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Christmas Bombing Suspect; Iran Hints at Exchange; "Don't Ask, Don't Tell"; Middle Class; President Obama and the GOP; Toyota Recall; Feds Might Fine Toyota; Pilot Error Blamed in Deadly Crash; President Obama's Senate Seat at Stake; Dems Campaign Finance Answer; Christmas Day Bomber Talking; Scared to be Counted

Aired February 2, 2010 - 19:00   ET


WOLF BLITZER, CNN ANCHOR: Happening now, breaking news. The suspect in the failed Christmas bomb attack starts talking again. Is he pointing fingers and naming names? We're going to tell you what we're learning right now. Stand by.

The top U.S. military officer says it's time to do the right thing for gay troops. This hour service members open up about plans to repeal "don't ask, don't tell".

And a new charge that Toyota was slow to recall millions of cars and a little deaf to the danger to drivers. A top Obama administration official is now speaking out.

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

But up first this hour, breaking news -- in the battle to protect Americans from terror, we're learning that the failed Christmas bombing suspect is cooperating now with investigators. This as top U.S. intelligence officials warned senators today another attempted attack on America, in their words, is, and I'm quoting now, "certain in the near future".


SEN. DIANNE FEINSTEIN (D-CA), INTELLIGENCE CHAIRMAN: What is the likelihood of another terrorist-attempted attack on the U.S. homeland in the next three to six months, high or low, Director Blair?

ADM. DENNIS BLAIR, DIRECTOR OF NATIONAL INTELLIGENCE: An attempted attack, the priority is certain, I would say.

FEINSTEIN: Mr. Panetta (ph)?

UNIDENTIFIED MALE: I would agree with that.

FEINSTEIN: Mr. Molar (ph).


FEINSTEIN: General Burgess (ph).

UNIDENTIFIED MALE: Yes ma'am, agree. FEINSTEIN: Mr. Dinger (ph).



BLITZER: Now let's bring in our homeland security correspondent, Jeanne Meserve. First of all, Jeanne, what are you learning about the Christmas Day bombing suspect's discussions under way right now with investigators?

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: Umar Farouk Abdulmutallab is talking to investigators after being silence since he was read his Miranda rights on Christmas Day. According to one source, he's providing useful, current and actionable intelligence. Another law enforcement says -- a source says he's provided information about his training overseas, who he met with, people he worked with and others that were part of the plot.

According to these sources, he started talking last Thursday. He is still talking. All of this information is being passed along to intelligence agencies for follow-up. One source tells me it appears to be valuable information that he's providing, Wolf.

BLITZER: The -- but this is a dramatic development because he was read his Miranda rights. He has a public defender, an attorney, and all of a sudden now we're learning this. Are they giving some background, some explanation why all of a sudden he's talking and cooperating?

MESERVE: Well one official who I talked to said that the Department of Justice and the FBI used what they called the levers, rather, in the criminal justice system to persuade him to cooperate. As one person pointed out to me, there were several hundred people on board that aircraft who watched what was happening on Christmas Day.

A conviction probably appeared like a sure bet and apparently investigators were quite persuasive in their conversations with him, Wolf. But obviously it has a political implication for the White House. Just today administration officials, those same ones who you showed talking about the terrorists, were getting hammered by some members of Congress for this decision to read this man his Miranda rights and try him in the criminal justice system.

The feeling was that an opportunity to get more information had been lost. Now apparently he's cooperating and that would appear to help the administration out of what was clearly a very sticky situation -- Wolf.

BLITZER: And the statement by the top intelligence officials unanimously that another attempted terrorist attack against the United States in their words now, certain, certain over the next three to six months. That was the question that the chair of the Senate Intelligence Committee, Dianne Feinstein asked. Is there any indication that the U.S. is about to elevate, raise the terror threat level? MESERVE: No, Wolf, I've heard absolutely no indication that that has been the case. There has been concern, of course, since Christmas Day that there might be follow-on attacks. They have ramped up security certainly, particularly in the aviation sector, but at this point, Wolf, no indication that the -- that the threat level is going to be raised. Look at how many attacks or attempted attacks there have been within the past year, and logic goes to tell you that there would be more coming up in the months to come -- Wolf.

BLITZER: Jeanne Meserve working the story for us -- thank you.

Meanwhile, a sudden shift in tone from Iran now dropping hints it might release three jailed American hikers in exchange for Iranians held supposedly by the United States. President Mahmoud Ahmadinejad is also suggesting Iran might address a key United Nations demand on its nuclear program. Let's bring in our foreign affairs correspondent Jill Dougherty. Jill, what is behind these remarks and what's the State Department saying?

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: Well Wolf, listening to some of the way you phrased that in fact might, could, possibly, et cetera, et cetera. There are a lot of questions about this. But essentially, President Ahmadinejad, in a TV interview in Iran said that there might be a deal, in fact, that they were talking about it. He didn't say with whom, about the possibility of swapping those three American hikers for some Iranians who are held in the United States.

