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The Situation Room
President Obama Statement Expected Soon; Hezbollah Captures U.S. Spies; MF Global Losses Possibly Larger Than First Suspected; President Threatens to Veto Legislation Nullifying Sequester; Grover Norquist Interviewed
Aired November 21, 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: Jack, thank you.
And to our viewers, you're in THE SITUATION ROOM.
Happening now, breaking news. The so-called super committee, son super. It fails to find a way to save a trillion dollars. And the man behind the Republicans' no tax pledge is taking a lot of heat. I'll speak about that this hour.
Grover Norquist of Americans for Tax Reform, he's here in THE SITUATION ROOM.
Plus, without a deficit deal, across the board cuts will kick in. The Pentagon warning that could turn the U.S. military into a so-called paper tiger. We're going to get a reality check.
And on the eve of CNN's GOP National Security Debate, we're learning about a blow to U.S. intelligence in the Middle East -- Hezbollah has uncovered captured CIA spies.
We want to welcome our viewers in the United States and around the world. Breaking news, political headlines and Jeanne Moos all straight ahead.
I'm Wolf Blitzer.
You're in THE SITUATION ROOM.
I'm Wolf Blitzer reporting today from DAR Constitution Hall here in Washington, DC, where we're counting down to tomorrow night's Republican presidential debate. I'll be moderating it here here right at CNN -- on CNN, 8:00 p.m. Eastern. The focus, national security.
While final preparations are being made here for the candidates, our new poll is out showing -- get this -- Newt Gingrich is now the Republican frontrunner. Twenty-four percent of Republicans make Gingrich their first choice, followed by Mitt Romney, with 20 percent. The sampling error makes it a dead heat. Herman Cain is next at 17 percent; Rick Perry at 11 percent. The other candidates all in single digits.
Republicans do not see Gingrich as the most likable, but they do view him as the most qualified. More on these polls coming up.
But let's go right now to that bipartisan super committee that was assigned to help America claw -- claw its way out of debt. But that Congressional all star team has struck out, unable to agree on how to come up with $1.2 trillion in savings over 10 years. They couldn't even do that.
In a statement, the co-chair -- the co-chairs are saying this -- and I'm quoting now -- "After months of hard work and intense deliberations, we have come to the conclusion today that it will not be possible to make any bipartisan agreement available to the public before the committee's deadline."
The deficit deadlock helped send Wall Street into a tailspin today. The Dow fell 248 points. The NASDAQ and the S&P 500 were each down to close to 2 percent.
Taxes may be the sticking point for the super committee, but our new poll shows two-thirds of all Americans favor increased taxes on high income Americans and on big businesses. And while both sides may pay a political price for failure, our poll shows the Republicans getting the worst of it -- at least so far. Seventy-seven percent disapproving of the way Republican leaders and Congress are handling their jobs right now.
So who's to blame for the deficit debacle?
While each side in Congress understandably, obviously, accusing the other of digging in its heels, Republicans are pointing directly at the White House.
Listen to Republican presidential candidate, Mitt Romney.
(BEGIN VIDEO CLIP)
MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: You have a president who didn't get involved in the process, who didn't pick up the phones -- bring in the Republicans, bring under the Democrat, make a proposal of his own.
(END VIDEO CLIP) BLITZER: All right. Should the president be held to account?
Let's go live to our chief White House correspondent, Jessica Yellin.
She's standing by -- Jessica, the president, at least in these last couple of weeks, we didn't see him very involved in the process. He was on a trip overseas to Asia. I don't think he was directly involved in that super committee, at least not visibly, over the past several months.
But what are they saying where you are?
JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: Well, Wolf, aides say that the staff here at the very highest levels was involved daily talking to members of super committee. But they aren't shy about acknowledging that the president himself didn't really get his hands dirty on this one. They don't use that phrase. That's my phrase.
But when I asked whether the White House takes any responsibility for the failure of the super committee to reach a debt deal, here is what White House Press Secretary Jay Carney said.
(BEGIN VIDEO CLIP)
JAY CARNEY, WHITE HOUSE PRESS SECRETARY: Congress assigned itself a task.
It wrote a law, voted for it, the president signed it. They have to hold themselves accountable. They have to -- to do the things that Americans families do every day, which is live within their means and take responsibility for their own actions.
(END VIDEO CLIP)
YELLIN: Now keep in mind, Wolf, the president did present a $3 trillion debt package to the commission, which the White House says was their responsibility and -- and that about ends it, in addition to their conversations.
Now, the politics here are pretty clear, Wolf.
First of all, it was not at all a sure thing. Beyond that, it was -- seemed highly unlikely that this debt commission was going to succeed. So if you're one of the president's aides, do you want him intimately involved in something that's likely to fail, A.
And, B, the president's poll numbers go down when he is locked in negotiations with Congress. The president's poll numbers go up when he is out of the country getting distance from Congress. And you have seen him out in the country not only getting distance, but viability, in his rhetoric, distancing himself from Congress lately. It's exactly what he's been doing. And his numbers have ticked up a bit -- Wolf.
