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Syrian City Bombarded; Campaigns Waging Verbal Warfare; Needles Hidden In Airline Sandwiches; New Chapter for North Korea; Worst Drought in Decades; U.S. Economy; Financially Irresponsible Government

Aired July 17, 2012 - 17:00   ET

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

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

Happening now...

(BEGIN VIDEO CLIP)

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

(END VIDEO CLIP)

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.

(VIDEO CLIP)

BLITZER: We begin this hour in Syria and the intense shelling in the city of Homs. Syrian opposition groups are reporting at least 45 people killed today in violence across the country. That's on top of 97 people killed yesterday, more than 15,000 since last March -- many simply massacred by government forces away from the eyes of the world.

Some activists are risking their lives to bear witness.

CNN's Arwa Damon has an exclusive report.

But we have to warn you, some of the images are very disturbing.

(BEGIN VIDEOTAPE) ARWA DAMON, CNN INTERNATIONAL CORRESPONDENT: (voice-over): The power is out in the streets of Duma. The three activists and their escorts don't dare shine the light. There is a sniper lurking. Gunfire in the distance forces them to pick up the pace.

The activists are part of the opposition's media operation. They smuggled themselves into the Damascus suburb last month and risked their lives to document this -- a massacre said to have taken place just hours earlier. Among the corpses strewn about, that little girl. A man points to one of the bodies and says, "He was executed, a civilian." He points to a second corpse and adds, "This is his cousin, shot because he tried to save him."

Residents are readying the bodies for burial. Blood is soaking through the funeral sheets, the names of the deceased hastily scrawled. It's a grim routine Syrians in areas that have dared stand up to the regime have grown accustomed to. The bodies unceremoniously dragged away and placed alongside others.

Residents say Syrian security forces searching for weapons in some buildings wiped out members of several families. This man described what happened in one instance. "They had two rooms they put the men and the women in," he says. "from 10:00 a.m. to 10:00 p.m. the living were trapped with the dead. It was an execution. They asked, 'Where are the guns?' 'There are no guns was the response.' And they executed them one after the other."

At least 45 were killed in this one attack, residents say, information CNN cannot independently verify.

In the morning, the media team picked their way through rubble strewn streets, but they would not be able to leave Duma. The Assad regime siege intensified, the government bombardment relentless. Many more were killed.

(on camera): The team that filmed this at the end of June was trapped inside Duma for more than a week. And it's taken this long to get the footage smuggled to Lebanon.

(voice-over): All of that effort, all of that risk to give to the world a glimpse of Syria's narrative of horror and despair.

Arwa Damon, CNN, Beirut.

(END VIDEO TAPE)

BLITZER: The report, Arwa Damon reporting for us.

Here in the United States, the mudslinging between the Romney and Obama campaigns is reaching new levels today, with the campaigns engaged in all-out verbal warfare.

CNN's national political correspondent, Jim Acosta, is here in THE SITUATION ROOM.

He's got details. And it's getting nasty by the minute -- nastier by the minute, I should say.

JIM ACOSTA, CNN CORRESPONDENT: Wolf, it is getting rough out there. As we said all day long today, Mitt Romney has been warning the Obama campaign that he would respond to the attacks he's been receiving from the president and his surrogates over the last several days.

Today, he and his campaign did just that.

(BEGIN VIDEOTAPE)

ACOSTA (voice-over): In Mitt Romney's first public rally since he says the Obama campaign accused him of committing a crime, the GOP contender blamed the war of words on the president.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: So the president is looking around for someone to blame. And recently, I became the -- the reason for all our problems here. It was a surprise to my family and me, but he's always looking for someone out there.

ACOSTA: Romney says there's a reason for the attacks on his tenure at his former private investment firm, Bain Capital.

ROMNEY: I'm convinced he wants Americas to be -- Americans to be ashamed of success.

ACOSTA: Not so, says the Obama campaign. At a fundraiser in San Antonio, the president said it's Romney who made his business career fair game.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: His main calling card for wanting to be president is his private sector experience.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP FROM CAMPAIGN AD)

UNIDENTIFIED MALE: Tax havens.

(END VIDEO CLIP)

ACOSTA: His campaign is stepping up the attacks, releasing a new ad that asks what Romney is hiding by refusing to release more than two years of tax returns.

Romney told the National Review online, "I'm simply not enthusiastic about giving them hundreds or thousands of more pages to pick through, distort and lie about."

JOHN SUNUNU, NEW HAMPSHIRE GOVERNOR AND ROMNEY NATIONAL CAMPAIGN CO- CHAIR: They are clearly and unequivocally a bunch of liars.

