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Campaign Attacks; Drug Smugglers Lose; Seizing Billions in Cocaine, Marijuana; Report: Big Bank Used by Terrorists; Campaigns Taking The Low Road; Boy Scouts Reaffirms Ban On Gays; "Seven Minutes Of Terror" Over Mars; Cat Celebrates 15 Years As Mayor; From Arab Spring To Olympic Games; Excitement Lags Among Young Voters; Google Exec Jumps To Rival Yahoo

Aired July 17, 2012 - 16:00   ET

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

WOLF BLITZER, CNN ANCHOR: Happening now: scalding new attacks in this presidential contest. The Obama campaign aims a hard-hitting new ad at Mitt Romney's taxes, while one of Romney's top surrogates says the president should -- quote -- "learn how to be an American." Also, caught in the act -- incredible pictures of an air and sea chase that kept tons of drugs off U.S. streets.

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

But we begin with both presidential campaigns getting down and dirty on the low road even as the candidates themselves try to stick to the high road.

The latest examples, a killer TV ad that the Obama campaign is using to welcome, so-called, welcome Mitt Romney to Pennsylvania. And a top Romney's surrogates complaint that the president should "learn how to be an American."

Let's go to our White House correspondent, Dan Lothian. He's watching all of this unfold.

And, as we have been saying, it's getting ugly.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: That's right, certainly some fireworks today. But the president he was out in Texas attending a total of four fund-raisers trying to catch up in the race for campaign cash.

Some of those fund-raisers were with small donors, the others with some big names like TV star Eva Longoria. But today was about more than just money. The president was also going after his opponent, Mitt Romney, for more details about his personal finances.

(BEGIN VIDEOTAPE)

LOTHIAN (voice-over): It won't help create jobs. And it won't ease the pain of homeowners stuck in upside-down mortgages, but the Obama reelection campaign is convinced that questioning Mitt Romney's finances and private equity resume is legitimate, answers that voters deserve.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: That is hardly a personal attack. That goes to the rationale for his candidacy.

LOTHIAN: So in two places at once, Texas in person, Pennsylvania on TV, the president launched a blistering attack on his opponent, first on his time at Bain Capital.

OBAMA: He made money investing in companies that have been called pioneers of outsourcing. I don't want pioneers of outsourcing in the White House. I want somebody who believes in in-sourcing.

LOTHIAN: Then in the new ad on releasing more of his personal taxes.

NARRATOR: It makes you wonder if some years he paid any taxes at all. We don't know because Romney's released just one full year of his tax returns.

LOTHIAN: The battle for Pennsylvania cannot be understated, even though Democrats in presidential races have held the state since 1992 and President Obama won by 10 points in 2008. The Keystone State appears to be in play, where the former Massachusetts governor was holding a rally standing in front of a sign that read "Obama's upside- down economy."

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: He's got no new ideas for getting the economy going. He's got no one new to blame. He's out of touch with what's happening in the country. And that's why in November we're going to put him out of office.

LOTHIAN: But the harshest counterpunch came from New Hampshire Governor John Sununu, a top Romney campaign surrogate and fierce defender who on a campaign conference call referred to team Obama as a "bunch of liars" for their Bain attacks, then criticized the president's handling of the economy this way.

JOHN SUNUNU (R), FORMER NEW HAMPSHIRE GOVERNOR: I wish this president would learn how to be an American.

(END VIDEOTAPE)

LOTHIAN: Sununu later clarified those remarks, saying he had hoped the president could establish what he said was an American formula for creating businesses, creating an environment where entrepreneurs could thrive.

He said that he wished that he could have better explained that the first time around and apologize. Nonetheless, the Obama campaign was quick to react, saying that the Romney campaign has -- quote -- "officially gone off the deep end" and that these over-the-top rhetoric will not make things any better -- Wolf.

BLITZER: All right, Dan, thanks very much.

Sununu, by the way, John Sununu, the former New Hampshire governor, he will be here live this hour in THE SITUATION ROOM. Give him a chance to explain precisely what he said. He now acknowledges he misspoke in that conference call.

Let's bring in our CNN chief political analyst, Gloria Borger. She's here in THE SITUATION ROOM as well.

The ad we just saw in Dan's piece part of a broader picture that the Obama administration, the Obama campaign is trying to project.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: As you know, this is the summer when it's time to define your opponent.

