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JOHN KING, USA

Geithner May Leave Treasury; Yemen Deteriorates

Aired June 30, 2011 - 19:00   ET

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


JESSICA YELLIN, CNN ANCHOR: Thank you, Wolf. Good evening, I'm Jessica Yellin sitting in for John King.

We begin tonight with breaking news. There could be a major change in the president's cabinet before the president's re-election campaign. A source familiar with discussions tells me Treasury Secretary Timothy Geithner has indicated to administration officials that he's thinking about leaving his post after a deal is struck, if it is, to raise the debt ceiling.

However, the Treasury secretary, I'm told, has not made a final decision. Tonight when he was interviewed, he hedged a bit when asked about the possibility of leaving.

(BEGIN VIDEO CLIP)

TIMOTHY GEITHNER, TREASURY SECRETARY: I never had a real job. I've only worked in public service, but you know, I live for this work. It's the only thing I've ever done. I believe in it.

I'm going to be doing it for the foreseeable future. People are interested because I have a family and my son is going back to New York to finish high school. I'm going to be commuting for a while. But I'm going to be this for the foreseeable future.

(END VIDEO CLIP)

YELLIN: Our other top story tonight is the deteriorating political and economic situation in Yemen. Suspected al Qaeda militants are taking advantage of the turmoil by spreading deadly violence there. That's a major concern to the United States. We'll have more on that in a few moments.

But first, Yemen's acting president sat down for an exclusive interview with CNN's senior international correspondent Nic Robertson in the capital of Sanaa.

Vice President Abdu Rabu Mansoor Hadi has been in charge since Yemen's President Ali Abdullah Saleh was seriously wounded earlier this month when insurgents attacked the presidential palace.

(BEGIN VIDEO CLIP)

ABDU RABU MANSOOR HADI, YEMEN'S ACTING PRESIDENT (through translator): I saw him immediately after the incident. He had burns on his face, burns on his hands, burns on his chest and there was a piece of wood that sticking in his ribs. Thanks to God the president's health has improved a lot and improves more every day.

(END VIDEO CLIP)

YELLIN: President Saleh was taken to Saudi Arabia for treatment and there was speculation as latest this past Monday that he was already back or soon to return to Yemen.

But we now know that is not the case at all. Nic Robertson tonight on the dire situation in Yemen and his exclusive interview now with the nation's acting president.

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Jessica, there were a couple of things that the vice president said in that interview that caught people. One of them is that he said President Saleh may not come back from medical treatment in Saudi Arabia for several months.

That's certainly got a lot of officials here talking. The other point that he raised was that when President Saleh talks about a new political deal, the deal he's talking about means he wouldn't step down until another president has been elected.

Thanks to the opposition here, that is, if you will, a red rag to the bull. Both of these points indicate that there's going to be some period yet before a political deal is done, before President Saleh come - as officials here continue.

The vice president continues to indicate he eventually will. But the problem people see here in Sanaa and across Yemen is that the longer you have this sort of political status, this lack of deal going on, the more likely there is to see an increase in violence.

On the streets here, you have growing lines of cars cueing up to buy gasoline. People sometimes 10 days in line. The economy here is tanking. Anger is growing on the streets here today. We've seen people forming impromptu small barricades across the road because they are so angry with the government not fixing the economic problems.

There are concerns it may not be the politics and could be the economics here that precipitate a wider conflict. The other problem emerging in this political status, al Qaeda is taking advantage. In the southern towns over the last days, al Qaeda, suspected al Qaeda militants attack a stadium where troops were based more than 30 of those Yemeni soldiers were killed.

According to government officials, 14 of the suspected al Qaeda militants where -- where al Qaeda is gaining strength there and across the rest of the province and other areas as well. But with this political sort of status, al Qaeda is taking advantage.

There are growing tensions on the streets here. The economy is getting worse and worse. So as long as President Saleh is out of the country and there is no political deal with the opposition here, the problems that face Yemen only seem to be getting worse. The vice president really alluded to that in the interview saying tensions were getting worse. Five provinces have fallen out of government control. The situation really here dire. People here talk about the potential for widespread conflict even within a matter of days, Jessica.

YELLIN: Nic Robertson from Yemen. Thank you, Nic.

Well, the Pentagon is closely monitoring that situation. There is also growing concern about Pakistan and whether al Qaeda or the Taliban could get hold of its nuclear weapons.

CNN's Chris Lawrence is at the Pentagon tonight. Chris, what's behind the growing concern and really, how real is the fear that terrorists will get their hands on those nuclear weapons?

