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The Most Powerful Man You Don't Know; Splitting California in Two; Marines Ask Stars to Military Ball; Rupert Murdoch and Son Will Face British Parliament This Week

Aired July 16, 2011 - 18:00   ET


WOLF BLITZER, CNN ANCHOR, THE SITUATION ROOM: Rupert Murdoch's media empire is dragged deeper into a scandal in Britain, and now here in the United States. The FBI now investigating alleged phone hacking as Murdoch prepares to face angry members of parliament.

Plus, most Americans have never heard of him, but he can instill fear in Republican lawmakers who even think about raising taxes. I'll talk to Washington power player Grover Norquist about America's debt and his own clout.

And what jurors were thinking when they cleared Casey Anthony of murder. One member of the panel now breaking her silence about the verdict that is letting Anthony go free this weekend.

I want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

One of the world's biggest media empires in crisis now. Rupert Murdoch publicly apologizing for serious wrongdoing at his now defunct tabloid, "News Of The World". The new ad in British newspapers coming just days before he and his son are scheduled to face members of parliament. Our Correspondents Brian Todd and Allan Chernoff are standing by. First let's go to London and our Senior International Correspondent Dan Rivers is standing by.

Are people in London, Dan, still as shocked as they were over these past few days?

DAN RIVERS, CNN SR. INTERNATIONAL CORRESPONDENT: I think so, yeah. I mean, this has been a seismic week in British politics. A week that will be written about for decades to come, I think. Just having all of the main political parties that are normally squabbling and at each other's throats suddenly united. But they're united because of their contempt and outrage at what Rupert Murdoch's papers are alleged to have done, whereas they spent the last 20 years assiduously trying to get as close as possible to Murdoch and court favor with his newspapers. It is a sort of tectonic shift, if I can put it that way, in the way politics and the media operate and it will be studied for decades to come.

BLITZER: So let's look ahead to the following week, this coming week. What do we expect will happen? Give us a few things we should be looking for. RIVERS: Well, the sort of box office day for your diary is on Tuesday, Wolf, when Rupert Murdoch, his son, James, and the former Chief Executive Rebekah Brooks will appear in the building behind me to give evidence to politicians in a committee, a powerful committee, that want to grill him on exactly what's going on in his paper.

Did he know about some of the illegal practices going on and if he didn't know, why didn't he know? Why didn't he have a grip on his organization? And why was it allowed to go so out of control? It will be a fascinating testimony, and it will certainly garner probably the biggest audience ever, for one of these committees here.

BLITZER: We'll be watching it every step of the way. Dan Rivers, thanks very much.

And the hacking scandal plaguing Britain has now spreading to Murdoch's U.S. empire. A federal law enforcement source telling CNN the FBI has launched an investigation. CNN's Brian Todd is working this part of the story for us.

Brian what do we know?

BRIAN TODD, CNN CORRESPONDENT: Wolf, the pressure on Rupert Murdoch in the U.S. is growing more intense. We've spoken to several people on Capitol Hill and more members of Congress are agitating for Rupert Murdoch to answer to them as well. From Capitol Hill to the FBI, Murdoch and his News Corporation are facing the prospect of much more scrutiny ahead.


TODD (voice over): A law enforcement source in the U.S. tells CNN looking into Rupert Murdoch's News Corporation is now a high priority. So high, the source says, that the FBI has already launched and investigation. The source says the probe is focusing on allegations that Murdoch's employees or associates may have hacked into phone conversations and voicemail of September 11th victims and their families. Anyone acting on behalf of News Corporation is being looked at, the source says, from the top down to janitors.

Democratic Senator Frank Lautenberg also believes News Corporation violated federal law against bribing officials in foreign countries for information.

(On camera): Would you want to hold hearings and maybe call Mr. Murdoch or his executives?

SEN. FRANK LAUTENBERG, (D) NEW JERSEY: Certainly that would be a serious consideration. I'm waiting now for a return from the Justice Department.

TODD (voice over): In canvassing Capitol Hill, we've learned of growing sentiment for Congress to delve into the activities of Rupert Murdoch and his journalists. Most of those calls are from Democrats. Murdoch is a big backer of Republicans. (On camera): If more momentum builds into probes for possible hacking in the United States, or even congressional hearings, there are cautionary tales for lawmakers. Reports that the tabloids sometimes turn the tables on those who investigate them.