It's not rocket science here, Wolf. What the Obama campaign is trying to do is paint a very, very unflattering portrait of Mitt Romney. He is, according to the Obama campaign, secretive, tax-avoiding businessman who outsources jobs and cares nothing about the middle class.

That is, of course, on top of his wealth. So it's a caricature, but sometimes caricatures can stick, particularly when you're spending $25 million a month, most of which is in negative advertising.

So that can stick. And the problem for Romney right now is that unless he releases his taxes or continues to -- or give some more information about his taxes or even Bain, these questions will be raised. Don't forget, Wolf, you were there. These questions were raised by his Republican opponents in the primaries, by Rick Perry and by Newt Gingrich.

And Rick Perry asked the question aloud at a CNN debate, we can't change candidates in September, you have got to disclose now.

BLITZER: Yes. Tough words at the time coming back a little bit obviously right now.

BORGER: Yes.

BLITZER: There's one layer of attack that the president has, but his surrogates, his aides, his advisers are a lot more fierce, shall we say. Let me play a few clips.

(BEGIN VIDEO CLIP)

DAVID AXELROD, SENIOR OBAMA CAMPAIGN STRATEGIST: This is the most secretive candidate since Richard Nixon.

REP. DEBBIE WASSERMAN SCHULTZ (D), FLORIDA: He and his campaign team leadership need to put their big boy and big girl pants on and defend his record.

STEPHANIE CUTTER, OBAMA 2012 DEPUTY CAMPAIGN MANAGER: If you're signing federal documents that aren't actually true, it is a felony. But that doesn't -- we're not accusing Mitt Romney of committing a crime here.

(END VIDEO CLIP)

BLITZER: Now, usually the advisers, the surrogates are a lot tougher than the candidate himself, especially a sitting president. But what's going on here?

BORGER: Well, it is. It's a high road/low road strategy.

The president answers the questions when asked them about Bain Capital or Romney's taxes and says it's a legitimate form of inquiry. But what you hear from the surrogates is the low road. And, by the way, I would point out with John Sununu that it is on both sides that you hear this from the surrogates.

And they take the low road. They sling the mud. And, of course, this is what, of course, a vice presidential candidate can help with too because generally vice presidential candidates are the hatchet men.

BLITZER: Romney clearly has been on the defensive a lot over the last week, 10 days, shall we say. What does he need to do to change the situation?

BORGER: I think he needs to get more comfortable, first of all, in talking about his wealth. He's never been comfortable talking about it during the primaries. He still isn't.

He may need to disclose his taxes or more about his taxes, talk more about Bain, be a little more informational about it, because otherwise you play into this whole notion of secrecy that the Obama campaign is talking about.

Then I would argue what he needs to do is change the subject. Maybe one of those ways to change the subject is to talk about, hey, why don't we have Congress stay in Washington in August? One Republican suggested this to me today. Why not have Congress stay in Washington in August and deal with the problems of the fiscal cliff before the election, rather than after the election?

I would argue that if either Romney did that or President Obama did that, that would have some resonance with the American public who actually wants to get these problems solved.

BLITZER: Good point, Gloria.

BORGER: There you go.

BLITZER: Thanks very much, Gloria Borger. Thank you.

Let's go to Jack Cafferty right now. He's got more in "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Congress in Washington in the month of August, I don't think that's ever happened, has it?

BLITZER: It's got to be a national emergency.

CAFFERTY: Well, yes. Well, this is one. We're going over the edge here come January 1.

Young voters are not nearly as excited about this presidential election. And that could doom President Obama's chances for a second term. A new Gallup poll shows only 58 percent of registered voters between the ages of 18 and 29 say they will definitely vote this fall. That is far below the current national average of 78 percent for all registered voters.

It's also at least 20 points below the percentage of young people who plan to vote in the fall of both 2004 and 2008. Young voters were one of the key voting blocs in President Obama's 2008 victory over John McCain. They overwhelmingly support the president again this time around, but historically they show up to vote in lower numbers than other groups.

There's a growing sense the outcome of this election could come down to turnout. And if that's the case, the relative lack of interest among the young people not a good sign for the president. Of course, it's only July. President Obama and Mitt Romney both have more than three months to fire this group up.

The poll also shows the percentage of blacks who say they will definitely vote is similar to the national average this year. However, Hispanic registered voters who overwhelmingly support President Obama are another group with the lowest expected turnout. Just 64 percent of Hispanics in the poll say they will definitely vote, again, not a good sign for the president.