ACOSTA: Punching back, the Romney campaign held a conference call with reporters featuring its brass knuckles surrogate, John Sununu, who questioned the president's understanding of the economy in a personal way.

SUNUNU: It is the American way. And I wish this president would learn how to be an American.

ACOSTA: Minutes later, Sununu corrected himself.

SUNUNU: The president has to learn the American formula for creating business.

ROMNEY: Thank you.

ACOSTA: But an Ohio businessman on the same call also let loose.

KYLE KOEHLER, VICE PRESIDENT, K.K. TOOL COMPANY: It seems to me that the Obama's America, there's no risk, but there's plenty of reward. That's called socialism to me.

ACOSTA: The personal attacks come one day after Romney said he would hit back at the president after what was said on an Obama campaign conference call last week.

STEPHANIE CUTTER, OBAMA DEPUTY CAMPAIGN MANAGER: Either Mitt Romney, through his own words and his own signature, was misrepresenting his position at Bain to the SEC, which is a felony, or he was misrepresenting his position at Bain to the American people.

ACOSTA: As for the Romney conference call, an Obama campaign spokesman said it's the GOP contender's team that has officially gone off the deep end.

(END VIDEO TAPE)

ACOSTA: All week there's been speculation Romney might change the subject by naming his running mate. His campaign announced two new staffers for the eventual VP pick.

Romney heads to Ohio tomorrow, the home state of the man said to be at the top of the list, Rob Portman.

But hold onto your hats. Bobby Jindal also scheduled to be in the same state of Ohio tomorrow -- Wolf.

BLITZER: All right. We'll see if there's an announcement or not. See you then.

ACOSTA: We'll -- we'll see.

BLITZER: If it's not tomorrow, it will be one of these days.

ACOSTA: It's got to be one or the other, that's right.

BLITZER: Jim Acosta, thanks very much.

WOLF BLITZER, HOST: And as Jim just reported, Romney national campaign co-chairman, John Sununu, is getting blasted by Democrats for what they see as some over the line remarks. Today. John Sununu, the former governor of New Hampshire, is joining us on the phone now from Manchester.

Governor, thanks very much for coming in.

And I want -- I want to give you a full chance to respond to what you said today...

SUNUNU: Sure.

BLITZER: -- because, as you know, it's causing a huge uproar.

Here's the full context of what you said on that conference call with the reporters.

(BEGIN VIDEO CLIP FROM ROMNEY CAMPAIGN CONFERENCE CALL)

SUNUNU: The president clearly demonstrated that he has absolutely no idea how the American econ -- economy functions. The men and women all over America who -- who have worked hard to build these businesses, their businesses, from the ground up is how our economy became the envy of the world. It is the American way. And I wish this president would learn how to be an American.

(END VIDEO CLIP)

BLITZER: All right, "I wish this president would learn how to be an American." Governor, go ahead and explain what you really -- Sununu: Sure.

BLITZER: -- meant to say.

SUNUNU: Well, I said the -- first of all, I was responding to the president's really terrible remarks in Virginia over the weekend, where he told the businesspeople of America they shouldn't take credit for building their businesses. That clearly is insulting to them and -- and, in my opinion, expresses a lack of understanding of how jobs are created.

I was making the point that in America, entrepreneurs deserve credit and there is an American formula for creating jobs. And I used that phrase three or four times in that call.

And -- and I wanted to come back to that same theme in that riff that you just played there. And instead of saying that he's got to learn the American formula for creating jobs, I -- I did say those words that are there. And, frankly, I made a mistake. I shouldn't have used those words. And I apologize for using those words.

But I don't apologize for the idea that this president has demonstrated that he does not understand how jobs are created in America. He thinks that jobs are created by giving grants to your cronies, to your bundlers and your contributors, like he did with Solyndra. Like he did with Vista (ph), like he did with the wind projects that took jobs out of this country. The common denominator is that they all had owners and investors that were bundlers and contributors to his campaign.

That's what he means, perhaps, when he says government creates jobs, American taxpayer dollars going to cronies.

BLITZER: So when you -- hewn you say you were apologizing, are you apologizing directly to the president?

SUNUNU: Yes, I'm apologizing for using those words. I shouldn't have used them.

BLITZER: All right. Because later in the day, on Fox News -- and I'll put it up on the screen -- you also went on and said this. You said, "President Obama has no idea how the American system functions and we shouldn't be surprised about that, because he spent his early years in Hawaii smoking something, spent the next set of years in Indonesia.

SUNUNU: Yes (INAUDIBLE)...

