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Trading Blame for Oil Spill; British Government Shakeup; Clinton Welcomes Karzai to Washington

Aired May 11, 2010 - 17:00   ET


WOLF BLITZER, CNN ANCHOR: Thank you, Rick. Happening now, trading blame for the gulf oil spill. Top energy company executives pointing fingers at one another as lawmakers try to get to the bottom of who and what caused the disaster.

Also, Hillary Clinton rolling out there to welcome the Afghan President Hamid Karzai at this hour before his talks with President Obama tomorrow with the White House. How far is the Obama administration willing to go to ease tension with its crucial ally with the war on terror?

And a shocker for the vice-president's family, his 41-year-old son suffering a mild stroke. We're going to have the latest on the condition of the Delaware attorney general, Bo Biden.

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

More than four million gallons of oil is tainting the Gulf of Mexico right now and threatening wildlife. Crews don't know exactly when or if they'll be able to plug the well that's been gushing for weeks. This is their next best hope.

Check out these new pictures of what's called the top hat. That's a smaller containment device being prepped for use this week after a giant dome failed to stop the spill over the past weekend.

We learned just moments ago that the top hat is on its way to the well site and could reach it by this evening. BP has released very limited underwater video of the leaking well and efforts to cap it.

But here in Washington, the Obama administration is trying to show it's on top of this huge crisis. It announced a new plan to split up a key interior department agency that oversees offshore drilling with another part of that agency dedicated to inspecting rigs and enforcing safety and collecting royalties and fees. Is there a built-in conflict of interest there? I'll speak about that with the Interior Secretary Ken Salazar. That's coming up ahead.

In the meantime, top executives for the three oil companies primarily involved in this huge spill face very angry lawmakers up on Capitol Hill today. Brian Todd has been covering this story for us. Brian, these lawmakers are angry and for good reasons.

BRIAN TODD, CNN CORRESPONDENT: They are, because the blame game has started. It actually started shortly after this blast, Wolf. It did nothing but continue today. It's been tough all along to get answers on the cause of this blast. We still don't have them.

And one reason why, there are three powerful companies who were in charge of this operation. The drilling rig is owned by Transocean. The blowout preventer that failed owned by Transocean, made by someone else. The cementing operation, which now looks increasingly crucial in this equation, run by Halliburton. But the overall operation, the decisions, the key decisions, BP was in charge of that, and today, all three companies tried to deflect responsibility on each other.


TODD (voice-over): As the leaders of the three key companies involved, these men are supposed to have the answers. Almost a month after this catastrophic blast, they couldn't point to a cause. But they did have plenty of blame for each other.

LAMAR MCKAY, CHAIRMAN AND PRESIDENT, BP America: Transocean, as owner and operator of the deep water horizon drilling rig, had responsibility for the safety of drilling operations.

TODD: In the hallway, I asked Transocean's chief executive if he accepted that. Steven Newman didn't answer. But in his testimony, he did dispute BP's accusation that the failure of Transocean's blowout preventer caused the accident.

And he repeatedly blasted the oil giant that's been his company's close partner saying, as the operator of the rig, BP was responsible for the work. The only time these execs came close to discussing a possible cause they lapsed back into the blame game.

It came during questioning about something that happened on the rig shortly before the explosion. According to accounts of rig workers in the "Wall Street Journal," there was an anomaly. Heavy drilling fluid called mud was pumped into the well to stop gas from escaping.

But then in an unusual move, the mud was removed before a cement plug could be put in. It was done, they said, after someone asked permission from the minerals management service.

SENATOR JEFF SESSIONS (R), ALABAMA: Do you know whether BP made that decision or did Transocean make that decision?

STEVEN NEWMAN, TRANSOCEAN: Because BP are the operator of the well and BP are the permanent holder and BP have the relationship with the MMS. If there was a discussion between somebody and the MMS about whether or not it was appropriate to proceed in a particular fashion, that conversation would have taken place between BP and the MMS.

TODD: Halliburton was in charge of the cementing operation, but Halliburton's executives also deflected.

TIM PROBERT, HALLIBURTON: If a discussion took place, it would be with the leaseholder and the MMS.

