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New Deal for Tough Iran Sanctions; Faisal Shahzad Court Appearance

Aired May 18, 2010 - 17:00   ET

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


BLITZER: Rick, thank you.

Happening now, voters are deciding to treat political veterans and insurgents in the best primary day of Election 2010. We're standing by for the first results in contests that could bring down some powerful incumbents and reveal the scope of anger at Washington.

Also, new campaign scandals -- a Democratic Senate candidate refuses to buckle under allegations he lied about his military record, while a Republican congressman calls it quits over an extra-martial affair.

And is Google spying on you?

Spying on you -- we're looking into allegations that the company is getting more from its camera cars than a 360 degree view of your street.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

We also following a developing story this hour. The failed Times Square bombing suspect's long-awaited court appearance. We're expecting Faisal Shahzad to face a judge in New York City any moment now. He faces five felony charges in the botched attack over two weeks ago. CNN has learned Shahzad invoked his right to have an attorney represent him today after 15 days of questioning. That's apparently why the court appearance is now going forward.

Our Susan Candiotti is outside the courtroom. She'll be inside during this appearance. She'll have a live report. We'll go there as soon as she -- as soon as that happens.

But in the meantime, fasten your seatbelts. In just about one hour, the first polls close on a primary day that could drive a new stake into the heart of the political establishment. This is the place for up to the minute results from a heated Senate contest in three states. It's the busiest test yet, so far this year, of voter anger and well over a year into the Obama presidency and in the midst of what is being called the Tea Party revolt.

Our reporters are standing by in three key battlegrounds -- Pennsylvania, Kentucky and Arkansas. First to our chief political correspondent, Candy Crowley. She's over at the headquarters of the Republican turned Democratic, Senator Arlen Specter -- all right, Candy, what's the mood over there?

What are they -- what do they think is about to happen?

CANDY CROWLEY, HOST, STATE OF THE UNION: Well, right now we have very -- we did -- we have, what, three more hours until the polls close. So, basically, they're starting to set up here. But in general, what a lot of people are looking at now is Philadelphia -- the voter turnout, because what Arlen Specter needs is a good turnout here in this city to help him, if he is going to beat back what has become a surprisingly strong challenge by Joe Sestak.

But what we are finding out from the Department of State here in -- in Harrisburg and here in Pennsylvania is that voting turnout has been very light. It has been light here in Philadelphia, as well, across the state. That is particularly so, we think, probably because of the weather. It's been cold here, in the '50s. It's been raining kind of all day long.

However, again, three more hours to vote. People do tend to vote on their way home from work.

What Specter was hoping was that Governor Rendell, who has been in the state for a very long time, who knows the city very well, could use his machinery, include -- including the labor unions, to push out that vote for Specter. So light turnout is not considered to be a particularly good thing for the senator.

However, again, we -- we don't have any particular voting results, only the idea of who's going to the polls at this point. And that is not very many people.

I will add, though, in the old John Murtha district -- the late congressman, John Murtha, there is a Republican versus Democrat fight in that to replace him from now until November. And we're told voting there is a little bit heavier than elsewhere -- Wolf.

BLITZER: We'll have all the results. They close at 8:00 p.m. Eastern in Pennsylvania.

Candy is not going anywhere.

Let's go to Kentucky right now and the race to replace retiring Republican Senator Jim Bunning. The Tea Party-backed candidate -- that would be Dr. Rand Paul -- is vying against the GOP establishment candidate, Trey Grayson.

Our national political correspondent, Jessica Yellin, is over Rand Paul's headquarters in Bowling Green. You had a chance to speak with him. I assume he's pretty upbeat right now -- Jessica.

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: He really is, Wolf. They are not taking anything for granted, they say, but they are feeling good. Paul has said that if he should win today, that it's a mandate for the Tea Party -- a mandate to shake up the Republican Party and change politics.

As we've reported, they -- he thinks the focus should be on reigning in government spending and also throwing out career politicians who, in his view, are more likely to spend too much government money.

But many in the Republican establishment have worried that his views might be too far out of the mainstream for him to win in November or for him to govern effectively. For example, Kentucky is a state that requires a lot of -- or takes a lot of federal spending here, federal earmarks. And he has said he would vote against earmarks.

So I pressed him on this point and he had a very solid response.

Listen.

(BEGIN VIDEO CLIP)

YELLIN: Are you going to see folks here suffer for your principles?

RAND PAUL (R), KENTUCKY SENATE CANDIDATE: I think what should happen is that the money should be spent based on the objective nature of the projects. You know, if a road is in disrepair, we fix it. If a bridge is in disrepair, we fix it. But we don't fix it based on the seniority of the congressman and the senators. That's why you have to have term limits.

