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Fed Chairman Warns of Dire Consequences; Libyan Rebels Lose and Retake Village; Pakistan's Top Spy in Washington; Casey Anthony Juror Breaks Silence; Taking the Marriage Pledge; Inside China's Secretive Military

Aired July 13, 2011 - 17:00   ET


WOLF BLITZER, HOST: Happening now, the president and the Congressional leadership, they're diving into debt talks for a fourth straight day. This hour, the Federal Reserve chairman meanwhile is warning that failure to reach a deal will create a major financial crisis for the United States. We're standing by for word of any progress. Let's see if it happens.

Also, U.S. senators call for an investigation of Rupert Murdoch's media empire as the company pays a new price for its phone hacking scandal. Could a massive probe now under way in Britain happen here in the United States?

And the Obama campaign money machine. Who's behind his record shattering haul of cash? And can his Republicans rivals compete?

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

President Obama and the congressional leadership are under enormous pressure right now, about 40 minutes into their latest round of debt crisis talks. They have less than three weeks until the deadline to raise the legal limit on the federal debt. And by all accounts, they're still very far apart.

As we stand by to hear what, if anything, emerges from this meeting, consider the very dire warnings from the chairman of the Federal Reserve. Ben Bernanke using very strong words today, telling Congress that the global financial system would be thrown into "enormous disarray". That's a direct quote, if the U.S. Treasury is deadbeat on its debt.


BEN BERNANKE, CHAIRMAN, FEDERAL RESERVE: Clearly if we went so far as to default on the debt, it would be a major crisis. Because the Treasury security is viewed as the safest and most liquid security in the world. It's the foundation for much of our financial system. And the notion that it would become suddenly unreliable and illiquid would throw show shockwaves through the entire global financial system.


BLITZER: Heading into today's debt talks, the Senate Republican leader Mitch McConnell was offering a controversial plan to prevent default-if-if there is no deal by the August 2 deadline. It would have given the president the authority to raise the debt limit in three short-term increases while allowing three congressional votes for lawmakers to show their disapproval, if that's what they wanted to do.

Let's bring in our Congressional Correspondent Kate Bolduan.

The McConnell plan is being criticized, not necessarily by Democrat, not by the White House, but Republicans up on Capitol Hill. And some are suggesting it's now dead in the water. What's the latest, Kate?

KATE BOLDUAN, CNN CONGRESSIONAL CORRESPONDENT: That's why it's so noteworthy. Today, one day after the top Republican in the Senate, Mitch McConnell pitched his so-called backup plan, that you laid out right there, House Republicans, his own party, are pouring cold water on it.

Just take a look at this statement from the No. 2 Republican in the House, Eric Cantor. He says, in part, "None of the plans being discussed could garner the 218 votes needed for House passage." He goes on later to say "Currently there is not a single debt limit proposal that can pass the House of Representatives." And Republican Congressional sources tell CNN that includes the McConnell plan.

Now, House conservatives, they seem to be complaining the loudest really about this plan. Just listen here to the conservative Congresswoman Michele Bachmann, also, of course, a presidential candidate, when she was asked directly about the McConnell plan. Listen here.


REP. MICHELE BACHMAN (R-MN), PRESIDENTIAL CANDIDATE: Well, I'm no, on raising the debt ceiling right now. Because I've been here long enough that I've seen a lot of smoke and mirrors in the time that I've been here. But I haven't been here long enough to forget who I serve, or where I come from. And again, all I can reiterate is that people across America are saying the spending is what has to be addressed. It's too much, it's got to be limited.


BOLDUAN: And you see right there that the criticism really seems to be centered on the fact that spending cuts are not required in the McConnell plan in exchange for a raise to the debt limit. Now, I'll tell you, I have spoken to some Senate Republicans, though, and they definitely said that it's an option to look at, especially as the clock ticks down, and if by chance this McConnell plan, this backup plan, could be left as the last option standing.

But the big question is always, Wolf, will it pass the House? Can it pass the House? And this seems to be another example of just how divided the Republican Party is right now on this issue, Wolf. BLITZER: Yes, it's a huge, huge division right now. And it is going forward, this debate, we'll see what happens. Kate, thanks very much.

Let's check in with Jack right now. He's got "The Cafferty File"-Jack.

JACK CAFFERTY, CNN CONTRIBUTOR: Despite that nasty game of chicken going on in Washington over raising the debt ceiling, congressional leaders in both parties pretty much agree that doing it is going to be necessary. The argument is over what else goes into the bill that's tying them up and bringing the country dangerously close to defaulting on some of our loans.