SESSIONS: What knowledge do you have about a decision being made to remove the mud before the plug was finished?

PROBERT: The only information that we have that it was part of the well program.


TODD: Now, BP's executive, Lamar McKay, said he had not reviewed that procedure and would not comment. Contacted by CNN, a spokesman for the Minerals Management agency would also not comment, citing the pending investigation -- Wolf.

BLITZER: And this whole restructuring of this key agency, as we've been pointing out, it now seems that they're acknowledging there was this built-in conflict of interest.

TODD: There clearly was, and the interior secretary, as you mentioned at the top, is going to split it up. Specifically, here's how he's going to do. The inspection, investigation and enforcement divisions of the Minerals Management agency will be separate and independent from what they call the leasing revenue collection and permitting functions.

Right now, it's all part of the same agency. Essentially, they collect royalties from the energy giants on behalf of the taxpayers. At the same time they're enforcing the rules against those energy giants. It's clearly a conflict and now Secretary Salazar is going to address that.

BLITZER: Yes, I'll be speaking with him later this hour about this. But some of the critics have pointed out this cozy relationship --

TODD: There's a big accusation there.

BLITZER: Yes, between the Department of Interior and these oil and natural gas companies. Thank you very much, Brian, for that.

Let's get to some breaking news right now out of London. Britain has a new prime minister. The queen naming the Conservative leader David Cameron to the post just a short while ago. It happened after the Labour party leader, the former Prime Minister Gordon Brown resigned.

All these dramatic developments coming after a very close parliamentary election last week that left neither party with the majority still there are lots of questions and uncertainly about the new British government. Uncertainty that can affect the United States, indeed the entire world. The new prime minister spoke out at number 10 Downing Street just moments ago.


DAVID CAMERON, BRITAIN'S PRIME MINISTER-ELECT: We clearly have is to rebuild trust in our political system. Yes, that's about cleaning up expenses, yes, that's about reforming parliament, and yes, it's about making sure people are in control and that the politicians are always their servants and never their masters.


BLITZER: Let's go to London with CNN's Paula Newton. How is this new prime minister, the new government, how is the relationship between the United States and Britain likely to be impacted by this change?

PAULA NEWTON, CNN INTERNATIONAL SECURITY CORRESPONDENT: Well, the new Prime Minister, David Cameron, well known to President Obama. They had a meeting when President Obama was here last summer.

What is different, though, Wolf, is this election really turned up three losers. And in that sense, they've cobbled together a government between David Cameron and Nick Clegg, the leader of that third party.

What does that mean for the United States? Much more difficult. They will continue to remain a strong ally of the United States, but in a sense the new prime minister here will continually be looking over his shoulder. He'll have to have more consensus, have to consult much more widely.

That's on a range of issues, you name it, banking reform, Afghanistan, the economy going forward, the environment. This is a much different government staring the White House in the face. Not so much in terms of it going from Labour to Conservative, but more about the nature of the coalition not seen here, Wolf, in 70 years.

BLITZER: We'll going to be learning a lot more about this new coalition and the new Prime Minister David Cameron. Paula, thanks very much.

By the way, the president of the United States called the new prime minister about an hour ago. David Cameron will lead this first coalition government in Great Britain since World War II. You heard Paula Newton report that.

So what caused the vice president's son, Beau Biden, to suffer what doctors believe was a mild stroke? We're going to have the latest details on his condition. Stand by for that.

And it was a cross that sparked a major controversy, but now it's been stolen.


BLITZER: Let's go right to Jack Cafferty for "The Cafferty Files."

JACK CAFFERTY, CNN ANCHOR: President Obama promised us all Supreme Court candidates who can relate to the real world and how law affects ordinary Americans, but there are questions about whether Elena Kagan fits that description.

Kagan comes from a world unknown to most Americans, from Manhattan's upper west side, to Princeton University and on to Harvard Law School. Former New York Governor, Eliot Spitzer joked with political saying, "Are you suggesting that Princeton, Harvard and New York aren't the totality of real life?"

But a lot of people don't think it's funny saying that someone who has spent so much time in elite academic setting is out of touch with average Americans. So far, only one Republican has publicly said he'll oppose Kagan's nomination to the high court.