(END VIDEO CLIP)

YELLIN: So the question got cut off, Wolf. But I had asked him why -- if you're against earmarks, are you worried that folks here in Kentucky will suffer. And you heard his firm response based on his principles, which he says he will not waiver from in office.

There's also been reports of some tension with Senate Majority Leader -- Minority Leader, Mitch McConnell, who's a senior Republican in this state and has backed his opponent in a recent debate. Rand Paul was asked will he support Mitch McConnell staying in leadership and what is his view of Republican establishment in general.

I pressed him on that, as well.

Here's his response.

PAUL: I would say that the mood of the country is to replace the career politicians with people who have not been politicians. And I think that bodes well for us.

YELLIN: OK. Let me give you a chance.

Would you vote for McConnell as majority leader?

PAUL: My understanding is he has no opponent.

How can I vote for anybody when he doesn't have an opponent.

YELLIN: Or minority leader?

PAUL: Yes, well, my understanding is he has no opponent.

(END VIDEO CLIP)

YELLIN: So he sounds very much like a politician there, Wolf, dodging the question. But he has made it clear that he will make peace with Mitch McConnell should he win tonight, but, too, we expect will speak later this evening, win or lose. But they are certainly optimistic here -- Wolf.

BLITZER: Some of the precincts in Kentucky closed right at 6:00 p.m. Eastern at the top of the hour. Others close at 7:00 p.m., is that right?

YELLIN: That's right. And they expect returns to come in pretty quickly after 7:00 p.m. Eastern time and say -- both Rand Paul and his father, Ron Paul, will be watching in terms of where we are -- Wolf.

BLITZER: All right. We'll be monitoring that and reporting the results as they come in.

Let's go to Arkansas right now. The Democratic senator, Blanche Lincoln, is fighting for her party's nomination and for her political life against the more liberal primary opponent, the lieutenant governor of Arkansas, Bill Halter.

Our senior Congressional correspondent, Dana Bash, is in Little Rock.

She's watching what's going on. Set the stage for us -- Dana.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, Blanche Lincoln -- the name of the game for her tonight is to reach 50 percent plus -- to get over 50 percent to avoid a run-off. If not, there will be a run-off in this Democratic primary on June 8th.

But her challenger, Lieutenant Governor Bill Halter, he pulled an all-nighter last night, campaigning all through the state in an R.V. all night. And he was giving his closing argument up until the last minute. And that is that is that he is somebody who is coming in from the outside and that is the only to change Washington. But he's getting help from millions and millions of dollars and lots of manpower from big labor unions from outside the state and liberal groups from outside the state, who have made it their mission to defeat Democrat Blanche Lincoln because, efficiently they think that she is somewhat of a traitor, that she hasn't stood with them on some of their key issues.

But Blanche Lincoln, Wolf, she is very disciplined. She is trying to make the case that, yes, she may be a senator, but she is not one of them.

Listen to the way she described that when she talked to reporters today.

(BEGIN VIDEO CLIP)

SEN. BLANCHE LINCOLN (D), ARKANSAS: We have expressed not only that I'm different. I'm definitely not your most typical of senators.

I'm not a lawyer. I'm not a former governor. You know, I'm not any of those. I'm a mom and that proof back here with me. I'm a wife, a daughter. I'm a hard worker.

(END VIDEO CLIP)

BLITZER: And -- and, Dana, you had a chance to speak to some voters out there today, as well.

BASH: That's right. We were at the polling place where Blanche Lincoln was just there. And the -- the way we heard from these voters, it was actually quite mixed in terms of their interpretation and the way that they voted.

In many ways, some voters sound like, Wolf, they could be anywhere in the country; that they voted against Blanche Lincoln because they want to change Washington and they're angry at incumbents there.

But remember, this is a Democratic primary. So we also heard opposition to her because she is somebody who was against a public option for health care and because many people voting against her thought she hasn't stood strongly enough with President Obama.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I voted for Bill Halter.

BASH: How come?

UNIDENTIFIED FEMALE: Well, I believe that he's on the right track. I think that, unfortunately, I've -- I've been a little disappointed in Blanche Lincoln. I would still vote for her. And if -- if she winds up winning. But I am a big supporter of Barack Obama and I'd like to see more cooperation with him.

(END VIDEO CLIP)

BASH: And, Wolf, we did actually find evidence that the message that Blanche Lincoln has been pounding away at all of across the state in these final days before today's primary and that is working. And that is that incumbency actually matters and being experienced and having seniority actually matters.

Listen to what this voter said after we voted for Blanche Lincoln -- he voted, rather.

(AUDIO GAP)

BASH: Oh, I'm sorry. We don't have that sound bite. But, effectively, what he said is that she's been a good senator for the state and a lot of people are mad at her because of the health care bill. But he said don't throw her out of office. He voted for her because she's chairwoman of Agriculture Committee and that this state really relies on their farmers. And that is part of the economy. So that's why that voter said that it was a yes for Blanche Lincoln. And several other voters told me exactly the same thing -- Wolf.