According to a new Gallup poll, 42 percent of Americans-42 percent, do not want the debt ceiling raised. And they want their members of Congress to vote against any measure that raises it. Only 22 percent want their lawmakers to vote for raising the debt ceiling. And more than a third of Americans say they're just not sure. When asked which is a greater concern, 51 percent say raising the debt ceiling without plans for major spending cuts worries them more. Only about a third is a say they're more concerned at the risk of a major economic crisis if Congress doesn't take action.

But there are two separate issues here. Republican lawmakers have tied voting to raising the debt ceiling to long-term deficit reduction. The fact is if we don't raise the debt ceiling by August 2, all kinds-the sky could fall. I mean, if we default on some of these loans, interest rates will go up, the dollar will go down-a lot, probably. Stock markets around the world will go down-a lot, probably. If you think things are ugly now, they could get a whole lot uglier and will.

In a separate poll, the in number of Americans who think this country is on the wrong track has risen now to 63 percent this month. That's up 3 more points from June. If the U.S. fails to pay its creditors, it's a good bet that number will go even higher.

Here's the question: What does it mean that 42 percent of Americans do not want Congress to raise the debt ceiling? Go to and post a comment on my blog.

The public has had enough, Wolf.

BLITZER: Yes, but I'm not sure everybody fully appreciates the consequences of failure by August 2. And you point out well, Jack, what the consequences would be. I write about it on my blog at

It could cause not only a recession even worse than the last 2008-2009 recession, it could cause a whole lot worse than that. Unemployment could go up. There would be a huge hidden tax on every American. So the consequences-I think the Republican and the Democrat leadership, the White House, they all fully appreciate it. That's why Mitch McConnell came up with his complicated desperate plan. We'll see if anything -- CAFFERTY: There are no spending cuts in that plan.

BLITZER: No, no.

CAFFERTY: The public wants the government to stop spending money.

BLITZER: Yes, he would have --

CAFFERTY: They have made it clear over and over again. Stop spending money. And there are no spending cuts in McConnell's plan.

BLITZER: Well, in McConnell's plan there would be three increases in the debt limit.

CAFFERTY: In the debt ceiling.

BLITZER: They would have to be tied a specific spending cut for each of the increases. That's the idea. But it's easier said than done, as you well know.

CAFFERTY: Yes. It's just horrifying to watch the government stumble around. Back in what was it February? Bernanke said you better get this done, February. Now it's the middle of July and nothing has been done, and the clock is ticking, and we got some real big storm clouds out there.

BLITZER: Huge. All right, Jack, thanks very much. Much more on this story coming up later.

But there's other news we're watching including the scandal causing major damage to Rupert Murdoch's media empire in Britain. It's now threatening to explode in this country as well. Three Democratic senators today are urging the Justice Department to investigate one of Murdoch's American-based companies.

And they're raising deep concerns about the possible violation of anti-bribery laws, among other things. As the allegations of phone hacking play out in Britain, the Senate Commerce Committee Chairman Jay Rockefeller says he may launch his own investigation. He suggested it's likely he would find some kind of criminal activity.


SEN. JAY ROCKEFELLER, (D) CHAIRMAN, COMMERCE CMTE.: It's really repugnant, you know, that one man can control so many. I mean, people in the parliament, I watch the parliamentary debate on television. They were talking about, you know, how they control the Labour Party, but then when they go out, they control the Conservative Party. It's all about that. And that's bad for the world. It's certainly bad for America. And we have enough problems getting objective media.


BLITZER: More of Brian Todd's report, including more of his interview with Jay Rockefeller coming up later here in THE SITUATION ROOM.

I'll also speak live, shortly, with a Senate Democrat Robert Menendez of New Jersey about his concerns that journalists working for Rupert Murdoch may have tapped into the phones of 9/11 victims here in the United States. My interview with Senator Menendez, that is coming up shortly.

The British government, meanwhile, launched a wide-ranging investigation of Murdoch's empire today as the company was forced to drop its bid to take over another prime media outlet. Our Senior International Correspondent Dan Rivers is in London.

DAN RIVERS, SR. INT'L. CORRESPONDENT: So, Wolf, the BSkyB takeover by News Corp. is now no longer on the table. Just as politicians in the building behind me were about to debate it, and just as they were all about to vote against that takeover going ahead, Rupert Murdoch's company decided it was not going to go ahead.


RIVERS (voice-over): The phone hacking scandal is turning into a high stakes game. The Conservative-led coalition is investing huge political capital into siding with the opposition Labour Party. Both now raged against media king Rupert Murdoch, who until recently was a card both parties coveted, but the hacking scandal has left the king in trouble.