Oklahoma Senator James Inhofe says he's concerned about Kagan's lack of judicial experience. She's never been a judge. He also points to a decision as Dean of Harvard Law School to block military recruiters from Harvard's campus in protest of the Pentagon's "Don't Ask, Don't Tell" policy.

And this could wind up being one of the big issues when her confirmation hearings roll around. Other critics point to Kagan's lack of litigation experience, and her scant writings. There's not the usual paper trail that's used to vet a Supreme Court nominee.

Kagan has no judicial experience, never been a judge, and has only written a few legal articles. Also, some worry that her lack of a public record means that nobody knows what Kagan stands for except President Obama. Still, others question Kagan's hiring record.

When she was dean of Harvard Law School, four out of every five hires were white men. Not exactly a poster child for diversity. A lot of questions. Here's our question: Is Elena Kagan the right choice to be the next Supreme Court justice? Go to and post a comment online blog.

When do her hearings start, Wolf? Do you know?

BLITZER: Probably, I'm guessing either the last week of June or right after July 4th. But probably some time, I'm guessing June 20th, June 25th, something like that.

CAFFERTY: So we got a ways to go.

BLITZER: Yes, they're going to have to do a thorough vetting and preparation before those hearings begin. Thank you very much, Jack. Don't go too far away.

The Secretary of State Hillary Clinton is welcoming the Afghan president Hamid Karzai to the United States for a series of public events on the eve of meetings with President Obama.

You're looking at these live pictures coming in from the State Department right now. There's the Afghan president and the secretary of state. We're monitoring what they're saying. We'll, of course, get you any news that emerges from these introductory comments.

Tomorrow is the big meeting over at the White House between Hamad Karzai and President Obama. Let's go over to the White House right now. Our White House correspondent, Dan Lothian who is standing by.

Dan, set the scene for us, because it was tense only a few weeks ago, but now the Obama administration is trying to make nice.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: That's right, Wolf. You know, it really is a complicated process and partnership here. The White House really needs Karzai in order to make a significant progress in Afghanistan, but sometimes his words and his actions get in the way.


LOTHIAN (voice-over): The White House may be touting signs of progress in Afghanistan under President Hamid Karzai, but administration officials aren't as quick to give him their full stamp of approval.

VALERIE JARRETT, SENIOR PRESIDENTIAL ADVISOR: It's not a matter of confidence in him. He is an elected official, elected by the people of Afghanistan. So that is the person with whom we have to work.

HILLARY CLINTON, SECRETARY OF STATE: We can't expect the United States and Afghanistan to agree on every issue. We will not.

LOTHIAN: U.S. and NATO forces are targeting the Taliban insurgency in southern Afghanistan. It's all part of President Obama's strategy to stamp out a safe haven for terrorists. Success depends on a stable and reliable government, but U.S. Ambassador Karl Eikenberry had a hard time defending Karzai as an adequate strategic partner.

KARL EIKENBERRY, U.S. AMBASSADOR TO AFGHANISTAN: President Karzai is the elected president of Afghanistan. Afghanistan is a close friend and ally. Of course, I highly respect President Karzai in that capacity.

UNIDENTIFIED FEMALE: So you're - (inaudible).

LOTHIAN: Karzai has been criticized for not doing enough to root out corruption in its own government, a charge he denies. But House Majority Leader Steny Hoyer isn't satisfied saying "The evidence to date has not been as hopeful as we would like."

And Karzai hasn't made any friends with stinging criticism of the west and the U.N., who he says want a puppet government and are responsible for fraud in last year's elections.

PRESIDENT HAMID KARZAI, PRESIDENT, AFGHANISTAN (through translator): This fraud has been done by the foreigners.


LOTHIAN: Now U.S. officials see this trip as a chance to confront some serious challenges on a number of fronts, including civilian casualties, but also they see this as a chance to strengthen the partnership even though as one U.S. official said, they'll continue to be some ups and downs - Wolf.

BLITZER: Dan Lothian at the White House for us. Thank you.

Let's bring in our senior political analyst, David Gergen who has been watch thing relationship. It's a strange relationship, but a relationship that both sides right now are trying to position as being really good when we all know it isn't.