BLITZER: As you know, Jessica, the president certainly had a golden opportunity to push for a debt deal, $4 trillion savings, when the Simpson-Bowles fiscal commission that he created turned in its report nearly a year ago, back in December of last year.
He -- he rejected that proposal at the time.
Does the White House knowledge now, knowing everything with hindsight that has happened over the past year, including a creditworthiness -- a credit rating collapse, or at least a reduction in U.S. creditworthiness over the past year, does the White House acknowledge that was a huge blunder?
YELLIN: No. In a word, no. The -- the Simpson-Bowles Commission report did include both revenue and cuts. So it was that balanced approach that the president has embraced. And the White House position is that the president never, in fact, rejected it, but that he embraced the larger principles of it and the -- and that Republicans never would have accepted that Simpson-Bowles proposal to begin with, because it included too much revenue.
I asked that question at the briefing today.
And here is Jay Carney's response.
(BEGIN VIDEO CLIP)
CARNEY: The approach that Simpson-Bowles took is one that the president adopted. Many provisions of Simpson-Bowles are reflected in the positions he took over the summer and in the plan that he put forward in September.
But the idea that somehow if we just put a different name on it, Republicans in Congress would be willing to...
(CROSSTALK)
CARNEY: -- well, there are some who are saying they should vote on it now.
(END VIDEO CLIP)
YELLIN: So, Wolf, it would -- he didn't overtly reject it, but the president certainly never embraced it at an earlier stage, where, perhaps, he could have had a conversation about debt negotiations prior to that ugly summer of that debt deal gone bad.
And keep in mind, the Simpson-Bowles proposal did include going after Democratic sacred cows -- Social Security.
So it was politically dangerous on both sides -- Wolf.
BLITZER: And we're just getting word, Jessica, that the White House announcing the president will go into the Briefing Room, 5:45 p.m. Eastern, a little bit more than a half an hour or so from now, to make a statement -- I assume make a statement on the collapse of the so- called super committee and tell the American people where the U.S. goes from here.
This is a major setback, obviously.
YELLIN: A setback, but also an opportunity for the president, once again, to press his message, which is the U.S. cannot afford, in the president's message, to wait to act on the jobs bill. So I would expect him to both acknowledge the failure today and then press Congress to act and also say, Wolf, that there is still time for Congress to reach some kind of deal on debt, because the trigger doesn't go into effect for another year.
So their message here is there's still time, despite this into failure today -- Wolf.
BLITZER: We'll have live coverage of the president of the United States in the Briefing Room over at the White House, of course, about a half an hour or so from now, assuming it's on schedule.
Jessica, don't go too far away.
Thank you.
One man is taking a lot of heat for the stalled effort to cut the nation's deficit. He's gotten just about every Republican lawmaker to sign a pledge not to raise taxes.
That -- we're talking about Grover Norquist, the president of Americans for Tax Reform. Grover Norquist will join me here in THE SITUATION ROOM later this hour.
Let's get some Congressional reaction right now on the collapse of the super committee.
Our Congressional correspondent, Kate Bolduan, is up on Capitol Hill.
They're all issuing statements
What was surprising to me, to a certain degree, Kate, is that the super committee, they didn't even have the -- the nerve, if you will, for all 12 members to show up publicly and make a statement before cameras. They just issued a piece of paper, as if they're running away from this as quickly as they possibly can.
It was sort of humiliating, because a lot of us had grand expectations months ago.
KATE BOLDUAN, CNN CORRESPONDENT: I'll tell you, Wolf, the moment it started to be known that this announcement was likely to come out in the form of a paper statement, it automatically started facing criticism that, you know, just a paper statement after all of these three months of these negotiations and all that's at stake seemed, to many, insufficient.
We are getting some reaction to this announcement by the top Republican and top Democrat in this Senate. I want to read to you, in part. Probably no surprise, both sides trading barbs here on crying to place who should be to blame for failure of this committee.
Let me read you first a statement, in part, from Senator Mitch McConnell, the top Republican in the Senate. Senator McConnell says, in part, quote, "For those of us who hoped that this committee would make some of the tough decisions President Obama continues to avoid, the Democrats' rejection of not one, but two good faith Republican proposals is deeply disappointing," he says. "The good news is that even without an agreement, $1.2 trillion will still be cut from the deficit."
He goes on to say: "In the end, an agreement proved impossible, not because Republicans were unwilling to compromise, but because Democrats would not accept any proposal that did not expand the size and scope of government or punish jobs."
But just as quickly, I received a statement from the Senate majority leader, Harry Reid, who, in turn, also criticizing Republicans for being the inflexible parties, being more interested, in his view, of protecting Bush-era tax cuts for the wealthy than in -- than pushing for a bipartisan agreement.
But he also goes on to say -- and this is important -- that he is opposed to any effort to overturn the trigger that we are now turning our focus to, Wolf, these automatic, across the board cuts.