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Well, Jessica, the good news is all the analysts I talked to say right now it's unlikely that terrorists could get and seize a nuclear weapon in Pakistan.

The bad news is all the trends are going the wrong way. Pakistan by 10 years from now will have about as many nuclear war heads as the British have right now today. The country is becoming increasingly radicalized.

Since 2007, there have been about four attacks on likely nuclear weapon sites. Just in May, the Taliban, the Pakistani Taliban stormed a Pakistani naval base. They killed about 10 troops there. They used rocket launchers.

It's believed they have help from the inside. That is a big key because the Taliban commander says they plan to hit nine more key sites. One of the analysts I spoke to said there is no way terrorists could get their hands on any sort of nuclear material without help from the inside. Jessica --

YELLIN: All right. Thanks so much, Chris. Chris Lawrence at the Pentagon.

Now let's get some analysis on the situations in both Pakistan and Yemen with Fran Townsend, CNN national security contributor and former Homeland Security advisor to President Bush. She is a member of both the CIA and DHS external advisory boards.

Hi, Fran. So first, let's start with Yemen. We heard Nic Robertson describe a pretty frightening picture there. What are your sources saying about what's really going on in that country?

FRANCES FRAGOS TOWNSEND, CNN NATIONAL SECURITY CONTRIBUTOR: You know, Jessica, Yemen has been a top priority and huge concern across two administrations now. When I was in the White House, I had responsibility on the counterterrorism issue.

John Brennan, President Obama's Homeland Security and counterterrorism advisor is struggling with this issue now and referred, the vice president of Yemen referred to john in his interview with Nic Robertson.

Look, the United States has put tremendous amount of capability and resources there to try and help sort of stabilize the situation. There is no question we have every form of human intelligence, technical intelligence.

We are trying to target and help the remaining Yemeni government target al Qaeda. But I think what we hear from Nic's report and from others in the region is that we are losing that. Yemen is losing its ability to control key provinces, key regions of their own country.

In Yemen, al Qaeda in the Arabian Peninsula, which is the main al Qaeda affiliate there is the strongest of the affiliates. They have the most capable bomb maker. Remember, we've got Anwar al-Awlaki, American-born al Qaeda cleric there.

So this really is probably the single most important serious threat for the ability to launch an attack into the United States there in Yemen. That threat is getting worse, not better.

YELLIN: You painted a frightening picture in Yemen. Turning to Pakistan now, we've seen the Taliban infiltrate nearly every federal agency in that country. Just how precarious is the security situation there?

TOWNSEND: Well, it's incredibly precarious. Look, this comes at a time where one U.S. official said to me, it's, we're at the lowest point in our bilateral relationship with Pakistan he has seen in his many decades working this issue. I think that's right.

You know, look, Leon Panetta is now the secretary of defense, but it wasn't certainly, he wasn't enjoying a great relationship with them in the wake of the Bin Laden raid when he was director of the CIA. That is going to be a very difficult relationship to repair.

This isn't just one incident. For those who think the relationship really crumbled over the Bin Laden raid, it's been crumbling over time during the Bush administration there were serious issues.

Pakistan has not been particularly a reliable partner. Nor have they provided some help in Afghanistan, but not consistently. So it's a troubled relationship.

YELLIN: And now Pakistan's defense minister is saying that the U.S. will have to stop using its main base to launch drone missile strikes against terrorist suspects. What kind of impact do you think this will have on U.S. operations there?

TOWNSEND: You know, Jessica, oftentimes what we found in the past is, Pakistani officials will say one thing in public and then frankly, they don't always do that. So first and foremost, we have to see whether or not they are serious about making a shut down the air base where they're used to fly the predators.

Second, Americans should know the U.S. never uses a single -- we are not ever tied to just one site from which we can launch operations. So that won't be the only place that the U.S. is able to base and launch drones from. So we are likely to be able to continue to operate.

YELLIN: All right, Fran, thanks for your insight as always. Fran Townsend joining us.

Coming up, later this hour, Bill Clinton checks out the 2012 Republican presidential candidates and reveals who he thinks has the advantage.

Also ahead, a surprise for Defense Secretary Robert Gates on his last day at the Pentagon.

(COMMERCIAL BREAK)

YELLIN: Today on Defense Secretary Robert Gates' last day as secretary of defense, President Obama addressed the farewell ceremony at the Pentagon. In a surprise move, presented Gates with the Presidential Medal of Freedom, the nation's highest civilian honor.