Now, we talked with the State Department, and the spokesman Gordon Duguid (ph) said he knows of no talks that are ongoing. In fact he said it's hard to know what exactly President Ahmadinejad meant by these fragmentary comments, as he put it, but essentially the U.S. is saying look, we want -- number one, we want access to those Americans because they haven't had access. The Swiss represent the U.S. with no relations between the two countries; they haven't had access for months. We want to see them and then also they and other Americans should be released -- Wolf.

BLITZER: Does the State Department confirm, Jill, that the United States is holding Iranians in American jails?

DOUGHERTY: There are some. They will not say precisely how many. The Iranians did release a list, or at least they said that there were 11 being held. And they claim that the U.S. has actually taken people off the streets. Some Iranians actually have disappeared, and the Iranians claim that they are here in the United States. But you would have to say that any type of idea about a prisoner swap would have to be very dubious, because the State Department has made it clear they don't believe that these Americans, who they say are completely innocent, would be able to be in some type of prisoner swap.

And then Wolf, on the other thing on that nuclear side, it sounds little more promising from President Ahmadinejad about giving up some or most of their highly enriched uranium, but again, you have these very imprecise statements in a TV interview. The details that he's giving about this don't match the details that the international community has.

BLITZER: Jill Dougherty thanks very much. In the midst of fighting two wars, the U.S. military starting a major retreat now on its long steady policy on gays serving openly in the United States military. Pentagon officials say they're already laying groundwork for the end of "don't ask, don't tell" six days after the president called for the repeal in a State of the Union address. The chairman of the Joint Chiefs of Staff, Admiral Mike Mullen delivered a powerful statement to senators today supporting the repeal.


ADMIRAL MIKE MULLEN, JOINT CHIEFS CHAIRMAN: Speaking for myself and myself only, it is my personal belief that allowing gays and lesbians to serve openly would be the right thing to do. No matter how I look at this issue, I cannot escape being troubled by the fact that we have in place a policy which forces young men and women to lie about who they are in order to defend their fellow citizens.

SEN. JOHN MCCAIN (R), ARIZONA: Our men and women in uniform are fighting two wars, guarding the front lines against a global terrorist enemy, serving and sacrificing on battlefields far from home, and working to rebuild and reform the force after more than eight years of conflict. At this moment (INAUDIBLE) hardship for our armed service, we should not be seeking to overturn the "don't ask, don't tell" policy.


BLITZER: Let's bring in our Pentagon correspondent Chris Lawrence. Chris, you recently spent some time with the troops in Norfolk, Virginia. What did you hear from them about this?

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: The same sort of disagreement that I think you just saw between Senator McCain and Admiral Mullen. In fact we really we came at this from two ways -- one, of course, talking to the members of the military, but also people who might have joined the military if not for "don't ask, don't tell".


LAWRENCE (voice-over): Coming out of Columbia Medical School, Robert Kavanagh wanted to be an officer. His friends were in ROTC, his grandfather was a U.S. Marine. But the openly gay doctor didn't go through with it because he couldn't go back in the closet.

DR. ROBERT KAVANAGH, WANTED TO JOIN MILITARY: Serving in the military was something I had always thought about, you know even through high school and college.

LAWRENCE (on camera): But you decided you know not to go the military...


LAWRENCE: ... your decision?

KAVANAGH: Hands down it was "don't ask, don't tell". You know to hide that, that much of yourself, to keep that big a part of yourself a secret, I think that you have to lie.

LAWRENCE: But that's only half the story. We also wanted to hear what real service members think, so head down to the naval base down in Norfolk.

AIRMAN LINDSAY RUNKLE, U.S. NAVY: There's nobody is out trying to hunt somebody down saying like oh my gosh, kick them out. They're gay. They're lesbian, nothing like that at all.

LAWRENCE: Airman Lindsay Runkle is right to a point. In 2008, about seven times more people got kicked out of the military for being too fat than for being openly gay. Runkle says she already serves with gay colleagues and nobody asks, nobody tells.

RUNKLE: You see it every day and you know you see it, you just don't say anything, so I definitely think you should keep it. If you get rid of it, I think it will just cause way too many problems.

LAWRENCE (voice-over): Others disagree.

PETTY OFFICER ALAN JIM, U.S. NAVY: Just because they're gay or they're not gay, it doesn't affect in -- from my viewpoint, it doesn't affect how someone performs their job.

LAWRENCE: Some told us between fighting two wars now is not the time to overturn "don't ask, don't tell". Kavanagh disagrees.

KAVANAGH: Yes, when I see the violence on TV and hear about the, you know the deaths and the violence and the bloodshed over there, you know I don't think I'm glad I didn't go. I think you know, damn, I wish I was over there. I can do something. I can help these people. You know they could -- they could put me to use over there, so it's frustrating.


LAWRENCE: Kavanagh told me if they repeal "don't ask, don't tell", he would give the military a second thought. Meantime, the Pentagon is pushing this discussion, the social media online. The U.S. Army on Facebook is asking people to weigh in on "don't ask, don't tell". And on Twitter, the chairman of the Joint Chiefs of Staff reiterated a statement from earlier saying allowing homosexuals to serve openly is the right thing to do -- Wolf.