Back to the young people for a minute. The outcome of this election will be enormous for the country. We're facing many critical problems, including high unemployment, runaway national debt, the fiscal cliff we were referring to. Those under the age of 30 have a huge stake in all this because whether we elect President Obama or Mitt Romney, it could have a big impact on what kind of America they will inherit.

Here's the question. What's it going to take to get young voters excited again?

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

BLITZER: He's got to get them excited if he's going to win states like North Carolina or Virginia or Ohio or Michigan, some of these battleground states, Pennsylvania to be sure. He's got to get that base out there, young people, certainly African-Americans, Hispanics, the way they turned out four years ago.

But, as you know, Jack, it's not going to be easy.

CAFFERTY: Well, and in North Carolina, for example, I think President Obama could have hurt himself with his stand on gay marriage, because that isn't playing well in a lot of the African-American churches in a place like North Carolina.

So he could have done himself some damage there. He's going to have to get the young people fired up to come out for him again like he did last time.

BLITZER: Well, as you say, he's got more than three months. Let's see how he does. Let's see what Romney does as well. Thank you.

(CROSSTALK) CAFFERTY: OK.

BLITZER: All right, stand by. We have some remarkable pictures we're going to show you, bales of marijuana, bricks of cocaine, and a victory in the war against drug smuggling on the high seas.

Plus, political star power. You're going to find out why the actress Jada Pinkett Smith came to Capitol Hill today.

And the actor Charlie Sheen makes sure military men and women will benefit from his attempted comeback.

(COMMERCIAL BREAK)

BLITZER: America's taking its war on drugs to the sea. The target? Key supply lines that criminals are using to get cocaine, cash and stolen goods into the United States.

Last year alone, the operation seized more than 100 tons of cocaine worth more than $2 billion.

Lisa Sylvester's taking a closer look at what's going on.

Lisa, these missions, they are stopping a lot of illegal stuff from getting into the country.

LISA SYLVESTER, CNN CORRESPONDENT: Absolutely right, Wolf. In fact, today almost four tons of cocaine and marijuana were brought ashore. That's the take after several months at sea chasing drug runners. And here's an inside look at how those fugitives and their loot were caught.

(BEGIN VIDEOTAPE)

SYLVESTER (voice-over): You're looking at a high-speed chase. Suspected drug smugglers on a souped up go-fast boat last month in Pacific Central America. In their wake, they're leaving suspicious packages thrown overboard.

A helicopter marks the location with smoke markers for ships to retrieve. The suspects are being pursued by an armada helicopter, surveillance planes, Navy ships, including the U.S. frigate Nicholas. But they still try to flee.

Sixteen miles later the jig is up. A gunner on a helicopter targets the engines with gunfire.

COAST GUARD OFFICER IN CHARGE: We were able to employ our aerial use of force with our precision marksman to shoot out the engines.

SYLVESTER: A tactical team suits up and heads out on a zodiac to board the crippled speedboat. This could go peacefully or there might be trouble.

The speed boat looks like it's sinking. The tactical team takes several suspects into custody. The boat is a goner. By nightfall over 25 packages of drugs have been fished out of the water and chemically tested.

COAST GUARD OFFICER IN CHARGE: There was approximately 220 kilograms of cocaine and 125 kilograms of marijuana.

SYLVESTER: This was one of several high-volume interdictions at sea over the last months by an international task force and Operation Martillo, Spanish for hammer. The results, almost four tons of cocaine and marijuana, which is just been brought to Jacksonville, Florida. Its value, about $93 million wholesale or quarter billion dollars on the street.

The joint operation combines two services that are sometimes rivals, the Coast Guard and the Navy. Technically they can re-flag a Navy ship to make it a coast guard cutter, more suitable for actions.

CMDR. STEPHEN FULLER, U.S. NAVY: The Coast Guard guys are great professionals. If I need to be a cutter to help them execute a mission, then I'm happy to do that.

SYLVESTER: Sometimes the chase results in the fugitives surrendering. But not always. In this chase back in March, the suspects tossed their load, jumped ship and their speedboat out of control shot up on to the beach.

ENSIGN TONY DUNLAVY, U.S. NAVY: Every bust that we had was just amazing. And just to see that in action was awesome.

(END VIDEOTAPE)

SYLVESTER: The four tons of drugs brought ashore this morning will be turned over to the DEA for destruction.

Wolf, you can see they're doing obviously a lot of good there taking those drugs, getting off the street.

