Return to Transcripts main page


Biggest Jobs Gain in Four Years; Stopping the Spill; Why Stocks Fell Almost 1,000 Points

Aired May 7, 2010 - 17:00   ET


WOLF BLITZER, HOST: Rick, thank you.

Happening now: Job gains and market madness -- the forces driving and squeezing the U.S. economy and your wallet. This hour, your guide to try to find some work.

Also, a better understanding of one of the craziest days on Wall Street in quite a while.

In the Gulf of Mexico, a giant dome right now is being lowered over that gushing oil well. It's a high-stakes experiment in plugging the leak that's threatening the environment and the economy.

And a false alarm in Times Square just days after the botched bombing. We'll have the latest on the investigation into the failed attack, and whether security officials are being over-cautious right now.

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


BLITZER: Some more big swings on the big board at the New York Stock Exchange a day after a stunning nosedive. At the closing bell an hour ago, the Dow Jones Industrials were down about 140 points. Traders still are anxious about yesterday's slide fueled by a computerized sell-off and fears about the European debt crisis.

The market seemed to shrug off the surprisingly strong employment report. New and revised figures show 290,000 jobs were added last month. That's the largest gain in America's labor force in four years. But the unemployment rate actually went up 0.2 percent to 9.9 percent.

President Obama welcomed the jobs gains, and he tried to calm some jitters on Wall Street.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Even as we take these steps to increase hiring in the short and long run, we're also mindful of other economic factors that can emerge. So, I want to speak to the unusual market activity that took place yesterday on Wall Street. The regulatory authorities are evaluating this closely with a concern for protecting investors and preventing this from happening again, and they will make findings of their review public, along with recommendations for appropriate action.


BLITZER: Let's dig deeper on the jobs report and what it means for America.

Lisa Sylvester is here. She's looking at these numbers.

First of all, Lisa, who's hiring?

LISA SYLVESTER, CNN CORRESPONDENT: Well, a big winner: manufacturing. This is an industry that has been absolutely battered in the last few years. But in the month of April, manufacturing added 44,000 jobs. That's the biggest one-month gain in the last 12 years.

Construction also added 14,000 jobs. This is the second month in a row for gains in this industry since the recession.

The hospitality sector added 45,000 jobs, and retailers posted 12,400 jobs. Also the government was hiring, census workers: 65,000 added in the month of April -- Wolf.

BLITZER: Sixty-six thousand.

SYLVESTER: Sixty-six thousand, rather.

BLITZER: If we created 290,000 new jobs, almost 300,000 jobs were created. But the unemployment rate went up from 9.7 to 9.9 percent. Please explain to our viewers how this is possible.

SYLVESTER: I think a lot of people are wondering that very same question. And here's what you have to keep in mind. Yes, payrolls are up 290,000 jobs that were added, but another number went up as well, and that is the number of people actively looking for a job.

You know, a lot of people, there are a lot of folks out there, you know, who were discouraged, so they gave up looking during the recession. Now, they're saying, hmm, let me try to see. Let me put my resume out and see what I can find.

So, yes, 290,000 more jobs, but it's not enough to offset the 805,000 more workers who started looking for jobs in April -- and that's why we saw that unemployment rate increase from 9.7 percent to 9.9 percent.

BLITZER: How many jobs would have to be created in a month to start seeing that 9.9 percent number go back down?

SYLVESTER: You know, this is sort of the big picture here, but the economy lost 7.8 million jobs since the recession started in December 2007. So to make up that number, and the number of jobs that should have been created due to -- to account for population growth, the normal ebb and flow, the Economic Policy Institute estimates that we're going to have to start seeing payrolls increasing around 325,000 a month consistently -- month after month -- to really start to see that unemployment number fall back, Wolf, to their pre-recession levels.

BLITZER: So, it could hover at 9.9, 9.8, 9.7 for months to come?

SYLVESTER: In fact, you know, I talked to several economists and what they anticipate is the remainder of this year, they actually expect the unemployment rate to tick up as even more people come back looking for jobs and such, and then start to gradually go down. So, we could see, again, another 10 percent, 10.1 percent, before we eventually see the numbers start to fall back.

BLITZER: I guess the silver lining is that so many millions of people just gave up getting a job have decided, well, maybe there is an opportunity for me to come back to the workforce.

SYLVESTER: And that's a sign actually of optimism. I mean, they're thinking that the economy is turning around and maybe now's the time that they can find a job, Wolf.

BLITZER: And let's hope they do.


BLITZER: Lisa, don't go far away.