BLITZER: A lot of people will hear that and think that's pretty outrageous, as well, Governor.

SUNUNU: Well, Wolf, look, the president has to stop denigrating American values. He makes success a -- a terrible trait. He's sending the wrong message to the young people of America, that if you get rich, you're somehow evil. Those are issues that are really critical.

And -- and the American dream and the in -- inspiration for the American dream comes from participating. And -- and the president, whether he likes to admit it or not, never really held a private sector job in which he earned a real paycheck. And -- and it's a lack of understanding what entrepreneurs do that is creating bad policy out of the White House. And if we don't talk about the fact that he doesn't understand what entrepreneurs do, then we will never understand why he failed to create a single job while he was president.

BLITZER: Well, and I guess in the past couple of years, what, about four million jobs have been created.

SUNUNU: Yes. Now...

BLITZER: A...

SUNUNU: -- now he's only 500,000 short total. And, frankly, he's bragging about creating 80,000 last month when -- when to keep up with population growth, you have to have 180,000 to 200,000.

BLITZER: But you remember, Governor...

SUNUNU: He's...

BLITZER: -- you remember, Governor, that when -- in the final months of President Bush's administration, the U.S. Economy was losing 600,000, 700,000, 800,000 jobs a month. SUNUNU: And what you should have is a, in the recovering phase of -- of an economy, as we are supposedly in now, is the mirror image of that. We should be creating 600,000 to 800,000 jobs a month. And he's not.

BLITZER: But when -- when the U.S. Was losing all of those jobs, we -- was President Bush un-American?

Did he not know anything about the -- the free market system?

What was going on?

SUNUNU: I think what happened to President Bush is that the -- the explosion of purchases of homes by people who couldn't afford them created a crisis.

But that doesn't excuse you from not putting policies in that create jobs. That doesn't excuse from (INAUDIBLE) -- you -- you're not allowed to demonize the entrepreneurs of America. You shouldn't be demonizing the successful people of America. You shouldn't be condemning those who have been successful with a fear every time you say rich.

That's what this president is doing. And he's scaring...

BLITZER: Well, let me just...

SUNUNU: -- he's scaring investment.

BLITZER: Well, on that point...

SUNUNU: (INAUDIBLE).

BLITZER: -- on that same conference call, Governor. There was a businessman, a supporter of Mitt Romney, who flatly said this president was somewhat engaging in socialism.

Is that what you're saying, as well?

SUNUNU: Well, that's what this president has done. He's created a feeling amongst entrepreneurs that he is not a capitalist. And -- and so I can't -- I can't speak for every businessperson out there in which that feeling has been engendered. But the president should be aware of the fact that small businesspeople -- listen to what the NFID said about this president. Small people -- small businesspeople think this president has absolutely no idea what to do to ce -- to create an environment for them to start hiring.

BLITZER: But are you saying...

SUNUNU: He's...

BLITZER: -- he's a socialist?

SUNUNU: No, I didn't say he was a socialist.

BLITZER: All right. All right. I just was wondering, because we...

SUNUNU: I didn't say that.

BLITZER: -- we did hear that...

SUNUNU: Don't -- don't...

BLITZER: -- from that -- I'm -- I just asked if you were among those who thinks he is a socialist.

SUNUNU: No. But I'm saying -- no, but what I'm telling you is he ought to be worried that he's making small businesspeople feel that way.

BLITZER: Well, let me ask you this question, because I -- I asked it earlier and I keep asking this question.

If this president is so anti-business, as so many Republicans now allege...

SUNUNU: Right.

BLITZER: -- why has Wall Street done so great over the past three years, going from, what, 6,500 in the Dow Jones Industrial Average to almost 13,000 right now and these huge companies are sitting on bill -- hundreds of billions, if not trillions, of dollars in -- in assets?

SUNUNU: Let's take the last point you made. They are sitting on trillions of dollars in assets.

You know what they're waiting for?

They're waiting to see who wins this election. If Oba -- if President Obama is re-elected, that investment money leaves the country. If -- if Mitt Romney is reelected -- is elected, that investment co -- money is used to buy equipment here and to do hiring.

You're exactly right. They're sitting on trillions of dollars because they're scared to death that this president might get re-elected.

BLITZER: But you agree that they've made a ton of money over the past three years, record profits for a lot of these big business corporations?

SUNUNU: But they have not invested it to create jobs because they're scared stiff of the man in the White House.

Yes, they've done well. They've worked hard. You're not going to denigrate the business community for -- for dealing with the difficult environment of climate and of -- of the climate situation on the economic side. They've done a good job.