BLITZER: We're going to have a lot more on this story in the coming weeks and months. Appreciate it very much, Chris Lawrence.

The Obama administration making a stunning charge today against Toyota saying the carmaker dragged its heels in dealing with its gas pedal safety hazard and that U.S. officials had to put enormous pressure on Toyota to do the right thing. And President Obama takes his jobs messages on the road and saves a few jobs for Republicans. We'll take you to New Hampshire -- that's coming up right here in THE SITUATION ROOM.


BLITZER: Jack Cafferty is here with "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Wolf, the middle class in this country is not what it used to be, not by a long shot. Since the end of World War II, middle class America always meant a certain kind of security. If you got a good education and you worked hard, there was the promise of success, being able to provide for your family, buy a home, educate your children and enjoy a comfortable retirement.

There was also the belief that each new generation of Americans would have it a little better than their parents' generation did. It's not the case anymore, and it might never be again. Since the start of the economic downturn, it's estimated 70 million Americans have lost their jobs and a lot of those jobs simply went overseas, never to return. The national unemployment rate is 10 percent.

It jumps to 17 percent if you include those who are underemployed. The nation's jobless rate expected to remain much higher than normal for a very long time. As for the great American dream of owning a home, in the wake of the housing crisis, more than two million families have lost their homes to foreclosure over the last few years. Consumer spending is down. The new reality might be that it stays that way.

Americans are paying more and more just for the basics -- food, health care, education. It's becoming increasingly difficult for many who used to consider themselves middle class just to make ends meet. So here's the question. How is the definition of middle class American changed? Go to and post a comment on my blog. Not a pretty picture.

BLITZER: No. Those jobs are never going to come back.

CAFFERTY: No. They're gone.

BLITZER: All right, Jack, thanks very much.

President Obama today accused Republicans of trying to, quote, "have their cake and vote against it, too". He's been turning up his criticism of GOP lawmakers even as he urges them to work with him. It's a risky strategy because many voters are fed up with all the feuding going on in Washington. Our White House correspondent, Dan Lothian, takes us behind the scenes at the president's town hall meeting today in New Hampshire.


DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: So we just landed here in Manchester, New Hampshire. Of course, during the campaign here, the road through the White House leads right to the granite state. But President Obama is not here to talk about votes; he's here to talk about job creation, promising billions of dollars for medium and community banks so they in turn can make loans to small businesses.

BARACK OBAMA (D-IL), PRESIDENT OF THE UNITED STATES: This will help small banks do even more of what our economy needs, and that's ensure that small businesses are once again the engine of job growth in America.

LOTHIAN: The president's focus, of course, was about jobs and the economy, but there were questions about health care.

UNIDENTIFIED FEMALE: Due to the great health care in this country, I'm a three-time cancer survivor.


OBAMA: We're proud of you.

UNIDENTIFIED FEMALE: But like -- but like many cancer patients was pushed out of a job. I was lucky enough to be able to retire early, buy into the retiree's health plan and then start my own successful business.

UNIDENTIFIED FEMALE: Health care is not bipartisan. Cancer survivors are left-wing liberals and right-wing conservatives, Democrats, Republicans in every party.

LOTHIAN (on camera): So how does it make you feel, then when you see...

UNIDENTIFIED FEMALE: It feels terrible. I saw this -- when the election in Massachusetts came in, I went, oh. You know I'm so worried that people who can't afford health care or people who have preexisting conditions won't have the care they need.

LOTHIAN: Outside the high school gym, a small group of demonstrators greeted the president, some supportive of Mr. Obama's agenda, others concerned that the administration's effort to turn the economy around will only raise their taxes and leave the country deeper in debt -- Wolf.


BLITZER: Dan Lothian in New Hampshire for us. Thanks, Dan.

Up for grabs in Illinois, the first primary in the mid-term election year is for President Obama's old Senate seat. Is it now the Republicans' seat to lose? What's going on?

And 10 Americans accused of illegally trying to take children out of Haiti. They get a day in court.


BLITZER: Lisa Sylvester is monitoring some of the other top stories in THE SITUATION ROOM right now. What's going on, Lisa?

LISA SYLVESTER, CNN CORRESPONDENT: Hi there, Wolf. Well President Obama's trip to New Hampshire today isn't sitting well with the state's Republican Senator, Judd Gregg, who almost became Mr. Obama's commerce secretary. Today Gregg blasted the president plan to recycle federal bailout money to the invested (ph) and community banks and he laid into White House Budget Director Peter Orszag (ph). Listen to this heated exchange during a budget hearing.


SEN. JUDD GREGG (R), NEW HAMPSHIRE: The law is very clear the moneys recouped from the TARP shall be paid from the general fund of the Treasury for the reduction of the public debt. It's not for a piggy bank because you're concerned about lending to small businesses...