Let me read you what he says in statement, in part. Senator Reid says, and, quote, "Make -- make no mistake," he says, "we will achieve the more than $2 trillion in deficit reduction we agreed to in August. The sequester" -- which is the formal name for the across the board trigger -- "was designed to be painful and it is," he says. "But that is the commitment to fiscal responsibility that both parties made to the American people in the absence of a balanced plan that would reduce the deficit by at least as much. I will oppose any efforts to change or roll back the sequester."
A very strong statement coming from Senator Reid. And that will be, of course, a major focus going forward, of course, after the Thanksgiving holiday -- Wolf.
BLITZER: Kate Bolduan up on the Hill, watching what's unfolding, the reaction only just beginning .
Once again, the collapse of the so-called super committee. They issued a piece of paper saying it's over, they're ready to move on.
Let's go to Jack Cafferty right now.
He's got The Cafferty File -- Jack.
CAFFERTY: Pretty sad stuff, isn't it -- $15 trillion in debt and now the country is probably looking at another credit downgrade and our government hands out a piece of paper and goes home.
Keep your eyes on Ron Paul, because the Texas congressman might have a major effect in the 2012 presidential race, whether or not he's the Republican nominee. Paul, who probably has the most passionate supporters of all the Republican candidates, is not ruling out a third party run. He says he has no intention of mounting a third party bid for the White House.
But -- and it's a big but -- he's not ruling it out.
A recent poll shows Ron Paul getting 18 percent of the vote in a three way contest against President Obama and Mitt Romney.
Most of Ron Paul's support would come at the expense of Mitt Romney. That's why some Republicans call it a nightmare scenario. They worry that a Ron Paul run as a third party candidate would benefit President Obama.
And it probably would, maybe even securing him a second term.
We've seen it before. Ross Perot did this as the third party candidate in 1992. He got 19 percent of the vote and the conventional wisdom was -- well, it's not conventional -- he handed the election to Bill Clinton. Clinton got a plurality, not a majority. Without Perot in the race, President Bush would have won reelection.
Ralph Senator Reid has also made several third party runs, but they're not really worth talking about, because they never go anywhere. plus, it's worth pointing out that our electoral system is stacked against the third party ever winning the White House. That's not an accident.
Meanwhile, don't count Ron Paul out of race for the Republican nomination. Some say he could be a real threat in the early voting states of Iowa and New Hampshire. One poll shows Paul in a virtual four way tie for first place in Iowa and he's polling in the top three in New Hampshire. If he could come out of those two states with something substantial and get some momentum, hey, who knows?
Some experts say they wouldn't be surprised if Ron Paul won in Iowa and then shook up the race even further in New Hampshire.
Ron Paul has been talking sense for a long time -- years. And the country keeps getting worse and worse. Now we're circling the drain big time. Maybe more and more people are ready to listen to what Mr. Paul has to say.
Here's the question -- should Ron Paul launch a third party run if he doesn't win the Republican nomination?
Go to CNN.com/caffertyfile and post a comment on my blog or go to our post on THE SITUATION ROOM'S Facebook page -- Wolf.
BLITZER: He's a factor, there's no doubt about that.
All right, thanks very much, Jack.
We'll get back to you. Remember, we're standing by this hour. We'll speak with Grover Norquist, one of the most influential men in Washington on the breaking news, the collapse of th e so-called super committee.
Also, the CIA agents captured in Lebanon: we'll expalin what happened, how it happened and what comes next.
(COMMERCIAL BREAK)
BLITZER: White House says the president of the United States will go into the briefing room shortly. We're expecting him in the next 20 minutes or so. The president will make a statement, we believe, on the collapse of the so-called Super Committee. You can see officials there, people getting ready in the White House briefing room where the president is going to make statements.
A major disappointment today. They were supposed to come up with $1.2 trillion in cuts. They couldn't do it, this 12 members of House and the Senate. Six Democrats, six Republicans, they fail, come up empty- handed. Now, automatic cuts are supposed to go into effect. We'll see if they actually will or if they'll change that as well.
We'll have live coverage of the president. That's coming up this hour. Stand by.
But there's other important news we're following. Just a day before the big Republican presidential debate here at constitutional hall over national security, we're getting disturbing new details about the loss of U.S. spies in Lebanon where Hezbollah has apparently rolled up part of the CIA's local network. Our Brian Todd has been digging into the story for us. Brian, what are you learning?
BRIAN TODD, CNN CORRESPONDENT: Wolf, we're getting information that some CIA agents in Lebanon, informants, have been identified by Hezbollah and captured. It's a significant setback for U.S. intelligence in the Middle East and could not have come at a worst time giving the boiling tensions with Iran.
(BEGIN VIDEOTAPE)
TODD (voice-over): It's one of America's toughest, most sophisticated enemies in the Middle East, responsible for killing more Americans than any other terrorist group before September 11th. Now, CNN is told the group, Hezbollah, was able to identify some CIA agents in Lebanon leading to their capture.