(Voice over): Most of those accounts date back to well before this scandal blew up in the media in recent weeks. Martin Moore of the British watchdog group Media Standards Trust, tells us when British parliamentarians looked into the tabloid press a couple years ago he heard of allegations that they were discouraged from repeatedly inviting Rebekah Brooks, one of the top execs, to testify.

MARTIN MOORE, MEDIA STANDARDS TRUST: The allegation was, they were told, members of that select committee were told, do not invite her again. Do not press this one, do not push it, because if you do, you'll regret it, and that was made very clear to them.

TODD: Contacted by CNN, a News Corporation spokesman would not comment on that allegation.

(On camera): Are you concerned they might hit back at you and dig into your personal life, or whatever?

LAUTENBERG: I'm not worried about my personal life, nor am I worried about my next term. I've been here 27 years, and when you grow up in a poverty stricken area and poverty stricken household, you develop a thick skin. I don't scare that easily.


TODD: A News Corporation spokesman would not comment when asked him about the possibility of congressional hearings; would not comment on the FBI investigation. But in one of his first interviews on this scandal Murdoch chose to speak to "The Wall Street Journal", which he owns, he defended his company's handling of this crisis an vowed to establish an independent committee that will, quote, "investigate every charge of improper conduct", Wolf.

BLITZER: Rupert Murdoch has been building his news empire over six decades. Our Senior Correspondent Allan Chernoff has been looking at this very long and successful career.

Allan, at least until now.


Rupert Murdoch has gone from power broker to pariah in the matter of a week. It's simply unbelievable for a man who is considered one of the great, brilliant businessmen, and he's achieved so much success by driving his editors to dig up salacious stories.


CHERNOFF (voice over): Rupert Murdoch's great love has always been the newspaper business, say those who know him. He demands dramatic stories, telling reporters, we will never be boring, and frequently checks in with his top editors. One of whom used to be Lou Colasuonno.

LOU COLASUONNO, SR. MANAGING DIR., FINANCIAL DYNAMICS: He's passionate about his newspapers, and along with that passion comes an involvement in the day-to-day operations of his papers, particularly his biggest ones.

CHERNOFF: Murdoch's ambitions began in his native Australia, inheriting his father's newspaper business. Murdoch added media properties across the country. He even started "The Australian", a nationwide paper. And aggressively used them to support politicians he favored.

Overseas Murdoch's first purchase was a British tabloid, "News Of The World", followed by "The Sun". Both of which he pushed to a new level of sensationalism.

MARTIN DUNN, FMR. EDITOR, "THE SUN", "THE NEWS OF THE WORLD": Topless girls on page three of "The Sun" was a Rupert innovation.

CHERNOFF: Murdoch became the central figure in Britain's competitive newspaper market known as Fleet Street. Former Deputy Editor Martin Dunn says he was as tough as his headlines.

DUNN: He was the man who tamed the print unions, so that newspapers became incredibly profitable.

CHERNOFF: Checkbook journalism, paying for stories, was a regular practice that paid dividends with higher newspaper sales. Some detractors referred to Murdoch as "The Dirty Digger".

COLASUONNO: He ran close to what might be considered journalistic ethics. I'm not saying he broke the law. I'm not saying he did anything illegal. But I will say that he is aggressive in getting stories.

CHERNOFF: Murdoch also used his papers as a power base, with his editorial support, Margaret Thatcher, John Major, Tony Blair, and David Cameron, all rose to prime minister.

ALEX BEN BLOCK, AUTHOR, "OUTFOXED": He, more than anybody I've ever seen in my lifetime in the media, understood how you could use the power of the media to shape the political views in the country, and in doing so to affect elections.

CHERNOFF: And to assist his business ambitions. Murdoch did the same in the U.S.

RUPERT MURDOCH, CHAIRMAN, NEWS CORPORATION: Now we are moving very fast, at News Corporation, to have a worldwide platform.

CHERNOFF: Newspapers, Internet, television, film, all together have expanded his political influence. His decades of brilliant business and political success make this week's collapse all the more shocking.