BLITZER: Dana is going to stay in Arkansas and watch race unfold. They close the polls there 8:30 p.m. Eastern. We'll have the results as soon as they come in.

Another race we're watching with national significance -- a special election to fill out the term of Democratic Congressman, John Murtha of Pennsylvania. Murtha's longtime aid, Mark Critz, is vying against Republican businessman Tim Burns. Both parties reported spending roughly $1 million each to influence this race in hopes of gaining momentum going into the fall Congressional election.

There are also gubernatorial primaries in Pennsylvania. And Oregon voters face a deadline for returning Senate and gubernatorial primary ballots in a statewide mail-in vote that began more than two weeks ago.

We're only a couple of minutes away from Jack Cafferty and The Cafferty File.

Also, you've probably seen those Google street camera views and maybe even looked up your own house online. But you may not know the kind of information Google is digging up on you and your family.

And President Obama visits Ohio. But the bigger story today is about the place the president decided not to visit.

(COMMERCIAL BREAK)

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

CAFFERTY: Wolf, the Democrats may soon wish that they have a different race -- a horse race -- a horse in the race for the Democratic Senate seat being vacated by Chris Dodd.

"The New York Times" has an explosive front page story today about Democratic candidate Richard Blumenthal, saying that he's lied on multiple occasions about serving in Vietnam. Blumenthal, who was the state's attorney general, never served in Vietnam. Yet on numerous occasions he has said things like, quote, "We have learned something important since the days that I served in Vietnam," unquote. He's also referred to, quote, "When we returned."

These are lies. Blumenthal never returned from Vietnam because he never went to Vietnam. What's more, he got at least five -- count them -- five military deferments so he wouldn't have to go to Vietnam. And he eventually joined the Marine Reserves so he won't have to go to Vietnam.

Blumenthal's campaign was quick to slam the "Time" story, calling it an outrageous distortion.

How is it a distortion if "The New York Times" said he lied about serving in Vietnam if he didn't serve in Vietnam, he just lied about it?

Blumenthal held a news conference this afternoon. That was a thing of beauty. He said he unintentionally misspoke on a few occasions, adding that he regrets it and accepts full responsibility.

What does that mean, unintentionally misspoke?

Is he not sure whether or not he never fought in Vietnam?

I was in the service. I remember where I served. This is garbage.

He repeatedly referred to his comments as a few misplaced words. That's called lying. And in what will prove to be a huge mistake, Democrats say they're going to continue to back him in the race to replace Chris Dodd in the U.S. Senate. Of course, if he wins, Blumenthal will fit right in in Washington with the rest of those weasels down there.

Here's the question -- should Connecticut Democrats support Richard Blumenthal, who lied about serving in Vietnam?

Go to CNN.com/caffertyfile and post a comment on my blog.

This guy's a joke.

BLITZER: You're going to get a lot of comments.

CAFFERTY: I already have.

BLITZER: I'm sure.

CAFFERTY: Oh, yes.

BLITZER: Are they tilting one way or the other way?

CAFFERTY: People have no time for this.

What about all the people that served, died, were wounded in country in Vietnam?

BLITZER: Yes.

CAFFERTY: You disgrace those people by doing this kind of stuff.

BLITZER: Jack Cafferty with The Cafferty File.

Let's get to some surprising new information right now just being uncovered about Google. It's raising some concerns about your privacy.

Our Brian Todd explains. BRIAN TODD, CNN CORRESPONDENT: Wolf, for years, Google has used a system called Street View -- driving around streets like this one, residential neighborhoods, taking 360 degree images of the streets to create maps. It's helped millions of people find their destinations. And now Google has found its way into some trouble.

(BEGIN VIDEOTAPE)

TODD: (voice-over): Rolling through the streets with a camera rolling on top -- they're called Street View cars and they've been used by Google to create one of the most sophisticated map systems anywhere online. These cars have taken detailed images of thousands of streets in dozens of countries.

(on camera): To find an address with Google Maps, you type it in up here. I'm typing in an address where we're going to be doing an interview for this story. You hit search. It goes from the satellite map there to this map. And then when you click more, you can go to Street View and it actually gives you a picture of the facade of the building so that you can I.D. it when you get there and it offers a 360 degree view of it.

So with my producer, Dougall (ph) driving, not too hard to find this address here in D.C. where we're going to do our interview and get to it on time. So, clearly, the Google Map system -- the Street View system very efficient.

Now, Google has had issues with people not wanting their addresses filmed, not wanting their license plates to be taken. So Google has to work to address those issues. Now, Google is accused of actually using that Street View map system and its cars to pick up wi- fi signals and download some very personal information.