(BEGIN VIDEO CLIP)

ROBERT GATES, DEFENSE SECRETARY: I'm deeply honored and moved by your presentation of this award. It is a big surprise, but we should have known a couple of months ago you get good at this covert op stuff.

(END VIDEO CLIP)

YELLIN: Funny. Gates will be succeeded tomorrow by Leon Panetta, former director of the CIA. We are joined now by William Cohen who, like Bob Gates, served as defense secretary under a president under a different party.

He is a Republican who served under President Bill Clinton. Secretary Cohen, on that point, let me ask you -- thanks for being with us. On that point, listen to what President Obama said today about Robert Gates.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: The integrity of Bob Gates is also a reminder, especially to folks here in Washington. That civility and respectful discourse and citizenship over partisanship are not quaint relics of a bygone era. They are the timeless virtues that we need now more than ever.

(END VIDEO CLIP)

YELLIN: You've been in a similar position. How difficult is it to put aside your personal political differences when you're in the kind of position Secretary Gates was in?

WILLIAM COHEN, FORMER DEFENSE SECRETARY: Well, when it comes to the national security of the country, it's very easy to put aside any partisan considerations. I think that's what the president was talking about today.

That really does mark the career of Bob Gates. I worked with him when I was a co-chair of the Senate Intelligence Committee. I worked with him over the years. I must say that he's the quintessential public servant.

I think the medal he received was justly deserved. Great job over his entire career.

YELLIN: The president and Secretary Gates, as much as they clearly admired one another, did have their differences. Most recently over Libya. On what issue do you think they had the most daylight between them?

COHEN: I think that perhaps was the biggest gap, at least according to the public discussion of it, on Libya, very clear. He made a statement that it was not in our national, strict national security interest.

I think he came around to the view once the French and British got out front and once the Arab league endorsed a no-fly zone, than he came in and supported the effort because he said publicly when you have countries like the great Britain and France who have been with us through very tough times.

And they're out front, you need them as your friends and you want to support your friends. That's the reason he ended up lending his strong support, supporting the president of the United States.

YELLIN: Always supporting the president. He was clear about that in the end.

COHEN: You either support the president of the United States or you then tender your resignation on issues of fundamental disagreement.

YELLIN: In his farewell remarks, Secretary Gates made a number of references to the men and women fighting on the front lines. Listen to this.

(BEGIN VIDEO CLIP)

GATES: I'm just saying here that I will think of these young warriors, the ones who fought, the ones who keep on fighting, the ones who never made it back until the end of my days.

(END VIDEO CLIP)

YELLIN: You know, he talked a lot in his last few weeks that he became almost too concerned about the men and women who were fighting on the front lines. It was almost too paramount in his mind. Is that possible for a defense secretary to be worried?

COHEN: I think you have the attitude of Bob Gates just right. You feel a passionate commitment to their welfare, well-being, safety and security. You do whatever you can to make sure you have whatever they need to fight adequately, survive and be safe. That's the kind of passion you need.

YELLIN: Let's talk more broadly about foreign policy. The recent attacks in Afghanistan underscored how fragile that country's security is as the president is talking about drawing down U.S. forces in the country. Should the U.S. be withdrawing or even talking about withdrawing troops when the security situation there is clearly so fragile?

COHEN: My view is initially that we should have followed Vice President Biden's recommendation about having more of a counterterrorism strategy than counterinsurgency.

I don't think you can successfully have counterinsurgency unless you're prepared to stay there 10, 15, 20 years. The American people aren't prepared for that. The sooner one can get to a counterterrorism strategy, the better off.

YELLIN: In Libya, the president argued the military action in Libya does not meet the bar for the War Powers Act. He does not need to go to Congress to get their approval to continue U.S. military involvement there. Do you agree with him?

COHEN: I think the president, you can argue this either way in terms of its constitutionality. Most presidents disagree with the constitution of the War Powers Act. I think the better course of action would be get Congress onboard with you in the beginning.

Debate, leave the constitutionality elsewhere. The president feels strongly. Most presidents do. It's always better to have members of Congress supporting you than opposing you. This will stay as an issue of contention from now until it's resolved. It's best to avoid that if you can.

YELLIN: Interesting, members of your own party have criticized looking at presidential politics, I should say, have criticized Jon Huntsman, Republican presidential candidate who went and served a Democratic president overseas. He says he did it because when the president calls you into service, that's what you do, no matter which party it is.