Let's get a little bit more context now on the state of the job's market. All -- after almost two years of losses, the economy now has added jobs in five of the last six months, 573,000 jobs have been gained since the start of this year. In the stock market, the Dow Jones Industrials fell to 6,547 in the early March of 2009, its lowest point during the recession. It climbed to a high point of 11,205 late last month.

But get this -- over the last two weeks, it's lost some 825 points, closing around 10,380 today.

Let's turn to the attempt to stop that massive oil spill threatening the Gulf Coast from spreading. B.P. has lowered a giant four-story containment dome more than 5,000 feet below sea level.

David Mattingly is joining us now from Venice, Louisiana, with more.

How is it -- how is it going, David? What do we know?

DAVID MATTINGLY, CNN CORRESPONDENT: Well, Wolf, B.P. officials told me just a couple hours ago that they expected to see that dome sitting on the ocean floor and in place by later this afternoon. There's no confirmation yet that has happened, but if they are successful, it would be a huge step forward in stemming the flow of oil into the Gulf of Mexico -- Wolf.

BLITZER: You also spoke with those officials and they told you that -- you asked them why they didn't have better emergency response operation in place when this disaster occurred.

MATTINGLY: I talked to Tony Hayward. He's the CEO of B.P., and he told me that he compares this disaster to Apollo 13. This is something that's never happened before to them. And they say they're attempting some engineering feats never tried before. There's no guarantee of success.

But here we are over two weeks after the disaster originally happened. So the natural question was: what's your plan B?


MATTINGLY: Do you have something ready to go just in case this fails?

TONY HAYWARD, CEO, BRITISH PETROLEUM: Well, the ready to go is, of course, containing the spill to the maximum extent possible and then there is a further operation on the blowout preventer which will probably take two to three weeks to bring into place.

MATTINGLY: But you're drilling for oil a mile underneath the ocean. Was something -- why wasn't something ready to go in the event of this kind of a disaster?

HAYWARD: Well, this has never happened in 25 years in the industry.

MATTINGLY: Yes, I understand that. But --

HAYWARD: There is the blowout preventer --


MATTINGLY: -- risks are involved in this. Was this something that you just never, ever thought would happen?

HAYWARD: It was considered to be an extraordinary low, low probability, and what we've implemented is the response part, and that is what you're seeing.


MATTINGLY: What we're also seeing, Wolf, is this oil moving past the mouth of the Mississippi River to the west, causing more environmental damage, and more economic damage.

BLITZER: And we should know, David, by Monday or early next week whether this containment will really work in stopping that gushing oil well?

MATTINGLY: Well, if that dome is in place right where it's supposed to be now, then they will begin work attaching the duct work and piping to that so they can siphon the oil that's leaking from the pipe and take it up to a containment vessel on top. That's going to take a couple of days to put together. So, it should be early next week when we know if this is going to work. And if not, you heard, they have a plan B in the works that could take a couple more weeks.

BLITZER: It's a really delicate operation, 5,000 feet under ground, under the water. So, let's hope for the best.

David, thanks very much. Supporters of the climate change bill say they're moving forward without a key Republican onboard. But will the oil spill in the Gulf doom the legislation's chances? Paul Begala and Ed Rollins, they're here for our strategy session. That's coming up later this hour.

And we're also digging deeper on why the stock market went into freefall yesterday. We're asking: what if -- what if human error could be taken out of the trading process?

And you're going it find out why the first lady of the United States, Michelle Obama, was almost in tears.


BLITZER: Checking in with Jack Cafferty for "The Cafferty File" -- Jack.

JACK CAFFERTY, THE CAFFERTY FILE: The federal government, Wolf, is trying to play catch-up with the state of Arizona when it comes to immigration reform. President Obama is calling on Congress to start work this year on comprehensive immigration reform legislation.

The translation is: nothing will get done this year.

The president acknowledges the nation's immigration system is broken, and yet criticizes Arizona's new law saying that that undermines, quote, "fundamental principles that define us as a nation," unquote. Portions of the Arizona law are word-for-word the same as the federal immigration law which is ignored year after year. Mr. Obama promised immigration reform during his first year in office. We're now approaching the mid-way point of his second year, and even some Democrats are getting tired of waiting for the president to do something.

President Obama has suggested there's not an appetite in Congress for another fiery debate in an election year, and just yesterday, his press secretary said that there's no enough support to move forward. Except, of course, in the country where there is overwhelming support for doing something.

One Democratic senator is asking Arizona to delay implementing its immigration law for one year. New York Senator Chuck Schumer, in an act of great chutzpah, tells Arizona Governor Jan Brewer a delay would give Congress a chance to pass a federal law which would be more effective than Arizona's. Governor Brewer says, no way. She, like the rest of us, has been lied to before.

