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The Situation Room

Jamie Dimon Appears Before Congress; Counting on Bill Clinton; America: Love It or Hate It; Brass-Knuckle Fight on the Economy; ; Bombings Kill Dozens Of Iraqi Pilgrims; Is Iran The Big Winner In Iraq?; Time For U.S. To Intervene In Syria?; Honda Recalls 50,000 New Civics; Toddler Ejected From Fleeing SUV; President Hosts Early Father's Day Lunch

Aired June 13, 2012 - 16:00   ET


WOLF BLITZER, CNN ANCHOR: Happening now: a Wall Street superstar who could do no wrong apologizing to Congress after his firm lost billions on a bad bet. So, does he now think the mega-banks need more regulation?

President Obama can't stop talking about President Clinton. Can he somehow ride Clinton's old coattails to a victory in November?

And one of America's most valuable assets is its image around the world. But there are now some surprising results in a new global survey about the United States and President Obama. And a lot of it is not pretty.

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

The head of the largest bank in the United States is called before Congress to explain a stunning $2 billion loss, maybe more, that one lawmaker compared to Russian roulette. J.P. Morgan Chase CEO Jamie Dimon appeared before the Senate Banking Committee, saying he could not defend or justify the trades that ultimately imploded.

CNN regulation correspondent Lizzie O'Leary was there on Capitol Hill watching it all unfold.

And it was very dramatic.


And, look, I have known Jamie Dimon and covered Jamie Dimon for a long time, Wolf. Usually, when he comes to Washington this is a town where he's received with open arms, even occasionally at the White House. This position was a little unusual for him.




UNIDENTIFIED FEMALE: I'm good. How are you? Nice to see you. O'LEARY (voice-over): He usually loves the cameras, but Washington's former golden boy banker got more of the rugby scrum reception on Capitol Hill.

UNIDENTIFIED MALE: These guys are not the job creators. They're the destroyers. This man is a crook.

DIMON: We have let a lot of people down. And we are very sorry for it.

O'LEARY: He apologized for losing billions, took some blame, but embracing more regulation? Maybe not.

DIMON: ... we think don't make sense and we think we're entitled -- the ones to tell you the things we don't make sense.

SEN. ROBERT MENENDEZ (D), NEW JERSEY: Well, I think you're entitled to tell us the things that don't make sense. I also think that the American people, after making major investments in your bank and other institutions, are entitled to ensure that they don't have to reach into their pocket again.

O'LEARY: Financial reform was passed two years ago. But most of it has yet to be enacted. And many Republicans want to roll it back.

SEN. BOB CORKER (R), TENNESSEE: But I'm talking about the regulatory regime that Congress put in place. Has it made our system safer?

DIMON: I don't know.

O'LEARY: One key part, a hotly debated rule that would keep banks that take customer deposits, like J.P. Morgan Chase, from making risky trades for themselves.

Dimon's opinion of that?

DIMON: It was unnecessary.

O'LEARY: Of this committee's 22 members, only six have not taken money from J.P. Morgan's political action committee.

Both Democratic Chairman Tim Johnson and top Republican Richard Shelby have gotten personal donations from Dimon. Shelby asked Dimon if he'd prefer to talk in private.

SEN. RICHARD SHELBY (R), ALABAMA: To detail what really happened, here we're talking in general terms now, would you feel better in a closed hearing?

O'LEARY: In the end, Dimon only lost his characteristic cool once arguing with Oregon Democrat Jeff Merkley about how much the bank took in bailout money.

SEN. JEFF MERKLEY (D), OREGON: I'm not going through that argument...

(CROSSTALK) MERKLEY: Sir, sir, this is not your hearing. I'm asking you to respond to questions.


O'LEARY: Now, to be honest, Jamie Dimon didn't have to answer that many hard questions. He got some others like what should we do about the state of the economy, the fiscal cliff that's coming?

What we really don't know yet, Wolf, is what this means for regulation going forward, this key part of financial reform, the so-called Volcker rule named after the former fed chairman. It's still a bit in limbo. Some folks want to make it tighter. Others say it would not prevent another financial crisis.

And that's really what's still being lobbied on right now.

BLITZER: We use this $2 billion number for the loss, but some insiders have said to me they think it may be $3 billion, maybe even $4 billion when all the dust settles. Did he clarify that?