These were not Americans, we're told, but so-called foreign assets, informants. A U.S. official would not discuss the details, would not say how many agents were affected. In a speech in June, Hezbollah leader, Hassan Nasrallah, said his group uncovered three spies, including two recruited by the CIA.
HASSAN NASRALLAH, HEZBOLLAH LEADER (through translator): Our brothers in the Hezbollah anti-spying unit discovered two separate cases of individuals and contact with two American intelligence officers working as diplomats at the American embassy.
TODD: At the time, the U.S. embassy dismissed that as empty accusations. The U.S. official we spoke to would not say what impact the capture of the informants had on CIA operations in Beirut. Bob Baer is a former CIA officer who served in Beirut was involved in operations targeting Hezbollah.
The George Clooney character in the film, "Syriana," is based on Baer. We asked him about a comment from U.S. officials who called reports that the Beirut CIA station was shut down as a result of this capture nonsense.
ROBERT BAER, FORMER CIA OFFICER: Look, if there's any truth to losing all of these assets, it's standard operating procedure for an intelligence station that close down until it can figure out what went wrong.
TODD: We're told the one way Hezbollah tracked the informants was through their wireless communicationsties, various media, including the "Los Angeles Times," offered details. (on-camera) According to those reports, Hezbollah's intelligence (ph) operatives used computer software and other means to track these alleged spies through their cell phones. Identifying those who only use certain cell phones very rarely from specific locations, just to call specific people.
(voice-over) Matthew Levitt is an expert on counterterrorism who wrote a book on Hezbollah.
What do you think Hezbollah did or will do to these people?
MATTHEW LEVITT, WASHINGTON INST. FOR NEAR EAST POLICY: Some people might be in prison. At some point later, they might be rehabilitated. Nasrallah has reportedly said that he knows the families of some of these people personally. In other cases, Hezbollah has been known to disappear people.
(END VIDEOTAPE)
TODD (on-camera): Various media reports say U.S. intelligence officials have been warned that their assets in Lebanon could be compromised through the tracing of cell phone calls and that those officials ignored the warnings. A official told us it would be wrong to say that problems with the CIA's operational trade craft led to the agents' capture. The CIA is not officially commenting on any of this -- Wolf.
BLITZER: Brian, Hezbollah has, apparently, eyes and ears all over Lebanon. They're a dominant political force in that country right now. So, I guess, that's a fact of life.
TODD: It is. Bob Baer says the CIA used to call Lebanon, quote, "a denied area." He says that means the police, intelligence services, people at the airport, many of them report one way or another report to Hezbollah. He says the group has infiltrated the security services in Lebanon to a great degree.
So, if there's any mistake in spy craft, they would be all over it. They were trained, remember, in how to do this, by the Iranians so they know what they're doing.
BLITZER: Yes. Hezbollah and Iran as well as the Syrian regime, Bashar al-Assad, all very, very closely aligned.
TODD: Right.
BLITZER: Thanks very much for that report, Brian Todd.
A 40,000 people invested their money in former New Jersey governor, Jon Corzine's MF Global. Now, we're learning that there's even more money missing than anyone thought. More than a billion, yes a billion dollars missing. Will investors lose their life savings? We're all over this story.
(COMMERCIAL BREAK) BLITZER: The collapse of the so-called Super Committee, no deal. Complete failure. You're looking at live pictures over at the White House. The president of United States will be going into the briefing room within the next 15 minutes or so to make an announcement, to make a statement, presumably, express his deep disappointment that 12 members of the House and Senate, six Democrats, six Republicans come up with nothing.
You're looking live pictures at the briefing room. They're getting ready for the president of the United States. We'll, of course, have live coverage here in the SITUATION ROOM.
Without a deal from the so-called Super Committee to trim $1.2 trillion over the next ten years, sweeping budget cuts are supposed to go into effect starting in 2013. The Pentagon already warning that that could seriously harm America's defense. Let's get a reality check right now. Our pentagon correspondent, Chris Lawrence, is digging into this part of the story. What are you finding out, Chris?
CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Wolf, look, these cuts would hurt. They would sting, no doubt about it. But the Pentagon officials have been saying it would completely hollow out the military. Not everybody is buying it, and the threat may have done more harm than good.
(BEGIN VIDEOTAPE)
LAWRENCE (voice-over): If Pentagon officials are right, cutting $600 billion over the next ten years will cripple the military.
LEON PANETTA, DEFENSE SECRETARY: It's a paper tiger. An army of barracks, buildings, and bombs without an up training soldiers able to accomplish the mission.
LAWRENCE: Defense secretary, Leon Panetta, says the cuts would terminate the military's next generation fighter jets, cut the submarine fleet, and leave America with its smallest ground force since World War II.
TODD HARRISON, CTR. FOR STRATEGIC AND BUDGETARY ASSESSMENT: I don't think it's dooms day.
LAWRENCE: Todd Harrison of the Center for Strategic and Budgetary Assessment says political posturing makes it seem every military program will be slashed equally.