They want another year to do nothing so they can campaign for the mid- terms without having to explain to the voters why they refuse to do anything meaningful about border security and illegal immigration. They're not even any good at covering up their real motives anymore.

Here's the question: How seriously do you take the president and Congress when it comes to immigration reform?

Go to and post a comment on my blog -- Mr. Blitzer.

BLITZER: All right, Jack. Get ready. Those e-mails are about to come pouring into you.

CAFFERTY: I hope so.

BLITZER: I'm sure they will.

All right. We heard President Obama saying that federal investigators are investigating yesterday's drastic plunge in stock prices. Senators also are trying to determine why the Dow fell at one point yesterday almost 1,000 points, and what if -- what if anything should be done response?

Mary Snow has been looking into this part of the story for us.

All right. What do we know, Mary, about what went wrong yesterday?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, it's still unclear. What's emerging is a man versus machine debate. With electronic trading taking over, where does the role of humans come in? And we look at what if changes aren't made in the way stock trading is regulated.


SNOW (voice-over): After Thursday's jaw-dropping plunge followed by its rebound, questions remain about exactly what happened. How could a stock like Accenture trading around $40 a share tank to just a penny within minutes?

(on camera): Is that the worst yesterday that you've seen so far?

WILLIAM O'BRIEN, CEO, DIRECT EDGE: Yes, it was. It's something that no one should be proud of and we have to work very quickly to make sure that doesn't happen again.

SNOW (voice-over): William O'Brien is the CEO of Direct Edge, just across the river from Wall Street. The company touts itself as America's newest stock exchange. It's on electronic exchange where the bulk of trading is done on computer at the speed of milliseconds. The difference at the New York Stock Exchange, there are humans who act at middlemen.

JONATHAN CORPINA, TRADER, MERIDIAN EQUITY PARTNERS: And it shows investors that, you know, you have to look at the markets where you're trading. You have to understand that human interaction is something that we need, and speed isn't always the answer.

SNOW: When the market started melting down Thursday, the New York Stock Exchange slowed trading on some stocks like Accenture to get a better handle of what was happening. But roughly 60 percent of the stocks that trade here also trade on other exchanges.

And when the NYSE went into slow-motion mode, trading was able to continue on other electronic exchanges, and that includes O'Brien's exchange. He says if there's going to be a time-out, it has to be system-wide and not just on one exchange. He says technology isn't to blame.

O'BRIEN: Technology can allow things that are left to get out of control cascade. But I think, on the other side of the coin, technology can be used to prevent that from happening in the first place -- if people are focused on it.

SNOW: One Georgetown professor says Thursday's meltdown was just a preview and that the system is dangerously unprotected.

PROF. JAMES J. ANGEL, GEORGETOWN UNIVERSITY: What we need is a real- time trading halt, that when the market gets chaotic, let the computers automatically call a trading halt so you don't have to way minutes for slow-moving humans to wake up, and then apply human judgment to allow the market to reopen when it's appropriate.


SNOW: And one House committee has called for a hearing next Tuesday to examine what happened. And two Democratic senators are calling for safeguards to prevent a repeat of what happened -- Wolf.

BLITZER: Mary Snow with that good explanation for us. Thank you, Mary.

Those devastating Tennessee floods are finally receding, but the cost of the damage is just starting to trickle in, and the numbers are staggering.

Plus: a big win for the CEO of the disgraced Wall Street giant Goldman Sachs. We're going to tell you what it means for the company's future.

And this Utah's incumbent Republican senator, at least one of two -- so, why is he now in danger of becoming a victim of the tea party? Jessica Yellin is in Utah with that Republican senator, Bob Bennett.

Stand by.


BLITZER: Lisa's back with other top stories coming incoming to THE SITUATION ROOM right now.

What else is going on, Lisa?


Well, the price tag for the damage done by those deadly Tennessee floods is already around $1.5 billion, in Nashville alone and climbing. The mayor says that estimate includes only commercial, industrial and 2,000 residential structures. The bill for damage done to roads, bridges and building contents is still outstanding.

The Food and Drug Administration is eyeing an Arizona farm as the potential source of an E. coli outbreak for romaine lettuce. The outbreak has sickened 19 people, three of whom have life-threatening illnesses. Freshway Foods in Ohio is recalling lettuce in about two dozen states and the District of Columbia. It applies to lettuce with "best if used" by date before May 12th or on and "Grab and Go" salads at some grocery stores.