COHEN: I agree. I think Jon Huntsman has been a great public servant not only as governor of Utah, but also serving in various Republican administrations. If the president of the United States asks you to serve in a capacity in which you're trying to promote the foreign policies of this country, then I think you have an obligation to serve.

YELLIN: What would you say to Republicans who argue his service to a Democratic president disqualifies him for the Republican nomination for president?

COHEN: I always thought that the issue of foreign policy stopped at the waters' edge and that they should put that aside and judge him on his merits. He is an extraordinarily capable individual.

Judge him how he performed as governor, how he served presidents from certainly George Bush, George Herbert Walker Bush and perhaps even President Reagan.

The fact he served a Democratic president ought not to be a disqualifying factor. I hope the Republicans will put that aside and judge him on the merits.

YELLIN: Thank you for your time, one of the true bipartisan members of the staff.

COHEN: Thanks very much.

YELLIN: Thank you, Secretary William Cohen. Thanks for being with us.

Coming up next, the latest news headlines, including what Stephen Colbert wants to do with your money.

(COMMERCIAL BREAK)

YELLIN: Welcome back. If you're just joining us, here is the latest news you need to know right now.

Some paychecks issued to employees of the Los Angeles Dodgers have bounced. A team spokesman says the problem was caused by a two- day freeze imposed on finances after the Dodgers filed this week for bankruptcy protection. The spokesman says the problem has been resolved and all bounced checks have been reissued.

In an odd turn of events, the Federal Election Commission is permitting comedian Stephen Colbert to start a super PAC to allow him to raise money to produce and run political ads.

A frightening moment today for French President Nicolas Sarkozy as someone grabbed his shoulder and pulled him toward a police barricade in southern France. A 32-year-old man was arrested.

Coming up, members of Congress had a fiery reaction to the president's harsh words at yesterday's press conference. How will it affect the standoff over the nation's debt? I'll ask one of the president's top economic advisers next.

(COMMERCIAL BREAK)

YELLIN: The standoff continues tonight between President Obama and congressional Republicans over whether to raise the nation's debt ceiling.

At his press conference yesterday, the president chided Congress to do its job and reach an agreement before the August 2nd deadline, insisting that any deal must include new taxes.

Today, Republicans in the Senate took to the floor to express how they felt about the tone of the president's message.

(BEGIN VIDEO CLIP)

SENATOR JOHN CORNYN (R), TEXAS: Absolutely disgraceful. He should be ashamed. I respect the office of president of the United States, but I think the president has diminished that office and himself by giving the kind of campaign speeches he gave yesterday.

(END VIDEO CLIP)

YELLIN: Republican Leader Michigan McConnell invited Mr. Obama to Capitol Hill so he could hear directly from Republicans on why they won't vote for his proposal.

With tensions running high, the Senate has canceled its scheduled recess next week to continue working on a compromise. At the White House earlier today, I spoke with Jean Sperling, Director of the National Economic Council for more context on the administration's position.

(BEGIN VIDEOTAPE)

YELLIN: So, Republican leaders in Congress say they simply don't have the votes to pass a deal to raise the debt ceiling. They're not being stubborn, they don't have the votes. Mitch McConnell invited the president to come and meet with Republicans. And the press secretary said not even worth the conversation.

Why not? Why doesn't the president just go there and take the meeting, take every meeting he can with Republicans?

GENE SPERLING, DIRECTOR, NATIONAL ECONOMIC COUNCIL: First of all, all this president has been asking for is an honorable compromise. The same type of balance we've seen in bipartisan deficit reduction agreements since the early '80s, which includes putting everything on the table.

And what the president is saying very clearly is that you can't have deficit reduction where you're putting all the burden on seniors and the middle class, and then saying that those who get the most egregious special interest tax cuts are those who are most fortunate in our society have to bear no burden in recovering from this financial crisis, strengthening our economy and getting the investment and job growth back we need. All of us need to be in this together. And the president is simply asking we have that type of balance and compromise that I think the country very much wants to see.

YELLIN: Part of this has to be politic. I mean, it feels like there's political posturing going on right now. And if this is as dire as the White House says it is, and as it would seem the capital markets are suggesting it is, why not just give the Republicans what they want? Why not just cave and say, "You know what? You want only cuts, fine. To save America and save the economy, we'll give you cuts, we'll raise the debt ceiling, and we'll fight another day on the other issues that matter to Democrats"?

