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Jobless Rate Drops, But So Does Hiring; Stunning New Revelations about Secret Service Sex Scandal; American Living A Nightmare in Cuba; ; Breakthrough for Blind Chinese Activist; Heritage Claim Worries Dems; Tough Warning for U.S. Troops; Guide Dogs

Aired May 04, 2012 - 17:00   ET

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

WOLF BLITZER, CNN ANCHOR: And you're in THE SITUATION ROOM.

Happening now, she met some men in a bar. She says she didn't know at the time they were members of the United States Secret Service. The scandal that followed has shaken the agency that protects the president of the United States. And now, that Colombian prostitute tells all.

And an American who's been wasting away in a Cuban prison now for more than two years calls me directly from behind bars. My exclusive conversation with Alan Gross. That's coming up.

And the unemployment rate dips a bit here in the United States. But the latest jobs numbers remain weak. We're going to show you why every job added or lost could be crucial in the November election.

We want to welcome our viewers in the United States and around the world.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

But first, stunning revelations about the U.S. Secret Service sex scandal. The Colombian prostitute at the center of it all is now speaking out. She says it all started with Secret Service agents, quote, "buying alcohol like it was water and dancing on the bar."

Here's Drew Griffin of CNN's special investigations unit.

DREW GRIFFIN, CNN SPECIAL INVESTIGATIONS UNIT CORRESPONDENT: Wolf, Dania Suarez recalled that now infamous night in Cartagena bar and then hotel very casually to an audience in Bogota and talked about how she and her girl friends were basically out on the town that night and met these Secret Service agents very casually in a bar. In fact, she says one of her friends was attracted to one of these agents. And Dania Suarez insists she had no idea these men that night were, quote/unquote "Obama's agents."

(BEGIN VIDEO CLIP, COURTESY CARACOL TV)

DANIA SUAREZ (through translator): And, you know, neither my friends nor I, you know, we didn't know they were agents you know, Obama's agents for -- for, you know. And then we left and we went to this place to buy condoms and then we went to the hotel.

UNIDENTIFIED FEMALE: Who went?

SUAREZ: Well, my friend, well, wait, she's not really a friend. She's just an acquaintance, and the agent who was with me and the other one, the four of us.

And then my friend went with him because she liked him.

No, I don't understand. Because she liked him. It -- it wasn't the same thing I was doing.

(END VIDEO CLIP)

GRIFFIN: What Suarez now admits she was doing was making money. She says she and the agent was paired up with had a deal. She would get an $800 gift from him if she went to that hotel room. She won't say what happened in that hotel, other than she spent five hours in the hotel room of the Hotel Caribe, until the next morning, when this took place.

(BEGIN VIDEO CLIP, COURTESY CARACOL TV)

SUAREZ: I told him to wake up and to give me my gift that I asked him for. And he says, no, that -- just go -- just go (EXPLETIVE LANGUAGE). I'm not going to pay you. And then he -- he just -- he put out 50,000 pesos for the taxi. And I was like -- I was in shock in that moment when he just said that.

(END VIDEO CLIP)

GRIFFIN: Fifty thousand dollars is about 30 bucks. So she says she was angry and spent the next three hours trying to get payment for her services. That's when she recruited Colombian police to come and help her. Those Colombian police, she says, were able to get together $250 from other Secret Service agents on that floor. And then she went home.

She had no idea until the next day that these were Secret Service agents.

And, Wolf, she says if she had known they were U.S. Secret Service agents at the time, she would have never told the Colombian police -- Wolf.

BLITZER: Drew Griffin, thank you.

Wow, what a story.

The House Homeland Security chairman, Peter King, by the way, has mostly praised the Secret Service's handling of this scandal. But he's asked them why they have been unable to find the woman we just heard from when the news media apparently didn't have much trouble finding her.

Now to the case of an American who's literally been wasting away in a Cuban prison since 2009. Cuba has tied his future to the fate of five of its agents imprisoned here in the United States.

I got a rare opportunity to speak exclusive with Alan Gross just a little while ago.

You're going to hear the conversation in a minute. He phoned me from Cuba.

But first, let's show you how he ended up behind Cuban bars.

(BEGIN VIDEOTAPE)

BLITZER (voice-over): Alan Gross is living a nightmare that's lasted more than two years. The Maryland subcontractor went to Cuba in 2009, working for a U.S. government funded international development group. Gross' family says his mission was to link Cuba's small Jewish community to the Internet.

The Cuban government thought otherwise, charging Gross with smuggling in illegal equipment and with being a threat to the security and independence of the state.