(voice-over): The problem is that along with those cameras was a powerful wi-fi receiver, able to pick up unprotected wireless networks and signals everywhere, including in private homes the Google cars drove by. Those cars downloaded and recorded so-called payload data -- Web sites people were surfing, even e-mails they sent.

Google says it never realized this was happening. That address I found through Google Street View, for Marc Rotenberg of the Electronic Privacy Information Center, a privacy advocate.

(on camera): Google says this was inadvertent, it was a mistake and a -- basically, a programming error that was made in 2006.

MARC ROTENBERG, ELECTRONIC PRIVACY INFORMATION CENTER: Well, you know, accidental or inadvertent, I think, is something that happens once. It happens because something overlooked something. It's something that happens in a particular place. What happened with Google's Street View took place over a three year period in 30 countries involving most of the major cities in the world. It's very hard, I think, to imagine that as an accidental action.

TODD: (voice-over): Rotenberg says Google could have broken wiretapping laws. Irish and German officials have launched investigations. A spokesman for the U.S. Federal Trade Commission wouldn't comment on reports that it might look into this.

ROTENBERG: We just came up with a network called Net Gear.

TODD: (on camera): Not protected?

ROTENBERG: Not protected.

TODD: (voice-over): Driving through D.C. using Rotenberg's iPad computer, we could pick up where all the wi-fi signals were, see which ones were secure, which ones weren't.

In a blog post, Google's chief engineer says the company never wanted and would never use that information.

(on camera): Google now says that it's not only deleting a lot of the payload data that it has downloaded, but it's also working with regulators in several countries to try to address the problem and it has grounded its fleet of Street View cars -- Wolf.

BLITZER: Brian Todd, thanks very much.

We're getting new details on the condition of the vice president's son, Beau Biden. One week ago, he suffered that mild stroke.

What is the latest?

We'll share it with you.

And could that massive oil spill in the Gulf of Mexico soon be headed for the Florida coast?

There's new information -- a new forecast. We'll share that with you, as well.

(COMMERCIAL BREAK)

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

SYLVESTER: Hi there, Wolf.

Well, there's new concerns this hour the oil leak gushing from the oil leak in the Gulf of Mexico could hit the Florida coast in the next week. Federal officials believe some of the oil is getting dragged into a Gulf current and propelled in that direction. But this forecast doesn't take into account how much oil is being dispersed or evaporated. New tar balls appeared on the Florida Keys.

And the vice president's son, Beau Biden, he's out of the hospital one week after suffering a mild stroke. The Delaware attorney general will recuperate at his Wilmington home. It's unclear, though, when he'll return to work. Biden is currently seeking re-election.

And imagine this -- being allowed to name the price for the food you order at a restaurant. Well, for customers a one Missouri store, that concept is now a reality. Panera Bread Company has launched a new non-profit location where customers donate what they want for the meal, whether it's a penny or $100. Now, if this pilot store can sustain itself, the company could create more nationwide. And we'll see if that idea takes off. That's a pretty novel idea -- Wolf.

BLITZER: Very novel, indeed.

All right, Lisa.

Thank you.

President Obama hits the road once again today.

But is there something or someone he's avoiding?

We'll have the politics behind his travel plans.

And a Republican Congressman admits to an extramarital affair and then resigns -- smart move or overreaction?

Stand by for our Strategy Session.

(COMMERCIAL BREAK)

BLITZER: You're in THE SITUATION ROOM.

Happening now, we're awaiting details on that first court appearance for the accused terror suspect, Faisal Shahzad. We're told he is now in the courtroom.

Our Susan Candiotti is there, as well.

This coming in as we get new information also suggesting he considered other New York City landmarks as possible targets before that thwarted Times Square attack. Five felony counts he's being charged with, including attempted use of a weapon of mass destruction.

Also coming up, my interview with the crew of Shuttle Atlantis from space. They're up in space right now. I'll ask them how they feel about what's likely to be their final shuttle mission.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

Voting is underway right now in the contentious Senate primary -- seven Senate primaries, indeed, across the county. The first polls close in about half an hour. The results could give us a new clue about the bigger battle for Congress in November and whether President Obama's party will suffer.

But the president flew right past one key state, where veteran Senator and Democrat convert Arlen Specter is in deep trouble.

Our White House correspondent, Dan Lothian, was traveling with the president in Ohio.

Why is he there?

Why not with Senator Arlen Specter in Pennsylvania?

Let's go to Dan Lothian.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Wolf, the president could have been lending his star power to incumbent senators in Pennsylvania and Arkansas, who are involved in very competitive races. But instead, he came here, no Youngstown, Ohio to a plant that manufactures steel pipes that are used in the oil and natural gas industry. They are expanding with the help of stimulus dollars and plan to add an additional 350 jobs.