DAVID CAMERON, PRIME MINISTER, BRITAIN: The people involved, whether they were directly responsible for wrongdoing, whether they sanctioned it, or whether they covered it up. However high or low they go, they must not only be brought to justice, they must also have no future role in running a media company in our country.

RIVERS: Murdoch's queen in all this is undoubtedly Chief Executive Rebekah Brooks. She remains at Murdoch's side, apparently untouchable as his chief executive. But now she'll be forced to appear before a parliamentary committee next week to respond to allegations of illegal activities in some of her papers. And the joker in the pack is Andy Coulson, the former editor of "News Of The World", now out on police bail. Coulson is now the source of increasingly awkward questions for the prime minister who hired the journalist despite repeated warnings that Coulson sanctioned payments to corrupt policemen.

UNIDENTIFIED MALE: He just doesn't get it. He just doesn't get it. I say this to the prime minister -- he was warned by the deputy prime minister about hiring Andy Coulson. He was warned by Lord Ashdown by hiring Andy Coulson. He's now admitted in the House of Commons today that his chief of staff was given complete evidence which contradicted Andy Coulson's previous accounts.

RIVERS: On Wednesday, sensationally as the House of Commons was about to debate Rupert Murdoch's controversial takeover bid for the British broadcaster BSkyB, Rupert Murdoch abruptly walked away from the table acknowledging the bid was impossible in the current climate. Suggesting that the ace he holds is that he could come back and bid again. But there may be more criminal charges and the stakes for Rupert Murdoch keep getting higher. With talk in the U.S. that News Corp. may be pursued there for bribing police under the Foreign Corrupt Practice Act.


RIVERS: Well, Rupert Murdoch might not be playing right now, but there is speculation he may come back to the table at a future date. He desperately does want to get his hands on that broadcaster BSkyB. We'll have to see if he comes back to play another hand, Wolf.

BLITZER: Dan Rivers reporting for us from London. Thank you.

And Dan mentioned the possible U.S. investigation. Did Rupert Murdoch's News Corporation take advantage of 9/11 victims here in the United States? Up next, you're going to find out what one U.S. senator is now calling for. He wants an investigation. Stand by for that.

Plus this:


A violent day in Libya. Moments before this battle, a CNN crew comes under fire, bullets flying all around them. We are going to show you the exclusive video. Stay with us. You are in THE SITUATION ROOM.


BLITZER: We're following growing concerns that the Rupert Murdoch outlets here in the United States may be engaging in the kind of phone hacking alleged in Britain. Several U.S. senators now are asking the Justice Department to take a close look.

And joining us now, Democratic Senator Bob Menendez of New Jersey. \

Senator, thanks very much for coming in.

SEN. BOB MENENDEZ, (D) NEW JERSEY: Good to be with you, Wolf.

BLITZER: Why are you calling for an investigation of Rupert Murdoch's News Corporation activities here in the United States?

MENENDEZ: Well, we see from "The Daily Mirror", a London newspaper, reports that suggest a private investigator was approached by a News International subsidiary of Murdoch's press operations, and trying to get access to telephone records and actually calls of 9/11 victims and their families.

And if, in fact, that is true, and we've already seen from the reports out of London as to how far this newspaper was willing to go in bribing individuals and law enforcement and others to obtain such information. That is if this is true, it would be horrifying to believe that these families that have suffered so much would actually have their privacy invaded, thinking about those phone calls that took place in the hours and days after September 11, with mothers and fathers and spouses and children.

It's just unimaginable. And I think the Justice Department should go forward and investigate and ascertain what's the truth of it.

BLITZER: But at this point it's a suspicion you have. You don't have any hard evidence that it actually occurred. Is that right?

MENENDEZ: We do not have hard evidence, but we do have this public press report, which quotes an unidentified source, saying that they were approached here in the United States to get access to that information. Based upon what we know that has happened in London, knowing that this is the way they operated, and even the prime minister and the royal family were ultimately pursued by this News Corp., and ultimately had information about them-private information that was discovered. I want to make sure this is not true for the families of the September 11 victims.

BLITZER: And you go one step further being suspicious that some of the news organizations that Rupert Murdoch owns here in the United States, specifically "The New York Post," "The Wall Street Journal", FOX News, for example, do you suspect that any of these American news organizations may have done illegal activity like that?

MENENDEZ: I don't know that for a fact. I have no idea whether that is the case. I'm focused singularly on this public report that suggests there was an effort to get the phone records, and actually the conversations, access to the conversations of 9/11 victims and their families after those fateful days. To me, that would be horrifying and horrendous enough. I would like to believe no news entity in the United States would use the same tactics. And until I see differently I'll suspect it.