Last year, after he spent months and months behind bars, a Cuban court finally convicted Gross, sentencing him to 15 years.

JUDY GROSS, ALAN GROSS' WIFE: I respect the sovereignty of Cuba. I have learned from my parents and through experience that respect is something that one must have in order to receive.

BLITZER: That's Gross' wife, Judy, reading a statement her husband wrote by hand and delivered to a Havana court after his trial.

She spoke to CNN's Jill Dougherty last fall, shortly after a Cuban court turned down Gross' last appeal.

J. GROSS: One of my biggest fears is I'm going to get a call from my attorney one day saying Alan had a heart attack or something happened to him. I don't know if I'll ever see him again. I don't know if he'll set foot on U.S. soil.

BLITZER: Several world leaders have tried to make that happen. Former President Jimmy Carter, former U.S. ambassador and New Mexico Governor Bill Richardson, even Pope Benedict, have all visited Cuba in the last year, calling on the government to release Gross.

But he remains in custody and his family says the 63-year-old's health is getting worse.

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: How concerned are you about his health?

J. GROSS: Very, very concerned. He's so frail. And now he's lost over 100 pounds. And when I saw him, you know, I could see his bones sticking out.

(END VIDEO TAPE)

BLITZER: Alan Gross is calling us in now from Cuba.

And tell us how you're feeling.

ALAN GROSS, IMPRISONED IN CUBA: Basically, I feel a lot lighter than I did a couple of years ago. I've lost about 100 pounds. And I -- I exercise as much as I can. My hip is starting to give me a little bit of a problem. But otherwise, I'm not -- I'm not really in -- in bad shape.

BLITZER: You've lost 100 pounds.

What did you weigh when you were taken prisoner in Cuba and how much do you weigh now?

GROSS: I weighed in at 254 and -- and this morning, I weighed in at 158.

BLITZER: Wow!

GROSS: I gained a few pounds because I received a package from home.

Now, walk us through a typical day in a Cuban jail.

GROSS: I'm in a secured hospital building that usually holds three people to a room. We're not allowed to see any other people, except the -- the cell mates. There are, you know, are bars, of course, on the -- on the doors and the windows.

At this juncture, I get to go outside every day while there's sunlight. And that -- that's been a recent development, because I didn't really see any sunlight for the first year-and-a-half or so.

Our food is brought to the cell. We're allowed to use a spoon with which to eat our food. The food initially wasn't very good, which is probably why I started losing weight rapidly at first. The food was infested with insects.

There really wasn't much variety or -- or quantity, mostly carbohydrates.

And eventually, after the conviction and after the supreme court upheld the conviction, things improved, as far as my physical comforts were concerned.

BLITZER: It's encouraging to me, Alan, but I'm wondering what you think, that they are even allowing you to make these phone calls outside to -- to the United States, not only to me, but you speak, I assume, to your family, to your lawyers in the United States, from time to time. That sounds pretty encouraging and is certainly a step in the right direction.

GROSS: There have been some positive developments. But it has required a lot of requests. I was told just a few months ago that I can call anybody I want once a week. That's a -- a more of a recent development. And they -- the fact that they allow this call to continue, you know, I think is a very positive sign. You're in the -- in a Cuban hospital, a military or a police hospital now.

Is that because you're ill or just for security considerations?

GROSS: I think mainly for a security situation. And I'm not sure whose security that they have more concern about. I know when they transfer me to the -- to the large jail facility for a meeting with the consulate, the U.S. Consulate, we go in about a caravan of four vehicles with about 15 guys. They make a big show out of the transfer. And they -- they have these guys with flak vests and helmets and -- and automatic weapons.

But a lot of it is a show. And I'm not sure who they're putting the show on for, whether it's for their own people or -- it's certainly not for me.

BLITZER: If you could speak directly to the top leaders in Cuba, what would you say?

GROSS: I would say to Raul Castro that I think he's trying to do some very courageous things. He himself has been on national television before the national assembly. And he said that a major problem with the economy here is the low productivity. And that can't be blamed on the United States. It cannot be blamed on the United States.

And I think it took a lot of courage to say that.

BLITZER: Any prospects, any headway that you can see at all, about getting your release?

GROSS: None. I have a 90-year-old mother who has inoperable lung cancer. And she's not getting any younger. And she's not getting any healthier. And my lawyer and I have written on more than one occasion to the government of Cuba, requesting permission for me to visit her.

I would return to Cuba. You know, you -- you can quote me on that. I'm saying it live. I would return to Cuba if they let me visit my mother before she dies. And we've gotten no response, no response whatsoever. She -- my mother is not allowed to travel. She is medically ordered not to travel. And the government of Cuba knows this.