New signs that embattled car giant Toyota could be bouncing back. "Consumer Reports" magazine is lifting its "don't buy" recommendation for a Lexus SUV. The company recalled about 10,000 GX 460 models last month after the magazine told readers not to buy them because of a rollover risk. Now, after software upgrades, "Consumer Reports" says the vehicles passed those tests.

And the British army could soon have a new pilot, Prince Harry. The 25-year-old, who is third in line to the British throne, received his wings from his father, Prince Charles, at a ceremony today. You see the pictures there. He will now train as an Apache attack helicopter pilot. The move might boost the prince's hopes of returning to the front lines in the war of Afghanistan.

And he looks pretty good in uniform, doesn't he, Wolf?

BLITZER: Yes. He's a handsome red-headed guy, isn't he?

SYLVESTER: Yes. Kind of reminds me a little of you, a handsome devil.

BLITZER: Oh, yes.


BLITZER: I once had red hair myself.

All right, thanks very much.

It's, what, about six months before election day? But a Republican senator in Utah could see his political career dashed tomorrow. Just ahead: Bob Bennett's fight against the tea party and the charges that he's not conservative enough.

And her husband tends to be cool, but the first lady, Michelle Obama, got downright emotional today. Stand by. You're going find out why.

And North Korea's reclusive leader riding in style and asking for help in China.



Happening now: the thwarted terror attack in New York's Times Square sparked some quickly developing investigations in both the United States and Pakistan. Our veteran correspondents right now -- they're closely monitoring some new developments. Stand by.

And it's the closest fought U.K. election in decades. Now with a hung parliament, who will end up being the country's next prime minister?

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


BLITZER: In Utah right now, Senator Bob Bennett is just a day away from possibly, possibly, being defeated by his own party. At the state GOP convention tomorrow, delegates will choose the party's U.S. Senate nominee, or two candidates to face-off in a June primary. And even though he's the long-term incumbent, Bennett, is in serious danger right now of not making the cut.

Let's go to Utah. Our national political correspondent Jessica Yellin is standing by in Salt Lake.

If someone would have said only a few months ago, Jessica, that Bennett would have trouble getting the Republican nomination, everybody would have thought they were crazy.

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: Including Bob Bennett himself, Wolf. I'll tell you, in this state, it is really a battle for the soul of the Republican Party. The tea party activists are very strong force here and determined to throw out the old guard. They'd like Senator Bob Bennett to be their first Republican casualty.


SEN. ROBERT BENNETT (R), UTAH: Hi. Bob Bennett. Good to see you. Glad you're here.

YELLIN (voice-over): This could be Utah Senator Bob Bennett's last stand.

BENNETT: I've been in the Senate 18 years. Some of you think that's too long, but the wise once among you realize I'm just getting started.

YELLIN: He's been targeted by tea party activists who say he's not a true conservative.

(on camera): When they say you're not conservative enough, is that surprising to you or --

BENNETT: You know, my colleagues in the Senate find that hilarious, on both sides of the aisle. They come up and say, if you're not conservative, we don't know what the definition of a conservative is.

YELLIN (voice-over): Bennett has a long record of opposing abortion rights and gay rights, defending gun rights. But those issues barely rate with the tea party.

Just ask David Kirkham, his company builds these sports car, but he's also founder of the Utah Tea Party and he's determined to boot Bennett because the senator voted for the 2008 Wall Street bailout.

(on camera): Senator Bennett is considered among the most conservative members of the Senate by groups, including the National Right to Life organization, the Christian Coalition and liberal groups like the ACLU. How can he not be conservative enough for you?

DAVID KIRKHAM, FOUNDER, UTAH TEA PARTY: I don't think it's a question of conservative. It's a question of responsible. He was not responsible when he voted for bailouts. It was not a responsible vote to vote to save companies that had literally destroyed themselves.

YELLIN: But should his career end over one vote?

KIRKHAM: His career will end over that vote.

YELLIN: Do you regret it?

BENNETT: No, I do not, because we were facing a very genuine crisis.

YELLIN: Bennett is no moderate. He voted no on health care reform, no on the stimulus, no on the auto bailout.

But he does work across the aisle. Last year, he and a Democrat proposed a health care alternative. The bill went nowhere, but for Bennett, the damage was done.

(voice-over): Many of these Utah Republicans won't forgive him for that health care proposal.

UNIDENTIFIED MALE: When you compromise things like that, you compromise your own values.

UNIDENTIFIED FEMALE: I feel like we need new people in the Senate who will show that they are conservative.

YELLIN: So, after years as a darling of the right, Bob Bennett could be the first Republican victim of the tea party's anti-Washington rage.

BENNETT: They just want everybody in Washington out. Throw them all out, and we'll start afresh.