The president did not mention the primary races but he did talk about his own past campaign and what he learned about the tough economy first hand.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: You know, in the two years I was running for president, I wasn't any stranger to this state. They guys know I came here an awful lot. And I saw first hand what years of failed policies have done to working families and I saw how hard these guys were working to put Ohio back to work. And the Mahoning Valley is a place that doesn't need an economist to tell you when a recession begins or when a recession ends, because plenty of folks here have known their own private recessions for 10, 20, 30 years.

(END VIDEO CLIP)

LOTHIAN: President Obama touted the sometimes unpopular steps that his administration has taken to fix the economy and to create jobs. Brushing aside questions about the president's choice to visit Ohio instead of campaigning in some of these critical primary states, the White House states that they are not ignoring the candidates, that they've done a lot to support the incumbent candidates -- Wolf.

(END VIDEOTAPE)

BLITZER: Dan Lothian, travelling with the president in Ohio.

The Obama administration meanwhile says it has reached a new deal on what they call to be strong sanctions against Iran's nuclear program. The Secretary of State Hillary Clinton is announcing a draft agreement with five other countries, including China and Russia. The U.S. is pushing forward with the sanctions despite Iran's recent deal to send some low and rich uranium to Turkey. Some have viewed as some sort of breakthrough. Others thought it was simply a ruse.

Let's bring in our Pentagon correspondent, Chris Lawrence, for more.

All right. Chris, what happened today? CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Well, Wolf, you know, some thought Tehran had outmaneuvered the U.S. and pulled the rabbit out of its hat at the last minute. You mentioned yesterday, Brazil and Turkey brokered that deal where Iran agreed to swap some of its nuclear materials. And the thinking was, it's hard to crack down on someone who is willing to negotiate. The Iranians even said the U.S. had no logical option but to accept it.

But the State Department had finally persuaded Russia and China to get on board with sanctions so Secretary Clinton had leeway to set that bar much higher.

(BEGIN VIDEO CLIP)

HILLARY CLINTON, U.S. SECRETARY OF STATE: We don't believe it was any accident that Iran agreed to this declaration as we were preparing to move forward in New York. With all due respect to my Turkish and Brazilian friends, the fact we had Russia on board, we had China on board and that we were moving early this week, namely today, to share the text of that resolution put pressure on Iran, which they were trying to somehow dissipate.

(END VIDEO CLIP)

LAWRENCE: Now, that said, some of the critics say these sanctions have less value than those proposed last year because Iran has produced more uranium since then. So, any reduction at this point will represent a lower percentage of their total.

BLITZER: Chris, if you can explain some of these new sanctions being proposed by the secretary of state.

LAWRENCE: Yes, the word "sanctions" gets tossed around a lot, Wolf. There's a lot of them.

But here are the main points: A new arms embargo that prohibits Iran from acquiring any ballistic missiles capable of carrying a warhead. They sanctions go outside the country to authorize cargo inspections in ports and on the high seas if there's an indication Iranian ships are carrying materials. And they restrict Iran from minding investments in some other countries. And these sanctions hit the wallet, freezing assets and placing restrictions on Iranian banks and insurance.

But, Wolf, the most -- the strongest points of these sanctions might not be what's already written down on paper because what these do is they empower other countries to one day perhaps enact their own sanctions, giving organizations like the European Union a legal basis to one day perhaps exact even stronger sanctions -- that could be the toughest part to come.

BLITZER: All right. Chris Lawrence on the scene for us with this story -- thanks very much.

We're also following the breaking news involving the Times Square bombing suspect. We now are just learning his hearing with the judge has ended. Momentarily, Susan Candiotti will be walking out. She was inside. She'll tell us what happened inside when Faisal Shahzad finally met with a judge. He has an attorney.

Now, we're watching all of this. The breaking news. Much more coming up right after this.

Also, Detroit police sued in a death of a 7-year-old girl. Did officers cross the line in the raid on her family's home?

(COMMERCIAL BREAK)

BLITZER: All right. Let's get to the breaking news right now. Susan Candiotti has just emerged from that federal courthouse here in New York City with the first court appearance by Faisal Shahzad, the alleged Times Square bomber.

Susan, tell us what happened inside in.

SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT: Well, the hearing, Wolf, lasted 10 minutes. He came walking into the courtroom. His handcuffs have been removed. That's not unusual.

He was wearing a cotton gray sweat suit. And as he entered the courtroom, he sat down and smiled at the lawyer who had been appointed to represent him.

At that point, it was pretty perfunctory. The judge said -- read the charges to him, explained what the possible penalties were. And the government asked for detention. Of course, they got it. And a preliminary hearing was set for -- within about two weeks or so.

Of course, in between time, remember, this was just a complaint. So far, that's the first step that's involved in this process and they read to him the five charges that he faces, including two of those charges that face up to term of life in prison. He didn't have to say anything other than agreeing that a financial study had been done on his behalf. And that was on the basis on which they decided that, of course, he could be represented by a court-appointed lawyer.