BLITZER: Anything you want to say to your mom, your wife, your family, right now?

GROSS: Well, I speak to my family every week. You know, I -- I try to give them encouragement. They try to give me encouragement.

But what -- what I want to say to you is that I have absolutely nothing against the people of Cuba. The people of Cuba have been wonderful. I would do anything in my power to help the people of Cuba.

But I don't have any power right now. Perhaps if I was miraculously released, I could work in the United States on -- on trying to improve the -- the business scenario here.

But I -- I have nothing against the people of Cuba. They're -- they're wonderful.

I'm not a big fan of the government right now.

BLITZER: I can tell.

GROSS: I -- I -- I feel like I'm a hostage. And they, you know -- just one quick thing.

The -- the president of the Dominican Republic told me two years ago, when -- when he visited. He said, Alan, I hope you realize this is not about you. And at that time, I -- I could understand that. But right now, it is about me. And it's about my family. And it's about my mother. And I'm taking this very personally. And for the Cuban government not to show the respect to respond officially to a letter that was submitted by my lawyer, who works for the same firm that represented Elian Gonzalez, I think is shameful -- shameful.

BLITZER: When you went to Cuba, Alan, did you know that this was a risky business?

GROSS: Absolutely not. You know, this -- you know, this is a place that tries to attract tourists. And my understanding was if there was any problem with -- with the things that I was bringing here -- which, by the way, anyone could buy in any Best Buy or Radio Shack or on Amazon.com -- that if there was any problem at the airport that I would just leave the equipment at the airport and take it back with me when I left.

BLITZER: And that was two...

GROSS: -- they -- they can't (INAUDIBLE)...

BLITZER: -- that was two-and-a-half years ago.

GROSS: I've never been in trouble anyway in the world. I've worked all over the world. I've never been in any trouble. I can't even remember the last time I got a speeding ticket. And -- and for this to happen to me at this age is incredible. It's just incredible.

BLITZER: How old are you, Alan?

GROSS: I was 63 on May 2nd.

BLITZER: Happy birthday belatedly.

GROSS: Thank you. Thank you. And I recommend exercise, especially pull-ups. They're very, very good -- it's a very good exercise, Wolf.

BLITZER: Well, at least you've got a little sense of humor, despite everything you've gone through.

Alan, let's stay in close touch.

Good luck. And, you know, we'll see what happens.

GROSS: Thank you so much.

BLITZER: Bye-bye.

GROSS: Bye-bye.

BLITZER: And we're going to post the full interview, by the way. I had a long, long conversation with Alan Gross. You'll be able to listen to it, watch it online on our Web site, CNN.com/situation room. We'll post it very, very soon.

Jobs and politics, so what's the latest unemployment numbers? What do they might mean for President Obama's chances for re-election?

Plus, the blind Chinese activist at the center of an international firestorm might be headed to New York. We're going to tell you what's going on.

And monkeys, leopards, and a bear back home in Ohio. The latest on those exotic animals freed from their owner's farm.

(COMMERCIAL BREAK)

BLITZER: The unemployment rate actually dips slightly last month to 8.1 percent, but that may be due a lot more workers leaving the labor force. The latest numbers don't offer much to cheer about. Only about 115,000 payroll jobs were added in April. The presumptive Republican nominee, Mitt Romney, was quick to call the report terrible and disappointing. Here's the president's take.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: If we're going to recover all the jobs that were lost during the recession, and if we're going to build a secure economy that strengthens the middle class, then we're going to have to do more.

(END VIDEO CLIP)

BLITZER: That's issue number one for American voters, every job gained or lost will be critical in November. CNN business correspondent, Christine Romans shows us why.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Wolf, since President Obama stepped into the White House in January 2009, six of 15 swing states have seen their unemployment rates drop. They are the states highlighted in yellow here, mostly in the Midwest, Iowa, Indiana, Ohio, Michigan, Virginia.

New Hampshire, basically, has seen no change in its unemployment rate. When you focus in on Michigan, you can see that the last GOP candidate to win Michigan was the elder Bush, as you know, in 1988. The economy there, it's improving, but it's still pretty weak.

The unemployment rate has dropped significantly over Obama's turn, 8.5 percent from 11.3 percent, but it is still higher than the national average. Let's talk about Ohio. In the past 11 elections, Buckeye voters correctly picked the next president. The jobs market has improved there in Ohio. The unemployment rate dropping below the national average to 7.5 percent. I want to look now at the states that we've outlined here in orange.