O'LEARY: He did not. I asked Jamie Dimon again at the end of the hearing, will you tell me how large the loss was, a question none of those senators, I might add, asked, and he said no.

BLITZER: Flatly.

O'LEARY: Flatly, yes.

BLITZER: All right. We will watch it together with you. Thanks very much, Lizzie.

CNN's Erin Burnett is going out front on this story as well. She's covered these stories for a long time.

What jumped out at you today as someone who knows Jamie Dimon, has covered him extensively? What jumped out of you, Erin?

ERIN BURNETT, CNN ANCHOR: Boy. You know, Wolf, there was, as Lizzie was pointing out, the fact that then he was talking the fiscal cliff and sort of had turned the tables and was lecturing Congress, which was very much in the style -- he's a very bombastic leader of the bank.

But also I think it's important -- a couple other things to that. One, in his prepared testimony, Wolf, he said this is an isolated incident. You look back at other banks these sorts of things have happened at, massive trading losses, every CEO without fail says it's an isolated incident, but yet it keeps happening.

And this one, whether it's $2 billion, $4 billion, $6 billion, very small relative to the overall size of J.P. Morgan, but it still remains incredibly concerning how the press had reported on this and Jamie Dimon didn't know that this problem was there, that this bank, which is no longer just too big to fail, but too big to bail out, could have these sorts of things happening that could be maybe even significantly bigger than this one.

And is there a risk that we don't know? And it doesn't seem that the financial reform, Volcker rule or not, would even go -- would even come close to preventing that sort of risk, that systemic risk that could bring down the system, which I think is pretty scary. He didn't really address that. But when he said it was isolated, it really stood out to me.

I mean, Wolf, J.P. Morgan is 50 percent bigger than it was before the financial crisis. So it's much bigger than big then. So that really stood out to me, also that he said there's going to be some claw-backs when he's referring to compensation. The woman who was in charge of this trade in the chief investment officer office, Ina Drew -- quote, unquote -- "resigned," was basically asked to leave in the wake of this, she made about $14 million last year, Wolf.

So, I think a lot of people are saying, will that be taken back? And it looked like he opened the door to that. But I think it's pretty clear that that's something most people think should happen. So I thought that was also an important takeaway today.

BLITZER: A lot of people out there, they look at the largest bank in the United States, Chase, J.P. Morgan Chase, and they assumed, at least a lot of people assumed after the 2008 banking disaster this couldn't happen again, a bank all of a sudden losing billions like that so quickly.


BLITZER: So the question is how reassured should they be that their money is safe?

BURNETT: Well, they shouldn't be reassured, Wolf, in many ways.

Look, it's not just J.P. Morgan Chase which is 50 percent bigger. The biggest banks in this company are all bigger. The derivatives market, which Warren Buffett famously described as weapons of mass destruction, the derivatives market, all these trades upon trades upon trades upon mortgages that caused the whole financial crisis, is also significantly bigger than it was before the crisis.

There still is no exchange for those derivatives to trade on. We still have all kinds of things that haven't been pushed forward that aren't really dealt with in the reform, plus the fact that that reform bill itself, as Lizzie said, is still being lobbied and debated over.

So it's out there. We all know about Dodd-Frank, but a lot of the blanks are still not filled in. So we -- could it happen again? I think, unfortunately, Wolf, I think we all have to admit the answer to that question is yes.

BLITZER: It's depressing to think about it. All right. Erin will be out front 7:00 p.m. Eastern later tonight on this story, several other important stories as well.

Erin, thank you. BURNETT: All right, thanks, Wolf.

BLITZER: One of the largest fires in Colorado history now burning out of control.


BLITZER: Growing horror in Syria right now and growing pleas from Syrians for outside -- out -- for help from around the world. They need the help. Jack Cafferty is wondering what the United States should do. He's coming up next with "The Cafferty File."

Plus, America's image around the world -- a new global survey shows some love that the United States has and doesn't necessarily have. What do folks around the world also think about President Obama?


BLITZER: Jack Cafferty's here with "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Sad news, Wolf, Syria teetering now on the brink of an all-out civil war as the situation quickly goes from bad to worse.