BLITZER: I'm impressed they got that engine on that fast boat, they stopped that the way they did.

SYLVESTER: Yes, they did. As you saw, that fast boat ended up sinking. I mean, those things go pretty fast -- hence the name obviously. But they're doing some good work out there.

BLITZER: You know what? They stopped this one, but there will be a lot more effort. There's a lot of money at stake. So, it will continue. This war on drugs -- it's been going on for a long, long time. I suspect it will continue, no end in sight.

Thanks very much, Lisa, for that.

A famous actress appeared front and center today in the fight against human trafficking. Jada Pinkett Smith testified before a Senate committee earlier today on a hearing on how to fight the growing problem of human smuggling. She got involved after her 11-year-old daughter talked to her about it and made her aware of just how widespread the issue is. She's an advocate for the Web site, don'tsellbodies.com. Today, she stressed that it doesn't take much to help.

(BEGIN VIDEO CLIP)

JADA PINKETT SMITH, ACTRESS AND ACTIVIST: Fighting slavery doesn't cost a lot of money. The cost of allowing it to exist in our nation and abroad are much higher. It robs us of the thing we value the most, our freedom. And we know what that freedom is worth. We have paid a high price to defend it here and abroad.

(END VIDEO CLIP)

BLITZER: The Justice Department says hundreds of victims are discovered right here in the United States every year. Most are forced into slavery to sell drugs or sex.

So did one of the world's biggest banks help drug cartels and terrorists? You're going to hear why Senate investigators say the answer is yes to the tune of billions of dollars. And one of Google's original employees jumps to rival Yahoo! We're going to take a closer look at the woman who's switching sides.

(COMMERCIAL BREAK)

BLITZER: One of the world's largest banks is being accused of being a tool for the drug lords and the terrorists. Executives of HSBC were grilled by a U.S. Senate committee today. They allegedly ignored repeated warnings of extensive money laundering through the bank's accounts.

Our own Jill Dougherty's been going through what's going on over at that Senate hearing all of the allegations.

Jill, what are you hearing?

JILL DOUGHTERY, CNN FOREIGN AFFAIRS CORRESPONDENT: Well, Wolf, you know, what they're saying -- the Senate subcommittee is saying, is that HSBC's money laundering controls were so weak that it exposed the U.S. financial system not only to money laundering, but to drug trafficking and even terrorist financing.

(BEGIN VIDEOTAPE)

DOUGHERTY (voice-over): You've probably seen the commercials, one of the world's biggest banks, London-based HSBC, trying to claim a stake in the American market. But before it does, the banking giant is under investigation by the U.S. Senate, accused of turning a blind eye to billions of dollars in money transfers by drug cartels and even terrorist groups.

SEN. CARL LEVIN (D), MICHIGAN: Why is it that the bank -- the bank that's the group bank that sees this kind of problems just doesn't flat out hold some folks accountable and fire some folks?

DOUGHERTY: At a Senate hearing Tuesday, a senior HSBC official, David Bagley, offered to resign. DAVID BAGLEY, HEAD OF GROUP COMPLIANCE, HSBC HOLDINGS: Now is the appropriate time for me and for the bank for someone new to serve as the head of group compliance.

DOUGHERTY: The money laundering stretched across the world. HSBC's Mexico unit shipped $7 billion in cash to the bank's U.S. affiliate. Law enforcement officials say the only way to account for that much money is if it was drug money.

PAUL THURSTON, CHIEF EXEC., RETAIL BANKING & WEALTH MGMT., HSBC HOLDINGS: We've closed branches in areas where there's a high risk of money laundering. We're now in the process of closing all the HSBC Mexico accounts in the Caymans.

DOUGHERTY: A Senate report also found that HSBC worked with a Saudi Arabian bank some owners linked to terrorist groups, including evidence indicates al Qaeda.

(END VIDEOTAPE)

DOUGHERTY: There's even more information, Wolf, about Iran.

HSBC's U.S. affiliate, this report says, handled nearly 25,000 transactions that were involving Iran in spite of course U.S. sanctions against Tehran. Some bank executives they say were aware of the transactions and the European affiliates stripped out information that linked them to Iran. And the bank itself in a review said that they had found nearly $20 billion of this type of transactions.

Now, the Senate subcommittee does say that HSBC has been cooperating and providing documents, but they also criticize government regulators who they say allowed this problem to fester for years. And then finally, Wolf, lots of information here, the Justice Department also has its own investigation of HSBC.