These are swing states where the jobless rate has gone up since President Obama became president, a 109 delegates at stake in just these orange states. The western states that had it the worst, especially Nevada here, the unemployment rate, 12 percent right now in Nevada.

In Missouri, a state that is often a proxy for the nation in elections, it's a huge spike in unemployment there jumping more than two percentage points, but it's still under the national average. With 29 delegates, Florida is another key state for the candidates, nine percent unemployment right now. That's going to be a hard sell for Democrats.

We're going to keep taking a closer look at these numbers on my show "Your Bottom Line" this weekend. We're talking about these issues on a special live edition of Ali Velshi's show "Your Money" on Sunday -- Wolf.

BLITZER: We'll be watching, of course. Christine, thank you.

And as you just saw, one of those crucial battlegrounds is Ohio. President Obama's pulling out all the stops to keep that state in his column. He'll campaign in Ohio tomorrow. Our chief White House correspondent, Jessica Yellin, is already on the scene for us. She's joining us now from Columbus with more. Jessica, set the scene for us.

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Hi, Wolf. In 2008, President Obama won this state by four points, but the latest polling shows a statistical dead heat with Mitt Romney actually running ahead when it comes to the economy. Now, both sides expect that whoever wins this state, it will be by a razor's edge. So, Mitt Romney will be back here next week, but the president is making a big statement tomorrow.

(BEGIN VIDEOTAPE)

YELLIN (voice-over): On the campus of Ohio State University, pockets of enthusiasm for the president's first official campaign rally.

UNIDENTIFIED MALE: Really (ph) excited. Have some energy.

YELLIN: But the excitement of 2008 is missing. So, the campaign is pouring resources into Ohio to keep it competitive. The state director has been here since 2009. His message to voters -- the president's auto bailout boosted the local economy.

GREG SCHULTZ, OFA OHIO STATE DIRECTOR: You know, one out of every eight jobs in Ohio is related to the auto industry. YELLIN: The Obama campaign has 18 field offices. Romney opens his first next week. And democrats say they'll try to use that local presence to win over undecided voters.

CHRIS REDFERN, CHAIRMAN, OHIO DEMOCRATIC PARTY: It's not a 30-second ad, it's not a direct mail piece. It is voter to voter contact between a screen door, and that kind of validation between the volunteer from that neighborhood gives us a huge advantage.

YELLIN: Then, there's social media 2012, a step up from the last campaign. Ashley Bryant, a Cincinnati native, is the state's digital media director.

ASHLEY BRYANT, OFA OHIO DIGITAL MEDIA DIRECTOR: We're showing, you know, the president doing the O-H-I-O stands, which is fantastic to get people excited for Saturday.

YELLIN: She runs an Ohio-based campaign blog, iPad app, and Twitter account with messages localized to Ohio voters.

BRYANT: Anything that we do, we're usually covering all of our platforms. We're posting it on the blog, on the website, on Flicker, everywhere in between.

YELLIN: At the Saturday rally, volunteers will be checking in attendees with this app. Speakers can ask the audience to re-tweet campaign messages, and there will be a photo booth on site.

BRYANT: And we're actually going to be showing their photos on the big screen during the rally.

YELLIN: Like on a jumbo tron?

BRYANT: Exactly.

YELLIN: Sounds modern and new, but is it enough?

RYAN WILLIAMS, PRESS SECRETARY, ROMNEY CAMPAIGN: Well, voters in Ohio and across the country know that the 2008 Obama campaign of hope and change has turned into the 2012 change campaign of hype and blame.

YELLIN: At this phone bank, the president has loyal supporters.

MATTHEW BRIGSTOCK, OFA VOLUNTEER: If Barack Obama can end the war in Iraq, and he'll have a successful presidency.

YELLIN: Political observers say the contest in this state will be a dogfight.

JOE HALLETT, CHIEF POLITICAL REPORTER, COLUMBUS DISPATCH: Any lack of enthusiasm for Obama will be matched equally by a lack of enthusiasm for Romney. I just don't see a lot of energy, period, in Ohio.

(END VIDEOTAPE)

YELLIN: So, Wolf, why would the president be coming to Columbus as opposed to any other part of the state? Well, political observers describe this as the swing region in the swing state, so it will be getting a lot of attention. And from here, the president will be going to Richmond, Virginia to another university for his second rally of the day tomorrow -- Wolf.

BLITZER: And technically, the Obama campaign, Jessica, saying tomorrow's event where you are in Ohio, that sort of kicks off officially the start of the campaign for the president? Is that what they're saying?