GREGG: ... and you want to get a political event when you go out and make a speech in Nashua (ph), New Hampshire. That's not what this money is for. This money is to reduce the debt of our children that we're passing on to our children. And you ought to at least have the integrity to be forthright about it and say that's what you're doing. You're adding to the debt that our kids are going to have to pay back when you're claiming at the same time that you're being fiscally responsible.


GREGG: Let me ask you another question, because clearly we're not going to agree on this and you're not going to follow the law. Secondly...

UNIDENTIFIED MALE: I'm sorry I -- excuse me. We will be following the law. This would involve...

GREGG: Well then you're not going to be able to do it unless Congress...


GREGG: ... gives you authority to do it.


UNIDENTIFIED MALE: That is how laws are made. Usually Congress passes them.


SYLVESTER: Peter Orszag (ph) stressed more than once that the administration is aware it needs Congress to OK any change in the way the TARP money is used.

President Obama's plan to bring Guantanamo detainees to the United States for trial is facing new opposition today. A bipartisan group of 18 senators has introduced a bill which would block the funding requested by the president to try these detainees in civilian courts. A similar Senate measure was struck down in November, but some Democrats who originally voted against it are now supporting that effort.

Democratic Congressman John Murtha of Pennsylvania is in intensive care this hour following complications from gallbladder surgery. The 77-year-old Chair of the House Subcommittee on Appropriations of Defense Spending underwent the scheduled procedure last week. Despite a gall bladder issue back in December, Murtha was able to help oversee the final passage of the defense appropriations bill.

And a preliminary hearing today for 10 American missionaries accused of child trafficking in Haiti. They were arrested trying to take 33 children across the border into the Dominican Republic. Now, CNN has located many of the parents, and they say they gave their children to the missionaries in the hope of a better life for their kids -- Wolf, that is one fascinating story.

BLITZER: Yes, an amazing story indeed, and we're going to stay on top of it throughout this week and see what happens -- a lot of interest. Thanks very much, Lisa.

Stunning comments about Toyota today from the Obama administration -- the Japanese carmaker accused of being tone deaf on safety and resistant to a recall of its gas pedal problem. And now a United States congressman is weighing in with new charges. Plus, federal investigators reveal the safety faults that led to that terrible airline crash a year ago near Buffalo.


BLITZER: New evidence today of how Toyota is reeling even as it tries to fix its massive recall crisis. Toyota sales here in the United States dropped 16 percent last month from a year ago while GM and Ford saw their sales rise. The transportation secretary says today that Toyota needed convincing from federal safety officials that it was dealing with a very serious problem. Brian Todd is working this story for us. All right Brian, update our viewers, some dramatic developments today.

BRIAN TODD, CNN CORRESPONDENT: There is, Wolf, some dramatic development, especially tonight -- new information tonight in a letter to Toyota's president. Two members of Congress said the automaker gave conflicting information to Congress about these recent recalls. Henry Waxman, Democratic Chairman of the House Committee on Energy and Commerce and Democratic Congressman Bart Stupak (ph) sent the letter to James Lentz (ph), the president of Toyota.

They say that in meetings last month with their staff, Toyota officials quote, "indicated that sticking accelerator pedals are unlikely to be responsible for the sensational stories of drivers losing control." But in public they point out, James Lentz (ph) said the problem of unintended acceleration did come down to two different issues that were addressed in two separate recalls, one for floor mats and one for sticking gas pedals.

The congressmen points out there are well published incidents where unintended acceleration was not caused by floor mats. They want Toyota to clarify the information. Now Toyota just responded to our inquiry about the congressmen's letter. A statement from Toyota reads, quote, "We received and are reviewing the letter. We will, of course, cooperate with the committee's inquiry. We believe our statements have been consistent and we will work to demonstrate that to the committee." Meanwhile, Wolf, the automaker and several key players in this entire controversy are taking other steps to defend their reputations.


TODD (voice-over): As millions of drivers scramble to get their Toyota gas pedals fixed, key players in this recall are protecting their flanks in a public relations nightmare. U.S. Transportation Secretary Ray LaHood says it took pressure from the government to get the automaker to take action over its sticking gas pedals that caused unintended acceleration. In a statement, LaHood says "while Toyota is taking responsible action now, it unfortunately took enormous effort to get to this point."

LaHood says in meetings in Japan and Washington over the past two months officials from his department pressed Toyota repeatedly to address the gas pedals and reminded them of their legal obligations. He told The Associated Press the automaker's North American office was a little safety deaf and that if his department hadn't pushed, "I don't know if the recall would be taking place."

Contacted by CNN, Toyota issued a statement saying "Secretary LaHood said to us that the soonest possible action would be in the best interests of our customers, and we took his advice very seriously and instituted a recall. We are very grateful for his advice and we feel that we have been given a chance to regain our customers' trust." But a key supplier of the gas pedals is also defending its reputation. The Indiana-based CTS Corporation says its product shouldn't be linked with unintended acceleration but does have a less serious flaw.