Murdoch has achieved the impossible, said one observer. Britain's normally divisive political parties are all united against him. DUNN: I think it is terribly devastating. He doesn't understand the word "defeat".


CHERNOFF: Indeed, Murdoch is used to winning. This is an incredible setback for a man who only last week, Wolf, we would have called the most powerful media baron on the planet.

BLITZER: Good report, Allan. Thanks very much. Excellent perspective.

A surging campaign, but now an unwelcome controversy for Republican presidential candidate Michele Bachmann. Questions swirling about her husband accused of offering a controversial therapy designed to make gay people straight.

And many Republican lawmakers live in fear of breaking his hard and fast rule. No new taxes. Stand by for my interview with Washington power player, Grover Norquist.

And a captured mobster alleged trail of bodies and blood lust. CNN is taking an in-depth look at Whitey Bulger's life of crime. Stay with us. You're in THE SITUATION ROOM.


BLITZER: A growing controversy is beginning to dog Michele Bachmann's presidential campaign. It centers on her husband and the Christian counseling center they own together where critics say controversial reparative therapy is used to, quote, "cure" homosexuals. CNN's Jim Acosta is investigating.

JIM ACOSTA, CNN CORRESPONDENT: Wolf, Michele Bachmann and her husband, Marcus, run a Christian counseling service that appears to believe gays and lesbians can change their sexual orientation through a religious-based therapy. It is just one of the couple's controversial beliefs on the issue of homosexuality.



ACOSTA (voice over): In her campaign for president, Michele Bachmann touts her background as a small business owner.

BACHMANN: As mom of five, a foster parent, and a former tax lawyer and now a small business job creator --

ACOSTA: That business is Bachmann & Associates, a Christian counseling service outside Minneapolis run by her husband, Marcus. They're both pictured on the clinic's website.

In recent years the clinic faced accusations that it encourages gay and lesbian patients to change their sexual orientation, a practice frowned upon by mental health experts. Back in 2004, Andrew Ramirez, at the urging of his mother, turned to Bachmann & Associates to talk about his own homosexuality. The then 17-year old says he was immediately skeptical of what one of the clinics counselors told him.

ANDREW RAMIREZ, FORMER BACHMANN & ASSOCIATES PATIENT: It was therapy that would help me change from being homosexual to straight.

ACOSTA (On camera): That's how he described it?


ACOSTA: He basically said, if you do this -- what? You wouldn't be gay anymore?

RAMIREZ: If I did this and worked this therapy program, that could perform a miracle and I could no longer be gay.

ACOSTA (voice over): Ramirez says he was assigned a therapy program consisting of prayer and reading Bible passages. He also says he was told he would be mentored by an ex-lesbian minister. And if none of that work, Ramirez says the counselor had another idea.

(On camera): He suggested to you what?

RAMIREZ: Not acting out on my same-sex attractions and leading a life of celibacy.

ACOSTA: That was an alternative to being gay?


ACOSTA: After the second session Ramirez told his mother he wanted to stop.

BETH SHELLENBARGER, ANDREW'S MOTHER: And I could just hear his voice quiver and I just said you know, Andy, if you're good with being gay, then I am, too.

ACOSTA: The American Psychological Association is sharply critical of what is known in the mental health community as reparative therapy. Saying in a recent report, "There is insufficient evidence to support of use of psychological interventions to change sexual orientation"

But in a talk radio interview last year Marcus Bachmann compared gay teenagers to barbarians whose must be disciplined.

UNIDENTIFIED FEMALE: What do you say when your teenager says she's gay? What do you say to Christian parents who come up with this?

MARCUS BACHMANN, SPOUSE OF PRESIDENTIAL CANDIDATE: Well, I think you clearly say, what is the understanding of God's word on homosexuality? And I think that this is no mystery that a child or pre-adolescent, particularly adolescents, will question and wonder, certainly -- there's that -- there's that curiosity. But, again, we -- we like -- you know, it is as if we have to understand barbarians need to be educated. They need to be disciplined and just because someone feels it, or thinks it, doesn't mean that we're supposed to go down that road.