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: That's for sure, Wolf. This is a relationship that the United States officials privately have lamented for some time. The Karzai government remains one, which there's a lot of corruption and very strong connections to drugs, including his own brother, who is down in the south.

It's a very important part of that country. So the United States, in private, I think is still giving him a pretty hard time. We've had this huge shift from treating him with tough love, with being pretty tough on him in public, to now the president putting out word and "The Washington Post" telling his own team, treat him with more respect in publicly and we're almost going overboard here. I respect what they're doing here, but it's odd to see the pendulum swing this wildly in over in just a few months.

BLITZER: Yes, because it was only a few weeks ago as you pointed out. Karzai was saying the U.S. was involved in an occupation of Afghanistan, he linked to Tehran and had hugs and kisses with Ahmadinejad, almost in defiance of what the United States was doing. And U.S. officials were deeply angry, although you wouldn't necessarily know that on the public statements we're seeing and hearing right now.

GERGEN: Yes. They all treat him with love and kisses here now. But there was a time just, as you say, a little while ago where Karzai was saying he was so angry he might join the Taliban. But, the truth is neither side has a choice right now. The United States very much needs the Karzai government in order to get the job done.

The situation we're in, we've put the surge in there, we're in a better position militarily than we were a few months ago, but it's not going swiftly, because the afghans aren't prepared to come in to places like Kandahar, places we've been trying to get them in with police and army. They're not ready to fill in behind us. So we have to push that up. Remember, the president has promised he wants to bring people out middle of next year. So the time pressure is on.

BLITZER: And further complicating all of this is Karzai's brother, who is wildly seen as a drug dealer, if you will. And it's causing a lot of heartburn here in Washington.

GERGEN: No bed of roses on this one, but it's so important to the United States and we're making progress. You know, we were in a situation where the tide was moving against us, starting to move back in our direction. But we've got to get the Afghans up and ready to take more responsibility. Karzai seems to be the best instrument for doing that. That's why we've got this charm offensive under way.

BLITZER: From tough love to a charm offensive.

GERGEN: Exactly.

BLITZER: We'll watch it closely with you, David. Thank you very much.

Another attempt to try to cap that leaky oil well in the gulf could be hours away, but is it too late to prevent this environmental catastrophe? I'll ask the Interior Secretary, Ken Salazar about what went wrong and what the administration can still do to try to make it right.

And a controversial cross in the desert simply vanishes. You may remember it. It was at the center of a major Supreme Court case and we're going to tell you what happened.

And security cameras around every corner. Could this so-called ring of steel prevent another bomb attempt in New York City?


Lisa Sylvester 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. Vice- President Biden's son, Beau is recovering this afternoon after suffering what doctors believe was a mild stroke. The Delaware attorney general is in stable condition and being transferred from Delaware to a Philadelphia hospital for further observation.

Doctors say he's fully alert and has full motor and speech skills. The 41-year-old returned from a year-long deployment to Iraq in 2009 and announced in January he would not run for his father's senate seat.

Thieves have stolen the controversial cross that was at the heart of a recent Supreme Court case. The six-foot metal cross was taken late Sunday or early Monday from California's Mojave National Preserve. It had been embedded in rock and held in place by concrete. The Supreme Court ruled just two weeks ago that the religious symbol and war memorial could stay on federal land.

A couple and their two young children are missing after their house collapsed in a large sinkhole. Canadian police have not seen any sign of life in the Quebec home, which is now tilting on its side. Rescuers called the father's cell phone and heard it ringing inside the house but no one is answering. Engineers are not sure what caused that sinkhole -- Wolf.

BLITZER: Lisa, thank you very much. Don't go too far away.

A lot of tough questions today for executives involved in that massive oil spill in the gulf. Did officials at BP give the Obama administration accurate information about the possible scope of an oil spill? I'll talk about that and a lot more with the Interior Secretary Ken Salazar. He's here in THE SITUATION ROOM.

And horrible yet gripping images of a car crash involving an infant. You're going to want to hear the full story, coming up.


BLITZER: A brand new prime minister, the Conservative David Cameron after Gordon Brown's very dramatic resignation. We'll go live to London for the latest details and a rapidly developing story.