BLITZER: I suspect a lot more is about to come out. Thanks so much for that report, Jill Dougherty.

Meanwhile, also here in Washington, the Fed Chairman Ben Bernanke gave investors a bit of hope today. Lisa Sylvester's back. She's monitoring that story and some of the other top stories in THE SITUATION ROOM.

What did he say? What's going on?

SYLVESTER: Well, Wolf, everything's relative. You know, Bernanke gave a gloomy assessment of the economy to a Senate panel today. But while he did not promise help, he also didn't definitively say the Fed would not take action to improve the U.S. economy if it decides action is need. He says risks to the recovery have grown with Europe's debt crisis and the looming fiscal cliff in the U.S. as major concerns.

Unacceptable, incompetent and immature -- that's how British officials are describing the contractor for the security staff for the Olympic Games. They grilled the head of the firm today. G4S was supposed to provide 10,000 guards but only 4,000 of them are ready. The British government is now calling in the military and extra police to help.

And if Charlie Sheen's new sitcom is a hit, America's military families will be benefitting. The creator and star of "Anger Management" is pledging to give 1 percent of the show's profit to the USO. He says he'll give at least $1 million. The donation will go to a program called Operation Enduring Care, which supports injured troops and their families.

A lot of military families probably please to hear that news, Wolf.

BLITZER: That's a nice, generous gift, $1 million to the USO from Charlie Sheen. Good work. I'm sure everyone will appreciate that.

Other news we're following, a little girl falls from a third floor window and lives. Coming up, the remarkable story of the man who was in the right place at the right time. He did something to break her fall. We'll explain what happened.

Also, Romney national campaign chairman John Sununu, he'll join us live to explain his extraordinarily harsh criticism of President Obama today. Democrats say it's proof the Romney campaign's gone off the deep end.

(COMMERCIAL BREAK)

BLITZER: Let's get right to our "Strategy Session." Joining us now, two CNN contributors, the Democratic strategist, Maria Cardona, and Erick Erickson. He is the editor-in-chief of redstate.com. Guys, thanks very much for coming in.

You know, John Sununu, we heard this earlier in the hour. We're going to be speaking with him later. He had some controversial comments today, which he's walked away from when he suggested that the president of the United States -- I wish this president would learn how to be an American.

He walked away from that. He did some explaining. We're going to speak to him in a moment. But I want you to listen to what Mitt Romney himself said today about President Obama because what he's saying is not all that different. Listen to this.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: In the past people of both parties understood that encouraging achievement -- encouraging success, encouraging people to lift themselves as high as they can, encouraging entrepreneurs, celebrating success instead of attacking makes America strong. That's the right course for this country. His course is extraordinarily foreign.

(END VIDEO CLIP)

BLITZER: All right, let me bring Erick Erickson in first. His course is extraordinarily foreign. He's speaking about the sitting president of the United States and his course is extraordinarily foreign. Erick, what is he talking about? ERICK ERICKSON, CNN CONTRIBUTOR: Well, Wolf, they probably should have just called the president a liar or felon because that's what the president's team has been calling Mitt Romney past week.

It's just crazy to me that they would get upset about John Sununu and Mitt Romney given the (inaudible) they've hurled. But in fact, I think the president is profoundly ignorant about the way the free market works and I agree with John Sununu and Mitt Romney.

The fact of the matter is the president in his own autobiography says he was a failure in his one private sector job before joining the Ivory Tower. He has benefitted off of being in government, working connected to government, working in academia.

I don't know that he knows how to start a business in this country. For him to say somehow if you've built something, you didn't really built it, other people do.

No one denies that other people contributed to your success in life. But I mean, this is just grade school Marxism that he's entering.

BLITZER: All right, well, I'm going to bring Maria in, in a moment. But I'm going to hold you accountable for this. If this is a president who knows nothing about the free market system, why is Wall Street done so well over the past three years from a low of around 6,500.

Now approaching 13,000 the Dow Jones Industrials, these huge big business operations are making trillions. They're sitting on trillions of dollars, big business has done exceedingly well over the past three years --

ERICKSON: Exactly.

BLITZER: -- under this administration.

ERICKSON: Absolutely, Wolf. Because we are confusing the free market and big business, and we shouldn't. And I wish Mitt Romney would focus on this. It's not that big business is succeeding.