They've worked to -- to bring themselves back. They've created more efficiencies in their factories. They have done what they should do, not with government's help, not with leadership from the White House, but because they're good businesspeople. And -- and now we shouldn't condemn them for having done that and say that somehow the president deserves credit, because these people brought themselves up by the boot straps.

BLITZER: Let -- let me play one clip for you from a new ad that the president has just put out.

SUNUNU: Yes.

BLITZER: I want to get your reaction to this. We're almost out of the time but...

SUNUNU: You've got to be careful.

BLITZER: I want -- I want...

SUNUNU: Be careful, Wolf...

BLITZER: Yes.

SUNUNU: -- because I will probably give you an extremely hot reaction.

BLITZER: All right. Well, I want you to listen to this. And you can give me any reaction you want. This is a free country, obviously, Governor.

SUNUNU: Uh-huh.

BLITZER: You and I have known each other for a long time.

SUNUNU: Right. Right.

BLITZER: All right, so listen to this latest Obama campaign ad, then I'll ask a question.

BEGIN VIDEO CLIP, COURTESY OBAMA FOR AMERICA)

UNIDENTIFIED MALE: It makes you wonder if some years he paid any taxes at all. We don't know, because Romney has released just one full year of his tax returns and won't release anything before 2010.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: You know what, I've put out as much as we're going to put out.

UNIDENTIFIED MALE: What is Mitt Romney hiding?

(END VIDEO CLIP)

BLITZER: All right, now, as you know, Governor. There are a lot of Republicans out there who say, you know what, Governor, go ahead and release these tax returns. We're talking about George Will, Bill Kristol...

SUNUNU: Right. BLITZER: -- Haley Barbour, the former chairman of the Republican Party, Brit Hume on Fox News last night. Rick Perry, the governor of Texas, he said this on January 16th in one of the Republican presidential debates.

(BEGIN VIDEO CLIP FROM JANUARY 16)

GOV. RICK PERRY (R), TEXAS: Mitt, we need for you to release your income tax so the people of this country can see...

(APPLAUSE)

PERRY: -- how you made your money. And -- and I think that's a -- I think that's a fair thing.

(END VIDEO CLIP)

BLITZER: All right, so go ahead. You can now say whatever you want.

SUNUNU: Sure.

BLITZER: Respond to some of your fellow...

SUNUNU: First of all...

BLITZER: -- fellow Republicans.

SUNUNU: Yes, and if -- if Governor Romney releases two years, they're going to play games saying he should have four. If he releases four, they're going to ask for 12. If he releases 12, he's going to ask for 20. And, frankly, with the way they're playing games with just about everything, Governor Romney is absolutely right that he ought not to give them a couple of thousand pages to play games with.

But let me talk about that ad, because that ad, in my opinion, defines President Obama. And I think he says, at the end, "I'm President Obama and I agree -- and I support this message," right?

BLITZER: Yes.

SUNUNU: Ok. So let's talk about that ad. That ad is trying to President O that Mitt Romney didn't pay taxes.

Mitt Romney is such a public figure, everyone knows that if he didn't pay taxes, the IRS would be all over him. So there is no way the Obama administration -- campaign -- and President Obama can't know that the IRS did not President O that Mitt Romney didn't pay taxes, which means they know that what they're saying is not true, which -- which draws me to only one conclusion -- when they say that something that's not true and the president of the United States puts the words "I support this message" at the end of it, knowing that what they say is not true, then the campaign is lying.

And so people should understand that when they hear that ad, all they're hearing is a campaign that knows that there is no way that Mitt Romney could have done what their insun -- insinuating, and, therefore, they're not telling the truth and the president is not telling the truth.

BLITZER: Governor, this conversation, no doubt, will continue.

Sorry we couldn't get you in front of a camera. We will do that the next time.

Appreciate your joining us.

SUNUNU: I'm sorry the connection didn't work. But thanks for the chance to come on, Wolf. We really appreciate it. And, frankly, I enjoyed it.

BLITZER: All right, Governor, thanks so much.

Governor, former governor of New Hampshire, John Sununu, explaining what he said earlier in the day.

This conversation, by the way, this -- this commotion over this is obviously not going to go away.

We'll have much more coming up in our new 6:00 p.m. Eastern hour, as well.

Meanwhile, other stories we're following. Needles, yes, needles found hidden inside airline sandwiches. We have new details into the investigation.

And a major change is growing in the world's most isolated country. Standby.

(COMMERCIAL BREAK)

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

JACK CAFFERTY, CNN CONTRIBUTOR: Wolf, it didn't used to be this way. Our government, local, state and federal, didn't always spend money like drunken sailors and run up astronomical debts. In recreant weeks, three cities in California, Stockton, Mammoth Lake, San Bernardino, all declared bankruptcy.