ACOSTA: Back in 2006, Bachmann denied his practice engaged in reparative therapy telling a Minneapolis newspaper, "That's a false statement" and went on to say, "If someone's interested in talking to us about their homosexuality, we're open talking about that. But if someone comes in a homosexual and they want to stay homosexual, I don't have a problem with that."

UNIDENTIFIED MALE: What would you suggest to me? Like a treatment plan type of thing?

UNIDENTIFIED MALE: You can definitely pray.

ACOSTA: This week a gay rights group, Truth Wins Out, released its own hidden camera video recorded by one of its activists who posed as a patient at Bachmann & Associates.

UNIDENTIFIED MALE: A member can actually leave homosexuality completely and become heterosexual?

UNIDENTIFIED MALE: Oh, yeah, definitely, I believe all about that.


UNIDENTIFIED MALE: And it has happened before, it really has.

ACOSTA: In the full five sessions of footage captured by Truth Wins Out, while the counselor at times suggests homosexuality can be treated at the clinic he also concedes he's not an expert on the subject.

Michele Bachmann has a long history of controversial views on homosexuality. She recently signed a pledge to defend marriage that compared same-sex couples to polygamists. That's a comparison Bachmann made as a state law maker in 2004 when she called for an amendment to block gay marriages in other states from being recognized in Minnesota.

BACHMANN: If we allow this to happen, group marriage, polygamy, and things much worse may not be far behind.

ACOSTA: Both Bachmann's declined our request for interviews. Her campaign released a statement to CNN that says: "The Bachmanns are in no position ethically, legally or morally to discuss specific courses of treatment concerning the clinical patients."

A local TV station in Iowa tried to ask Bachmann whether her family clinic engages in reparative therapy she dodged the question.

UNIDENTIFIED FEMALE: Is that something that is conducted at that center?

BACHMANN: Well, I'm running for the president of the United States and I'm here today to talk about job creation, and also the fact that we do have a business that deals with job creation. We're very proud of the business that we created. (END VIDEOTAPE)

ACOSTA: The latest poll shows Bachmann has a serious shot at winning the Iowa caucuses, where social conservatives will be a decisive factor. And who just might consider the Bachmann Christian Counseling center a political asset, Wolf.

BLITZER: Jim Acosta, thanks very much.

Michele Bachmann's husband Marcus Bachmann is defending his family's counseling business. In an interview just published in the "Minneapolis Tribune" he says the treatment is not focused on trying to convert gays to heterosexuals. He suggested that "barbarian" quote you heard in Jim's piece might have been doctored. He says he was referring to children, not gays.

Let's talk a little more about the Republican race for the White House. Our Chief Political Analyst Gloria Borger is here.

She's really doing well in almost all of these polls. In Iowa -- even in New Hampshire she's doing remarkably well. Michele Bachmann is getting some life of her own on the campaign trail.

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: She's getting some traction. Obviously, she's a cultural conservative. She is a fiscal conservative. She says she wouldn't vote to raise the debt ceiling under any circumstance.

She's good on the stump. People like her. I think her big problem, the big question is, whether Rick Perry gets in, the governor from Texas, because he would take some oxygen away from her.

BLITZER: And if Sarah Palin were to come in, that would take some oxygen away, too.

BORGER: Of course. Here is what's interesting, though, when Michele Bachmann came on the national scene a lot of people -- one Republican described her to me as a Sarah Palin mini me. OK? And now there's not that sense anymore. In fact, lots of people are looking at Michele Bachmann and saying, actually, she's a very credible candidate, even when compared with Sarah Palin.

And at a certain point, Sarah Palin has to decide whether she wants to run for the presidency or not. And Republicans are getting very, very impatient. And at a certain point they're going to say you know what? We've got Michele Bachmann here. We have-if Rick Perry gets in, we've got him in this field. They're both cultural conservatives. Maybe Sarah Palin is too polarizing, and we don't need you in the field?

BLITZER: Some of Michele Bachmann supporters have privately suggested to me, they don't want to publicly criticize Sarah Palin but say Michele Bachmann is much more substantive on the policy issues than Sarah Palin is, who basically served two years as governor of Alaska.