YELLIN: That's right. They're calling it his first official campaign rally, and that is the launch of his political part of the campaign. And we'll be covering it all day tomorrow from here and from Virginia, Wolf.

BLITZER: We'll be watching you and the president, Jessica. Thanks very much.

Tough talk from the top. The defense secretary of the United States makes a personal appeal to American troops to clean up their act.

And a controversy brewing in one key Senate race. Why Democrats are worrying a bit about their candidate's heritage claim? Stay with us. You're in the SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Back to the U.S. economy and those job numbs, and now, a recovery that seems to be losing some steam. President Obama says the economy has come a long way, but concedes there's still a long way to go. His presumptive opponent in November taking a much tougher view.

Let's discuss what's good going on with the Obama 2012 deputy campaign manager, Stephanie Cutter. She's joining us now. Stephanie, thanks very much for coming in. As you know --

STEPHANIE CUTTER, OBAMA DEPUTY CAMPAIGN MANAGER: Thanks for having me.

BLITZER: -- 115,000 jobs created last month. Here's -- a lot of people were disappointed, but here's how Romney responded earlier today. Listen to this.

(BEGIN VIDEO CLIP)

MITT ROMNEY, (R) PRESIDENTIAL CANDIDATE: It should be same numbers in the 500,000 jobs created per month. This is way, way, way off from what should happen in a normal recovery. The reason that you're seeing the unemployment rate go down is because you have more people dropping out of the workforce than you have getting jobs.

It's a terrible and very disappointing report this morning.

(END VIDEO CLIP)

BLITZER: All right. How's your campaign reacting? He says it's terrible and very disappointing.

CUTTER: Well, let me make a couple of points, Wolf. First, you know, the job numbers that came out today show steady progress of rebuilding this economy after the worst recession of our lifetime, but it's not enough. We have to keep our foot on the pedal and continue growing the economy.

And it's sure that we're doing everything we can to grow that economy, which means that Republicans in Congress are going to eventually have to work with us to get that done. My second point is, you know, we appreciate the economic advice from Mitt Romney, but, I don't think we're going to follow it for a variety of reasons.

First, his statement today on 500,000 jobs a month shows a real misunderstanding of the economy. Only five times over the last 50 years did we create 500,000 jobs in a month, one of them was Barack Obama. The others, Bill Clinton, Ronald Reagan, and two months during the Carter administration.

So, you know, obviously Mitt Romney doesn't have a good understanding of our economic history in this country over the past 50 years. The second point that I would make is that Mitt Romney doesn't really have any experience in creating jobs. We know that. We know that in Massachusetts. He plummeted from 36th to 47th in the nation in job growth. Massachusetts was fourth from the bottom in new jobs created.

And we know at Bain Capital he admitted himself his position there wasn't about job creation. It was about wealth creation. So we appreciate the advice, but I think that we are on a path of steady growth. We're going to continue moving forward, do everything we can to continue unleashing growth and creating jobs.

BLITZER: What's a good number if it's not 500,000? That would be terrific, obviously. Hundred thousand not so terrific, what's something that your campaign, the Obama White House thinks would be realistic, a good number over these next six months between now and the election in November?

CUTTER: Well Wolf, you know I'm not going to predict how many jobs we're going to create each month between now and the election. That would be foolish of me to do. And I'm also not an economist. But you know we are going to keep doing what we're doing. The president is going to keep his foot on the pedal to ensure that we are continuing to move this country forward.

And you know there are a number of things that we could be doing right now that because of the intransigence in the Republican Congress we haven't been able to get it done. For instance, the president has a comprehensive infrastructure proposal, which would put all of those construction workers who lost their jobs in the housing bust back to work, but Congress refuses to move on it.

We have a proposal to give small businesses a tax cut if they hire new people or increase wages. Congress refuses to move on it. So we need willing partners in this to continue injecting growth into our country and creating jobs and ensuring that we're doing all we can to restore that no class security that was lost over the last decade.

BLITZER: For some reason I suspect there's not going to be a whole lot of bipartisan cooperation between now and November, given what's going on in Washington, but that's something we can discuss on another occasion. Stephanie Cutter thanks very much for joining us.

CUTTER: Thank you, Wolf.

BLITZER: This note to our viewers, on Monday we'll speak with a senior official from the Romney campaign as well.

Mitt Romney's family is growing. Romney's son Tag (ph) just tweeted, happy to announce birth of twin boys, David Mitt and William Ryder (ph), a big thanks to our surrogate, life is a miracle, and included this touching photo with one of his newborn sons. The twins are Tag (ph) and wife Jen's fifth and sixth children, and the 17th and 18th grandchildren of Mitt and Ann. Congratulations, by the way, to them and to the entire Romney family.