SPERLING: Let's be clear. This president is willing to do historic levels of spending cuts and efficiencies to help bring our deficit down. As somebody who is involved with the negotiations with the vice president and Eric Cantor and others, anybody in that room will tell you, we were making significant progress on spending cuts across the board.

So, the president is willing to do quite a lot on reducing spending, but in order to show a seriousness, in order to show we're all in this together, in order to get the votes you need from both Democrats and Republicans to pass and the House and Senate, you have to have a sense of balance and shared sacrifice.

YELLIN: Why did the talks break down? Eric Cantor walked away, why, in your view?

Well, I think they were very serious and I think there is enormous amount of progress. But I think there was a recognition that at some point, leaders have to work with the president on the overall contours of what that bipartisan deficit reduction agreement will be.

And, yes, you probably will see politics as always in things. But there's no doubt where the president's focus is. He wants to get this done. He wants serious talks, serious negotiations. Whether that is one-on-one meetings, shuttle diplomacy, phone calls, where there's a serious discussion to be had on finding a bipartisan agreement, that is our 100 percent focus.

YELLIN: As somebody who's been involved with the negotiations, you know how much those sort of one-to-one relations matter. The president took a different tone yesterday, much more combative. How does tweaking essentially the Republican leadership help the negotiation process?

SPERLING: What the president was trying to do was really bring people back to the table. We were having a serious discussion. I think -- and I think there was --

YELLIN: By saying they are not on the level?

SPERLING: By having great trust. I think what the president said is, as people left, they were trying to cast aspersions of his involvement as opposed to just working out our differences.

Look, this president, as you know, put forward a call for a bipartisan negotiation only five days after this year's budget was finished. Then, a week later, he called together the eight top leaders and set up a bipartisan negotiation with the vice president in charge. And he has monitored that and given those of us in the negotiating table instruction on a day by day level. He's met one-on- one with the leadership. He's brought all the caucuses down to Washington, I mean, down to the White House to hear them out, get their views.

So, this president is going the extra mile and will continue to go the extra mile. But I think what he was saying yesterday at the press conference was, come on, guys, you know, it's time to come back to the table. I can I can throw a brush package, too. But that's not going to help.

What helps all of us is to come back to the table, get serious and get a balanced deficit reduction plan that will help us get this economy going, get confidence in investment and long-term job creation. And give a lot of members of Congress the comfort they need to ensure our country does not default for the first time in our history and forever tarnish our credit rating.

YELLIN: Let's look at the broader economy for a minute. There is talk not much can be done to spur job growth. But we heard the president say Congress does have tools at its disposal. Would you point to one thing Congress could do when it comes back from vacation?

SPERLING: Yes. I'll give you two examples, which is one, we have $2 trillion sitting on the sideline in our economy right now. If we could give those companies, those investors the confidence that American can work past its divisions and get its house in order, I have no question that will increase more confidence in people making long-term investments, which means more construction, more job creation here in the United States.

And, secondly, you can do a deficit reduction package the smart way, that is phase in and that has something like the payroll tax cut, which puts $1,000 in the pockets of average families, which can help not only with them to face the strains of higher food and energy prices, but it means more spending and it can give an extra kicker of growth to help this economy grow together.

So, a strong deficit reduction, a bipartisan plan that included something like the payroll tax cut is exactly the right type of recipe to restore confidence, get more investment and job creation and put a little bit more spending and demand in the economy and help out many hard-pressed working families at the same time.

YELLIN: These are measures that largely Democrats support and Republicans don't?

SPERLING: That is actually not the case. I think one of the reasons we were able to have our bipartisan agreement in December, which has helped our economy face enormous headwinds it has was that the president actually looked for proposals where we thought there'd be bipartisan agreements.

So, the payroll tax cut had been supported by both Democrats and Republicans. The idea of giving people 100 percent expensing, which is a great encouragement for people to invest in the U.S. and invest now were both things this president and his economic team felt were good economic policy that could help with job growth but were also measures that we saw Republicans had support e supported.

YELLIN: In the past?

SPERLING: That's the type of bipartisan compromise that we need to move our country forward.

YELLIN: So, do you think the reason the Republican House isn't behind these measures because they don't want to give the president that kind of victory in election year? Is it politics?

SPERLING: You know, I'm not going to prejudge where they are. This is negotiation. And I understand that people take different postures in their negotiations. But I think what is important is that people understand that there's a time and place for everything.