BORGER: In an interesting way, she's much more willing to answer reporters' direct questions about lots of issues. Lots of controversies, and she's gotten herself into some hot water here. Her husband has been an issue, but also the question of pledges that she's signed. And she does answer you without saying, you know, it's just the bad press. It's just the bad press.

Sarah Palin tends to deflect everything and blame it on the press, and Michele Bachmann seems to present a more optimistic view, which voters really like.

BLITZER: How should the arguable front-runner, Mitt Romney, feel about this rise of Michele Bachmann?

BORGER: I think he should feel fine about it, actually, because if it's Michele Bachmann he's up against, or if it's Sarah Palin he's up against, or Rick Perry he's up against, he will present himself as the electable Republican who would be more acceptable to those independent voters. You know, you can't win an election without those independent voters. So it will be easier for him in a sense, to make the case of electability, which is really his main selling point.

BLITZER: The Republicans want to beat Barack Obama.

BORGER: They do, more than anything.

BLITZER: So they need someone who is electable.

All right. Thanks very much for that, Gloria.

Many call him, and I'm quoting now, "a stone cold killer." Just ahead, we're going inside notorious mobster James "whitey" Bulger's life of crime.

Plus, a juror in the Casey Anthony trial breaking her silence about the verdict.


BLITZER: As Casey Anthony is set to be released from jail this weekend, some of the jurors in her murder trail are breaking their silence despite the outpouring of threats they have received from those outraged over her acquittal. Our National Correspondent Gary Tuchman spoke with juror number three, Jennifer Ford.

(BEGIN VIDEOTAPE) GARY TUCHMAN, CNN CORRESPONDENT (On camera): They tell me the original vote for the aggravated manslaughter was 6-6.


TUCHMAN: Which side of the six were you on?

FORD: The manslaughter.

TUCHMAN: So, originally you thought that she was guilty of manslaughter, or could be guilty?

FORD: Right. Could be, and I wanted to investigate it further to see if it fit 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?

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, if you took a good, hard look at it, you could kind of -- 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 didn't have enough proof to find her guilty beyond a reasonable doubt?

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

TUCHMAN: The defense, in their opening statement, said that Casey Anthony's father molested her repeatedly when she was young. And that's the reason she why she kept the drowning of her child secret. Do you believe that she could have been molested? Was there evidence 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. That was irrelevant. Thrown out there but never substantiated.

TUCHMAN: Does it bother you that it was never substantiated? Later in the trial, what happened, was the judge said can you cannot bring this up in your closing arguments, defense, because you didn't present evidence about it.

FORD: I really wish he hadn't brought it up. It's a disturbing image to have in your mouth-I mean, he painted a very graphic and disgusting picture. If you're going to do that, least back it up. 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? The only evidence presented were pictures of Caylee climbing in the pool with her grandmother, standing near a screened door, which -- a door which her grandmother testified she couldn't open. It is pretty flimsy evidence, at best. I'm wondering if you think there was possibility that she could have drowned? Was there any evidence that could have convinced you of that?

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

TUCHMAN: So you don't think she drowned, you don't think she was molested. What a casual viewer of this trial might say, OK, well, how come you didn't find she was guilty of murder?

FORD: Because that has nothing to do with what the defense presents. 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 bringing those charges that the crime was committed. TUCHMAN: So, you didn't believe the central points of what the defense told you, but you just felt 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 have kind of said this, or that, this way, that way. Many different ways you could have gone with each piece of evidence.


BLITZER: Gary Tuchman, speaking to Jennifer Ford, juror number three in the Casey Anthony trial. She will be released from prison this weekend.

Now to a man who by all accounts is a stone cold killer. We are talking about the notorious mobster James "Whitey" Bulger, captured last month after 16 years on the run. Deborah Feyerick is here with a preview of the CNN special report she has been working on.

Deb, this is truly a fascinating story.

DEBORAH FEYERICK, CNN CORRESPONDENT: You know it really is. And a former mob associate describes Whitey Bulger as a man of psychopathic intelligence. Someone who demanded total loyalty, but who in the end betrayed everyone he knew. The Italian mafia, his own Irish gangsters, even the community of South Boston by doing the one thing that was not allowed in the criminal underworld, that is becoming a rat. Take a look.