Their release set off a scare. Why some exotic animals are now back home on an Ohio farm. Plus Michael Jackson and Pepsi together again? How the late "King of Pop" and the pop-makers are now teaming up.

(COMMERCIAL BREAK)

BLITZER: A New York City building collapses. Mary Snow is monitoring that, and some of the other top stories in THE SITUATION ROOM. Mary, what do you have?

MARY SNOW, CNN CORRESPONDENT: Well Wolf, officials are responding to this building collapse in Harlem. There are no reports of injuries and no known cause yet. The Brownstone Building (ph) was under construction at the time.

(INAUDIBLE) animals have been returned to an Ohio widow including two leopards, two monkeys and a brown bear. The woman's husband freed 50 animals from his farm before committing suicide last October. Law enforcement officials killed 48 of the released animals. Two were killed by other animals. The five animals returned today weren't among those released in October.

A tightening of environmental rules for what's known as fracking or hydraulic frackturing (ph). The administration wants oil and gas companies to disclose what chemicals they use when it's done on federal lands (ph). Fracking involves injecting water and some chemicals deep into the earth to crack shell rock. It lets oil and gas flow more easily, but environmentalists worry that chemicals may seep into ground water.

And Pepsi and Michael Jackson are back together again. The company is honoring the 25th anniversary of the late "King of Pop's" "Bad" album. It plans to produce one billion Pepsi special-edition cans printed with Jackson's silhouette. The campaign will also include new mixes of Jackson's music and contests. In the '80s Jackson's hair famously caught fire while shooting a Pepsi ad -- Wolf.

BLITZER: I remember that album. Remember the whole experience. Thanks very much, Mary, for that.

An invitation to the "Big Apple" for the blind Chinese activist who is at the center of a diplomatic firestorm. Straight ahead we go live to Beijing.

Plus she's a darling among Democrats, but will Elizabeth Warren's claim of Native-American roots hurt her Senate run?

(COMMERCIAL BREAK)

BLITZER: A possible breakthrough for the blind Chinese activist who took refuge in the U.S. Embassy in Beijing. NYU School of Law offering Chen Guangcheng a visiting scholar position. This as the Secretary of State Hillary Clinton weighs in on the diplomatic standoff. CNN's Stan Grant has details from Beijing.

(BEGIN VIDEOTAPE)

STAN GRANT, CNN CORRESPONDENT (voice-over): Chen Guangcheng's future is looking a little less uncertain and from the U.S. secretary of state a sign that better days may be ahead.

HILLARY CLINTON, SECRETARY OF STATE: Progress has been made to help him have the future that he wants.

GRANT: These were Secretary Clinton's first public comments regarding Chen. It is far from the face-to-face meeting with Clinton the blind activist has asked for, but Clinton says the United States is fully supporting him.

H. CLINTON: All of our efforts with Mr. Chen have been guided by his choices and our values.

GRANT: Right now though Chen remains in a Beijing hospital with his family but surrounded by heavy Chinese security. Journalists and pro Chen supporters have been physically dragged away. China is still playing tough, it demands an apology from the U.S. for harboring Chen in its Embassy and says if the U.S. wants good relations with China it needs (INAUDIBLE). "The U.S. should reflect on its policies and behavior, and prevent these types of situations, so that it doesn't impact our relationship", this spokesman says.

(on camera): But the door is opening absolutely. China says that Chen can apply for a passport and visa to study in the United States. The U.S. is saying it would give that application a priority.

(voice-over): Chen's fate has been at the center of a diplomatic firestorm since he fled house arrest more than a week ago. He left the Embassy believing he would be safe and hoping to stay in China. Now though he says he and his family are no longer secure here. Chen made the extraordinary step of calling into a U.S. congressional hearing Thursday to plead his case.

"What worries me is my family", he said. "I can't get in touch with all my family members. They've installed seven surveillance cameras in my House. In addition they have guards staying in my place. They are building an electric fence around my house. They even scoffed let's see what this blind guy can do to us."

This saga has captured world attention. Chen is now a symbol of the struggle for human rights in China, Hillary Clinton making that clear.

H. CLINTON: This is not just about well-known activists. It's about the human rights and aspirations of more than a billion people here in China and billions more around the world.

GRANT: Diplomacy that continues to be sorely tested over the case of a blind man who's stared down the world's two greatest powers.