And this is the time to come together, to get serious, to cut a bipartisan deficit reduction agreement that involves compromise, involves balance, that takes on special interest and asks for some contribution sacrifice from the most well-off, as well as having very significant spending cuts in virtually every area of the government.

YELLIN: Do you think you'll come to a deal on the debt limit?

SPERLING: I do. I really do. I do believe, in the end, that everybody wants to do the responsible thing. That's my hope. That's my belief.

Our country has had impeccable debt since Alexander Hamilton, our first secretary of treasury, assumed all the debt and had the vision to do that 220 years ago. I really have to believe all the leaders, Democrat and Republican, don't want to be part of driving the United States into default for the first time in our history and would like to show American people and markets that we can get something done on the deficits even with our divisions.

(END VIDEOTAPE)

YELLIN: And coming up, another airline security failure. How could a man board a cross country flight without proper boarding pass or valid ID? We'll examine that issue.

But, first, Republicans hit back on the president's recent criticism of Congress. Who's right? We'll debate that, next.

(COMMERCIAL BREAK)

YELLIN: The key battleground state of Pennsylvania hosted two presidential candidates today, including the president himself.

President Obama was in Philadelphia for two fundraising events. He told supporters he is ready for his opponents.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: They're going to attack. Here in Philadelphia, they're going to attack. They won't have a plan.

(LAUGHTER)

OBAMA: But they'll attack. I understand that. That's politics as we've come to know it.

What I also understand is the American people are a lot less interested in us attacking each other. They are more interested in us attacking the country's problems.

(END VIDEO CLIP) YELLIN: Republican candidate Mitt Romney was ready with lines of his own. He was a bit north of Philly, in Allentown, slamming President Obama's economic policies outside a metal factory that closed down. Well, the president had visited that very same plant when it was still open back in 2009, and at that time he had been touting his economic stimulus plan.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: The plant has been open 100 years. It survived the Great Depression. It couldn't survive Obama economy.

Now, the president says just give me more time and it could have been worse. It couldn't have been worse for the people who worked here at this plant. For them, it's as bad as it gets.

(END VIDEO CLIP)

YELLIN: There is a lot of campaign news to talk about today, including who former President Bill Clinton believes is a strong candidate in the GOP race. He's got a few actually. To discuss it all, we are joined by Republican strategist Rich Galen, and Bill Burton, a former press secretary -- deputy press secretary to President Obama and now active in the campaign in his own way.

Bill, I'm going to start with you. You've got to admit it was shrewd of Mitt Romney to go to a plant where President Obama has visited himself, where he touted the stimulus, and then said, look, it shut down because of the president's economy. How does President Obama respond to attacks like this?

BILL BURTON, FORMER W.H. DEPUTY PRESS SECRETARY: Look, it was a good gimmick and it's really got him on CNN this evening, and it got him some local press, too.

But, look at how this has set up. You've got Mitt Romney out there, dark and gloomy about the economy, really talking down in a depressing negative way how things are going out there at a time when people are looking for hope versus President Obama who did go to that plant. I was with him on that trip.

RICH GALEN, REPUBLICAN STRATEGIST: How did that work out?

BURTON: And he is there fighting for those people's jobs -- as opposed to Mitt Romney who was there just celebrating the fact they no longer had that and use it as a campaign prop.

So, I think what the president is going to do is he'll talk about the things that he's done, the ways that he's been trying to turn the economy around and talk about the future. Ultimately, this campaign is going to be about the future and how the choice stacks up between the president and the Republican nominee.

YELLIN: Wow. I thin we just got a preview of the campaign.

Rich, I want you -- I want you to listen for a moment to President Obama --

GALEN: Can we do that? Can we talk about this?

YELLIN: Yes, yes. We're going to talk about it. We want to play a clip of President Obama when he was at that plant in 2009.

GALEN: Yes, you were there, too.

(CROSSTALK)

(BEGIN VIDEO CLIP)

OBAMA: I just came from Allentown Metal Works where I had a chance to visit workers there. They were working hard not just to forge the machinery that makes this country run, but like so many others across America, these workers have also been doing the best they can to stay afloat in a brutal recession that has hit folks like them hardest of all.

(END VIDEO CLIP)

YELLIN: You notice, first of all, he has almost no gray hair then? What a change. But that's not the point, Rich. Is this really this dynamic a preview of the campaign we're going to see?

GALEN: Well, I think the really interesting thing for me today watching that go on was that the Romney people have decided this is over. They are running against Obama.

YELLIN: Right.