Scranton, Pennsylvania is so cash strapped it's cut the pay of all municipal workers to $7.25 an hour, minimum wage. Scranton's mayor wants to raise property taxes by 80 percent to try to close a $17 million budget deficit and prevent bankruptcy. And there'll likely be more cities forced to declare bankruptcy because of toxic economic conditions.

High unemployment along with foreclosures and plummeting home values all combine for less tax revenue. The "Los Angeles Times" reports the tax receipts in some areas have shrunk more than 20 percent over the last three years. And soaring pension costs exceed funding levels by about $3 trillion nationwide. Meanwhile, the federal government's nearly $16 trillion in the hole, more than $5 trillion increase in the three and a half years since President Obama took office.

CNSNews.com crunched the numbers and found that the national debt has now increased by more than $64,000 for every federal taxpayer in the land in the last three and a half years under President Obama. To pay off the entire $15.8 trillion national debt, cost every taxpayer in the United States a $194,000.

In the meantime, neither Democrats or Republicans are doing anything meaningful about the fiscal cliff. And we're getting closer and closer to the edge.

Here's the question, why has government become so financially irresponsible? Go to CNN.com/CaffertyFile and post a comment on the blog, go to the post on the SITUATION ROOM's Facebook page. We are in dire straights. You've been there, haven't you?

BLITZER: Yes.

(CROSSTALK)

BLITZER: All right. Jack, thank you.

Needles, yes, needles are found. They are hidden inside airline sandwiches. There's an investigation underway. The FBI has been brought in. We have details.

(COMMERCIAL BREAK)

BLITZER: An airline horror story sparking an international investigation. Needles, needles found inside sandwiches on Delta flights. CNNs David Mattingly is working the story for us. David, what's the latest?

DAVID MATTINGLY, CNN CORRESPONDENT: Wolf, there's a lot riding on getting to the bottom of this right now. You can bet that the airlines and their food service contractors want to know what happened not to mention the passengers themselves.

(BEGIN VIDEOTAPE)

MATTINGLY (voice-over): It is the picture that launches a thousand questions. Why and how could someone slip tiny needles undetected into sandwiches served aboard Delta flights from Netherlands? Passenger, James Tonjes, believes he was the first to find one, about seven hours into his flight to Minneapolis.

JAMES TONJES, PASSENGER: When I pulled it out of my mouth, I looked at it, and it was basically like a straight needle. And, instead of being like a sewing needle, there was no eye on the one end. It was just pointed on both ends and it was about an inch long. It was about like having a shot in your arm. So, it was a pretty good poke.

MATTINGLY: The needle stuck Tonjes in the roof of his mouth. Less than two minutes later, a second passenger found another one. He spoke to Minneapolis station, KSTP.

DR. JACK DRODT, PASSENGER: I bit down on it so that I wasn't biting down on the sharp side but on the flat side. It could have been, you know, a bad injury orally, but had I taken a big swallow and swallowed that down, I'd have a needle inside. That would be very concerning to me.

MATTINGLY: Other flights were alerted. Similar needles were found in six sandwiches on four Delta flights, all from Amsterdam's Schiphol Airport. The FBI has launched a criminal investigation not commenting on whether or not this could be an act of terrorism. Not likely says CNN analyst, Tom Fuentes.

TOM FUENTES, FORMER FBI ASSISTANT DIRECTOR: This more along the lines of a serious prank. The reason I say that is, if al Qaeda or serious terrorist group like them had access to the food supply that's going on airplanes through the catering service, why mess around with needles?

MATTINGLY: But it does raise questions about possible vulnerabilities when so much has already been invested in screening passengers and cargo. A spokeswoman for Gape Gourmet (ph), which prepared the sandwiches for Delta, tells CNN "this is a terribly upsetting situation. First and foremost is the safety of the traveling public." A spokeswoman from Delta also tells CNN, "Delta has taken immediate action with our in-flight cater at Amsterdam to ensure the safety and quality of the food we provide onboard our aircraft."

(END VIDEOTAPE)

MATTINGLY: Every country has their own rules to follow when it comes to security. We spoke to the TSA; a spokesman for the TSA tells us that their role in these international situations is to look at the procedures -- the security procedures that are in place for the airlines and their contractors and to evaluate them. They won't give us any details about the evaluations they had for what was going on here -- Wolf.

BLITZER: David Mattingly with the latest on this story, pretty frightening stuff. We'll stay on top of it. Thank you.