Secretary of State Hillary Clinton says she's concerned Russia is sending attack helicopters to Syria, something that, if true, can escalate the difficulties there very quickly.

She says the U.S. has confronted Russia about stopping its arms shipments to the Assad government. According to the State Department, Russia insists these weapons they're sending are only to be used for self-defense, that they cannot be used against the civilian population. Hey, if Russia says it, what's not to believe, right?

Syrian forces are reportedly pummeling their own people with attack helicopters, tanks and mortars. On the other side, the insurgents now appear to be increasingly better armed and better organized.

Meanwhile, the U.N. is out with a report that the Syrian government has used children as human shields and tortured other children whose parents are suspected dissidents. These child victims describe being beaten, blindfolded, whipped with heavy electrical cables, burnt with cigarettes and, in one case, subjected to electrical shock of the genitals.

A U.N. peacekeeping chief now describes the situation in Syria as a civil war. It's estimated 14,000 Syrians have died in the 15 months of bloodshed.

Secretary Clinton says there's no easy solution to the mess in Syria. But it's clear that sanctions and isolating Syria haven't worked so far.

As for Americans, they overwhelmingly say the U.S. does not have a responsibility to step in. A recent CNN/ORC poll, 61 percent oppose any American intervention; 33 percent say the U.S. ought to get involved, and that's up from 25 percent in February.

That's the question: Has the time come now for the U.S. to intervene in Syria?

Go to, post a comment on my blog. Or go to our post on THE SITUATION ROOM's Facebook page -- Wolf.

BLITZER: Jack, thanks very much, excellent question.

Other news: It's one of America's most valuable assets, its image around the world. And there are some surprising new results in a brand-new global survey about President Obama, his policies and the United States in general.

CNN foreign affairs correspondent Jill Dougherty has the details. She's joining us now live.

Jill, what does this survey reveal about the U.S. image abroad?

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: Well, let's start with the bottom line, Wolf, that, in most parts of the world, in many parts of the world, the image of the United States, the popularity of the United States is higher under President Obama than it was under President Bush.

However, on certain specific issues, there is a sense in some countries that that promise that President Obama had that he would carry out some things those people wanted to see is not being carried out. So there's an unmet expectations quotient.

Here's what it said.


DOUGHERTY (voice-over): On the streets of Cairo, some Egyptians say they had high hopes when Barack Obama became president. Now, there's bitter disappointment.

UNIDENTIFIED MALE (through translator): We were optimistic for change after George Bush. But sorry, it's the same politics.

DOUGHERTY: Among America's traditional allies however, Europe and Japan, President Obama has largely repaired America's image. But the Pew Research Center's New Global Attitudes Project shows Barack Obama's own policies are hurting him.

Take the use of drones -- a major complaint on the streets of Islamabad.

UNIDENTIFIED FEMALE: Illegally attacking us on our soil without our permission.

DOUGHERTY: That's the opinion in 17 of 21 countries. More than half disapprove of U.S. drone attacks targeting extremists in countries like Pakistan or Yemen. Compare that to 62 percent of Americans who approve of the drone campaign.

The survey questioned more than 26,000 people in 21 countries. One major finding: leadership matters.

ANDREW KOHUT, PEW RESEARCH CNETER: When President Bush was unpopular, the United States was largely unpopular.

DOUGHERTY: Three years into the Obama presidency, there's been a dramatic turnaround in how European countries like Germany and allies like Japan view the United States. But in Muslim countries, Obama's policies have damaged views of the U.S.

The biggest concern worldwide about America still is that it acts without concern for the interests of other countries. And yet, despite disappointments over his policies, there's considerable support for Mr. Obama's re-election in Europe.

KAHUT: Most of the publics in allied nations say he should be re- elected in large numbers. If he had those numbers in the United States, he'd be very well.

DOUGHERTY: But in some Middle Eastern countries, it's the reverse. In Egypt 76 percent don't want him to have another term. In Jordan, it's 73 percent. Another finding in the Pew Global Survey, even America's friends in Europe think China, not the U.S., is the world's top economy.

UNIDENTIFIED MALE: When China sneezes, I think the rest of the world get a cold.

DOUGHERTY: But the Chinese themselves think it's more like a sniffle. Only 29 percent of Chinese say they are the leading economic power. Almost half say it's the United States.