YELLIN: Now, Wolf, to give you just a sense of what Bennett is up against, some of the delegates we spoke with said that Bob Bennett should have stopped the Democrats' health care bill from passing. When I pointed out he voted no on it and Republicans did everything they could to block it, they say, well, they should have found a way to do something more. You get a sense in the end, Wolf, that Bob Bennett is being blamed for things that are just out of his control -- Wolf.

BLITZER: Well, stand by for a moment, Jessica.

Gloria Borger, our senior political analyst is with us as well.

Gloria, whatever happened to the notion that these longtime incumbents automatically, at least, get their party's nomination?

GLORIA BORGER, CNN SR. POLITICAL ANALYST: It's gone. It's not just eroding, I think it's gone. Look, you have a very angry electorate out there, as Jessica was just showing you, and they're taking it out on all incumbents.

Now, clearly, that affects Democrats more than Republicans just because the Democrats control the House and the Senate. But what you see Senator Bennett getting is this sense of anger, polarization and that anybody who works across the aisle is no good, because compromise is a dirty word.

What we're also seeing, Wolf, is this is going to be a national referendum, this midterm election. President Obama has thrown a lot of big issues out there, whether it's health care reform, the stimulus package even the bailout that Senator Bennett's got problems with. And people are going to make this a national election. We don't like what you guys in Washington have done, so you be gone.

BLITZER: Jessica, Utah, that's where you are right now, shows this problem is bipartisan as well.

YELLIN: It really is. As you can see, Republicans are struggling as well. Bob Bennett himself said, these folks are oh angry they're not differentiating between Democrat and Republican and said some of the folks, delegates he's talked to said he should go back to Washington and scream more. Well, good luck getting the mild mannered Bob Bennett to scream. The bottom line, Wolf, it seems they want to wipe the slate clean and have a new kind of politician. Somebody who will dig a line in the sand, not budge, and do away with the gentile old ways of Washington. They want to blow it up in a sense.

BLITZER: Is it true that in Iowa, Chuck Grassley, the longtime chairman of the Senate Finance Committee, a powerful guy here in Washington. Right now he's the minority ranking member. Is it true he's in trouble in Iowa?

YELLIN: Well, in the latest polls, Wolf, he's only nine points ahead. He's ahead, but this is a fellow who's used to winning, coasting to victory with like 65 percent of the vote. So it shows that people are saying, you've been around Washington too long. Again, he is somebody who is kind of quirky. He works with Democrats. He works with Republicans. He speaks his mind, and you know, maybe there are a lot of folks who don't think that he is conservative or pure enough. But you're going to wind up with, a much more polarized Congress, and ironically, the voters are saying, it's polarized enough.

BLITZER: And long time incumbents, saying enough is enough. David Obey in the house. Evan Bayh in the Senate. They're not going to run for re-election. They've had two in Washington, at least for now. Guys, thanks very much. Good reporting, as usual.

Sarah Palin is taking sides at a high profile Senate race. Some conservatives are not very happy with her choice. Palin's response is coming up in our strategy session.

And from Pakistan to Times Square, our correspondents right now, they're investigating the failed bombing suspect, Faisal Shahzad on two continents and his possible connections with terrorist networks. Times Square evacuated for a while today because of a suspicious package that proved to be harmless. Were security officials being overcautious? Overreacting? Stay with us.


BLITZER: Let's go back to Lisa. She is monitoring some of the other top stories in THE SITUATION ROOM right now. Lisa, what do you have?

LISA SYLVESTER, CNN CORRESPONDENT: Hi there Wolf. Well embattled Goldman Sachs chief Lloyd Blankfein survived a threat within the company today. Shareholders rejected a proposal designed to strip Blankfein of his role as chairman. There is speculation his job might be in jeopardy because of the civil fraud charges the company is facing and the steep drop in Goldman stock.

Iceland's volcano is wreaking new havoc in the skies. European air authorities say that dense cloud of ash is stretching more than 1,200 mile ace cross the north Atlantic and it's forcing most flights between North America and Europe to travel in highly congested airspace causing delays. Forecasters say the cloud could reach parts of Greenland and Spain by tomorrow.

And if there is a new son or daughter in your future, as there is mine, you might want to consider names Isabella or Jacob. In the social security administration's annual list of top names, Isabella topped the list of names for girls followed by Emma which slipped from number one last year. Olivia came in third, and for boys, nearly 21,000 boys were named Jacob, followed by Ethan and Michael.

First lady Michelle Obama celebrated mother's day a little early, and got a little choked up in the process. It happened when she spoke about her own mother who was at the event and lives with the Obamas at the white house. Listen to this.