A military shakeup, a mystery woman, even Disney characters, some very unusual developments in one of the world's most secretive countries, North Korea. We have new information.

(COMMERCIAL BREAK)

BLITZER: North Korea says it's promoted a little-known general to vice marshal of the country's armed forces one day after the Army chief was suddenly ousted. It's yet the latest sign change is brewing in the world's most secretive and isolated country.

Let's dig a little bit deeper with the former New Mexico governor, Bill Richardson, a former U.S. ambassador to the United Nations. He's had extensive dealings with North Korea. I joined him there on a trip about a year and a half or so ago. Governor, thanks very much for coming in. Did you ever meet with Ri Yong Ho, who is the departed Army chief? The guy who was just sacked for whatever reason?

BILL RICHARDSON, FORMER U.S. AMB. TO U.N.: I believe I did, Wolf. There were some instances where we were talking about recovery of American remains, American servicemen during the Korean War. I think he was the main guy that we were dealing with. I've dealt with a lot of military people there. But most interestingly this was the guy, Wolf, the Army chief of staff, who was involved in the bombing of those South Korean ships pretty much when you and I were there. We were there right after.

So it seems that he's been removed. He was clearly a hard-liner. But it's uncertain for what reason. I think what is happening is the young leader is consolidating his power. Maybe he didn't think this guy was loyal enough, bringing his own people in. You know anybody that predicts and thinks they know everything about North Korea doesn't know generally what they're talking about.

BLITZER: Yes because it is so secretive as both of us can testify. The other interesting little nugget and I've got my own assessment of what's going on, this mystery woman, this young woman, all of a sudden is showing up at the new leader Kim Jong Un's side on various occasions. There are some pictures of her that we're showing our viewers. What do you make of this development?

RICHARDSON: Well look, it's very much -- it's probably like father like son. If you recall the father, he liked Scotch. He liked women. He liked western movies. He liked decorative (ph) stuff and it looks like it's passed onto his son. Now, I don't know if this woman is his spouse. It's a total mystery. But it's obvious when I see the clips of this young man he's pretty much more assured politically than his father. He moves more like a politician. His hand gestures, he seems more confident than the father, more of a natural politician.

But what is obvious is he's consolidating his power. He's sending messages to his people that maybe he's going to relax things by having some of that Mickey Mouse stuff, the Rocky (ph) stuff that maybe he's going to let some Western -- evil Western trends to move into North Korea. You know, so I think it's a sign that the guy is trying to consolidate his power, lessen some of the social strictures, the tough stuff that his father had, but also consolidate his military power by bringing his own people in.

BLITZER: Yes. That's my assessment as well. He seems to be pretty confident for a young guy. He's not even 30 by all accounts. Here's my assessment. Tell me what you think. He did spend according to almost all of the reports at least one year, maybe two years in a boarding school in Switzerland. Meaning he was exposed to the West at an influential age. And that may be influencing him right now in terms of his confidence. And maybe -- and maybe we're all being a little naive and overly optimistic, maybe he's opening up a little bit more to the West.

RICHARDSON: Maybe so and even moving this general I saw some speculation that he was doing it as a gesture to South Korea saying, look, I'm removing this guy that bombed your ships. I don't totally buy that. But what is clear is that he does seem to be more confident. It seems that the power structures have accepted him as the unquestioned leader. But still, you don't always know what's happening there because they control information.

They control every flow that -- of speculation that happens. But it's interesting that he's going both ways. He's going to the left in control of his own society, loosening things. But then he's tightening the grip on power through control and appointments in the military.

BLITZER: You have any indication that he's reaching out to the U.S. or vice versa, that the Obama administration may be sending diplomatic messages behind the scenes to him?

RICHARDSON: No. I have no information on that. But my -- I'm suspecting that there's a wait-and-see attitude, the six-power -- six- party talks countries South Korea, U.S., Japan, Russia, China, they're holding back and making an assessment of this guy. It seems that the Chinese have expressed some concern with some of the moves in North Korea telling Kim Jong Un (ph) to cool down. Hopefully that will take effect. But in general he's still consolidating power. I think once he makes that power, he feels he has it, then you'll see the real leader, Kim Jong Un (ph) and what he wants to do with the United States, with the six-party countries. I mean the good news is that he hasn't detonated another nuclear weapon. But they're so unpredictable they may do it any day now because you don't know what's happening next.

BLITZER: Yes, well, you and I both would be more than happy to go back there if the new young leader of North Korea were willing to sit down. I'm sure you'd be happy to speak with him. I certainly would be happy to interview him here on CNN if he would like to invite you, me or both of us for that matter to come over there. We'll see if he --

RICHARDSON: Maybe late in the year --

(CROSSTALK)

RICHARDSON: Maybe later this year after things cool down.