BLITZER: And you want the Justice Department, the Attorney General Eric Holder to be in charge of this investigation? Is that what you want?

MENENDEZ: Well, I want the Justice Department to go after it, whether he uses the FBI. I mean, Scotland Yard is already pursuing an investigation of thousands of phones that were intercepted. It seems to me that we should have a very clear ability to be working with Scotland Yard and determine whether Americans were pursued, and whether particularly the families of 9/11 victims were pursued.

BLITZER: To those who said Bob Menendez, or Barbara Boxer, or Frank Lautenberg or Jay Rockefeller, they're all Democrats and this is political payback, if you will, against Rupert Murdoch, what say you?

MENENDEZ: I don't have anything against Rupert Murdoch. Look, if Wolf Blitzer and CNN, if the report was that you all did this, or alleged to have done this, I would be going after you, Wolf. BLITZER: Well, I hope you don't have to do that at any point down the road.

MENENDEZ: I don't think that I will.

BLITZER: Hey, Senator, thanks very much for coming in.

MENENDEZ: Thank you.

BLITZER: More than 20 people dead, dozens injured. Just ahead, the latest on the triple bomb blast that rocked Mumbai, in India.

Plus, dog versus machine: Why that was the topic of a fiery debate on Capitol Hill.


BLITZER: Body scanners versus dogs; the topic of bitter debate up on Capitol Hill today. Lisa Sylvester is monitoring that. Some of the other top stories in THE SITUATION ROOM right now.

Good to have you back, Lisa.

LISA SYLVESTER: Good to be back, Wolf. Thanks very much.

At issue during the fiery airport security hearing was which could be more effective in searching travelers for explosives. Some made the argument that canines are cheaper and less invasive than body scanners while others allege they're too costly. Listen to this exchange.


REP. JASON CHAFFETZ (R), UTAH: How do you come up with hundreds of thousands of dollars. I mean, Alpo only costs so much.

UNIDENTIFIED MALE: We oversee the Transit Grant Program, where we provide dog teams to agencies around the country and it is in excess of $100,000.

CHAFFETZ: You said hundreds of thousands of dollars per dog. I challenge you to verify that number.


SYLVESTER: The TSA assistant administrator promised to look into the cost and to report back.

A dramatic 27-day prison standoff in Venezuela has come to an end. More than 1,000 inmates abandoned the building and turned themselves over to authorities today amidst black smoke and gunfire. The standoff began when the government ordered raids on the complex last month. An official said renovations on the prison will begin immediately.

The roof of Minneapolis's famous Metrodome is back up. Seven months after collapsing in a major winter storm. The cave-in, which you can see here, put the dome out of business until repairs could be completed and forced the Minnesota Vikings to relocate some games. Officials hope to have the $22 million project completed by August.

And get ready to say goodbye to those long-time paper savings bonds. Starting January, they'll be available only online rather than at banks or other financial institutions. Although there will be some exceptions. The Treasury Department says the new electronic bonds will save taxpayers more than $70 million over the first five years.

BLITZER: I kind of like those paper U.S. Savings. You got them, when you were a little girl, you used to get those savings bonds.

SYLVESTER: I actually have one still. I still have some in an envelope in our house. It's going to be a thing of the past.

BLITZER: I just cashed one in a few weeks ago myself.

SYLVESTER: I got them as a gift and I just held on to them all these years.

BLITZER: I just looked into a drawer and there it was, $100. A $100 is still a $100.


BLITZER: All right. Thanks very much.

Stand by for a CNN exclusive. Our crew is there for a dramatic fire fight between Libyan rebels and Moammar Gadhafi's forces. Control of an entire village is at stake.

And you're going to find out what Pakistan's top spy is now doing here in the United States. And whether it will help the relationship get any better.


BLITZER: I'm Wolf Blitzer. More dramatic stories we're working on in the next hour.

President Obama shatters fundraising records, already raking in an historic $86 million in his bid for re-election. But is it enough to top Republican numbers? Stand by.

And Britain's prime minister blasted in the wake of a widening tabloid hacking scandal. Just ahead, why some members of parliament say he just doesn't get it.

And he could be the most powerful man in a high-stakes debt talks and he's not even a member of Congress. You're going to meet him. My interview coming up with Grover Norquist.

I'm Wolf Blitzer, you're in THE SITUATION ROOM.

But first, this just coming in to THE SITUATION ROOM. A new source of pressure on President Obama and the congressional leadership, Democrats and Republicans, as they hold their fourth straight day of debt crisis talks over at the White House. Those talks continuing right now.

One of the big three credit agencies, Moody's is now warning -- it's warning today that the United States may indeed lose its perfect AAA credit rating in the next few weeks if the lawmakers fail to raise the debt ceiling.