And it's known as the ring of steel. Could London's network of more than 12,000 surveillance cameras have detected the Times Square bomb suspect had that system existed in New York?

New York City Mayor Michael Bloomberg visits the U.K to find out. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

BLITZER: But first, more on the new prime minister of Britain. There you see the president on the phone in the oval office, speaking with David Cameron, the new Prime Minister of the United Kingdom. The White House has just released a statement saying that President Obama has invited Prime Minister Cameron and his wife, Samantha to visit Washington this summer.

The president reiterating his personal commitment to the special relationship between the two countries. As I told the prime minister, the statement says, the United States has no closer friend and ally than the United Kingdom. The new prime minister will be coming to Washington this summer, probably in July.

Other news we're following: The growing oil spill in the Gulf of Mexico is prompting changes within the Interior department. The department announcing reforms today to toughen oversight of offshore oil and gas drilling operations.

Joining us now from the White House, the Secretary of the Interior, Ken Salazar. Mr. Secretary, thanks very much for coming in.


BLITZER: Best case scenario and worst case scenario, when does the oil spill end?

SALAZAR: Best case, that it starts coming into some kind of containment over the weekend and into next week and the next couple of weeks. Worst case is looking at August with a relief drill. We're doing everything to make it happen as fast as humanly possible.

BLITZER: Realistically, the best case scenario over the next several days, you get your hand on it, how realistic is that?

SALAZAR: Here are the two key things that will happen over the next several days. First on this Thursday, we should know whether or not this alternative top hat dam is going to work. That's what is scheduled to happen on this Thursday.

The next key date is Saturday because by Saturday, they will have the diagnostics completed through x-rays and gammarays and pressure ratings to be able to make decisions about what the next steps are in terms of top valve or a new preventative mechanism.

And so the key dates really are this Thursday and Saturday relative to be being able to predict what will happen in the future in controlling this oil.

BLITZER: If the smaller cap doesn't work, the so called top hat, doesn't work, the next step would be to just take garbage and junk and throw it down there to stop it, is that right?

SALAZAR: Well, with the top hat, what they have is a top hat that they will deploy but they have another mechanism in there. So if that doesn't work, they're going to try to go directly into the pipe. That essentially won't stop the leak. All that does is mitigate the amount of oil flowing out at some percentage, maybe as high as 85 percent, 75 percent nobody knows exactly what. But the solution here is to stop the leak and that's where they will move to these other alternatives like the valve and the relief wells.

BLITZER: Do you have a better sense of how many gallons a day are being spilled out there?

SALAZAR: The estimates are still the same. The numbers being used is about 5,000 barrels a day.

BLITZER: 5,000 barrels a day. And that's still your best guess?

SALAZAR: That's the number that has been used. There are efforts under way to try to quantify the amount that has leaked from the beginning now, that this incident is in day 21 and there may be better numbers coming out but that's the number that has been used.

BLITZER: If this goes on for several more weeks, if not a few more months, would this be the worst environmental disaster ever?

SALAZAR: Well, I think there have been huge environmental disasters. Obviously Exxon Valdez, Chernobyl and other things. The fact of the matter is that it's very bad as it is today. Our charge is to do everything that we can to protect the environment and to protect the people of the gulf coast. The president has made it clear to all of us from day one that we are to be relentless in our purpose and we will not rest until we get the job done.

BLITZER: Based on what you know right now, is the department of interior too cozy with the oil and natural gas industry?

SALAZAR: You know, based on what I know now, Wolf, the investigations will tell us more what happened in this incident. But it seems to me that a separation, which I directed today, to have the revenue functions separate from the police functions of the Minerals Management Service are very important. On one hand, you have the Minerals Management Service collecting about $13 billion in revenue for the American taxpayer every day through the leasing of America's oil and gas resources. On the other hand, you have MMS having the responsibility also of policing those efforts. So splitting it up is something that makes sense and something that we will do. BLITZER: You did that because you feared there was a built-in conflict of interest between these two parts of the Minerals Management Service?