HARRISON: That isn't the way it has to be implemented, though. Under the rules of sequestration, DOD could instead propose a budget that fits within the budget caps, and then, they get to choose how cuts are allocated.
LAWRENCE: Which still means tough choices, but canceling some weapons programs, and reducing peace time training missions. Cutting 10 percent of the civilian work force could save up to $7 billion a year. But last year, the U.S. spent about 700 billion on defense. That's more than the next 17 nations combined. Defense secretary, Leon Panetta, has been delivering dire warnings about what will happen to the military if the mandatory cuts kick in.
PANETTA: It's a ship without sailors. It's a brigade without bullets.
LAWRENCE: But Harrison says the Pentagon's rhetoric got so heated it may have backfired by making the threat less credible.
HARRISON: If the consequences for defense are going to be as severe as he seemed to indicate, no one would ever let them actually go into effect. So, the Super Committee knowing that sequestration was not actually going to be allowed to go into effect. It removed some of the pressure from them to actually find a compromise solution here.
(END VIDEOTAPE)
LAWRENCE (on-camera): Yes. Already, the chairman of the House Arms Services Committee said about an hour ago that he will introduce legislation to prevent the so-called catastrophic cuts from the military. And look, the Pentagon will have some wiggle room because war-funding is not part of the money that can be cut.
So the Pentagon may be able to funnel some of the money from the base budget into the war funding and sort of protect it. Congress let them do that with without $10 billion in the current fiscal year budget. So there are ways around this, Wolf, other than the total cuts that everyone was so concerned about.
BLITZER: Yes, I'm sure there are plenty of ways around it. There always are in Washington, D.C. Chris Lawrence, thank you.
At first government regulators were stunned to learn what that MF Global of the company was called was missing more than $600 million in customer funds. It turns out that was just the tip of the iceberg for the bankrupt brokerage firm. CNN's Lisa Sylvester has been looking into this for us. What's the latest, because it is pretty shocking?
LISA SYLVESTER, CNN CORRESPONDENT: It is, Wolf. MF Global had about 40,000 customers at the time it went bankrupt. Well, now the trustee overseeing the MF Global case says it appears $1.2 billion of their money is missing and that is double the initial estimates.
(BEGIN VIDEO CLIP)
JIM MAYER, FORMER MF GLOBAL CUSTOMER: It is scary and that's all I can say about it. It is just scary.
SYLVESTER: And 63-year-old Jim Mayor slept at 2:00 in the morning and can't go back to sleep. About half of his life savings, about $200,000, was invested at MF Global, the brokerage firm that was headed by former New Jersey Senator and Governor Jon Corzine.
MAYER: A bunch of people's money was stolen. What is left is frozen. Jon Corzine hasn't answered one question. We can't hardly get any information out of the trustees. We just found out at this late date that it could be a much bigger loss.
SYLVESTER: MF Global originally said about $600 million in customer funds was missing. But the trustee overseeing the MF Global liquidations now says that number is closer to $1.2 billion, money that was supposed to be in customer accounts. MF Global invested heavily in European debt market until its collapse ended in bankruptcy. Now federal regulators are investigating if the company used customer money to cover its risky bet. And 7,000 of MF Global's customers formed a new group called the Commodity Customer Coalition. James Koutoulas of Typhon Capital Management and attorney Trace Schmeltz are helping recover as many as possible.
TRACE SCHMELTZ, ATTORNEY, BARNES AND THORNBURG: We've heard from people who have their retirement funds completely frozen, people who depend on the revenue from their commodity trading to fund their daily lives, so shop for groceries, et cetera, and this is really having a severe impact on all of those people.
SYLVESTER: The trustee office plans to distribute to customers 60 percent of what they had in their accounts. But the balance of the money, will it be returned? That's uncertain at this point. The FBI launched an inquiry. Koutoulas says somebody needs to be held responsible.
JAMES KOUTOULAS, TYPHON CAPITAL MANAGEMENT: If it's proven that illegal activity was done here, damn right somebody should go to jail. If Corzine had knowledge and he intentionally and willfully hurt his customers in an illegal fashion, he needs to go to jail.
SYLVESTER: We contacted Corzine's attorney to get a response, but we were told no comment. Neither MF Global nor its lawyer returned our calls.
(END VIDEOTAPE)
SYLVESTER: Jim Mayer has about $200,000 with MF Global and so far he has gotten back only $11,000. And to make matters worse, he was a private trader. That isn't just his savings, it was also his job. It is what he used to earn income, trading on the commodities market, Wolf.
BLITZER: Pretty shocking stuff all around. I know you are all over the story. Lisa, thank you.
Some Democrats blame Grover Norquist for the super committee's failure. Is he really to blame? He is here. We will speak with him up next. He is here live. I will ask him what is going on.
And this is California's real road to nowhere. Rains help along south a slow motion disaster south of Los Angeles.