More on this story coming up. A significant warning, though, from Moody's.

In Libya's civil war, rebels lost and then regained control today of a village in the western part of the country. It was a dramatic five-hour firefighter with Moammar Gadhafi's forces.

Our senior international correspondent Ben Wedeman joins us from Libya with an exclusive report.

Ben, you and your team were caught up in a firefight today. Tell our viewers what happened. I understand it got pretty, pretty hairy.


We had gone to this village Qawalish, which this morning was in the hands of the rebels. We just arrived on the outside of the village. We were going to investigate reports, a report by human rights watch that the rebels had engaged in widespread looting and vandalism. But we just were on the outskirts of that village when suddenly we were ambushed by Gadhafi's forces.



UNIDENTIFIED MALE: Get in the car --

UNIDENTIFIED FEMALE: You guys. Wait. (EXPLETIVE DELETED). Wait. Wait, wait, wait. Wait.

UNIDENTIFIED MALE: Wait, wait, wait. Are you in?


UNIDENTIFIED MALE: OK, just calm down.


UNIDENTIFIED MALE: Get down, get down.

WEDEMAN: OK, we're leaving this area. There's gunfire all around us and we believe that Gadhafi's forces are doing a roundabout movement. So we are rushing out of this area.

(END OF VIDEO CLIP) WEDEMAN: Now we had to go drive very quickly for about 20 minutes to get out of that area where the Gadhafi forces seemed to be flanking the rebels along this main road that links this town of Qawalish with Zintan, which is where we are now.

Later we were able to get to the rebels who were regrouping. And after something of a barrage of the town, and as you mentioned that five-hour fight in which eight of the rebels were killed, at least 27 wounded, they were able to retake it. But this is an indication that even though they have made progress there's still a long way to go before they're able to punch through Gadhafi's forces and make it to the capital Tripoli -- Wolf.

BLITZER: I don't blame you, but you look like you were scared out of your mind. I would -- I was scared just looking at that video, I must say. Thank God you're OK, Ben. But bigger picture right now. Is it a stalemate? Is that what we're seeing? A prolonged stalemate in Libya?

WEDEMAN: It's difficult to say. Certainly if you look at eastern Libya, it's a stalemate. But in the west, the rebels seem to be getting better organized. They're getting better armed. And they are gradually retaking territory.

Of course today, they lost temporarily, Qawalish, but they were able to retake it. And they plan on trying to get to this main highway that links the city of Sabhan, southern Libya with Tripoli in the north. And if they take that highway, if they can cut that highway, that could mean serious problems for the Libyan army, because much of their ammunition and their heavy weaponry, many of their men and the food supplies, they get to the Libyan capital come from the south of the country along that highway.

So I wouldn't say it's a stalemate but it's going to be a real slog for the rebels to make really steady progress and get much closer to the capital of Tripoli -- Wolf.

BLITZER: One of our truly courageous correspondents, Ben Wedeman. Be careful over there. We'll stay in close touch. Thank you.

And right now the United States and Pakistan are getting a new opportunity to address their troubled relationship. It took a sharp turn for the worse after the killing of Osama bin Laden.

Let's bring in our Pentagon correspondent Chris Lawrence who's working the story for us.

Chris, the head of Pakistan's intelligence service, has he already landed here in Washington or is he still on the way?

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: You know, Wolf, his visit is going to be very brief. I mean he's only going to be here tonight and part of tomorrow. U.S. officials tell us, you know, there's no one issue that's driving the visit, but there are plenty of things on the table. Lieutenant General Ahmad Pasha is due to meet with several officials, including the acting director of the CIA. He's not going to meet with any Pentagon folks during this visit. Mostly intelligence operators.

But again, there are so many issues on the table between these two countries. The U.S. threatening to cut off about nearly $1 billion in aid to Pakistan. At first, the Pakistani military sort of brushed it off. But today, the prime minister of Pakistan expressed some real concern about that aid being cut.

This visit could be one of the first steps to trying to find a way forward in which the two countries can still cooperate.

BLITZER: The accusation and it's a serious one is that elements of the ISI, the Pakistani intelligence service are helping insurgents, enemies of the United States in Afghanistan, and effectively helping to kill Americans and other NATO forces there.

What are they saying about that?

LAWRENCE: Well, Wolf, it doesn't make sense when you look at it from an American perspective. When I was in Pakistan earlier this year, you talk to some Pakistani officials, they're very concerned about two things. They feel a very existential threat from India. And so they're worried about the Indians having influence in Afghanistan.