FEYERICK (voice over): Bulger's life of crime started early. Arrested in his teens he was robbing banks by age 20. His shock of blond hair earning him the name "Whitey". A name he is said to despise. With his rugged good looks and reckless flamboyance, Bulger imagined himself Boston version of Hollywood gangster Jimmy Cagney.

But instead of red carpet, he was headed to Alcatraz. A string of bank robberies landing Bulger 10 years in federal prison at age 25. He did his time and upon release vowed he would never, ever go back.

UNIDENTIFIED MALE: They had no hard proof.

FEYERICK: "Boston Globe" reporters Dick Lair (ph) and Gerald O'Neill ultimately uncovered the deal he cut to make sure of that.

UNIDENTIFIED MALE: He got out of prison in 1965, and we started doing research in 1988, and he hadn't got so much as a parking ticket.

FEYERICK: Whitey Bulger, fresh from prison, went to work as a mob enforcer. But Bulger wanted more, and federal investigators say he'd stop at nothing to get it.

UNIDENTIFIED MALE: Then he went on a killing rampage. Like a month, he killed six guys in 1972.

UNIDENTIFIED MALE: He was ambitious in making his move.

FEYERICK: He was making his move with this man, Steve Phlegmy, aka, "The Rifle Man." Among their alleged victims, Phlegmy himself testified his own girlfriend, Deborah Davis.

TOM FUENTES, CNN CONSULTANT: Back in those days before DNA was in use to identify victim, he would personally get involved in cutting off the fingers or hands of the victims and extracting their teeth.

FEYERICK: Tom Fuentes, now a CNN consultant ran the crime squad for FBI headquarters.

(on camera): Give me three words that describe Whitey Bulger.

FUENTES: Stone cold killer.


FEYERICK: It is hard to imagine, Wolf, what might have happened had FBI agents not lured Whitey Bulger into the garage on a pre-tense that a locker had been broken into.

FBI agents ultimately found some 30 weapons, including assault rifles, shotguns, silencers, revolvers, pistols, knives, all of those in his apartment. Even at age 81 it appeared Whitey Bulger still had that fight, maybe not willing to be taken easily.

So the fact they did as well as they did attributed to the bureau that took such a beating after it was told he was an FBI informant.

WOLF BLITZER, CNN ANCHOR: We'll watch your special report, Sunday night 8 p.m. Eastern on CNN. Deb Feyerick, thank you.

Sometimes here in Washington the most influential people aren't necessarily well known outside of the nation's capital. Stand by to meet the anti-tax crusader who makes a lot of Republicans in Congress nervous.


BLITZER: The Republicans have been under intense pressure to refuse any new taxes as part of a deal to raise the nation's debt ceiling. Lawmakers who give in risk the wrath of one of the most powerful men here in Washington.

A man most Americans never heard of, Grover Norquist. I'll be speaking with him in just a few minutes. But first, Lisa Sylvester with some background on who Grover Norquist is.

LISA SYLVESTER, CNN CORRESPONDENT: Wolf, he is a fascinating man. Grover Norquist got a start in politics early. At 12, he hopped on a train and headed to Boston to volunteer for Richard Nixon and he has held on to his conservative values ever since. He believes in small government, lower taxes, and limited government services. (BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: That's Mitt Romney, Michele Bachmann.

SYLVESTER (voice-over): In this black binder are signed pledges from the GOP presidential candidates. Grover Norquist, President and founder of Americans for Tax Reform, has secured their signatures as well as those of most of the congressional Republicans all committing to not raise taxes. Hundreds of names with the originals safely stored away.

(on camera): So where are the pledges? Everybody wants to know. Where are the pledges?

GROVER NORQUIST, PRESIDENT, AMERICANS FOR TAX REFORM: Well, we keep the original pledges inside a vault that can't be burned, a safe vault, but keep multiple copies just so that they can't be lost. We want to promise to voters and to elected officials that their pledge will be there forever.

SYLVESTER (voice-over): In some ways. this father of two young toddlers is a study in contrast, although politically conservative through and through, he loves Janis Joplin, has figures from the adult animation series "South Park" on his book shelves and dabbles in impromptu comedy.

NORQUIST: When midgets play miniature golf, do they know?