Remember, the president of the United States is getting toward go into the White House briefing room within the next 10 minutes or so to make a statement on the collapse of the super committee. We will go to the White House for live coverage of president Obama. That and a lot more news coming up here THE SITUATION ROOM. (COMMERCIAL BREAK)
BLITZER: We will hear from the president momentarily. He is getting ready to go into the briefing room. But Lisa Sylvester is monitoring other stories right now, including a high profile pick to lead the investigation into the Penn State University child abuse scandal. Lisa, what's the latest?
SYLVESTER: That's right, Wolf. The man leading the inquiry has impeccable credentials. Former FBI Director Louis Freed will investigate allegations that former football coach Jerry Sandusky sexually abused children and school officials covered up his crime. Penn State says no one will be above scrutiny and no one will interfere. Police, the department of education, and Sandusky's former charity are all investigating the scandal.
An inquiry into media ethics brought sobering testimony today. The mother of a murdered school girl Millie Dowler recalled finding someone had deleted voicemail messages from her daughter's phone, leading her to tell her husband Millie was alive. In reality Dowler's phone was hacked by an investigator working for the tabloid "News of the World." Celebrities were also allegedly victims. Hugh Grant didn't try to hide his disgusts and he discussed the tabloid.
(BEGIN VIDEO CLIP)
HUGH GRANT, ACTOR: You see them glamorizing themselves as we might be a bit naughty, but we get the story. But when the story has been a obtaineded by hacking the phone after murdered school girl or a soldier killed in Afghanistan, I don't find that lovable and naughty. I find it cowardly and bullying and shocking.
(END VIDEO CLIP)
SYLVESTER: And General Motors says it will restart reproduction of the Chevy Equinox at a plant in Springhill, Tennessee. The company is investing $61 million to upgrade the facility and will hire an additional 685 employees. GM reports sales of the Equinox were up 18 percent last month.
Drivers south of Los Angeles are facing something worse than smog or traffic. Take a look at this, a massive chunk of road crumbled into the Pacific Ocean over the weekend. The slow motion landslide was accelerated by a weekend of heavy rain section of the road has been closed for months. The land is moving about four inches a day. Look at those pictures. There it is, the road gone. Wolf?
BLITZER: Dramatic picture indeed. Lisa, thanks very much.
Let's get right back to Jack with the "Cafferty File." Jack?
JACK CAFFERTY, CNN CONTRIBUTOR: The question this hour, should Ron Paul launch a third party run for the White House if he doesn't win the Republican nomination? Dave in Ohio writes "Absolutely. The man who predicted the economic collapse and war's big problems in Iraq before they existed ought to be able to challenge President Obama and Governor Romney on these critical issues. Let's be honest, the 2012 election will likely shift the White House a little bit right or left. But Ron Paul is shaping the political center of this country whether he wins or not."
Phil writes "As a supporter for Ron Paul for the nomination, I take offense at the very question you're asking. It's another attempt by the media to make Ron Paul appear to be a candidate on the margins. He is making a real move in polling in Iowa and New Hampshire, and with solid finishes there he is a real contender for the nomination. With any other candidate you would be talking about a surge in polls and potential nor nomination. I, for one, am telling the media who to vote for based on your assumptions of who is electable."
Richard writes, "He definitely should. If you don't agree with him on specific issues, you cannot argue with the fact he respects the constitution and will bring that founding document back to the forefront of American politics the way it is supposed to be."
Charles from Tennessee says, "Of course he should. The country will have to take its bitter medicine sooner or later. The GOP will either wake up and get behind Dr. Paul or we will all suffer another four years of President Obama. Everyone but the establishment GOP is waking up now, and from now on there will be a Ron Paul in every election."
Mary Ann in New Jersey says, "Ron Paul is not given a fair shake in the primaries. I will not hold my nose and vote for the neo-con the mainstream media presents to me. I pray that he runs."
And Tony writes "Only if Ron Paul wants Obama to get four more years."
If you want to read more on this, go to my blog, CNN.com/Cafferty File or through our post on THE SITUATION ROOM Facebook page. Wolf?
BLITZER: Jack, thank you.
I want to go to Jessica Yellin right now. She's over in the White House briefing room getting reading to hear from the president of the United States on the collapse of the super committee. Jessica, set the scene.
JESSICA YELLIN, CNN WHITE HOUSE CORRESPONDENT: You can hear they're announcing that the president will be here in just two minutes. When he comes out we expect he will talk about the importance of doing something serious about our debt and deficit, something along the lines of the plan he presented to the super committee which was roughly a $3 trillion deficit cutting plan, that he is going to reiterate his view that Congress should not undo the so-called trigger, the plan to cut the budget, to cut future budgets based on the plan that they had already drawn up that causes pain on both sides, because the president in the White House's view is that there is still time to find cuts in the next year, because that trigger doesn't kick in for another year.
So if you leave that sequester in place, that remains a threat that could motivate Congress to act in the next year. In other words, the super committee wasn't the only option for cutting debt and deficit.
And then finally we know the president is traveling to New Hampshire tomorrow to push his American jobs act, but in particular to emphasize, the need on their view to pass -- extend the payroll tax cut -- expand the payroll tax cut, and I wouldn't be surprised if he addresses that as well in his remarks here shortly, Wolf.