MITCH WALORSKI, CTS CORPORATION: The pedals that are the subject of the recall have to do with a slow return phenomenon, which is a very rare condition, which occurs only under certain environmental conditions such as high (ph) humidity and CTS is not aware. And Toyota has said this also, that there's been any accidents or injuries from that condition of those pedals.

TODD (voice-over): A Toyota official told us that's true, but said it's also true that some CTS pedals didn't just have slow return but also got stuck.

We couldn't reach CTS officials for comment on that.


TODD: But a Toyota official was very adamant with us that Toyota is not blaming the supplier. He said CTS and other suppliers designed these parts to Toyota's specifications. This is a Toyota part, he says, and we take responsibility for it. Wolf?

WOLF BLITZER, CNN ANCHOR: Brian, Toyota is not out of the woods with the federal government yet, is it?

TODD: By no means. Ray LaHood said flat out, quote, "We are not finished with Toyota," and another official in his department told us the National Highway Safety Transportation Safety Administration is considering a civil penalty against Toyota. A Toyota official would not comment on that.

BLITZER: Yes, this story is going on and on.

TODD: Absolutely.

BLITZER: We'll see what happens tomorrow. You're going to stay on top of it for us. Lots of people out there very, very disturbed.

There are some very disturbing findings in the crash of a Continental Airlines connection flight that killed 50 people almost one year ago.

CNN's senior correspondent Allan Chernoff reports.

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Wolf, the Safety Board investigation points to pilot error as a cause of the tragic accident. But it also highlights a system that allowed a pilot who appears to have been poorly qualified and poorly trained to be in command of an aircraft with four dozen passengers dependent upon him.


CHERNOFF (voice-over): When Continental Flight 3407 was about to stall, Captain Marvin Renslow reacted with tragic mistakes, ignoring warnings the plane was slowing and then overriding an emergency system that tried to point the aircraft nose down to regain speed.

EVAN BYRNE, NTSB HUMAN PERFORMANCE CHAIRMAN: The captain's improper flight control inputs were instead consistent with startle and confusion.

CHERNOFF: Renslow, a pilot for regional airline Colgan Air, which operated the flight had repeatedly failed test drives but withheld some of the failures from his employer. Colgan Air never trained Renslow in a simulator to use the emergency stick pusher that warned of an imminent stall.

ROGER COX, NTSB OPERATIONS GROUP CHAIRMAN: The captain would have been a candidate for remedial training. However Colgan did not have a corner program for pilots who've demonstrated weakness.

CHERNOFF: From Renslow's student days at Gulfstream Training Academy to his rise as a pilot at Colgan, the NTSB chair says the aviation system failed to hold back an aviator who simply didn't have the right stuff.

DEBORAH HERSMAN, NTSB CHAIR: The pilot needed a good day to pass the test. And I liken it to a student that keeps getting passed from grade to grade to grade and ultimately upon graduation hasn't mastered the material.

CHERNOFF: The NTSB found Renslow and co-pilot Rebecca Shaw were not well rested and engaged in conversation unrelated to the flight through much of the evening. A violation of cockpit rules.

BOB PERRY, FATHER OF CRASH VICTIM: There is no reason why this should have happened had he been property trained. The pilot had been properly trained, the co-pilot had been properly trained, my son would be alive today. They cannot bring my son back.

CHERNOFF: The Federal Aviation Administration is demanding better performance from airlines, reviewing pilot training, and plans proposals to address pilot fatigue later this year. But to the NTSB, the FAA is doing too little too late.

HERSMAN: The same thing over and over again. We have made recommendations time after time after time. They have not been heeded by the FAA and they haven't pushed it across the finish line.


CHERNOFF: In a statement, Colgan Air said we want to make clear again that our pilots are highly trained to handle all situations they may encounter. Wolf?

BLITZER: Alan Chernoff reporting for us. Thank you.

It was a landmark study on autism that frightened an entire generation of parents. Now that study is being retracted. Stand by.

Americans aren't necessarily drinking less but they are drinking differently. Details of a little known impact of the great recession.


BLITZER: Lisa Sylvester is monitoring some of the other top stories in THE SITUATION ROOM right now.

Lisa, what else is going on?


The medical journal "The Lancet" is retracting a controversial study linking certain vaccines to autism. The lead author of the 1998 study, Dr. Andrew Wakefield, was discredited last week by the council that overseas doctors in Britain, calling his selection of patients biased and his conduct dishonest. Wakefield calls the allegations unfounded and unjust.

A new study finds that an abstinence-only education program is the most effective way in keeping sixth and seventh graders from having sex. According to the study published in the "Archives of Pediatrics and Adolescent Medicine," only a third of children who took an abstinence-only class had sex within two years of taking the class, while more than half of the students in a safe sex program had sex within the same period. Forty-two percent of students who took a combined course reported having sex.

Michael Jackson's personal physician is expected to turn himself in within the next day or two to face charges in connection with the entertainer's death. Prosecutors have not announced any charges against Dr. Conrad Murray and his attorney says he has not been told how or where he should surrender.