(END VIDEOTAPE)

GRANT: Now, of course, the potential for a successful outcome here is not obscuring the problems in the process that the United States had in their protection a man that China considers an enemy of the state and yet handed him back to the Chinese where he's now in fear for his life. And for China's side that despite all of its progress and developments, the human rights record is such that Chen Guangcheng no longer feels safe here -- Wolf.

BLITZER: How much of all of this is really getting through to the people in China? Because I know they've been censoring a lot of these reports. What can you tell us about that, Stan?

GRANT: Yes, it's a great question. That you know, at the early stages of this crisis there was a blanket ban on coverage. There was nothing being reported in the local media. I think you're aware as well that a lot of our reporting has been blocked. Our television screen simply going to black. We've seen a little bit more reporting in state media just over the past 24 hours. This is part of the Chinese spin, Wolf, as this starts to reach some sort of a conclusion, and the preparation for Chen traveling to the United States. China wants to spin this that there are bad guys here. And the bad guys are United States and Chen Guangcheng -- Wolf.

BLITZER: Stan Grant on the scene for us; we'll stay in close touch with you. Thank you.

Enough is enough. The defense secretary, Leon Panetta with a stern warning for the troops about bad behavior.

(COMMERCIAL BREAK)

BLITZER: A heritage controversy igniting an already heated Senate race. Democrat Elizabeth Warren said she claimed Native-American roots to meet others like her. Some say though she did it to try to advance her career as a Harvard Law professor. CNN's Mary Snow once again back with us for more. What's going on here, Mary?

SNOW: Wolf, this story about Elizabeth Warren listing herself as a Native-American in law school directories first broke last week. The Scott Brown campaign immediately pounced calling it a hypocritical sham. And political observers are paying close attention to how it's being handled.

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SNOW (voice-over): Elizabeth Warren is considered a darling among Democrats challenging Massachusetts Republican Senator Scott Brown. In the last week, though, she's found herself on the defensive, faced with questions about why she identified herself as Native-American while teaching at Harvard Law School. Those questions followed an initial report from the "Boston Herald" that found she listed herself as a minority in law school directories in the '80s and '90s.

ELIZABETH WARREN (D), MASSACHUSETTS SENATE CANDIDATE: I am very proud of my heritage. I am very proud of the stories that my grandparents told me, that my grandparents told my parents and my parents told my brothers and me. Being Native-American is part of who our family is.

SNOW: New England's "Historic Genealogical Society" says an initial search shows Warren is one-thirty-second Cherokee. The Cherokee Nation says there's no minimum of Cherokee blood required to be in the tribe. Conservatives pounced suggesting she used her background to advance her career and her rival Senator Scott Brown jumped in earlier this week telling this to the "Boston Globe".

SEN. SCOTT BROWN (R), MASSACHUSETTS: Well I know the media has been asking a lot of questions and I have been following it just like you have, so if there are questions, you know she should answer them.

SNOW: Harvard's newspaper, "The Crimson", quotes administrators in 1996 and '98, talking about Warren's Native-American heritage as a touted and diverse staff (ph), but the university says Harvard recruited her and that her background wasn't even known until after she was hired. And Warren, a former economic adviser to President Obama, fought back against any question regarding her qualifications to teach at Harvard.

WARREN: The only one as I understand it who is raising any question about whether or not I was qualified for my job is Scott Brown.

SNOW: Warren's minority status says CNN senior political analyst David Gergen is not a big deal. But he says what's surprising is this story didn't go away after one day.

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Frankly, it was I think her campaign inexperience showed and she was faltering about it. She has been faltering. Her team didn't respond well. I do think they are going to find their voice. I think they'll find their footing and I imagine this is going to pass. But it has -- it's raised -- it's raised all sorts of trembles in the Democratic Party about boy we had such a winner on our hands. Is she really up to this?

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SNOW: And Wolf, as you know, both Democrats and Republicans have a lot at state with the Massachusetts seat. Democrats are hoping to regain the seat they lost after Ted Kennedy passed away and Scott Brown scored his upset victory in a special election -- Wolf.

BLITZER: Mary, thank you. After a series of nasty scandals involving U.S. troops, especially in Afghanistan, the entire U.S. military has received a warning against bad behavior. Our Pentagon correspondent Barbara Starr has the details.

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BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): After a series of high-profile incidents of troops misbehaving, Defense Secretary Leon Panetta went to Ft. Benning, Georgia on Friday to say enough is enough.

LEON PANETTA, DEFENSE SECRETARY: A few who lack judgment, lack professionalism, lack leadership, can hurt all of us.