So some major topics, three major topic there, but headlining with the debt and deficit doesn't have to end with the failure of the super committee today, Wolf.
BLITZER: All right, Jessica. The president is about to walk into the White House briefing room. We are getting ready to hear the president of United States. He will walk in in the next few seconds. It'll be interesting to see if he sticks around and answers reporter's questions or if he leaves immediately after his speech. The president of the United States walking in now.
BARACK OBAMA, (D) PRESIDENT OF THE UNITED STATES: Good afternoon. As you all know, last summer I signed a law that will cut nearly $1 trillion of spending over the next ten years. Part of that law also required Congress to reduce the deficit by an additional $1.2 trillion by the end of this year. In September I sent them a detailed plan that would have gone above and beyond that goal. It's a plan that would have reduced the deficit by an additional $3 trillion by cutting spending, slowing growth in Medicare and Medicaid, and asking the wealthiest Americans it pay their fair share.
In addition to my plan there were a number of other bipartisan plans for them to consider from both Democrats and Republicans all of which, promoted a balanced. This kind of balanced approach to reducing our deficit, an approach where everybody gives a little bit and everyone does their fair share, is supported by an overwhelming amount of Americans, Democrats, independents and Republicans. It's supported by experts and economists from all across the political spectrum.
And to their credit, many Democrats in Congress were willing to put politics aside and commit to reasonable adjustments that would have reduced the cost of Medicare as long as they were part of a balanced approach.
But despite the broad agreement that exists for such an approach, there is still too many Republicans in Congress who refused to listen to voices of reason and compromise coming from outside of Washington. They continue to insist on protecting $100 billion worth of tax cuts for the wealthiest two percent of Americans at any cost, even if it means reducing deep cuts with things liked education and medical research, even if it means deep cuts in Medicare.
So at this point at least, they simply will not budge from that negotiating position. And so far that refusal continues to be the main stumbling block that prevented Congress from reaching an agreement to further reduce our deficit.
Now, we are not in the same situation that we were in August. There is no imminent threat us to defaulting on the debt that we owe. And there are already $1 trillion of spending cuts locked in. And as I stated in summer that if Congress could not reach an agreement, there would another $1.2 trillion in cuts divided equally between domestic spending and defense spending.
One way or another we will be trimming the deficit by a total of at least $2.2 trillion over the next 10 years. That's going to happen one way or another. We've got $1 trillion locked in, and either Congress comes up with $1.2 trillion, which so far they have failed to do, or the sequester kicks in and these automatic spending cuts will occur that bring in an additional $1.2 trillion in deficit reduction.
Now, the question right now is whether or not we can reduce the deficit in a way that helps the economy grow, that operates with a scalpel, not with a hatchet, and if not, whether Congress is willing to stick to the painful deal we made in August to automatic cuts.
Already some in Congress are trying to unthe automatic spending cuts. My message to them is simple -- no. I will veto any effort to get rid of those automatic spending cuts to domestic and defense spending. There will be no easy off-ramps on this one. We need to keep the pressure up to compromise, not turn off the pressure. The only way the spending cuts will not take place is if Congress gets back to work and agrees on a balanced plan to reduce the deficit by at least $1.2 trillion. That's exactly what they need to do. That's the job they promised to do. And they still got a year it figure it out.
Although Congress has not come to an agreement yet, nothing prevents them from coming up with the agreement in days ahead. They can still come together around a balanced plan. I believe Democrats are prepared to do so. My expectation is that there will be some Republicans who are still interested in preventing the automatic cuts from taking place. And as I have from the beginning, I stand ready willing to work with anybody that's ready to engage in that effort to create a balanced plan or deficit reduction.
Now, in the meantime we have a lot of work to do left to do this year. Before Congress leaves next month we have to work together to cut taxes for workers in small business owners all across America. If we don't act, taxes will go up for every single American, starting next year, and I'm not about to let that happen. Middle class Americans can't afford to lose $1,000 next year because Congress wouldn't act. And can I only hope that they have been fighting so hard to protect tax breaks for wealthy that they will fight just as hard to protect tax breaks for small business owners and middle class families.
We still need to put construction workers back on the job rebuilding our roads and bridges. We still need to put our teachers back in the classroom educating our kids. So when everybody gets back from Thanksgiving, it is time to get some work done for the American people. All around the country, Americans are working hard to live within their means and meet their responsibilities, and I know they expect Washington to do the same. Thanks.
BLITZER: So there you have the president of the United States saying he will veto any effort to do away with these automatic cuts that are supposed to go into effect in 2013, $1.2 trillion. He says they will go into effect. He will veto any effort to undermine that even though there are many members of the Republicans and some Democrats who say that $600 billion in cuts in defense spending would undermine, would undermine U.S. national security. His own defense secretary Leon Panetta making a strong case in recent days that $600 billion automatic cut and defense spending would create a so-called hollow U.S. military or lead to something like that.