It's that big business that has very close ties to government is succeeding. Frankly, it's been a bipartisan problem. Wall Street has benefitted from Democrats and Republicans. It is no secret.

It is documented fact that the firms that have profited the most from Dodd-Frank have been firms like Goldman Sachs that both Republicans and Democrats vilify.

It's not a free market. We do have an unlevel playing field and Wall Street has benefitted from the unlevel playing field. It's just the president's rhetoric and his policies don't match up.

BLITZER: I'll bring Maria into this conversation. But there are plenty of huge firms out there that don't have a whole lot of ties to government. They are making a lot of money. But go ahead, Maria. Go ahead and respond. MARIA CARDONA, CNN CONTRIBUTOR: Sure. I think Erick just used one of the points that Democrats are making, which is that big business is benefitting from what is not a level playing field.

And the people who are hurting are the small businesses and the middle class. And frankly, if you hear what the president talks about and what Democrats talk about are policies that are built to increase.

And to focus on having a robust middle class building it from the bottom up to make sure that everybody benefits, not just big businesses or the ones who are most wealthy in this country.

BLITZER: Go ahead, Erick.

ERICKSON: Except there's no economic philosophy outside of Marxism that believes you build up an economy from the bottom up. You actually don't build up an economy from the bottom up.

You build it from individuals who come up with an idea or service that they can sell better than anyone else and then they provide jobs out to everybody else.

"The Wall Street Journal" reported it last week, Daniel Iningrams column, there is actually no non-Marxist economic philosophy that believes that growth comes from the middle class.

The middle class derives from profits of individuals in America through American ingenuity come up with. That for him to be running a class warfare campaign shows he's absolutely clueless on how to create jobs and the economy.

CARDONA: But I think if you look at what you just said in terms of its individuals who come up with an idea and start their small business and that is what creates jobs in this country, a lot of middle class voters -- and small business people would say, yes, absolutely, that's me.

That's what I am doing. And if you look at what the president is trying to push and what he's talked about 18 tax cuts for small businesses trying to figure out how to help middle class families, many of those who are the small business owners and I think that's what resonates more.

I do want to go to, Wolf, what you mentioned at the very beginning in terms of both Romney's comments and what Governor Sununu said earlier during a conference call basically saying he wished this president would be more American.

I think the Republicans run a really big risk of going back to the '08 campaign and basically using one of Michelle Bachmann's talking points.

When she called President Obama an American and when you look at the coalition of voters that the Republicans really need to get more of, i.e. minorities, especially Latinos, they hear this kind of rhetoric and they're going to recoil. That's what my reaction was when I first heard it.

BLITZER: The rhetoric is getting intense and ugly. We're going to be speaking later live with John Sununu, the former governor of New Hampshire, a major Romney surrogate.

He did say on that conference call, I wished this president would learn how to be an American. He has since walked away from that. He said he misspoke. So we're going to get his clarification that's coming up later. Erick Erickson and Maria Cardona, thanks for coming in.

CARDONA: Thanks so much, Wolf.

BLITZER: The Boy Scouts of America under fire for ban on gay members makes a major announcement on the police. We have details.

Also coming up, more on John Sununu's explanation of his anti-Obama remarks. We're going to be speaking with John Sununu. That's coming up later.

(COMMERCIAL BREAK)

BLITZER: The Boy Scouts of America is announcing a major decision on its policy to ban gays. Lisa Sylvester's monitoring that and also some of the other top stories in THE SITUATION ROOM right now. What's the group saying, Lisa?

LISA SYLVESTER, CNN CORRESPONDENT: Wolf, the group is emphatically reaffirming its ban on gay members. In a statement today, the organization says the decision to continue to exclude gays, quote, "remains in the best interest of scouting."

The boy scouts conducted a two-year review of the ban. The group has faced numerous protests over this policy.

NASA's latest rover is in for a rocky landing on Mars in the coming weeks. NASA officials call it 7 minutes of terror because the landing is so complicated. The curiosity rover is about the size of a small SUV.

So NASA's using parachutes and a rocket's backpack to slow it down enough to make the landing. It is scheduled to touch down on Mars on August 6th.

And the mayor of one Alaska community is celebrating -- you are looking at him, Stubs, the cat. Yes, I said a cat. When residents weren't happy with the options, he knows what he likes including drinking water from a wine glass with catnip.

And his popular with the town's 800 residents and he even has his own Facebook page. Somehow I would guess he probably has a Twitter account as well and probably a number of followers, too, Wolf.