There are some elements within Pakistan that use these insurgents in Afghanistan as sort of a check on India's power there. They don't like the idea of this rival India having influence on the other side of the border.

The other thing they're worried about is that going into these tribal regions and going after the insurgents that are killing the Americans, by doing so, they kick up a hornet's nest and then those people start to make attacks where Pakistan really cares, in places like Karachi and Islamabad.

You could almost liken it to a problem in the U.S., a very rural part of Alaska, there would be a big difference between something happening there and something happening in the heart of Times Square, Manhattan.

That's sort of the Pakistani perspective on that -- Wolf.

BLITZER: Chris Lawrence, over at the Pentagon. Thank you.

A juror in the Casey Anthony trial breaking her silence about the verdict and the threat she's been getting because of it. You'll hear from it. That's coming up.

And President Obama's reelection campaign posing a record- breaking pile of cash. We're following the money.

(COMMERCIAL BREAK) BLITZER: Some of the jurors in the Casey Anthony murder trial are now breaking their silence despite the outpouring of threats they're receiving from those outraged over the last week's acquittal.

Our national correspondent Gary Tuchman spoke with juror number three Jennifer Ford.


GARY TUCHMAN, CNN NATIONAL CORRESPONDENT (on camera): You told me that the original vote for the aggravated manslaughter was 6-6.


TUCHMAN: And which side of the six were you on?

FORD: The manslaughter.

TUCHMAN: So originally you thought that she --

FORD: Right.

TUCHMAN: -- was guilty of manslaughter or could be guilty?

FORD: Could be and I wanted to investigate it further to see if it fits based on the evidence that we were given.

TUCHMAN: So what convinced you and the five others to switch your votes and vote for not guilty of manslaughter?

FORD: I think everyone will tell you the same thing. It's just lack of hard evidence. Like I said, the duct tape and the chloroform and things like that, you could -- if you took a hard -- good hard look at it, you could kind of -- there was so -- there was a lot of doubt surrounding all of those certain things. So there's not enough to make anything stick.

TUCHMAN: So you don't necessarily think she's innocent but you feel you don't have enough proof to find her guilty beyond a reasonable doubt?

FORD: Right. I don't know either way. I mean, obviously it has not been proven that she's innocent but it certainly hasn't been proven that she's guilty.

TUCHMAN: The defense in their opening statements said that Casey Anthony's father molested her repeatedly when she was young and that's the reason why she kept the drowning of her child secret.

Do you believe that she could have been molested by her father? Was there evidence that she could have been molested by her father?

FORD: There was no evidence, none at all. And that had no bearing on any verdict that was made. I mean, that was irrelevant. It was thrown out there but never substantiated so it had no bearing. TUCHMAN: But didn't it bother you that it wasn't substantiated later in the trial? What would happen was the judge said you cannot bring this up in your closing arguments, defense, because you didn't present any evidence about it.

FORD: I really wish he hadn't brought it up. It's a disturbing image to have in your mind. I mean it was -- I mean he painted a very graphic and disgusting picture. And if you're going to do that, at least back it up. And if you can't back it up, don't put that picture in people's minds. Nobody wants to see that.

TUCHMAN: And regarding the drowning, I mean the only evidence that was presented was pictures of Caylee climbing in the pool with her grandmother, standing near a screen door, which -- a door which her grandmother testified she couldn't open.

It's pretty flimsy evidence at best. And I'm wondering if you think that there was a possibility that she could have drown. Was there any evidence that convinced you of that?

FORD: There's no evidence to convince me of that, no.

TUCHMAN: So you don't think she drowned, you don't think she was molested, so what the casual viewer of this trial might say is, OK, well, how can we find she was guilty of murder?

FORD: Because that has nothing to do with what the defense presents so it's on the prosecution to prove what -- they brought charges. They have to prove with their evidence that those charges are -- you know, they can validate and bring those charges and the crime was committed.

TUCHMAN: So you didn't believe the central points about what the defense told you, but you just believed that the prosecution didn't have enough evidence to convict?

FORD: Well, they had -- like I said, they had good, strong circumstantial evidence, but at the end of the day it was circumstantial and there was not just one strong piece of evidence that said something definitively. Every piece of evidence could kind of said this or that, this way or that way. I mean there were many different ways you could have gone with each piece of evidence.


BLITZER: By the way, a search and rescue group has now filed a civil suit against Anthony for the more than $100,000 it says it spent searching for her daughter when she allegedly knew the child was dead.

Anthony is scheduled to be released from prison this coming Sunday.

The power of prayer. Wait until you hear what the Texas governor and Republican -- at least possible presidential contender Rick Perry is saying this week. Is he going too far?

