name and the Herman Cain campaign has now apologized. They've tried to correct it, but why do they shoot from the hip like that without getting their information straight, Mary?

MATALIN: Why indeed. I mean, campaigns are exhausting, but you've been attending crisis management mode, you should at least know you're too exhausted to go on the record. His campaign needs to have circuits that are solid as he was yesterday.

I thought Block spot, we talked about this. I thought it was sophisticated, good spot. He needs to get out there, get his game together, take a deep breath and stop, as Roland just said, quit being operatives, quit blaming everybody. Get back to message, 9-9-9, whatever it is and just stop. Stop, Mark, stop.

MARTIN: First thing, keep your campaign manager off the air. I mean, that's the first thing because this whole deal, blaming Perry and demanding apologies. Look, the allegations are there.

Your candidate gave a news conference and as we know, the last thing you want is the most recent comment to be the one everyone focuses on. Cain gave a news conference. Let that stand as opposed to you adding more fuel to the fire.

BLITZER: All right, guys, we'll leave it on that note. We'll have more on the story later in THE SITUATION ROOM. Roland Martin, Mary Matalin, appreciate it. Why are Republicans more likely than Democrats to go to church? Jack Cafferty's been going through your e-mail. And the fallout from a sex abuse scandal linked to Penn State. It's growing larger and larger. We have details coming up right at the top of the hour.

(COMMERCIAL BREAK)

BLITZER: Jack's joining us again with the "Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Gallup posts an interesting than an interesting poll. Why are Republicans more likely than Democrats to go to church and by a substantial margin by the way?

Jim in Los Angeles, "The answer's obvious. Churches are wealthy, they pay no taxes. They shepherd their flocks to status quo positions. They forgive bad behavior. Take money for a ticket to heaven and pedal superstition in order to raise fears. Now that's a ticket to warm a Republican's heart."

Bea in Virginia writes, "Some people live their faith and what they do and advocate. Others put on a show. For the latter, in God we trust is both a national motto and their political platform."

Tom in Atlanta writes, "Well, Jack, it's pretty simple, us Republicans believe that we're not beyond help and we might be admitted to heaven, while Democrats, they know they're toast."

S in Florida writes, "Religion and Republican politics are both fare based. It makes perfect sense." M on Facebook, "Going to church doesn't make you a Christian any more than standing in a garage makes you a mechanic."

Dave in Orlando writes, "For show, sorry to be so cynical, but Republicans cannot possibly believe in a hereafter or a God and still advocate for it or do the things they do to their fellow citizens.

They're just covering their basis by pretending to pray and believe in God. They think their sins will be forgiven if they make a big enough donation to the church and by wearing religion on their sleeves, they expect to be fast tracked into heaven if there is one."

Tom on Facebook writes, "It's easy, Jack. It's the only way they have a prayer." And another Tom writes, "The big draw would have to be the confessional."

If you want to read more of this, we got some great e-mail on this interesting question. Go to my blog cnn.com/caffertyfile or through our post on THE SITUATION ROOM'S Facebook page -- Wolf.

BLITZER: Jack, thank you.