Jackson, you will recall, died in June after Murray administered several sleep aid, including a powerful anesthetic.

Well, this apparently is a sign of the time. People are drinking more but they're spending less on what they drink. An industry group reports that people are buying less expensive liquor and drinking at home more rather than going to bars and restaurants.

Sales of lower-priced liquors shot up 5.5 percent last year. The high-end stuff, though, fell off 5.1 percent. And as the report says, total revenue was flat. Overall, Americans' favorite liquor, I'm probably guessing you can guess this one, Wolf, but it is still vodka.

BLITZER: It's a sign of the economic times. People are drinking more at home, less at a bar or restaurant because they don't have that much money. All right, thanks very much, Lisa, for that.

Illinois is about to close the polls on the first primary of this mid-term election season. We're going to Chicago also.

Up for grabs in the contest tonight, the former Senate seat held by President Obama. Why this one is the Republican candidates' to lose right now. We have new information.

And later, congressional Democrats draft their answer to the decision overturning campaign finance limits. How they're thumbing their legislative nose at the U.S. Supreme Court ruling.


BLITZER: Primary days almost over in Illinois. It's the first primary in this year's mid-term elections. Up for grabs, President Obama's former Senate seat.

CNN's Jessica Yellin is in Chicago waiting the outcome of round one.

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: Wolf, it's a storied Senate seat. Remember, it wasn't just held by President Obama, it was also allegedly put up for bid by then governor, Rod Blagojevich.

Now Democrats in this state are worried that the Republicans are poised to pick up that seat in the fall.


YELLIN (voice-over): In the race to fill the Illinois Senate seat once held by President Obama, corruption is a recurrent theme.

UNIDENTIFIED MALE: Tired of being embarrassed by elected officials?

UNIDENTIFIED MALE: An incorruptible man who tells truth to power.

UNIDENTIFIED MALE: And his is family's bank gave $1 million to Blagojevich crony and convicted felon, Tony Rezko.

YELLIN: Indicted former governor, Rob Blagojevich, goes on trial this summer. That's bad news for the Democrats. But good news for this man, five-term Republican House member, Mark Kirk, who is expected to win his (INAUDIBLE) primary.

He is running against high taxes and Washington spending, but especially against a Democratic Party that has majority control here in Illinois as in Washington.

REP. MARK KIRK (R), ILLINOIS SENATE CANDIDATE: I think that no one political party is the source of all wisdom and no one political party should have all the power. Our government works best when there is a check and balance.

YELLIN (on camera): And you think the Democrats have too much power right now and it's out of balance?

KIRK: It is out of balance because we have a one-party state in Chicago, in Illinois and in Washington. And that's too much all on one side.

YELLIN (voice-over): On the other side, leading Democrats aren't thrilled with the choices. State treasurer Alexi Giannoulias, a young heir whose family bank was just cited by federal regulators. That's hurt his populous message.

ALEXI GIANNOULIAS (D), ILLINOIS SENATE CANDIDATE: No one will work harder for everyday working class families than I will.

YELLIN: And with late momentum, a squeaky clean, anti-corruption candidate, former Chicago City official, David Hoffman, whose campaign may have surged too late.

DAVID HOFFMAN (D), ILLINOIS SENATE CANDIDATE: We need (INAUDIBLE) and people who actually is separated from this insider political system we have...

YELLIN: When it comes to the general election, many political watchers here believe it will be the Republicans' seat to lose.

RUSS STEWART, POLITICAL COLUMNIST: The Obama nation, the people who were energized for Obama, are disillusioned and disgusted right now. The Democrats are disillusioned what the Democratic hierarchy that runs Illinois, so a lot of people say, I'm going to go Republican just as a protest.


YELLIN: In an interview with CNN, that leading Republican, Congressman Mark Kirk, five times referred to himself as independent. Not Republican. Independent. So while not being a Democrat might be helpful in Illinois, it's clear neither party has a particularly winning brand right now. Wolf?

BLITZER: Jessica Yellin in Chicago for us. Thanks, Jessica.

Remember, the polls close about 15 minutes or so, right at the top of the hour. CNN will follow the results throughout the night.

The U.S. Supreme Court's decision reversing limits of campaign spending by corporations, big corporations, unions, special interest groups did not sit well with a lot of congressional leaders. So they're taking action right now to try to reverse at least part of the ruling.

Let's bring in our senior legal analyst, Jeffrey Toobin. He's joining us in THE SITUATION ROOM.

Jeff, can they do that? Is that likely to happen, reverse the Supreme Court decision?

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Well, you know, ever since Scott Brown won that Senate race in Massachusetts, the Democrats have been looking for some issue that can, sort of, get their mojo back. And some Democrats -- Chuck Schumer, the chairman of the rules committee, thinks this is one opportunity.

It's kind of populism First Amendment style. Basically what Schumer is trying to do is push a law that says if corporations, which now have the right to participate in political campaigns -- they have to identify themselves. They can't use front groups.

And he wants to bar foreign companies from getting involved in congressional or political races at all. That's the claim, that's what they want to do. Whether they can pass it and whether it's constitutional, that's another question.