DOUGHERTY: Now, people around the world nevertheless say they like American popular culture. In the Middle East, they like how Americans do business. But overall many people complain that there is too much influence from the United States. In fact, they say that globalization equals Americanization -- Wolf.

BLITZER: Very interesting numbers. Jill, thanks very much.

A political pre-game for tomorrow's dueling speeches by Mitt Romney and President Obama. We have details of Romney's prebuttal today.

And was the Iraq war fought by the United States largely really won by Iran? We'll talk about that and more. Arianna Huffington is here in THE SITUATION ROOM.


BLITZER: This just coming into THE SITUATION ROOM, good news for John Edwards. The Justice Department announcing moments ago he will not -- repeat, not be re-tried. Assistant Attorney General Lanny Breuer saying, "The jurors could not reach a unanimous verdict of the five of the six counts of the indictment. We respect their judgment. In the interest of justice, we have decided not to retry Mr. Edwards on those counts." Fully expected, another trial will not happen for the former U.S. senator, former vice presidential nominee. That's not happening for John Edwards.

Other news we're following, President Obama and Mitt Romney are now gearing up for a head-to-head clash, dueling speeches just minutes apart in a state that's crucial to the outcome in November. Romney had a tune-up today before a very receptive audience.

CNN's national political correspondent Jim Acosta is joining us with the latest -- Jim.

JIM ACOSTA, CNN NATIONAL POLITICAL CORRESPONDENT: That's right, Wolf. Today was the pre-game to the main event tomorrow. As you mentioned, dueling speeches at virtually the same time in the ultimate battleground state of Ohio. And today was the preview of the battle to come.


ACOSTA (voice-over): The campaign isn't getting down to brass tacks, more like brass knuckles, with Mitt Romney and President Obama ready to rumble over their economic plans.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: This is the most anti- investment, anti-business, anti-jobs series of policies in modern American history.

ACOSTA: Just one day before Romney and the president go head-to-head with dueling campaign events in the swing state of Ohio, the Republican contender met with some of the nation's top CEOs to offer a prebuttal to Mr. Obama's speech.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We will not rest until we are succeeding and generating jobs --

ACOSTA: The message as delivered in this new GOP web video is that Mr. Obama has failed to meet his own goals of creating jobs.

ROMNEY: I think you're going to see him change course. He will speak eloquently, but the words are cheap.


ACOSTA: In a clear sign the president is in election mode, White House Press Secretary Jay Carney was asked about the president's speech and read from essentially the campaign script.

CARNEY: The president believes that this election is a fundamental choice between two very different visions for how we grow the economy, create middle class jobs and pay down our debt. The other side's plan is a $5 trillion tax cut that explodes the deficit -- ACOSTA: At a series of fundraisers, the president conceded he has his work cut out for him, saying in a private home full of supporters Romney can just sit back and say, "Things aren't as good as they should be, and it's Obama's fault. And, you can pretty much put their campaign on a tweet and have some characters to spare."

In another event, Mr. Obama took on the Republican charge he is a big government liberal.

OBAMA: I want to be clear: we don't expect government to solve all our problems. And it shouldn't try to solve all our problems.

ACOSTA: And reminded voters a Republican president was running up the deficit before he got into office.

OBAMA: It's like somebody goes to a restaurant, orders a big steak dinner, martini, all that stuff and then just as you're sitting down they leave.


OBAMA: And accuse you of running up the tab.

ROMNEY: I will in my first 100 days take action to eliminate government programs --

ACOSTA: Meanwhile, Romney is pulling back the curtain on his own economic plan, vowing to repeal the president's health care law, strike down Obama era regulations and get the country back in the black. All while giving everybody a tax cut.

ROMNEY: And those things save about $500 billion a year by my fourth year in office, if I'm lucky enough to be elected, and get us to a balanced budget within eight to 10 years.


ACOSTA: Romney has so far not provided all the details on which government programs he would cut, so the Obama campaign is of course accusing the GOP challenger of just, quote, "offering dishonest claims and no new ideas." That's to be expected because of the fireworks will be flying tomorrow in Ohio, Wolf, make no mistake about it.

I will tell you, I just got off a conference call that the Romney campaign is holding right now sort of bracketing what is going to take place in Ohio tomorrow. Keep in mind, the economic picture is improving in Ohio right now. The unemployment rate has dropped dramatically over the last couple of years.