Let's get full analysis. First, Gloria Borger, who is watching all this unfold. Gloria, strong words from the president, disappointment the super committee couldn't do its job but promising that $1.2 trillion in defense and nondefense spending will be implemented.
GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Right. This is the first time we've heard him use the word veto. We know that he doesn't want these cuts to be undone but he never threatened to veto before.
Also, he made the point very clearly that Congress has a year to work until these automatic cuts are due to take effect. And he said, so at any time, if you guys want to get together and do your jobs, you can do it because it doesn't take effect for another year.
Another thing, Wolf, he also made it very clear that he still wants to extend the pay roll tax cut, and that is something that he is clearly going to raise with Congress again, because he said middle income Americans cannot afford a tax increase. So he is going back to Congress for that.
BLITZER: All right, hold on a minute, Gloria, because Grover Norquist is here, the president of Americans for Tax Reform, arguably one of the most powerful men in Washington. Do you that when I say that, you don't like that when I say that? Because all the Democrats blame you and that so-called pledge that you've gotten from most of the Republicans including, I think, all six of those Republicans on the super committee, no new taxes under any circumstances. And so they blame you for this. Give me your reaction to what we just heard from the president.
GROVER NORQUIST, PRESIDENT, AMERICAN'S FOR TAX REFORM: Harry Reid and President Obama are in a difficult position. They cannot say to the American people we've spent the country into bankruptcy over the last three years. Bush spent too much, but we took it into hyper speed. And we want you to -- we want to raise your tax to pay for our more spending and the Republicans won't let us raise your taxes to pay for our more spending. Instead Obama and Reid and some of the other Democrats want to blame me, which is sort of funny.
BLITZER: It's your organization that got that pledge for them.
NORQUIST: The pledge, of course, is to the American people. It is not as Patty Murray --
BLITZER: But it is your organization that got them to make that pledge.
NORQUIST: We share it with people. BLITZER: What would have happened if one of those six that you wills, if there wouldn't have been a seven to five vote, if one of those Republicans would have gone along with Democrats and voted to increase taxes?
NORQUIST: Then it would have gone to the House and the Senate.
BLITZER: What would your organization have done to that one Republican? Because a lot of them were saying privately, we can't raise taxes. We're nervous that Grover Norquist and American for Tax Reform will come after us.
NORQUIST: They don't have to worry about me coming after them. They would have to answer to their constituents. They didn't promise me anything. They themselves promised the people of their states and congressional districts.
BLITZER: Would you target them for defeat if they had done that?
NORQUIST: I would not have to because the entire establishment press would announce which Republicans were for tax increases. They would have a problem there. It is their jurisdiction they have to worry about.
BLITZER: You saw our new poll. Most Americans would favor tax increase on the wealthiest Americans, on big corporations to try to do something with this budget.
NORQUIST: And what Obama did when he ran for president, he promised he would never raise taxes on anyone who earn less than $250,000 a year. And 16 days into his presidency, his first tax increase was on billionaires, oil companies? No. Cigarette smokers. The only person in this country who makes more than $250,000 a year and smokes cigarettes is named Barack Obama. That was a tax on lower income Americans 16 days into the presidency. Politicians who promise they'll only tax the rich, it's called trickle down taxation. They tell you they'll tax rich people, and before you know it, they're taxing you. The alternative minimum tax, the tax to pay for the Spanish American War on rich people who owned phones. And 100 years later everybody is paying that tax.
BLITZER: John Kerry, the senior senator from Massachusetts who was a member of that so-called super committee didn't turn out to be all that super for that committee. He specifically cited you and your organization for intimidating these Republicans.
NORQUIST: That's what Democrats say because they can't deal with the fact that the American people and voters and the Republicans who are elected do not want to raise taxes and won't raise taxes. The problem we have is Obama, Reid, and Pelosi have spent too much money in the last several years. They've added trillions of dollars to the debt. The only way to solve overspending is to spend less. Raising taxes does not reduce spending.
BLITZER: You've got some rich people like Warren Buffett saying, you know what, tax us a little bit more. it will help poorer people, help the middle class. You don't have to go after Social Security recipients or Medicare recipients. Tax billionaires and millionaires, as the president likes to say.
NORQUIST: I was very concerned about Warren Buffett's problem, so I sent him a letter. The letter I serve showed where he can go on the IRS website and pay additional money if you would like. And Steve Scalise, the Republican Congressman from Louisiana, has new legislation to have a Buffett line on the 1040. So it says here's how much you owe. The next line it says if like Warren Buffett you want to spend more money because you think the government is smarter and better than you, add it here. So Warren Buffet's problem is solved any moment he wants to write the check.
BLITZER: We have to leave it there. Grover Norquist, you're happy the super committee failed?
NORQUIST: They did not fail. We'll cut $1.2 trillion through the sequester.
BLITZER: If that happens. Thank you very much for coming in. That's it for me. Thanks very much for watching. I'm Wolf Blitzer in THE SITUATION ROOM. The news continues next on CNN.