Our "Strategy Session" coming up next.

Plus, has Britain's phone hacking scandal stretched into the United States? You're going to find out what several U.S. senators are now doing about that.


BLITZER: Let's get right to our "Strategy Session."

Joining us our CNN political contributor Roland Martin. Also from, our contributor and former Bush speech writer David Frum, he's the editor of

Guys, thanks very much.


BLITZER: How big of a deal is it that some of these Republican candidates like Michele Bachmann and Rick Santorum are signing this traditional values pledge, if you will, opposing same-sex marriage in Iowa as opposed to others refusing to sign like Tim Pawlenty and Mitt Romney?

FRUM: Well, it says some other things than that which in many ways more disturbing. Can I say -- this just drives hope what a great point it would be to move this first Republican primary to Florida the way the Florida state wants and have it in a big urban state?

The people who are signing this are the people pinning their hopes on Iowa. The social conservatives are very strong in the caucuses. You have to spend a lot of time in those caucuses. You have to be very committed.

The people who are not signing are the people who not making the big commitment to Iowa. And the anomalous role of Iowa in Republican politics, it's a question mark. It's not like the Democratic Party where you must win Iowa. And the Republican Party almost -- you don't --

BLITZER: I got to tell you --

FRUM: You must not win Iowa.

BLITZER: I hear this argument about dumping Iowa caucuses every four years. Hasn't happened. Probably is not going to happen.

FRUM: I wish it would, though.

BLITZER: Yes. But a lot of people probably do. But it looks like Iowa has a lock.

ROLAND MARTIN, CNN POLITICAL CONTRIBUTOR: Look, Wolf, I'm an Evangelical. My wife is an ordained minister, I'm a Christian author. I think this pledge is stupid, it is idiotic. And so for those Republicans who are refusing to sign it, I agree with them. If you're married when you stood at that altar and pledged before God, that's the commitment you made. Also if you are elected, you are to recite a pledge that is in the Constitution. That's the only one that matters. And so this is -- this is ridiculous. It's simply detracts.

And look what happened to Santorum and Bachmann. Now they're having to explain the slavery language whereas the rest of the people saying, I'm not dealing with that nonsense. This has nothing to do with the real issues that people care about.

BLITZER: There was a preamble in there, in that document suggesting that black people had it better under slavery as opposed to now.

FRUM: Why -- well, the pledge point, as Roland says, is very powerful. I mean why you won't allow your commitment to be segmented by these different groups, each of whom has -- and why is it by the way only the family people? Where are the people who are concerned about better roads? Don't they have a pledge? The farmers, shouldn't they have a pledge? And eventually you are beholden to so many people you forget who --

BLITZER: Let's talk about Rick Perry, the governor of Texas. He's thinking of running. I think he's going to run. A lot of people think he's going to run. We won't know for a while. But in early August, he's going to have this prayer meeting that he's organizing in Texas. He's on his Web site already talking about it.

Let me play a little excerpt of what he's saying.


GOV. RICK PERRY (R), TEXAS: As an elected leader, I'm all too aware of government's limitations when it comes to fixing things that are spiritual in nature. That's where prayer comes in. And we need it more than ever.

With the economy in trouble, communities in crisis, and people adrift in a sea of moral relativism, we need God's help. That's why I'm calling on Americans to pray and fast, like Jesus did, and as God called the Israelites to do in the Book of Joel.


BLITZER: Is that appropriate, do you think, for a sitting governor to be getting involved in organizing a prayer and fast, meeting like this at a stadium in Texas?

MARTIN: I have no issue with that at all. What I do take issue with, and I would hope Governor Perry will read some other parts of the bible where it says, faith without work is dead.

I mean you can sit here and pray, you can fast. But if you make no correction in your life, all of that stuff is meaningless. And so I have no issue with any politician doing that. You do not sit your Christian faith or whatever your faith is aside when you go into office. But you better have some work along with your faith.

BLITZER: Some people are feeling uncomfortable, a little queasy about that.

FRUM: Well, a lot of presidents have called for prayer and fasting before including Abraham Lincoln and George Washington, both of whom the people on -- more on the agnostic side of the spectrum to put it mildly.

But here's the thing that I find most concerning. When Governor Perry talks about the things that -- where government can't help, we are in the middle of a crisis of underemployment, of economic failure. Dealing with things that government can do something about.

When we're back in prosperity, when we have full employment, we'll then still have -- we have a lot of problems that are beyond the reach of government. Right now our problems are within the reach of government. Let's hear some solutions.

MARTIN: I got to say this, Wolf. If you saw the report on the tiling of Governor Rick Perry making more than $1 million over a four- year period, only tiling $90, maybe that's one of the reasons why faith can't do more because Christians aren't tiling as they should.