And the Romney campaign was asked, well who gets the credit for this? The Romney campaign says it's the Ohio governor there, John Kasich, the Republican, not the Democratic president in the White House -- Wolf.

BLITZER: They'll both be spending a lot of time in Ohio. And you know what? That means you'll be spending a lot of time -- ACOSTA: That's right.

BLITZER: -- Jim Acosta, in Ohio as well.

ACOSTA: You bet.

BLITZER: Thank you.

Let's dig a little bit deeper right now with our chief political analyst, Gloria Borger.

He hasn't had a great few days, the president of the United States, in the last few days. A lot of economic challenges he faces right now. You've been looking into this.

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Yes, he's had a bad couple weeks, actually, Wolf. And what the president has an economic speech tomorrow as Jim was talking about, is he's got to defend his economic record in ways that people understand and then provide the context and I think you saw the president starting to do that, to say -- to remind people where we were and how far we've come.

But he's got to do that without whining and make it sound like he's blaming everything on George W. Bush. And then he needs to give voters some hope and optimism that things are headed in the right direction.

This is where Democrats are starting to have some problems. They disagree about what to do. Some say, look, just provide a different general vision from Mitt Romney. Other Democrats are saying absolutely not. You have to be specific plan for the economic future that's beyond what you've already told the American public.

Let me read you something from a Democratic group Democracy Corps, which conducted focus groups in Ohio and Pennsylvania with independent-minded voters. And they said this after the focus groups, "The voters are very sophisticated about the character of the economy. They know we're in a new normal where life is a struggle. And convincing them that things are good enough for those who have found jobs is a fool's errand. They want to know the plans for making things better in a serious way. Not just focused on finishing up the work of the recovery."

In other words, and it's signed by Stan Greenberg and our own James Carville -- and what this means is they're saying, you can't just say, OK, things are bad, it's getting better. You have to be the man with the plan and give people hope.

Have you heard about hope?

BLITZER: Hope and change.

BORGER: Right, you heard that.

BLITZER: Independent voters --

BORGER: They make a comeback.

BLITZER: Independent voters are going to be critical obviously in this election.

BORGER: Absolutely.

BLITZER: Are they satisfied with either candidate based on what you're saying?

BORGER: No, absolutely not. And if you look at the new "Washington Post"/ABC News poll out today, the question was asked: do you have an unfavorable opinion of the candidates' economic plan -- 54 percent unfavorable, Romney 47 percent unfavorable. So, neither one gets good grades. I think part of the problem is people don't know what they're economic plans are.

This isn't just a Barack Obama problem. It's also a Mitt Romney problem. He has a 59-point plan. What's a 59-point plan to most people? It's a muddle.

So, it has to be more defined. And I think President Obama's plan has to be more defined too.

BLITZER: What Romney does well is on day one, those commercials he does, I will do x, y and z. That's much more specific. Much more interesting than a 59-point plan.

BORGER: It needs to be narrowed a little.

BLITZER: Thank you, Gloria.

President Obama can't stop talking about President Clinton. Can he somehow ride [resident Clinton's old coattails to a victory in November? Our strategy session is next.


BLITZER: Let's get right to our "Strategy Session." Joining us our CNN contributors, Democratic strategist Maria Cardona and former Bush White House speech writer, David Frum.

Listen to President Obama speaking out there on the campaign trail, but mentioning the name a lot of another former president.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: We have taken a surplus left behind by President Clinton, turned it into deficits as far as the eye could see. Bill Clinton described it well the other day.

He said they want to do the same thing, just on steroids. Remember, when the last Democratic president was in office, we had a surplus. The two presidents with the least growth in government spending in the modern era happened to be two Democrats named Barack Obama and Bill Clinton. (END VIDEO CLIP)

BLITZER: He's making it absolutely clear, David, he loves Bill. Clinton, I don't know if he really does, but he seems to love Bill Clinton and sees Bill Clinton as a huge asset towards November, especially in states like Florida or Ohio and several other battlegrounds.

DAVID FRUM, CNN CONTRIBUTOR: Well, you mentioned Bill Clinton, it's like Republicans mentioning Ronald Reagan. Those are better times than now. You make people nostalgic.