GALEN: As far as they are concern, there is no primary campaign. They are going dead on after the president. And we may see that for the next 17 months.

I think it was more than a gimmick. I think it was a pretty good catch by the campaign to go there. I don't think anybody coordinated their schedules. To the point that you were making about one side looking down one side looking up, if you re-run that footage of the president when he was talking about the fact they are going to say bad things about me but they don't have a plan, he didn't exactly look like he was ready to sing "puttin' on the Ritz" either.

I mean, these are tough times and these guys are, I think, taking it seriously. And I think in both of these cases -- let's assume for the moment that Romney is going to be the nominee. He's leading, but I don't know he's going to put it out. But let's assume that it's Romney or somebody like him, I think what we're likely to see -- and I think this is good for the process -- we'll see two serious people running for president starting some time this time next year, I think, when the field is set.

YELLIN: And then the economy is the major issue. Let me play for you, Bill, a series of sound bytes. Yesterday, the president ratcheted up pressure on Congress to get a deal cut on this whole debt limit issue. And he said, you guys should be in town working this out instead of going off, back home, taking recess and vacation. And then he left town to go visit Pennsylvania.

GALEN: For fundraisers, hello.

YELLIN: And this visit. OK. Take a listen to what the Republicans had to say.

(BEGIN VIDEO CLIPS)

ROMNEY: The president ought to be in Washington meeting with Republicans, meeting with Democrats. He shouldn't leave that town until he has an understanding of what it's going to take to get this economy going again.

SEN. RAND PAUL (R), KENNEDY: I'm here today, though, Mr. President, where are you? My understanding is the president's campaigning, has a fundraiser in Philadelphia tonight. I don't believe he is here tackling the nation's problems today.

SEN. JOHN CORNYN (R), TEXAS: I wonder if he will cancel his fundraiser to meet with Senator McConnell and Speaker Boehner to try to work on this threat he was so emphatic about yesterday.

(END VIDEO CLIPS)

YELLIN: So, do they have a point?

BURTON: What I love with Senator Cornyn who criticized the president for going to a fund-raiser left that speech and went to his own fund-raiser. I mean --

GALEN: He didn't have to get on air force one and have 700 advance people do it for him. He did it --

(CROSSTALK)

BURTON: I can assure you those 700 advance people are not working on alleviating the debt crisis.

(LAUGHTER)

BURTON: You know, as for Mitt Romney to make that criticism -- you know, look, what he suggests this balanced budget amendment, you know, in order to have a debt ceiling increase, it's crazy fiscal policy. Even the radical Ryan budget wouldn't fit under that.

So, I don't think Republicans are talking about a lot of solutions. They got a lot of negativity. They've got a lot of attacks for the president, but they don't really have a workable plan.

GALEN: And what is the president's workable plan?

BURTON: Well, the president is sitting down with leaders to try to --

GALEN: Obviously, he's not, Bill. He refused to come to the Hill to talk to Republican senators. So, he's not sitting down. And the only reason he did sit down the other day because, frankly, I think he goaded into it by Governor Chris Christie who got a budget --

(CROSSTALK)

GALEN: -- a Republican governor with --

YELLIN: The real difference is with the house. He has to wait until the House is back and work this out.

(CROSSTALK)

GALEN: Reid keeping everybody in. What does that do again?

YELLIN: Yes, excellent point.

BURTON: I just to wrap this up, I mean, for starters, I can assure you that Chris Christie had nothing to do with why the president did anything. And secondly, you know, I don't think --

GALEN: How can you be sure?

BURTON: I don't think it passes the laugh test to suggest the president hasn't been serious about doing this. As it turns out the vice president is a pretty important member of the administration who's been sitting down and talking.

One second, Rich. And, secondly, the president has been talking to congressional leaders on both sides to try to make progress instead of, just, you know, grandstanding like we've seen on the other side.

YELLIN: Let me ask you, today is also an important day because fund-raising totals come in. This is something we in Washington all watch. All of these candidates have been raising a lot of money and today, they have to file and hit a deadline and tell everybody how much they raised.

Jon Huntsman brought in $4.1 million, we're told by our producer, Peter Hamby -- less than half of it from himself.

Does any of this matter? We're going to all report about it. Does the fund-raising total really matter?

BURTON: Well, you know, a lot of people say that Mitt Romney is a much better candidate this time around. But if you look at the way he managed expectations on his money, saying that he was going to have $40 million coming from the campaign but then actually only coming out with somewhere between $16 million and $20 million, I think that shows a lack of discipline.