STARR: In Afghanistan alone, one scandal after another. In January, video of Marines urinating on dead insurgents. In February, Marine snipers posting with a flag with SS initials. The Nazi overtone sparked an investigation. Then, riots broke out after U.S. troops inadvertently burned Korans. Last month soldiers posing with dead insurgents. Panetta's Ft. Benning speech was broadcast to the entire U.S. military, warning bad behavior can lead to instant international headlines.

PANETTA: And those headlines can impact the mission that we are engaged in. It can put your fellow service members at risk. It can hurt morale. It can damage our standing in the world.

COL. CEDRIC LEIGHTON, U.S. AIR FORCE (RET.): Unfortunately, we are dealing in a situation where the image is everything. It is not all the good that we have done, which has been considerable in a lot of these places. But it also boils down to the fact that there are so many things that are perceived because of one bad image.

STARR: The investigation of a dozen service members in potential misconduct involving alcohol and prostitutes during President Obama's trip to Colombia brought the issue an even higher profile.

UNIDENTIFIED MALE: We are embarrassed by what occurred in Colombia.

UNIDENTIFIED MALE: Remember, zero tolerance, zero.

STARR: Military broadcasts like this have warned troops for years about excessive drinking and soliciting prostitutes.

UNIDENTIFIED MALE: Patronizing prostitutes can lead to dishonorable discharge, forfeiture of pay and imprisonment.

STARR: But the strongest words came from Marine Corps Commandant General James Amos who told his commanders "recent widely publicized incidents have brought discredit on the Marine Corps." He called for an end to "undisciplined and embarrassing conduct".

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STARR: And the Chief of Staff of the Army has also weighed in saying this has to end. The Marine Corps -- pardon me -- the Navy -- the Navy has fired 47 commanders in the last 2.5 years for failure to meet standards but, Wolf, we must say one more time, the majority of the troops, of course, serve very honorably -- Wolf.

BLITZER: Almost all of them, an overwhelming majority, thanks very much, Barbara, for that.

An extraordinary pair of dogs proved that love really is blind. Jeanne Moos has the story.

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BLITZER: Seeing eye to eye, how a guide dog is helping a blind dog see. Jeanne Moos takes a closer look at a special pair of pooches.

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JEANNE MOOS, CNN CORRESPONDENT (voice-over): He is a 2-year-old golden retriever, but the one thing he can't retrieve is his sight. This is more or less what he has seen since birth. But now, Tanner, the blind dog has a guide dog. Meet Blair, a 1-year-old female. Now not only is Tanner blind, he has epileptic seizures that cause him to lose control of his bodily functions. After his adoptive owner died, Tanner's seizures got worse. A retriever rescue group brought him here to the Woodland West Animal Hospital (ph) in Tulsa, Okalahoma.

UNIDENTIFIED MALE: I can tell you it was more than one time I have recommended putting Tanner to sleep.

MOOS: And though the situation looked black, so did the solution.

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UNIDENTIFIED MALE: Just your everyday street dog.

MOOS: Blair was a stray brought in with a gunshot wound to the leg. She was a nervous wreck until she and Tanner bonded in the play yard. Take it from a singer whose eyesight matches Tanner's.

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SINGING: And you can always count on me --

UNIDENTIFIED MALE: The two of them together have been a remarkable synergistic effect.

MOOS (on camera): The sight of a sighted dog helping a blind one reminded us of a special kind of fetch playing by a deaf dog and a hearing one.

UNIDENTIFIED MALE: This is the dog that's out there fetching the dog that is deaf over there. Buffy fetch Benson. Fetch Benson.

MOOS (voice-over): Buffy fetched Benson by grabbing his collar in her teeth.

UNIDENTIFIED MALE: Good girl, Buffy. MOOS: Blair prefers to use the leash.

UNIDENTIFIED MALE: She is a service dog for another dog.

MOOS: Does she realize he is blind?

UNIDENTIFIED MALE: Oh yes. I don't think there is a doubt.

MOOS (on camera): One thing for sure. Their up-for-adoption is a two-fer.

(voice-over): And offers are pouring in to "Sooner Golden Retriever Rescue". Tanner's seizures used to come every day or so. And after two months of togetherness, he has had only a couple.

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SINGING: In good times, in bad times, I'll be on your side forevermore --

UNIDENTIFIED MALE: They are pretty much inseparable at this point.

MOOS: In this case love really is blind and Blair keeps Tanner on a short leash.

Jeanne Moos, CNN --

SINGING: That's what friends are for --

MOOS: New York.

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BLITZER: Lovely. Thanks very much for joining us. I'm Wolf Blitzer in THE SITUATION ROOM. The news continues next on CNN.