The thing I'm struck by in those remarks is this president has lost the plot on having an economic policy. He has a fiscal policy. Fiscal refers to the government's treasury, surpluses and deficits.

Economics refers to the overall growth of the economy. The fiscal problem is a subset of the economic problem. Fix the economy, if a government finances follow.

And Obama is now trapped in doing what the Republicans unfortunately have also unwisely done, which is to put the lesser problem at the head of the cue and to forget the greater problem.

BLITZER: You agree, I assume, that Bill Clinton to the Democrats is what Ronald Reagan is to the Republicans?

MARIA CARDONA, CNN CONTRIBUTOR: Well, I would to a certain extent in that what President Obama wants to do is actually have people remember the good times. And the good times were when a Democratic president, Bill Clinton, was -- he basically directed the biggest economic expansion in 50 years.

And his policies, Obama's policies, are very similar to President Clinton's policies that will do the same thing. Where I don't agree the comparison is fair is that right now the GOP of today would never follow Reagan's policies.

Reagan by the way also raised taxes 11 times and asked the wealthier to pay more. So actually frankly he's doing more of a President Obama wants to do.

FRUM: I have an exercise, which is I would like to hear the candidates talk about their economic policies without using the words either tax or spending. Omit them. Because when you talk about those things, you're talking about fiscal issues, government's position.

The most urgent questions are what will be done to protect American banks against the impact of the euro crisis? What will be done in order to reduce the burden off indebtedness on households?

That's the biggest constraint on the economy. Household debt came down in the first couple of years of this recession, but it's ceased to come down.

It is now remaining very, very heavy. What are you going to do about that? When they talk about taxes and spending, they're talking about pulling levers that don't have a lot to do with the actual problems the American economy faces now.

CARDONA: What President Obama does do though is he talks about protections for the middle class, which I think is important and it is to your point it is about the greater economy.

When you have a middle class and a working class that is flourishing, that's when you can have the kind of expansion that President Clinton was directing over.

And those are the policies that President Obama is wanting to put into play. So I think rightly so he's talking about Bill Clinton because Bill Clinton lived it.

FRUM: When you say middle class, nothing happens. The same way when you say jobs, nothing happens. The way these campaigns work, what's your plan on jobs? The answer is jobs.

You can't just say the word jobs over and over again as if that's a plan, jobs. And in the same way say what are you going to do for the middle class? That's not an answer.

CARDONA: President Obama actually has a very detailed plan that Republicans don't want to pass.

BLITZER: We heard a little in Jim Acosta's speech, but listen to what he's now saying on the campaign trail.


PRESIDENT OBAMA: This notion that somehow we caused the deficits is just wrong. It's just not true. And anybody who looks at the math will tell you it's not true.

And if they start trying to give you a bunch of facts and figures suggesting that it's true, what they're not telling you is they baked all this stuff into the cake with those tax cuts and a precipitation drug plan they didn't pay for and the war.

So all of this stuff is baked in with all the interest payments for it, it's like somebody goes to a restaurant, orders a big steak dinner, martini, all that stuff. And then just as you're sitting down they leave and accuse you of running up the tab.


BLITZER: So is that something the public will understand and appreciate those words?

FRUM: Maybe they will understand it, but -- maybe they'll even believe it, but as a description of what is wrong with the American economy, it's inadequate.

The reason the deficit is so enormous is because of the collapse of economic production. And when the president buys into this deficit notion, he's in trouble.

Because he's now playing on ground he doesn't believe in, that his advisors don't believe in, and you can just feel it and hear it. The problem with the American economy is not that the deficit is too big. The deficit is too big because of the problems with the American economy.

CARDONA: But I think what President Obama is trying to do is to talk about the problem in ways that the American people can understand. He does have a plan. He has a very detailed plan that is up in Congress right now.

It's called the American Jobs Act, which by the way has very bipartisan pieces in it that Republicans used to support including a lot of tax cuts for small businesses, up to 18 now.

He has in there something where corporations can write off 100 percent, which Republicans have said no to. So right now, he's trying to lay out a plan where he puts middle class families first, workers first, small businesses first. And he is telling the American people that Republicans are just saying no.

FRUM: But given he said deficit reduction is the highest priority, he has to pose his own job creation plan.