It's not a huge deal in the grand scheme of things, but does show a lack of discipline.

GALEN: You seem to be protesting a bit too much about Romney. I don't understand. But we can talk about --

BURTON: We are talking about money. But the truth is Huntsman is going to need a lot more money -- YELLIN: We're out of time.

GALEN: No, no. We only have two ways of figuring out what's going on, money and polls. And so, people actually go to vote. So, yes, but money is important.

YELLIN: OK, gentlemen, thank you so much. We'll have you back. Bill Burton, Rich Galen, great to see you.

BURTON: Thanks, Jessica.

YELLIN: Up next, an airline security breakdown. How could someone board an airplane without the proper boarding pass or valid ID? We'll find out what can be done to protect your security, next.

(COMMERCIAL BREAK)

YELLIN: This next story has a lot of people scratching their heads, especially with all the criticism leveled at the airport TSA agents for the intrusive way they search passengers. The FBI now says a man somehow flew cross country with a fraudulent boarding pass and without a valid ID.

Homeland security correspondent Jeanne Meserve picks up the story.

(BEGIN VIDEOTAPE)

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT (voice-over): The saga starts at New York's JFK Airport where on June 24th, Olajide Oluwaseun Noibi boarded a Virgin America flight bound for Los Angeles.

After takeoff, the FBI says, other passengers complained about Noibi's odor. When the flight crew investigated, they found he had a boarding pass for a different day with someone else's name on it. His only ID from the University of Michigan, though he hasn't been a student there since '06.

How did he get through a TSA checkpoint which requires a valid government-issued ID and a boarding pass?

There was clearly a malfunction.

(END VIDEOTAPE)

YELLIN: Law enforcement officials say there is nothing to indicate this is a terrorist incident. The man was arrested and is now charged as a stowaway.

We're joined by Isaac Yeffet, former head of security for Israel's El Al airlines.

Isaac, we know when someone is in the wrong seat at a football game -- so how could something like this slip through the cracks on an airline? ISAAC YEFFET, AVIATION SECURITY CONSULTANT: It's very simple. When you don't have security, so please don't be surprised this is the results we have. We go back to the shoe bomber, Richard Reid. We know the story of this guy.

We know the story of the Nigerian, Abdulmutallab, that hide the explosive in his underwear. We had information about him.

The shoe bomber gave us the biggest threat, red flag, to tell us -- arrest me, stop me. But because we rely only on technology, and technology will never be able to replace the qualified and well- trained human being, so we should not be surprised that we once after once.

It's impossible that the TSA will continue rely only on technology, because we have experience, bad experience technology on September 11th, 2001. Nineteen terrorists went three airports walking through the security checkpoint. They put their carry-on on the X-ray machine.

YELLIN: And they managed to get through.

YEFFET: And 19 -- look what they did to us.

YELLIN: Now, this man claimed that he was able to get through passenger screening by obtaining a seat pass and then displaying his University of Michigan identification and a police report that his passport had been stolen. Putting all that together, does that make sense?

YEFFET: No. I read the story. You are talking about criminal guy that's stole a boarding pass from a man that was on the same subway in Manhattan, New York. And then he used it in a way that only blind people cannot stop him the second he comes to the security checkpoint.

How you don't see that at the date, how you don't match the names, how you don't see the flight number, how you allow men like this to go through the security checkpoint and to let them board the flight? Where are the employees of the airlines that allow this man to go and to cheat all of us? Are we blind? We don't care about security?

YELLIN: There's nothing that indicates this was a terrorist incident, but do the circumstances strike you as suspicious? And do you question this person's motives or you just think it's a crazy guy?

YEFFET: First of all, we question every passenger. This is the system that proved that we could save El Al over 600 passengers' lives. One flight on Zurich, Switzerland, and the other on Heathrow London, when the luggage of the passenger went through the X-ray machine, nothing was identified.

Thanks to the system of interviewing passenger, asking the right question, the guys came to the conclusion that something wrong with these two passengers. The passenger in Zurich when they opened the luggage, they found four kilos of explosives and the pregnant lady, Irish lady at Heathrow London, they found four and a half kilos of explosive. She never knew she's carrying the explosives.

YELLIN: You clearly think profiling is the answer. All right, thank you so much, Isaac Yeffet, former security for El Al. Thank you for joining us tonight.

YEFFET: Thank you so much.

YELLIN: And that is all from us tonight on J.K, USA.

"IN THE ARENA" starts right now.