BLITZER: Very high-tech cat indeed. Thanks, Lisa, for that.

During the Arab uprisings, thousands of lives were put on hold to join protests and Olympic athletes were no exception. Many of them had to stop training, others suffered injuries and some even lost family members.

CNN's Mohamed Jamjoom has the story of Tunisian gymnast who was told by the former regimen he would never compete again.

(BEGIN VIDEOTAPE)

MOHAMMED JAMJOOM, CNN INTERNATIONAL CORRESPONDENT (voice-over): Wajdi Bouallegue's finally getting the global recognition he deserves. A major photo shoot for "Sports Illustrated" and what has become one of the symbols of the revolution.

This is the former home of the toppled Tunisian president's brother- in-law. After he fled the country it was gutted and covered in graffiti. Now it houses rubble and revolutionary art.

For Tunisia's star gymnast and Olympic hopeful, it's a strong statement. Bouallegue's one of Tunisia's leading athletes, known to be one of the best floor exercise performers in African and Arab history.

He makes the sport look easy combining physical strength, poise, flexibility and balance. He competed in the 2004 Olympics and now set to be the only Tunisian gymnast at the 2012 games.

During Tunisia's revolution, the scenes of protest not only took over his athletic dreams, the violence hit home.

WAJDI BOUALLEGUE, TUNISIAN GYMNAST: I was here downstairs with all the neighbors here ready to protect our city.

JAMJOOM: Bouallegue decided to defend his community during the uprising as part of a neighborhood watch.

(on camera): So this is where you guys would sort of patrol?

BOUALLEGUE: Yes. This is where every residence over here have their own groups and every head of family right here of every home. And our wives and our sons are at home and right here to communicate with us if there is something wrong happening we communicate quickly.

We were really scared. Sometimes we was like 200, 300 people. Then we just heard some noise like, come on, come on, go to fight, go to fight and we run, we run, we run.

(END VIDEOTAPE)

BLITZER: That report from CNN's Mohamed Jamjoom.

Coming up, President Bill Clinton, he is visiting Nelson Mandela on the eve of his 94th birthday. In our brand new 6:00 p.m. Eastern hour of THE SITUATION ROOM, President Clinton sits down with CNN in South Africa.

You're going to hear what he has to say, what he's learned from the South African leader and more. The interview with Bill Clinton in the 6:00 p.m. Eastern hour.

Also, there were heated President Obama's victory in 2008, but what will the president need to do to get young voters really excited this time around?

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

JACK CAFFERTY, CNN ANCHOR: Wolf, the question this hour is, what is it going to take to get young voters excited again? A Gallup poll indicates that young voters not nearly as revved up about this election as they were in 2008.

Jennifer writes from Winnipeg, "A definite plan to fix the economy and jobs. The way the money situation is now. Younger people have nowhere to go. It's pretty grim out there, Jack. And if I were in that age category, I probably wouldn't vote either. What's to vote for? More of the same?"

Rachel, a 19-year-old student writes this, "Two things, more financial aid for students who can't afford college. And two, the message needs to hit home that if we don't do anything, if we don't vote we are messing up our own future. Young people need to be in office, not the old white guys."

John in Oregon writes, "Maybe a united front. Both candidates, together, asking voters to actually vote this election despite who they're voting for, just get out and vote."

George in New York writes, "I'm a high school teacher who had numerous students who were excited about Ron Paul because of his stance on drugs. I'm not trying to be funny. Young people are more interested in discussing the legalization of marijuana than the deficit. They've become extremely passionate when discussing the enormous waste the war on drugs has been."

Gregory in Texas, "Vote for Obama or you'll have to get a job." And Mark in Oklahoma, "Well, let's see, I suppose the president's going to have to promise something new and exciting to the young voters like maybe a new shovel-ready apartment so they can move out of their parents' basement."

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

BLITZER: Been saying it's getting ugly out there on the campaign trail. Jack, you've covered a lot of these races over the years. It's nasty.

CAFFERTY: You know, and we go through this every time. They all start out fairly genuine and polite. By the middle of summer, it's a knife fight. You know, it gets tough to watch after a while. Isn't there another way we can do this?

BLITZER: No. This is the only way we can do it.

CAFFERTY: No. This is it.

BLITZER: This is it. This is what we got. It's the best we can do. All right, Jack, thanks very much.

Dutch officials now say six, yes, six needles have turned up in sandwiches served on U.S. airlines. In our next hour, we're going to have the latest on what now is a criminal investigation.