BLITZER: We're talking about U.S. subsidiaries of foreign-owned -- of foreign companies, right? Is that the distinction that's being made?

TOOBIN: Well, that's actually part of what this -- the hearing that was about today, is how you would define a foreign company. Because a lot of companies have very mixed ownership. If it's only 5 percent foreign owned, is that enough? What about a company like Budweiser which is, you know, very American in its subsidiary but is actually now owned by a Belgian company.

How you define a foreign company is actually a lot harder than it seems and that's what they were struggling with today.

BLITZER: Listening to Floyd Abrams, the well-known First Amendment attorney. He said this the other day. Listen to this. (BEGIN VIDEO CLIP)

FLOYD ABRAMS, FIRST AMENDMENT ATTORNEY: The reality is we got 25 states out there that already allow unlimited -- absolutely unlimited -- spending by corporations and we have not seen examples that, as a matter of reality, indicates that anything bad has happened.

All we've had is some more speech about politics, and for people who care about the First Amendment, I would have thought they'd say, hey, that's a good thing, that's what the First Amendment is all about.


BLITZER: All right. What about that? The basic point being that the liberals, he suggests, they should support this because this increases the First Amendment free speech allowing people to spend their money as they wish to try to get candidates elected.

Is this just politics with Republicans by and large supporting the Supreme Court decision, Democrats by and large opposing it, because they think all this money is going to hurt them?

TOOBIN: Well, you know, Bob Bennett, who is the Republican from Utah, the ranking Republican on the Rules Committee, he made an interesting version of that argument today. He was really sticking it to the Democrats because he started talking about Keith Olbermann, the MSNBC host who's a big liberal.

And Bennett pointed out that Olbermann, you know, just said the worst things about Scott Brown before the election. He said he was a racist, he said he was a sexist, that he didn't care about violence against women. And Bennett pointed out that he could do that because MSNBC, which is owned by General Electric, has First Amendment rights, and that's a good thing.

That people are free to express their opinions on corporate-owned media, and he was sort of making the same point, saying, look, let's not get carried away limiting the rights of First Amendment of corporations.

Now whether freedom of speech is the same thing as buying advertisements, that's an issue the courts are struggling with, but that point about the First Amendment and freedom of speech is a real one, too.

BLITZER: Let's see what happens with the legislative process on this sensitive issue.

All right, Jeffrey, thanks very much.


ANNOUNCER: This is CNN Breaking News.

BLITZER: Let's go to our senior White House correspondent, Ed Henry. He's getting some new information just coming in.

What are you picking up, Ed?

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, I just came out of a briefing here at the White House. It was really extraordinary because it was thrown together very quickly, and what's going on is that the White House tonight through senior officials are pushing back very hard on this charge from conservatives we've heard in recent days that maybe reading the Miranda rights of that Detroit bomber on Christmas day somehow stopped his cooperation.

They're revealing all kind of new information. And we ran through it quickly. And we go back and forth on it.

First of all, a senior official is saying tonight that since Christmas day, the FBI has been working daily to get information from the suspect, Abdulmutallab, but more importantly, that the FBI in recent weeks secretly gained the cooperation of some of his family members.

That they flew all the way to Nigeria on January 1st without -- you know this being revealed by the government, and told tonight in order to reach out to various relatives. And they've worked on this -- these are officials from the State Department, the CIA -- for a couple of weeks.

They flew to Lagos, Nigeria. They also flew to the capital Abuja in Nigeria. And the point is that on January 17th, we're learning now for the first time from these senior officials, two relatives of Abdulmutallab flew to the United States with State Department and FBI officials in order to then talk to the suspect and gain his trust and say basically, according to the senior officials, that you can trust the U.S. government, and that since then, he has been providing a lot of intelligence.

You know that Jeanne Meserve was reporting earlier that we heard that they were getting very good intelligence from Abdulmutallab to try to disrupt other attacks. The new information is that that came because of U.S. officials' secretly flying to Nigeria in January and working with some of his relatives to get his cooperation -- Wolf.

BLITZER: Do we know who the family members were?

HENRY: Now I asked specifically one of the senior officials, is one of relatives the father of Abdulmutallab, who had first raised these concerns about the potential for an attack that was unheeded, apparently.

I was told that they were just not going to comment on specifically which relatives. They're not going to comment also on whether these relatives are still in the United States. But what's very interesting is that they're claiming that they've gotten intelligence that could help disrupt future terror attacks from al Qaeda.

This is all a back and forth, all these charges that maybe the White House didn't do a good job with these interrogations. They're insisting that they're letting professionals at the FBI handle it and that they're getting a lot of new information -- Wolf.

BLITZER: Very useful information, I assume. Let's hope. Thanks very much, Ed Henry, for that breaking news we're following.

We'll take a quick break. Much more coming up after this, including "The Cafferty File."


BLITZER: Let's get to "The Cafferty File" right now. Jack?