BLITZER: Later this year.

RICHARDSON: Yes.

BLITZER: Maybe after the U.S. elections. We'll both be in December in Pyongyang as we were in December 2010 --

RICHARDSON: A two year anniversary.

BLITZER: That would be good --

RICHARDSON: Where we stopped a war. We did.

(CROSSTALK)

RICHARDSON: We helped stop a war.

BLITZER: There are some pictures when we were there in Pyongyang. All right, Governor, as usual thanks so much.

RICHARDSON: Thank you. BLITZER: Parts of the United States suffering through the worst drought in decades. Farmers are facing ruin. All of us potentially could be facing higher prices.

(COMMERCIAL BREAK)

BLITZER: It's a natural disaster in slow motion, the worst drought in decades stretching across the continental United States. Twenty-six states are now feeling it, farmers taking the hardest hit. Lisa Sylvester is back. She's working this part of the story for us. What's going on, Lisa?

LISA SYLVESTER, CNN CORRESPONDENT: Yes, Wolf, you see the map there. Fifty-five percent of the country is suffering moderate to severe drought conditions according to the National Climatic Data Center. So what does it mean? Well, for you and me we will likely see higher prices at the grocery store. But it is really taking a toll on the farmers.

(BEGIN VIDEOTAPE)

SYLVESTER (voice-over): Homestead farms in Coleville (ph), Maryland.

BEN ALLNUT, FARMER: Funny thing in farming, either it rains a lot or none at all. It's the darnedest thing.

SYLVESTER: Ben Allnut is a third-generation farmer.

UNIDENTIFIED MALE: The soil is fairly dry. Don't really have anything to dig with.

SYLVESTER: Take one look at his water reserves and you can tell why.

UNIDENTIFIED MALE: Water's supposed to be right -- right about right here. I should have my foot in the water right here.

SYLVESTER: To save water, he'll have to turn off the irrigation pumps to his Christmas trees that are just coming up to keep water flowing to his money crop, the peaches.

(on camera): These peaches are growing well now, but it hasn't been an easy year. Aside from the drought and the hot conditions, there was also an early spring.

UNIDENTIFIED MALE: There are some farmers in the drought belt that are singing the blues and re-evaluating you know their risks and extended risks.

SYLVESTER (voice-over): Allnut says the farmers in the Midwest and the Corn Belt are really getting socked in this the worst drought since 1956. For consumers, it will likely mean higher food prices. For farmers, it could mean the end of their livelihoods.

(on camera): So if they can't control Mother Nature.

UNIDENTIFIED MALE: You can't control Mother Nature, right. They can get the corn in the ground at the right time. And they can forward market to get the best price, but they better be darn sure that they have the corn to deliver or else they're coming up short. It's a real -- a real tight business and this weather thing is the only monkey wrench in it.

SYLVESTER (voice-over): Allnut sums it up; the weather is maddening, the highs and the lows.

(END VIDEOTAPE)

SYLVESTER: And Illinois Governor Pat Quinn (ph) summed it up this way, he called it a natural disaster of epic proportions and he is now calling on Congress to expedite passage of a farm bill to bring relief to family farms -- Wolf.

BLITZER: Lisa, thank you.

One of the most influential Republicans of the party won't be attending the Republican Convention in Tampa. We'll tell you who that is.

(COMMERCIAL BREAK)

BLITZER: Stern warnings from the Fed Chairman Ben Bernanke on Capitol Hill today about the dire state of the U.S. economy and the potential threats to the country's recovery, but he also made it clear there won't be another stimulus, at least not now. CNN's Erin Burnett of "ERIN BURNETT OUTFRONT" is joining us a little bit to explain what's going on. So read between the lines, Erin. What are we hearing from the Federal Reserve chairman?

ERIN BURNETT, HOST, "OUTFRONT": Well you know Wolf, I think the main headline is, is that he thinks the U.S. economy is not growing as quickly as he was hoping it would just a couple months ago. He described the pace of job growth as frustratingly slow. And a lot of people watching you're going to say hey, I already know that, but he had been a little bit more sanguine when he spoke before and you know I mean keep in mind our unemployment rate, Wolf, of course has been above eight percent now for about 3.5 years, so he said that that will continue to be a frustratingly slow recovery. He also talked about recent economic data that have come out that have been weaker and he described them as quote "having a generally disappointing tone".