BLITZER: Guys, we have to leave it right there. Thanks so much for coming in. As we've said many times, don't expect anything really all that significant to be passed by Congress between now and November.

CARDONA: Unfortunately.

BLITZER: Iraq and Iran, Arianna Huffington says it's a troubled partnership made in the United States of America. She's here to talk about it.

Plus the growing pressure on President Obama to free one of the most spies in U.S. history, Jonathan Pollard.


BLITZER: A string of bombings killed dozens of people today all across Iraq. Most of the dead were Shiite pilgrims headed to a religious shrine.

The worst attack was just south of Baghdad where car bombs killed 20 people. All of this sparking fears of a resurgence of the sectarian fighting we saw only a few years ago in Iraq. And there are now also fresh concerns about Iran's influence.

Arianna Huffington is joining us now from New York. She is the editor in chief of "Huffington Post." Arianna, you've written a really powerful blog today entitled Iraq and Iran, a partnership made in America. Give us the gist.

ARIANNA HUFFINGTON, PRESIDENT, EDITOR IN CHIEF, "HUFFINGTON POST": Well, the president said after the last troops left in Iraq that the war in Iraq belong to history.

But in fact as we saw from today's brutal attack in Iraq, it does not belong to history. In fact, it was created a kind of state of Iran.

While we're focusing on Syria and Iran, we are missing the fact that the former director of Al Jazeera told me Iraq is remaining a central player in the Middle East.

BLITZER: What you write and other have written and I've written as well is that this enormous investment over many years that the United States made in blood and treasure to build up Iraq as a democracy as a base in the region, all of a sudden it's emerging that they're much more closely aligned with Iran than they are with Iraq, the government of Prime Minister Nuri Al-Maliki.

HUFFINGTON: Absolutely. Iran really supporting the government of Malaki against the Sunnis and we are now seeing the arrest warrant against the Sunni vice president, which was partly responsible for the attacks today.

And we see also what's happening in the alliance overall. Right now, the combined oil production of Iran and Iraq will soon overtake Saudi Arabia. They're partnering in terms of the policy in OPEC with Iran supporting an Iraqi candidate for secretary general of OPEC. And all that really is our creation.

BLITZER: Iraq is now exporting, by the way, 2.4 million barrels of oil every single day. They're raking in a lot of money. It's going to be a wealthy country. Here's what I wrote on my blog last October, Arianna.

Tell me if you agree with me. The Iraqi government is aligning itself with Iran and trying to bolster the regime of Syrian President Bashar Al-Assad.

Unlike several other Arab governments, Al-Maliki's Shiite-led government is not only defending the Al-Assad regime, but actively joining forces with Akmadinijad in trying to prop him up. Do you agree with that analysis still?

HUFFINGTON: Absolutely. You are very (inaudible). That's exactly what's happening. And the reason why we need to remember that it is our creation because a lot of the same voices that edged us to go to war with Iraq are now urging us to go to war with Iran.

And in any good legal proceedings, you need to actually challenge the credibility of the witnesses and we're not doing enough challenging.

BLITZER: And what you write in your piece is that the whole war in Iraq was a total blunder as far as the U.S. was concerned. Listen to what the Israeli president, Shimon Peres, and the Secretary of State, Hillary Clinton, said yesterday at a luncheon here in Washington sponsored by Brookings.

(BEGIN VIDEO CLIP) PRESIDENT SHIMON PERES, ISRAEL: I'm afraid that some countries may take advantage if the Iranians were location in Iraq, in Syria, in Lebanon and they won't stop. Wherever there is a drop of oil, there is a chance of gaining anything. We can't negate with it.

HILLARY CLINTON, SECRETARY OF STATE: The continuing effort by the Iranians to extend their influence and to use terror as a tool to do so extends to our hemisphere and all the way to East Asia. So the threat is real. We're dealing with a regime that has hegemonic ambitions.


BLITZER: She, of course, and Shimon Peres are both talking about Iran. But its growing influence not only obviously in Iraq, but Syria, in Lebanon.

And they're deeply worried down the road what could happen elsewhere in the Persian Gulf, whether not only Bahrain, but some of the other oil-producing states in the Gulf. How worried about this are you?