So, with that, the next step in this process would be that the presumably a grand jury would probably be seated. And next, that might be an indictment that could come within the next couple of weeks. With that, it was over.

But, of course, CNN has learned from federal law enforcement official that the reason that the -- more than two weeks of questioning that had gone on, presumably voluntarily, without a lawyer present, stopped, when during the course of the day, sometime after noontime today -- according to my sources -- he decided that he wanted to have a lawyer to represent him -- Wolf.

BLIZTER: Did his lawyer appear with him in the courtroom, Susan?

CANDIOTTI: There was a woman, a female attorney who was seated at the table when he sat down next to her. That's the woman that he smiled at, he sat down, they talked during the course of this very brief appearance to the initial charge of the criminal complaint -- those five charges against him. So, that appears to be the lawyer representing him during the course of this process or at least at this stage of the game.

BLITZER: Susan, don't go away. Stand by for a moment.

Fran Townsend, our natural security contributor and the former homeland security adviser to President Bush, who also served in the Justice Department during the Clinton administration. She's joining us.

Fran, I want to go through these five charges -- these five felony counts that have been leveled now formally in this courthouse here in New York.

One count of attempted use of weapons of mass destruction which carries a sentence of life in prison; one count attempting acts of terrorism transcending national boundaries, also carries a maximum sentence of life in prison; one count of use of a destructive device in connection with attempted crime of violence, consecutive mandatory minimum sentence of 30 years in prison; one count of transporting and receiving explosives, a maximum of 30 years in prison; and one count of attempting to damage and destroy property by use of fire and explosives, a mandatory minimum sentence of five years in prison and statutory maximum sentence of 20 years in prison.

All right. Give us -- you used to be in the Justice Department -- give us your analysis. These five counts -- he has been cooperating. Now he wanted to go before the judge. He apparently has a lawyer representing him. This is a critical moment in this whole process.

FRAN TOWNSEND, CNN NATIONAL SECURITY CONTRIBUTOR: It is, Wolf. And what you do is, based on the evidence you have available to you right now, immediately, what you know you can prove, you take the most serious charges and put them in the complaint. Why do you put the most serious ones in there? Because this complaint document is the document that will be used to set bail. Now, either his defense lawyer can argue the bail issue or they can waive it and they can agree that he will be held.

Look, this is a guy who was clearly going to be held. They put serious charges in there. This document is not terribly meaningful, however, over the long term. What we'll find is there will be a superseding indictment -- they'd be an indictment levied. There's likely to be superseding indictments as the government learns more. You can have multiple superseding documents before Shahzad actually goes to trial or enters a plea. As the government learns more about international aspects to the case, what his connections were to the Pakistani Taliban, who else in the United States may have assisted him or supported him -- all those things will be added as they understand more about the facts of the case.

BLITZER: I was intrigued, Fran, by this line in the press release that the U.S. attorney for the southern district of New York released earlier in the day. Let me read it to you. "Shahzad has been in law enforcement custody since his arrest on May 3rd, 2010 and has provided valuable intelligence from which further investigative action has been taken. The investigation into the attempted Times Square bombing continues."

But the fact the U.S. attorney is saying he's provided valuable intelligence, what does that say to you?

TOWNSEND: It says a couple thing, Wolf. Remember, there were searches recently along the east coast. No question that those searches primarily reply lied on information provided by Shahzad. No question that information -- you know, we now know that CIA Director Panetta and national security adviser, Jim Jones, have been sent by President Obama to Pakistan. No question. That information by Shahzad has led to the belief on the part of the administration, intelligence community that the Pakistan Taliban is directly involved in these -- this investigation, this case, this threat.

And so, all of these things, when you hear the government say he's provided valuable intelligence information, they'd action that and they're acting on it and they believe that information he's provided gives them greater insight into the threat against the United States.

BLITZER: And it certainly confirms he has been cooperating. All right. Stand by.

Susan Candiotti is in the courthouse. We'll get back to her.

Fran Townsend is in Washington.

Much more of our coverage of the breaking news right after this.

(COMMERCIAL BREAK)

BLITZER: Let's get to the strategy session right now. Joining us: our two CNN political contributors, the Democratic strategist Paul Begala and the Republican strategist Alex Castellanos.

Another congressman in trouble -- Alex, let me start with you -- a Republican congressman from Indiana, Congressman Mark Souder is now resigning from Congress after acknowledging an extramarital affair. Are you surprised -- I'm sure you're not surprised that these things happen but are you surprised that he's actually decided to resign instead of coming forward with his wife apologizing and all of that?

ALEX CASTELLANOS, CNN POLITICAL CONTRIBUTOR: No, they usually do die with their boots on. But he's actually, I think, doing the right thing probably for his family and for the country.