MICHELLE OBAMA, FIRST LADY: And raising our girls in the white house with my mom -- ah. Not going to do this. Is a beautiful experience, and the opportunity to have three generations living in the white house, it's beautiful, and I'm pretty sure the president's happy about it, too.

SYLVESTER: How she called her mother her rock, who helped make her become the woman she today. To all the mothers out there, happy mother's day.

BLITZER: And to you as well. Happy mother's day.

SYLVESTER: Thanks, Wolf.

BLITZER: Thank you.

He was a key ally in the Democrats' fight for climate change. Can they get a bill without Senator Lindsey Graham's support? And Sarah Palin is weighing in on key race in California, now she's taking some heat for her choice.


BLITZER: Let's get to our strategy session right now. Joining us, our CNN political contributors, the Democratic strategist Paul Begala and the Republican strategist Ed Rollins. A climate bill, Paul. You know there was almost a huge news conference a couple weeks ago. John Kerry, Joe Lieberman, Lindsey Graham, they were all set until Harry Reid started talking about comprehensive immigration reform. Lindsey Graham got angry about that. Here's what he's now saying because Lieberman and Kerry are ready to start pushing again. This is Graham. "I believe there could be more than 60 votes for this bipartisan concept in the future, but there are not nearly 60 votes today, and I do not see them materializing until we deal with the uncertainty of the immigration debate and the consequences of the oil spill." Are there enough votes without Lindsey Graham in the U.S. Senate, you need 60 to break a filibuster, to get a climate change bill, a new energy bill, off the ground?

PAUL BEGALA, DEMOCRATIC STRATEGIST: I think there probably are not. In that sense Graham is right. But what puzzled me and I can't figure this out is the connection. Senator Graham is saying that he won't support an energy bill that he helped to write. If the -- the Senate brings up an immigration bill that he supports, and the truth is immigration's not likely to come up. It's going to go to a committee and I think the Senate is far too divided to get into immigration. My own guess, but I think -- not giving advice, I think Senator Graham is making a political mistake. There ought to be a bipartisan to wean us off oil, especially Middle Eastern oil. The oil slick ought to make it more important, not less, to try to move us off of oil and foreign oil. I think Lindsey Graham is making a mistake on the national security argument and the oil art.

BLITZER: What do you think Ed?

ED ROLLINS, REPUBLICAN STRATEGIST: I think the story about Robert Bennett, a great senator, a senator that's been there 18 years facing possible defeat in the next couple of days in the Republican convention in Utah is a message to a lot of Republicans like Lindsey Graham. You don't want to cross the aisle. There's a lot of risk tat. It's a different environment today and I would simply think that the president and the Democrats know they probably have one more good fight before this election and it maybe the Senate nominee, depending who he or she is, I don't think they can fight immigration. I don't think they can fight this particular thing. I don't think they can get much done, other than the appropriation process.

BLITZER: You're referring to the Senate nominee for a Supreme Court nominee?

ROLLINS: That's correct.

BLITZER: You think that's the last serious fight that's going to happen before the election?

ROLLINS: That along with basically whatever appropriation bills they want to try and get passed. They have to get something passed or basically face consequence there. BLITZER: In fairness to Lindsey Graham, Paul, there was a deal that was worked out between Kerry, Lieberman and Graham, that the next major piece of legislation would be this energy legislation, this climate change bill. Then all of a sudden Harry Reid said, not so fast. Supposedly because he's so concerned about getting himself re- elected in Nevada, he was trying to energize that Hispanic vote?

BEGALA: I don't think that's the case at all. The Hispanic vote is very, very energized thanks to our friends in Arizona. There's nothing more -- believe me, it's hotter than a jalapeno right now and Hispanics are very up in arms over what they perceive to be discriminatory Republican policies on immigration. Harry Reid doesn't need an immigration bill to energize the Latino vote in this state. The good people of Arizona, the Republicans there at least have done that for him. I don't think this is political at all in this sense for Reid. I think Senator Reid is trying to run the Senate and it looked like they had an agreement on energy. The Senate probably ready to go to energy and Senator Graham has blown it up for the very reasons Ed states. It's not about energy or immigration. It's about politics and it's about Senator Graham getting whipped sawed by the extreme right wing fringe of his party.