BLITZER: Meaning that's all he gave to charity?

MARTIN: Ninety bucks.

BLITZER: Over four years?

MARTIN: Like a couple of years. To his church. $90. So maybe that's part of the problem. He's not tiling like he should which the bible talked about.

BLITZER: All right. Guys, I'm going to double check that and make sure you're right.

MARTIN: Go right ahead.

BLITZER: That's a sensitive issue, obviously, guys. Thanks very much.

Rupert Murdoch's companies here in the United States may be targeted with a formal investigation like the one unfolding in Britain right now. Stand by for more on this new push by some leading members of Congress.

And China's secretive military lets the top U.S. officer enter what's called the no-go zone.


BLITZER: America's top uniformed officer gets a rare window into China's powerful military machine. The chairman of the Joint Chiefs Admiral Mike Mullen wrapped up a four-day visit to the communist nation. It's another important and difficult U.S. relationship that's on the line.

CNN's Stan Grant is in China.


STAN GRANT, CNN SENIOR INTERNATIONAL CORRESPONDENT (on camera): This is a rare opportunity to get up close at a Chinese military base. You can see over here that is the Chinese jet fighter. And that's Admiral Mullen who's just emerging from the bottom of the stairs there.

This is a very, very tightly controlled trip. Every move is being scripted. And we're being kept a good distance away from him.

Of course, while they're getting to see these jet fighters, they're not getting to see the one that they would like to see. And that is the JA-20 stealth fighter. Now that's already being trialed and that takes the Chinese military, the Chinese Air Force, to a whole other level.

China has been spending more on its military. It's increased its spending by 12 percent this year, not just developing the stealth fighter but also developing aircraft carriers as well.

Now Admiral Mullen has said that China has, indeed, arrived as a world power. He says, though, that that brings great responsibilities. He says that China needs to show more openness. And trips like this, visits like this, are an attempt to try to really get this relationship on a more even footing.

There are tensions. China is not happy with U.S. war games off its coast and American arms sales to Taiwan. The U.S. has concerns about North Korea. And territorial disputes in the South China Sea.

China spends about $100 billion a year on its military. That's seven times less than the United States. But today was keen to show Admiral Mullen the range of its fire power.

At the same time, there are so many with concerns about what just China's military rise, China's rise to a world superpower, will mean. Not just for this region, but for the rest of the world.

Stan Grant, CNN, Shandong Province, China.


BLITZER: Jack Cafferty is here with the "Cafferty File." Jack.

JACK CAFFERTY, CNN CONTRIBUTOR: That's pretty fascinating stuff, isn't it?


CAFFERTY: Question this hour is what does it mean that 42 percent of Americans don't want Congress to raise the debt ceiling? Jeff in Virginia, "It means that most of the taxpayers in this country have to live on a budget and our government needs to start doing that as well. We cannot continue doing everything we do with borrowed money. Doesn't matter if it's wars, defense spending or even some of the entitlements. I agree that taxes should go up a little bit but it has to be fair for everyone."

Jim in Illinois writes, "Americans see the present danger about outrageous debt and foresee the dire consequences of more debt being piled on. President Obama's request for more debt would be like asking the captain of the Titanic to hit another iceberg."

Alex writes from Washington, "It means that Americans realize we can't keep borrowing 40 cents of every dollar we spend. But a similar majority don't want any cuts in the programs that benefit them, things like Social Security and Medicare. Like AP reporter Charles Babington wrote, quote, 'voters generally oppose large deficits, higher taxes and cuts in programs that benefit them. A painless but impossible combination,' unquote."

Rick writes, "It means the citizens think Obama has squandered far too much of our money at a time when we can ill afford it and we are all fed up with that."

Michael in Virginia says, "Americans see this as the definition of our debt problems. If the debt limit is raised it seems counterproductive in the crusade to lower the deficit. Now is viewed as the best time to start a process by which this debt can be made manageable. America needs this to happen before the limit is raised."

And Pete writes, "It means once and for all average Americans are sick and tired of lunatic federal government, runaway spending, the deceit covering up where all of the billions really go, and the mindless casual attitude of how horribly this will affect our children and beyond. Thank God for a few leaders with a backbone. Enough."

If you want to read more on this, the story of the day, go to my blog,

How is it all going to end, Mr. Blitzer?

BLITZER: I don't know. But the stakes as you know and all of our viewers know, Jack, they are enormous right now. I'm nervous about it, I must say.

CAFFERTY: Yes, I am, too.

BLITZER: And to our viewers, you're in THE SITUATION ROOM.