What this means is that -- it's a fairly good Republican district, Wolf. It's -- it will stay in the Republican column. This will actually -- and Republicans have a good bench in that district, businessmen, candidates who are waiting in line. So, Republicans probably hang on to this seat. This probably means no net change.

BLITZER: This is a problem that affects both parties, Paul, as you well know. Have you've been advising him, would you have told this congressman -- you know what, you better just quit?

PAUL BEGALA, CNN POLITICAL CONTRIBUTOR: No. Hell no. I mean, come on. If we run all the centers out of Washington, nobody left except me and Alex. Well, and you, of course, Wolf.

No. That's ridiculous. It's his personal thing. If he's got to work out his personal issues, that's fine. It is, as the great John Hiatt, the songwriter, once said, the most un-original sin. I will note the wrinkle, though. You know, with Democrats, with John Edwards, for example, Democratic sex scandal inevitably, there was a sex tape. With this guy, there's an abstinence tape. But it's actually -- they got a tape of him with apparently the woman he's alleged to have the affair with and they're talking about abstinence and how important it is to practice abstinence. So, that's a -- I think it's a little bit of a problem.

But, no, I think people should have to resign for this. He should apologize. You know, I do wish maybe some of these guys would be less judgmental about other people's lives if they themselves have these other kinds of problems. But, you know, I don't see why every senator has to quit Congress.

CASTELLANOS: Well, there is, though, Paul. There is, though, this sense that Washington is going to the bar and spending the red money on wine, women and songs. So, it's not just about personal r morality. It's the sense that Washington has lost all disciplines. The kids keep having parties and it's time for the grown-ups to go in there.

I think, on both sides, Democrat and Republican, the voters are going to try to say, hey, kids, party is over. It's time to get back to work.

BLITZER: Guys, I want you to watch this little clip with this ad. It's going viral on YouTube. Alabama Republican Dale Peterson, he's running for Alabama's agriculture commissioner's position. I'll play this little clip for you.

(BEGIN VIDEO CLIP)

DALE PETERSON (R), ALABAMA AGRICULTURE COMMISSIONER CANDIDATE: Alabama AG commissioner is one of the most powerful positions in Alabama, responsible for $5 million. I bet you didn't know that? You know why? Thugs and criminals are trying to keep you in the dark. They do whatever they want with all of that money.

Norman Grace brags on his Facebook page about receiving contributions from industries he would regulate, bragging about receiving illegal money on Facebook. Who on earth would support such a dummy and why?

I'm Dale Peterson. I name names and take no prisoner. Get me to Republican nomination for AG commissioner and let's show Alabama we mean business.

(END VIDEO CLIP) BLITZER: All right. Alex, you're a professional. What do you think of that ad?

CASTELLANOS: I think we're going to run him for president. He's our Republican nominee, a cross between Jack Cafferty and John Wayne. How can you lose with a candidate like this?

BLITZER: Have you seen the political ad where a guy actually takes out his rifle and starts walking around like that?

CASTELLANOS: You know, on a bigger sense, though, Wolf, this shows you how mad voters are this year at government on every level. It has failed them. It has lost control. And this tells you the size of the wave that's out there. We're going to see that in the elections later tonight.

BLITZER: As a political professional, Paul, what do you think about that ad?

BEGALA: I loved it. It was -- you know, it's fresh. It's original. It's a little amusing, the notion that thugs and crooks don't want you to know how powerful the Alabama agriculture commissioner is, is, of course, moronic.

But set that aside, that's not what the ad is about. It's about a tough guy waving what look to me like a 30-30, a Winchester pump action 30-30. But that's, you know, that's just me. I don't know why he needs that on his farm in Alabama.

But, no, I think it's fine. It's great. It's hilarious, you know? I mean, I think we ought to have -- it's at least authenticity and that's what people are looking for, if, in fact, the guy is real.

BLITZER: Part of the ad, Alex, if you've seen the whole thing, he talks about the illegals who are coming into Alabama. I suppose that's why he needs that rifle.

CASTELLANOS: He's going to build a fence between Alabama and Mexico, apparently, and fix our problems that way.

No, again, it's a sense of a loss of control. The government is supposed to be doing something about our problems. And instead, it's making them worse. And he's going to go up there and clean up the mess. He doesn't have a shovel, he has a rifle. That's the tool they're going to use this year.

BLITZER: Dale Peterson -- we'll follow his race.

Do you want to make another point, Paul?

BEGALA: You know, I hate government so much, why don't you put me in it? But it's fine, look, I like it.

CASTELLANOS: Paul, let's get together and run the horse.

BEGALA: It's a good ad. Yes, it's a good-looking horse, too. CASTELLANOS: Run the horse for president.

BLITZER: Thanks very much.