SALAZAR: We had been working on this effort a long time. It started last year with new ethics guidelines, ethics reforms with elimination of royalty and kind programs and a whole host of reforms under way. This reform is one that was in the works before this incident happened, this incident from our point of view made it necessary to expedite what we were planning on doing.

BLITZER: "The Washington Post" had a story in early May, May 5th to be specific, that the department of interior exempted BP's Gulf of Mexico drilling operation, only a few months before this disaster coming to the conclusion this a massive oil spill was unlikely. What happened? Was there a mistake that the department of interior made that gave this exemption to another round of inspections for this drilling operation?

SALAZAR: Wolf, this particular well and this lease has been subject to significant environmental reviews. Second of all, there's another environmental review and impact statement that's conducted prior to the lease sale. So there's multiple layers of environmental reviews that actually occurred. What happened here will be taken with the approach that we want fresh eyes and accountability. We don't want any stone left unturned as we find the answers to what happened here and why it happened. And so we will have independent reviews and investigations coming in to make sure that we get the answers to these fundamental questions. Because at the end of the day, as you know, Wolf, what happens with respect to the development of our energy supplies in this country is very important. The president has wanted to move forward with a comprehensive energy plan. We're implementing it with executive orders and doing a whole host of things like that. But oil and gas are very much part of our economy and energy security and the gulf coast supplies about a third of the oil and gas to the country.

BLITZER: Existing oil drilling operations will continue, but new ones you're putting on hold. Is that right?

SALAZAR: Existing oil operations will continue. We will not give out any additional permits until we complete the directive from the president, which is due at the end of May, on the safety issues that arise from this incident.

BLITZER: Ken Salazar is the secretary of the interior, good luck to all the men and women working on this. We're counting on all you guys.

SALAZAR: We have an army working on it and we're not going to stop until we get it done.

BLITZER: The president's new Supreme Court nominee is preparing to go to Capitol Hill without much of a paper trail and some critics say she doesn't have enough experience. How will she fight those charges? And a car crash involving a baby. You'll feel better when you hear what happened in the end.


BLITZER: President Obama's Supreme Court nominee Elena Kagan will head to Capitol Hill tomorrow to start making courtesy calls to some of the senators who will be deciding whether she gets the job. She may get some questions behind closed doors about her staff on gays in the military. Critics have suggested Kagan is anti-military because when she was dean of the Harvard Law School, she upheld the policy preventing the U.S. military from recruiting on campus as an official student organization. The reason, its policy of don't ask, don't tell, which prevents gays from serving openly in the United States military. We're joined to discuss this now by our senior political analyst, Gloria Borger. Will this hurt her?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: It's clearly an issue which her opponents have struck on and they're going to mind that during the hearings. But you've got the question you just mentioned, which is the political question, is she anti-military? But in talking to some of her opponents today, they told me they're going to raise the legal question, which is why was she associated with a legal case, which the United States Supreme Court, which she wants to join, overturned unanimously and disagreed with her, including some of the Democratic judges. So they're going to say, you know, she's really out of the legal main stream. So they're going to use this.

BLITZER: She wrote a friend of the court amicus brief and it was rejected.

BORGER: Unanimously, not even a Bill Clinton appointee agreed with her.

BLITZER: Jeff Sessions is the top Republican and he's not happy about something else. Let me play you a clip.


SEN. JEFF SESSIONS (R-AL), JUDICIARY COMMITTEE: It is a confirmation, it's not a coronation. The nominee has had some very aggressive political views in her life. It's going to be critical that whoever puts on the robe of the Supreme Court justice, that they be committed to following the law, even if they don't like it, even if they don't -- they wish it had been different.


BLITZER: He's raising questions about her experience.

BORGER: We really are starting to hear that from opponents as you might expect. And the vice president went on television this morning and said look Judge Rehnquist had never been a judge before he served on the court. Other people say, well, he did have 16 years of practice as a trial attorney. He wasn't an academic. But the world has changed since Rehnquist was brought to the court. Recent polls show that over 70 percent of the American public believe that prior judicial experience is necessary to serve on the supreme court. So her opponents may have the public with her on this one and they're going to say, the court's not the place to get on the job training.

BLITZER: We're going to have a major debate coming up in the next hour. Thank you very much, Gloria, for that.