And in our brand new 6:00 p.m. Eastern hour of THE SITUATION ROOM how the historic U.S. drought will hit you at the grocery store.

Also coming up, talk about taking on new challenges. The newly named head of Yahoo! just reveals she's also expecting her first child.

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BLITZER: Here's a look at this hour's "Hot Shots." In London, angry cab drivers block city streets during a demonstration against an upcoming taxi ban during the Olympics.

In Bangladesh, sparks fly of a piece of metal as a young man works in a factory. In China, a woman works her way up the ancient stairs of the Great Wall of China.

And in France, a zoo manager feeds a piece of cake to an orangutan to celebrate the zoo's 50th birthday. "Hot Shots," pictures coming in from around the world.

She was Google's 20th employee and now she's switching sides. Yahoo! has named her its newest CEO. CNN's Silicon Valley correspondent Dan Simon is joining us.

He's taking a closer look at Yahoo!'s newest member. Dan, what are you learning?

DAN SIMON, CNN SILICON VALLEY CORRESPONDENT: Well, Wolf, as you can imagine this announcement is getting a ton of buzz in Silicon Valley.

The Yahoo! Board is getting a lot of credit for putting in Marissa Mayer as CEO of the company. The question, can she turn it around?

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SIMON (voice-over): The news was met with enthusiasm says one senior Yahoo! executive who thinks Marissa Mayer's appointment will lift the company's sagging brand.

Mayer started at Yahoo! today. Her reputation as a driven product leader should serve the company well, according to Valley insiders.

DAVE MCCLURE, FOUNDING PARTNER, "500 STARTUPS": But I think she also brings potential for recruiting. One of the biggest issues Yahoo! has right now is probably morale in addition to the tech leadership. SIMON: Mayer was one of Google's earliest employees and an integral part of its success. Success that helped make competitors like Yahoo! less relevant.

Despite her impressive credentials, it's not clear whether anyone can make Yahoo! the power house web site it used to be. Dave McClure runs a company that invests in small start-up companies.

MCCLURE: Generally speaking, I think they've been losing the race pretty badly to Google and Search. I think they've been losing sort of the battle in e-mail and other areas.

SIMON: Mayer, who is 37, earned her degree in computer science at Stanford. She eventually became Google's first female engineer in 1999. She spoke to CNN earlier this year about the company's incredible ride.

MARISSA MAYER, YAHOO CEO: We have a thousand times more employees now than we did then. The lunch lines are longer than the company was big when I started.

But at the same time I really think that Google's done an amazing job throughout preserving its culture and preserving what motivates the employees.

SIMON: The opposite can be said about Yahoo! A company that's lost its focus, has seen its stock price drop, and has had to layoff thousands of employees.

KARA SWISHER, DIGITAL TECHNOLOGY ANALYST: The question is, does she have what it takes to really make the changes? Yahoo! does not have a lot of time. You know, these companies can get very sick very quickly. Yahoo!'s been on life support for a while.

SIMON: Mayer is expected to have her first child in October, a boy. She says she'll be taking a quick maternity leave then back to the office.

MCCLURE: I think it will give her a lot of connection with the mainstream consumer base that, you know, maybe a male CEO wouldn't have.

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SIMON: Well, most analysts and company insiders thought that the interim CEO, Ross Levinson would get the nod. He took over a couple months ago after the previous CEO was found he fudged on his resume. No word yet on Levinson's future -- Wolf.

BLITZER: Did the board, Dan, express any serious reservations because Mrs. Mayer was pregnant?

SIMON: No, Wolf. And in fact, she informed the board back in June when she was first contacted about the job. She says they expressed no reservations about her ability to juggle motherhood and the demands of the job. That's what she told "Fortune" magazine. She says it showed the boards quote, "a bold thinking" -- Wolf.

BLITZER: All right, Dan Simon reporting for us from Silicon Valley. Thank you.

And you're in THE SITUATION ROOM. Happening now.

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UNIDENTIFIED MALE: I bit into and I felt this real jab in the top of my mouth.

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BLITZER: Delta and the FBI now investigating needles, yes, needles found in airline meals.

Also, parts of the United States suffering through the worst drought in decades. Farmers are facing ruin. All of us face higher prices at the same time.

And a series of highly unusual moves has the world wondering, is North Korea on the brink of any significant change?

We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in THE SITUATION ROOM.