So a downgrade from the top economist in this country in terms of how our economy is growing and recovering and that's obviously deeply concerning. The big question, Wolf, is will he do anything more about it. And he was very careful to say I will if I need to which he says every single time, but he refused so far to come out and try to do anything from the Fed's point of view instead of saying look, Congress, if you dealt with this fiscal cliff, you know with the Bush tax cuts expiring, the debt ceiling, the sequestration issue, if you dealt with that that would go a long way towards helping. It seems like he very much would prefer Congress to be the one to act instead of the Fed for what would be the fourth time.

BLITZER: I'm sure he'd like to see no more issues over raising the nation's debt ceiling as well. There's a lot of concern. If there's another battle over that, that could be further, cause further problems for the economic recovery. You're going to have a lot more at 7:00 p.m. Eastern, Erin Burnett, "OUTFRONT". Thank you. Jack Cafferty is here with "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: The question this hour is why has government become so financially irresponsible and don't hold your breath on Congress doing anything before the election.

Dave in California "excellent question. We have gone from temporary politicians who used to stay in office one or two terms to professional politicians, many of whom have never worked for anyone but the government, whether it's local, state, or federal. Hence they see that their primary job is to get reelected. The easiest way to do that is to use our tax dollars to buy votes."

Boomer in Missouri writes "because the legislative bodies are bought and paid for. The highest bidding lobbyist controls the votes. The people are no longer in charge of their elected representatives. Money has totally corrupted Congress and every statehouse in this nation."

Ernie in Vermont writes "when the U.S. defense budget is as big as the next 17 countries combined and yet members of Congress say we can't cut it because it would endanger our national security, what do you expect?"

Rich in Texas "as a small business owner who used to employ 100 people, now employs 43 and barely hanging on I would say we are no longer respected and looked at as the evil greedy ones who owe everyone else a living without them earning it. I will most likely end up closing my business. It is no longer worth fighting the good fight. I'm telling you that small business owners, even in Texas, are broke and tired."

Roger in Pennsylvania says "you can't get elected or reelected unless you promise a lot of free stuff to the voters. Politicians care more about their job than the fact that this free stuff will have to be paid for by babies who are being born today."

And James in North Carolina "politicians do not get elected to save money but rather to spend, spend, spend. If you spend enough, you create an electorate that depends on your largesse. That's what's happening now. Soon there will be more people voting for a living than working for a living".

If you want to read more on this subject you go to my blog CNN.com/CaffertyFile or through or post on THE SITUATION ROOM's Facebook page -- Wolf.

BLITZER: That one reader makes an important point that needs further clarification. We're going to be doing it in the coming days and weeks. The U.S. defense budget is greater than the next at least 13, 14 countries combined, if you will --

(CROSSTALK) BLITZER: -- and the argument that the U.S. Defense Department makes all the time, you know you can't cut defense spending in any significant way. Why is the United States spending so much more than almost the rest of the world combined is a subject we're going to be discussing, Jack.

CAFFERTY: All right. Look forward to it. Thanks.

BLITZER: Thanks so much. There are a lot of arguments on that front.

By the way, coming up in our new 6:00 p.m. Eastern hour, one of the world's largest banks accused of being a tool for drug cartels and terrorists.

Also straight ahead, she's unique among Olympic athletes, she's pregnant.

(COMMERCIAL BREAK)

BLITZER: Major no-shows at the Republican Convention. Lisa Sylvester is monitoring that and some of the other top stories in THE SITUATION ROOM right now. What's the latest, Lisa?

SYLVESTER: Hi there, Wolf. Well former President George H.W. Bush and his wife Barbara won't be attending the Republican National Convention in Tampa next month. The 88-year-old former president who is supporting Mitt Romney uses a wheelchair due to a disease limiting his mobility. He has attended every convention since 1980 when he was tapped to be Ronald Reagan's running mate.

And torrential rains are hammering parts of China, toppling thousands of homes and reportedly killing at least eight. Rescuers managed to relocate 3,000 residents trapped by floods in one province. More teams are reportedly coming to help.

And next week, Summer Olympic Games in London will bring challenges for most athletes competing, especially for this woman who not only is the first female shooter to represent Malaysia, she will also be -- get this -- eight months pregnant when she does it. "The New York Times" reports she's had a few physical problems during her training. She is just hoping, though, that the baby doesn't kick as she is pulling the trigger -- Wolf.

BLITZER: All right, Lisa, thank you.

Happening now, the ugly truth behind the newest and nastiest presidential campaign ads.

More than half of the U.S. is wilting from one of the worst droughts in years.

And we'll talk to the man behind an astounding catch that saved a little girl's life.

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