BLITZER: He was just re-elected last year. He has five years. He doesn't have to worry about getting re-elected for five years. He's in relatively good shape. Let me move on to Sarah Palin and pick your brain on her decision to endorse Carly Fiorina for the nomination in California. The Senate nomination, Republican nomination. She was criticized, Sarah Palin, by some conservatives saying that Carly Fiorina wasn't conservative enough. She replied by saying, this is Sarah Palin, "Most importantly, Carly is the only conservative in the race who can beat Barbara Boxer. That's no RINO," Republican in name only. "That's a winner." How significant is the Sarah Palin endorsement of Carly Fiorina?

ROLLINS: It certainly is helpful. There's a month to go. Tom Campbell, who's leading in the polls, a former Congressman, a former state director of budget, and a whole variety of other jobs in California, is leading in the polls. He's a moderate. Fiorina is a moderate, too. I think this is kind of payback from the campaign. Governor Palin had a relationship with her. She was one of the co- chairmen of the McCain/Palin campaign. I think there's plenty of time for this to play out. People who are voting now, though, the absentee ballots starting to vote today, it may have impact. Sarah Palin never hurts you.

BLITZER: You know, probably it will help her, Carly Fiorina, in the Republican nomination process. Don't you think, Paul?

BEGALA: I suppose, but I do think it's going to help Barbara Boxer a lot more, should Ms. Fiorina be the nominee. It's an odd move I think for Sarah Palin. Carly Fiorina is the queen of outsourcing. I mean she shipped tens of thousands of jobs overseas when she was the CEO of Hewlett Packard and if you look at Sarah Palin's vote, it's much more blue collar. Here she's endorsing the outsourcing queen, and just when the race could not get weirder, this new video the Democrats are putting out. I think it's the Democratic Senate campaign committee, mocking a Fiorina ad. Fiorina made the weirdest ad of the year with these demon sheep with red eyes, and so now the Democrats have turned that back around on her and have made another demon sheep video. If you have free time, it's hilarious. Politic aside, it's a hilarious video about Fiorina and the demon sheep ad that she herself made. It can only get weirder. There's another month left. It's Ed's home state, I know but California can always get weirder.

BLITZER: She was here in THE SITUATION ROOM a couple weeks ago. That's old video of her. She is suffering from breast cancer. She was going through radiation. A lot of her hair though since then has grown back and we wish her healthwise only, only the best. Guys, thanks very much for coming in.

ROLLINS: Thank you.

BLITZER: Jack Cafferty is asking, how seriously do you take the president and Congress when it comes to immigration reform? He'll be back in a moment with your e-mail.

And we're following the giant experiment in the Gulf of Mexico right now aimed at capping that massive oil leak. CNN has exclusive action to the government facility where procedures like this one are being tested.

And what Kim Jung-Il trying to get in China, North Korea's reclusive leader is out and about and traveling in style.


BLITZER: Jack's back with "the Cafferty file." Jack?

JACK CAFFERTY, CNN CORRESPONDENT: The question this hour, Wolf, is how seriously do you take the president and Congress when it comes to immigration reform?

Rick writes, "Congress has no intention of doing anything about illegal immigration other than legalizing all the illegals, and they know that the citizens are against that, so they do nothing. Every state needs to copy the Arizona law and every state needs to apply it. It's time for the citizens to get some action from someone, even if it has to be the states individually."

And Mike writes, "I think that the president and the Democrats are doing is that they're trying to string the Hispanics along, just so they can say that they are doing something about immigration. When, in fact, they are actually not doing anything at all."

Bob in Pennsylvania writes, "The country doesn't want immigration reform. They want the border closed and our laws enforced."

Alex in Washington says, "Not very seriously. There are more votes and money for both sides in maintaining the status quo. Taking any action will lose voters for those with the courage to act. Any path toward citizenship will be vilified as amnesty, and any crackdown on illegal aliens will alienate, no pun intended, Hispanic voters, so as usual nothing will be done." Michael in Phoenix, "I don't take them seriously. The government has failed us over and over. If they do come up with a new policy, it will be the inverse of what the people want. It will cause more problems, and there won't be any funding for it."

And Lillian in Tucson, Arizona, writes, "I hope President Obama takes this topic seriously and with responsibility. We're living a nightmare in Arizona, people leaving the state, families suffering and afraid of what will happen. The situation cannot continue like it is. The Hispanic community says today we march, tomorrow we vote. We are not one, we are not hundreds, we are not thousands, we are millions."

If you want to read more on this, and it's one of those hot-button topics, you'll find lots of e-mail on my blog at

One more thing, Mr. Blitzer, we got word that you were celebrating 20 years here at CNN. The last five of them you and I have worked together here in THE SITUATION ROOM and along the way there have been some moments.


BLITZER: Good to be with you. A lot of our viewers probably going to be surprised to learn this is the first time that the two of us have actually met.