It's a frightening comparison. Why is one senator suggesting that the United States debt could soon soar to the levels haunting Greece right now? And taxes are at their lowest levels in 60 years. We'll talk about that and more in our strategy session.


BLITZER: Joining us, our CNN political contributors, the Democratic strategist Paul Begala and the Republican strategist Alex Castellanos. Listening to Judd Gregg, the Republican senator from New Hampshire, he says if we continue to spend much more than we take in, we'll triple our debt in ten years and essentially be where Greece is in about seven years. We are headed in that direction unless we do something about reducing the level of debt and reducing the level of our spending. Is he right, that we're moving toward Greece?

ALEX CASTELLANOS, REPUBLICAN STRATEGIST: Absolutely he's right. If the stimulus spending that the Democrats are doing here worked, Greece would be the most prosperous nation in the world. If you're a government worker in Greece, you get to retire in your 40s. It doesn't work. Here's the good news for Greece. They have the Euro zone to bail them out, the European family. Guess who the United States has to bail them out? The American taxpayer. The national debt will be $20 trillion in the next decade.

PAUL BEGALA, DEMOCRATIC STRATEGIST: Judd Gregg has the right message, he's just not credible messenger. It'd be like the president of the Phillip Morris cigarette company saying cancer rates are too high. Yes they are but you're causing them. Judd Gregg voted for the Bush tax cuts that took the Clinton surplus and handled it to a tiny elite of the wealthiest, people in the Castellanos tax bracket. The deficit and the debt are killing us and they're killing us because the Republicans put them in place. And for Judd Gregg, a Republican senator, who helped create those deficits now all of the sudden to complain about this rings hollow.

CASTELLANOS: I love it when Paul is so articulately misinformed. The top 10 percent of the American taxpayers pay 70 percent of our taxes. Those are just the facts.

BEGALA: That's not true. You left out a word, what word did you leave out? Income taxes.

CASTELLAOS: That's right.

BEGALA: Not taxes. Income taxes. Sales taxes, gas taxes, all kinds of taxes that poor people pay, social security tax, the Medicare tax. These are the taxes Republicans like to raise. You like to cut taxes on the rich and raise them on the middle class.

CASTELLANOS: The other fact is that right now the gross domestic product, 18 percent of the revenue is taxes. That hasn't changed. What's going up from 20 to 25 percent is government spending.

BLITZER: There was a report based on this study that the tax bills right now, the tax levels in 2009 are the lowest since 1950.

CASTELLANOS: Well, tax revenue collected by the government is at the lowest because the economy has collapsed. That's like saying a country where everyone starving is on a great diet. That's not the way it works. We have 10 percent unemployment, but tax rates haven't substantially changed. We're punishing the most productive and most successful job makers in the country.

BEGALA: Wait a minute. This is now a moral point. Some dirt bag hedge fund manager isn't more productive than a master sergeant in the Marine Corps. Just because he makes more money doesn't make him more productive. I'm sorry people who are maids to master sergeants, they're the real heroes in this economy and they're the ones that get hammered by the Republicans. When you suck up to the rich like that and saying we're punishing the most productive, they aren't, they're just the most wealthy and they ought to pay their fair share.

CASTELLANOS: Well that's not true Paul. Actually whether you're a maid or media consultant, the fact is, we don't create as many jobs as guys who make a lot of money.

BEGALA: That's not true.

CASTELLANOS: You and I don't.

BEGALA: The economy is driven by millions of middle class and working class consumers. 2/3 of economic activity in America is consumers, which are people, not wealthy elites. This is the elitist economics that's part of the past and it failed us under Bush and President Obama is turning away from that to a much more all-American economics where we're cutting taxes for middle class people.

CASTELLANOS: Where you tax the heck out of everybody.

BEGALA: No we cut taxes for middle class people.

BLITZER: You're saying when the Bush tax cuts lapse at the end of this year and they go back to where they were during the Clinton administration, what will happen?

CASTELLANOS: We're going to tax the most productive people in the economy, two by numbers do have the largest businesses, who do create the most jobs, and we're going to tie them up in a chair and say be productive and great jobs for America, that's not right.