HUFFINGTON: Obviously, there are concerns around Iran. But the point I want to stress is that Iraq had a Sunni government and now it's really become a client state of Iran because of our actions, because of what we did. So every time we contemplate a new action, we need to all over again look at the unintended consequences of everything we do.

BLITZER: Arianna Huffington is the editor in chief of "Huffington Post." Arianna, always good to have you back here in THE SITUATION ROOM.

HUFFINGTON: Thank you very much, Wolf.

BLITZER: Syrian troops pound civilian neighborhoods, the U.S. and Russia waging a war of words about the crisis. Is Washington sending some mixed signals out there?

And a frightening police chase ends with a toddler being thrown from a fleeing vehicle. You're going to see more on this dash cam video.


BLITZER: Jack is back with "The Cafferty File," -- Jack.

JACK CAFFERTY, CNN ANCHOR: Question this hour, has the time finally come for the U.S. to intervene in Syria?

Duke writes, "We really need to unplug our own war machine and not feel militarily responsible for resolving conflicts everywhere. Other nations can take the lead handling the Syria mess. Pressuring Russia to join the peace effort is step one."

Gregory writes, "It's time the U.S. stop trying to be the international policeman and protector of the world and take care of business here at home." Paul in Ontario says, "Yes, the time has come. But that doesn't necessarily mean Iraq-style intervention. Just a drone strike on Assad's residence might correct his thinking immediately."

Bill in Wisconsin writes, "It's time for the intervention from the U.N. and the Arab League. The U.S. should stay out of Syria completely. That includes no material support for a no-fly zone or safe zone for refugees."

Ruth in Miami says, "We absolutely have an obligation to intervene in Syria. I know most Americans are war weary, but think about what happened in Cambodia, in Bosnia and of course, in Ruanda."

Dave in Virginia writes, "Jack, it's like dealing with my mother-in- law. If I get involved, I'm blamed. If I do get involved, I'm blamed. I'm sorry the Syrian people are going through this, but it just cannot be America's responsibility to fix every problem in the world especially since the world hates us when we stick our nose in."

If you want to read more about this, go to the blog, or through our post on THE SITUATION ROOM's Facebook page -- Wolf.

BLITZER: Lots of reaction, I'm sure, Jack. Thank you.

Syrian human rights activists are outraged at Columbia University in New York for admitting a controversial student. We have details of her ties to Syria's president.

Plus, amazing police dash cam video and a toddler's remarkable story of survival.


BLITZER: A massive recall by a popular automaker, Lisa Sylvester's monitoring that. Also some of the other top stories in THE SITUATION ROOM right now. What do you have, Lisa?

LISA SYLVESTER, CNN CORRESPONDENT: Hi, there, Wolf. Well, Honda is recalling 50,000 new Civics because of problems with the drive shaft.

The automaker says an assembly error could cause it to come apart and separate it from the joint that connects the shaft to the wheel on the driver's side.

Honda says there are no reports of accidents or injuries from the defects. Customers are being notified about the recall by mail.

And we have some remarkable police dash cam video. It shows the end of a high speed chase in Lubbock, Texas. And a toddler ejected from a fleeing SUV. Take a look here.

You see the 18-month-old girl thrown from the SUV as it rolls over. Amazingly though she gets up and runs toward the vehicle. Her mother eventually jumps out and grabs her. The little girl was taken to a hospital and has now been released. She is OK. Four people all juveniles inside the SUV are under arrest, pretty amazing stuff there.

And a powerful telescope is getting a position to study one of the biggest mysteries in space, black holes. It's called nustar and it has what are described as specialized x-ray eyes, 100 times more sensitive than similar telescopes.

This was no regular launch. It took off today from a jumbo jet like this one at 39,000 feet. NASA says these plane-assisted launches are less expensive since less fuel is required to escape earth's gravity.

And President Obama hosted an early Father's Day celebration with four other dads. They enjoyed a barbecue lunch at Kenny's Smoke House. This is a Washington institution.

Two of the dads are active duty military members. The other two are local barbers participating in the administration's new fatherhood buzz campaign.

It's designed to reach out to dads through barbers and barbershops with positive information with things like finances, jobs and training. What an honor for those four dads. I'm sure they had a good time -- Wolf.

BLITZER: I'm certain they did as well. Thanks very much, Lisa.