CAFFERTY: I know. Six months ago, we met in THE SITUATION ROOM. It's a pleasure to have you in New York City.

BLITZER: You're much taller in person.

CAFFERTY: I'm actually the same size whether I'm there or on TV. I would guess it didn't exactly represent a profile in courage for the vice president to wander over there to the f-word network for a sit- down with Brit Hume. I mean, that's a little like Bonnie interviewing Clyde, isn't it?

SARAH PALIN: All those things under the umbrella of job creation, this bailout is a part of that.

CAFFERTY: I'm 65 and have been covering politics as you have for a long time. That is one of the most pathetic pieces of tape I have ever seen for someone aspiring to one of the highest offices of this country. That's all I have to say.

BLITZER: Yeah, but she's cramming a lot of information --

CAFFERTY: There's no excuse for that. She's supposed to know a little bit of this.


CAFFERTY: Don't make excuses for her. That's pathetic. You and I travel in much different circles.

BLITZER: Okay. Jack, you got to tell us how you really feel about Nancy Pelosi.

CAFFERTY: I just did. She's a horrible woman.

BLITZER: I heard that.

CAFFERTY: Welcome to our good city. Wouldn't you rather be here every day than Washington?

BLITZER: I love Washington.

CAFFERTY: No, no, this is the big apple.

BLITZER: I love politics.

CAFFERTY: Well, you can talk about them from here. We have satellites.

BLITZER: It's Wall Street, you have politicians.

CAFFERTY: We can fraternize and commune. Here's the question. How would you fix the department of department of homeland security? E- mail your thoughts to Is Anna Nicole Smith still dead?

BLITZER: Yes. We're going to be updating our viewers coming up shortly.

CAFFERTY: Can't wait for that.

Did you file your taxes yet?

BLITZER: Yes I did.

CAFFERTY: Did you get a refund?

BLITZER: A little bit. Not much.

CAFFERTY: How much?

BLITZER: Let's not discuss. I pay so much in taxes. You want to make me nauseous a little bit.



BLITZER: A few nice moments.

CAFFERTY: So, happy anniversary.

BLITZER: Yeah, thank you, Jack. It's been a good -- you know, August it will be five years, SITUATION ROOM, on the air. You and me.

CAFFERTY: I know. It seems like ten, doesn't it?

BLITZER: It's like dog years, Jack. CAFFERTY: Yeah. Yes, they are.

BLITZER: 20 years at CNN.

CAFFERTY: That's good stuff. How did you start here? I mean, you just walk in off the street and say, I want to go to work here?

BLITZER: They thought I was a good reporter. But the key words, we think we can get him cheap.

CAFFERTY: Yeah, but you are a good reporter, and you're no longer cheap.

BLITZER: Those days, they could get me cheap. Do you know what was really good, only a few weeks after I started as the pentagon correspondent, do you know what happened?

CAFFERTY: What, the gulf war?

BLITZER: Saddam Hussein invaded Kuwait.

CAFFERTY: That's where you kind of made your chops not just with CNN, but the whole country. We all got to know who Wolf Blitzer was when you were covering Schwarzkopf and the boys laying the wood to Saddam Hussein and his lads.

BLITZER: Great, Jack. We'll discuss it a little bit more, Jack. Thank you.

As investigators pursue leads in the Times Square bombing case, is the U.S. getting the help it needs from Pakistan? We have a special report coming in from our state department and pentagon correspondents.

Who will form the next government in London? What kind of turmoil might there be until then? We're going to London.


BLITZER: It's a highly publicized and unexpected trip. Our senior international correspondent, Jon Vause, looks at North Korea's leader, Kim Jong-Il, rare visit to China.

JON VAUSE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Kim Jong-Il's not so secret visit to China ended on Friday with state-controlled media reporting that with the meeting with China's president Hu Jintao, the North Korean leader said he was still committed to restarting the long-stalled nuclear disarmament talks, but no word on when it might happen. During his five days here, Kim also toured a high-tech zone and a train manufacturing plant. The 68-year-old appeared to have lost weight and hair and at times looked frail. There's been speculation about his health ever since reports emerged almost two years ago that he suffered a stroke. The dear leader rarely leaves North Korea, and analysts believe his trip to China may be to ask for economic aid for his impoverished country and also to seek Beijing's diplomatic support in the crisis over the sinking of a South Korean warship last month. Investigators have reportedly concluded the North is to blame. Pyongyang has denied having anything to do with the incident. Kim traveled here in his own personal armored train, reportedly decked out with conference rooms, bedrooms, satellite phone connections and flat- screen TV's.

John Vause, CNN, Beijing.