BLITZER: Your tax rate will go up what 35 to 39 percent.

BEGALA: And it should because people like me got big tax cuts under the Bush plan. It's just fine we pay our fair share. I won't have quite as much money -- we got the Wizards, the Larry King people got the Wizards people to make Wolf a special jersey.

(BEGIN VIDEO CLIP) BLITZER: Oh, my god, what is this? Look at that.

BEGALA: We got the mascot of the Wizards to bring you your 20th anniversary cake.

BLITZER: Thank you.

BEGALA: See if you can get a word out of him.

BLITZER: They're not allowed to talk.

Do you think Elena Kagan was a good nominee for the United States Supreme Court?

Are you with her, gee wiz? I'm taking that as a yes.


BLITZER: He loves Elena Kagan.

BEGALA: He's a big Kagan guy. But I know you love the Wizards are telling me they're coming back.

BLITZER: They are coming back, I got the word from Flip Saunders himself.

CASTELLANOS: 20 years, Wolf? The average American works 20 years to pay taxes, so congratulations. You've been working for the government for 20 years!

BLITZER: Do you know what Paul and the folks at Larry King got me, a Wizards' jersey that says Blitzer with 20 on the back? You see that?

CASTELLANOS: If you suit it up, it could help.

BEGALA: Hail McGee, the seven-footer they have. I've become a big Wizards' fans, we'll see you at the game. They're coming back.

BLITZER: All right, thank you.

It's the so-called ring of steel. Could a network of thousands of security cameras like London's have prevented the Times Square bomb square? Michael Bloomberg, the mayor of New York, is in New York right now to investigate. So are we.

And the U.S. targets insurgents in Pakistan with a series of drone attacks. Could these assaults actually be creating new terrorists? That story coming up.


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

CAFFERTY: The -- pardon me -- question this hour: Is Elena Kagan the right choice to be the next Supreme Court justice?

Steven writes from Maine: "Kagan appears to be highly qualified academically as well as a sharp and likable person. In a recent article, though, someone suggested that she has wanted a seat on the Supreme Court since she was a youngster. It almost appears her thin paper trail has been a lifelong strategy, calculated to help her clear Senate confirmation. If her convictions were mainstream, this would not be necessary."

Mark writes: "She apparently has the ability to go toe to toe intellectually with Scalia. She reflects the character of the American people more than Alito or Roberts who reflect the character of the American corporation. She will make an immeasurably better justice than Clarence Thomas, but then so would my cat. As for being elitist, would you rather have Joe the plumber?"

Linda writes: "How can you say in one breath that you we don't know enough about her and ask in the other if she's the right choice. Let the process run its course. Those who have the responsibility to decide her qualifications will find out what they need to know."

Dave writes: "Comes from a world unknown to most Americans as did Justice Sotomayor, but apparently the south Bronx is more real than the upper west side? Come on, Jack, you've lived in New York long enough not to make a comment like that. Yes, she's the right choice. But only because Hillary Clinton is indispensible as Secretary of State."

Kevin in Illinois: "I think she's a solid choice for the Supreme Court, and I believe Barack Obama would be a great choice as well when he's out of office in 2016."

And Mark in Oklahoma: "She's female, not a judge, dean of the Harvard Law School, intelligent, probably has some common sense. What else do you want? One of the gals from "The View"?"

If you want to read more on this, you can go to my blog at Maybe they should put Whoopi Goldberg on the Supreme Court?

BLITZER: Do you know what I love about your blog?


BLITZER: Some of those comments that we get are so funny and clever.

CAFFERTY: They're terrific.

BLITZER: You know, you laugh out loud you read some of those.

CAFFERTY: I know. It's a very bright group that watches this program.

BLITZER: They are indeed. Keep on watching it.

CAFFERTY: There you go.

BLITZER: Don't go far away, Jack, thank you.

It's a dramatic firsthand account of what happened on the oil rig explosion in the Gulf of Mexico. We'll hear from a rescuer.

And could U.S. drone attacks actually be creating new enemies?



Happening now, a massive missile attack on a Taliban sanctuary. U.S. drones targeting insurgents in Pakistan's rugged border