JACK CAFFERTY, CNN ANCHOR: The question this hour, Wolf, is how is the definition of middle class American changed?

Chad writes from California, "Middle class has become the peasant class. We have been taken over by a few wealthy people who control both our politicians and our government. We've become an aristocracy. Except the people in control aren't royalty. They're businessmen hiding behind the cloak of deception that is corporate America."

Ralph in Chicago says, "We only have two classes in America. The ones who don't know how many homes they own like John McCain and the ones who are raised by a single parent like President Obama. How many members of Congress are millionaires? A lot, but they feel our pain? Right."

Bernie in Massachusetts, "There's no middle class. It vanished just like the label "moderate."

Paul writes, "The biggest change I've seen is that it now takes both the husband and wife to achieve the land of middle class. The government's made it too hard for most to achieve it without two incomes."

Maria says, "The definition of middle class, choosing between whether to feed your family or make your house payments, praying that you don't get sick because you have no insurance, and hoping to find a job after being laid off for months on end. There is no middle class anymore"

Matt in Massachusetts writes, "It depends on where you live. Why doesn't the federal government take into account the difference in the cost of living when it comes to taxes? If you live in the northeast or coastal California, you tend to have a much higher cost of living that in most other parts of the country which leads to less discretionary income. $100,000 in New York City is not much. $100,000 in Indianapolis is a lot."

And John writes, "The definition of the middle hasn't changed. They're just being eliminated."

If you want to read more on this, you'll find it on my blog at

It's been a joy having you here in the big city for two days.

BLITZER: I'll be back.


BLITZER: I don't know.


BLITZER: I promise.

CAFFERTY: I want warning.

BLITZER: Thank you, Jack.

The census moves to the U.S.-Mexican border and one of the poorest communities in the country. The trouble is, many don't want to be counted. Why are they so afraid?


BLITZER: "CAMPBELL BROWN" is just ahead. I'll be back tomorrow 5:00 p.m. Eastern, but first this year's census is facing a considerable challenge. How do you count people who don't want to be counted?

CNN's Ed Lavandera shows us who and why. Ed?

ED LAVANDERA, CNN CORRESPONDENT: Wolf, I'm going to take you on an eye-opening journey into one of the poorest neighborhoods in America. This is the San Carlos colonia, along the Texas-Mexico border.

Walk through here and you'll feel like you're stepping into another world.


LAVANDERA (voice-over): A colonia is a cluster of homes carved out of the most undesirable property along the southern U.S. border. In Texas, it's estimated some 400,00 people live like 14-year-old Anabeli Rendon.

(On camera): Who do you live here with?

ANABELI RENDON, COLONIA RESIDENT: With my mom and my little sister.

LAVANDERA: The three of you live in here?



RENDON: We have a one-bed. I used to sleep on the floor.

LAVANDERA: You slept on the floor?


LAVANDERA (voice-over): Anabeli and her family are moving into a new house. For $200 a month it's not much better.

(On camera): This is the house they're moving into. It's 264 square feet, there's going to be five people living in here. Three brothers and sister, two small children, and they're still working on the house as speak here. They've been painting and this is the area that's of most concern. The big hole in the ceiling and it's been leaking water since we've been here.

Follow me inside here, and you can see this is what passes as a bathroom in colonias, and the owners aren't even sure that the septic tank or the sewage system here even works.

(Voice-over): The roads aren't paved, there is no air- conditioning or heat, and finding water is a daily quest.

(On camera): So this is life in a colonia. We've jumped in the back of this pickup truck and the man driving the truck is going to take us to the waterfront so he can fill up this tank and then he's going to start driving the neighborhood streets here in the colonia and fill up barrels of water for people.

(Voice-over): Most of the people who live here make under $10,000 a year, finding work whenever they can. So you'd think it the farthest thing from their minds would be the 2010 Census count. But Anabeli says the census sparks fear.

RENDON: I just think they're scared, like going out.

LAVANDERA (on camera): You think they're scared.

RENDON: I think so. Yes.

LAVANDERA: And why do you think they're scared?

RENDON: I don't know because -- I don't know, because most (INAUDIBLE).

LAVANDERA: So they don't trust them?

RENDON: I don't think they do.

REP. HENRY CUELLAR (D), TEXAS: What can we do to do a better job to make sure we count everybody?

LAVANDERA (voice-over): Congressman Henry Cuellar and the Census director are trying to build trust. Many in this group have relatives living here illegally but they assure the neighbors it's not about deporting immigrants.

ROBERT GROVES, U.S. CENSUS DIRECTOR: The benefits of participating in the census are quite large. We return as a country over $400 billion a year to local areas, neighborhoods like this, cities and states dependent on census counts.

If you get counted, you get your fair share of that money.

LAVANDERA (on camera): This is Anabeli's mom, and she just listened to the meeting with the Census folks, and she's moving into her new place here. She's telling us that after listening to that, she feels confident to answer those questions and it's something that she wants to do.

(Voice-over): Ed Lavandera, CNN, Laredo.


ANNOUNCER: CNN Primetime begins right now.