Let's go to Jack right now for "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: The question this hour is: Should Connecticut Democrats continue to support Richard Blumenthal who lied about serving in Vietnam?

Lot of mail. Not much sympathy for this clown.

Larry writes: "It seems that our only standard for politicians is that they be slightly above room temperature. Lying? Not a problem. Cheating? To be expected. Self-serving? Of course. When did the idea of a public servant die? These guys are supposed to work for us and if we do our duty, we ought to vote these slime balls out, or in Blumenthal's case, not in."

Hank writes: "As a Vietnam vet, I find it extremely distressing that someone would lie and then lie about his lie. Misspoke, my rear end. By piggybacking on the sacrifices of brave young men and women who gave life and limb for their country, he dishonors himself and his party since the party continues to back a liar."

Paul writes: "Ease up on Blumenthal, Jack. Let himself set himself right by giving up the election and then volunteering to go to Afghanistan, frontline duty. He can stay there until the last real soldier comes home."

Laura in Connecticut: "As a Connecticut resident, I can tell you Attorney General Blumenthal has been viewed as the front-runner for this Senate seat and has enjoyed support from many unaffiliated voters and even Republicans because he's done a pretty good job overall for many years as the attorney general. However, this misrepresentation of his service, this news is a bombshell and may well lead to his undoing. This changes the entire race."

Jim writes: "The guy didn't misstate anything. He lied and he got caught. I watched the news conference. It was a joke. No Democrat, no Republican, nobody, should support this man.

Reserve units during the Vietnam War were difficult to get into. They were a form of legalized draft dodging. I should know. I was in one."

And Jim in New Jersey writes this: "As a Vietnam veteran, I felt sad when I heard that Mr. Blumenthal lied about serving in Vietnam. I felt sad for all those men and women I served with, those who came home and those who didn't.

I don't feel sad for Blumenthal. In fact, I feel nothing for him. It's pitiful what he did. Yet I have no pity. And as a Democrat, I hope he loses, big time. I will take any Republican over him."

You want to read more on this -- you can go to my blog, CNN.com/CaffertyFile.

BLITZER: Thanks, Jack.

Hollywood comes to New Mexico. Tom Foreman has the story of that state's booming new industry.

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BLITZER: Not Hollywood or New York, but when it comes to movies, New Mexico is the next best thing and the industry there is "Building Up America" one film at a time. Our Tom Foreman has the story.

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TOM FOREMAN, CNN CORRESPONDENT (voice-over): What do "Transformers," "Indiana Jones" --

UNIDENTIFIED MALE: That was close.

FOREMAN: -- and "No Country For Old Men" have in common?

UNIDENTIFIED MALE: Well, this is just a deal gone wrong, isn't it?

UNIDENTIFIED MALE: Yes.

FOREMAN: They were all made in New Mexico.

(on camera): The film industry here is just going game busters. It really is.

(voice-over): And in the capitol, the governor's man in charge of film, Eric Witt, is delighted.

ERIC WITT, OFFICE OF THE GOVERNOR: It's helped a lot of people and our local economy, not just film but all the related industries.

FOREMAN (on camera): And what is this place right here?

WITT: This is an establishment called Evangelist, one of the more famous bars in Santa Fe. It is been here for about 40 years. In this bar, they shot "Crazy Heart."

(VIDEO CLIP)

FOREMAN (voice-over): New Mexico has built this love affair with film through an aggressive campaign that started seven years ago. That's when the state began offering big rebates to filmmakers who would come and hire local workers, buy local products, and use local facilities, like the sprawling new sound stages just outside of Albuquerque.

In addition, the state can help cover salaries for local folks, being trained for film jobs. As a result, the number of skilled film workers here has gone from 100 to 3,000.

UNIDENTIFIED MALE: And it's a very high-paying job, great benefits.

UNIDENTIFIED MALE: As construction has really slowed down, this has really been a good -- a good way to fill that economic void for jobs.

FOREMAN: This is not an utterly new idea. Thomas Edison's picture company made the first film here more than a century ago. And in the '20s and '30s, cowboy films rode all over the New Mexico range.

(on camera): But what is happening now is much bigger than what was happening back then, even bigger than what was happening 13 years ago when they had five film and video projects in this state. Last year, they had more than 40, and the number keeps growing.

(voice-over): The state estimates 10,000 jobs have been created on the sets and by the dozens of local businesses providing everything, from catering to computer animation to big-spending filmmakers.

(on camera): Do you have any idea how much they're spending each year here?

WITT: They're spending about $300 million a year here, right now, in hard cash, generating about a $1 billion a year now in economic activity as the money circulates through the local economy.

FOREMAN (voice-over): And that ride by almost all accounts is just beginning.

UNIDENTIFIED MALE: Thanks for coming out. So good to be home.

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BLITZER: You're in THE SITUATION ROOM.