SYLVESTER: But Norquist also has the ear of powerful GOP leaders, who often won't act on sensitive budget issues unless he signed off. Every Wednesday, Norquist convenes a meeting here, a prominent Republicans, political activists and GOP operatives to plan strategies. If someone thinks about breaking the pledge, he likes to remind them of President George H. W. Bush.

GEORGE H.W. BUSH, FORMER U.S. PRESIDENT: Read my lips. No new taxes.

NORQUIST: A lot of people were very angry that he had broken his committment. He had a very successful presidency except for the tax increase.

SYLVESTER: In the ongoing debt ceiling negotiations one point of debate is whether to raise taxes in tandem with government cuts. Norquist is quick to remind Republican lawmakers of their promises. Here is a wall of Republicans who went astray.

NORQUIST: These are people who voted for tax increases and down below, points which ones were defeated in the next election.

SYLVESTER: But his position, power and ego have sparked outrage by some on the other side of the political aisle. Michael Ettlinger with the liberal group, the Center for American Progress says it makes it harder for congressional leaders to legislate.

MICHAEL ETTLINGER, CENTER FOR AMERICAN PROGRESS: Grover Norquist is a big problem, but I think the people whose feet he's holding to the fire are getting tired of it.

You know, we're getting to the point where we need serious people to sit down and make serious decisions, and drawing really hard lines in the sand the way Grover does is hurting the country.

And I think people who signed that pledge are starting to recognize that, and realize that that kind of hard line just is not in the best interests of the country.

SYLVESTER: But Norquist is unfazed. It all comes down to the one line pledge that hangs in the Americans for Tax Reform office.


SYLVESTER: Now, the group's strength is in the grassroots operations, being able to run ads and make phone calls to either elect or a defeated candidate and that makes Norquist a very powerful master behind the scenes even though he has never been elected to office.

BLITZER: He still is a powerful guy here in Washington. Lisa, thanks very much.

Now that you know more a little bit more about him, stand by for my interview with Grover Norquist. I'll ask him about the role in the debt limit drama that's been playing out here in Washington and whether he's willing to accept any compromise on taxes.


BLITZER: Now my interview with someone that people here in Washington believe is one of the most powerful men in the nation's capital, Grover Norquist, the president of Americans for Tax Reform.

We spoke about the negotiations under way right now to see if they could reach a deal over raising the nation's debt limit.

In principle, do you agree that if they don't raise the debt ceiling August 2nd it would be a disaster for America?

GROVER NORQUIST, PRESIDENT, AMERICANS FOR TAX REFORM: If Obama chooses not to cut spending and we end up with the default, that would be very bad.

BLITZER: That would be the value of the dollar presumably would go down, interest rates would go up. Inflation could occur. That would be a huge hidden tax on almost every American.

NORQUIST: Every problem we have is because Obama's ramped up spending so dramatically in the last two years that it's busting the bank. We need to fix that overspending problem.

BLITZER: They've doubled the national debt during the eight years of the Bush administration you know that?

NORQUIST: Right. We went from spending $2.9 trillion before Obama came into power to $3.8 trillion. BLITZER: The national debt went from $5 trillion when Bush took office to $10 trillion when he left office.

NORQUIST: Now about $15 trillion after two years. Look, the ramping up over the last two years of massive spending increases is just unbelievable.

BLITZER: All right. So are there any tax reforms that you could support as part of this deal? For example, I'll throw in a few examples of what a lot of people consider to be, you know, crazy situations.

John Paulson who's a hedge fund manager, he made last year $4.9 billion. Billion with a "B" not million, but $4.9 billion and a big chunk of that income was taxed at 15 percent not the maximum 35 percent because it was seen as some sort of capital gains. Is that fair?

NORQUIST: Well, certainly the Democrats have been arguing to raise the capital gains tax on all Americans. Obama says he wants to do that. That would slow down economic growth. It's not necessarily helpful to the economy.

Every time we've cut the capital gains tax, the economy has grown. Whenever we've raised it, it's been damaged. It's one of those taxes that clearly damages economic growth and jobs.

BLITZER: Should it be taxed as regular income, 35 percent like you and me, everybody else who's in the highest income bracket?

NORQUIST: If it's capital gain, it should be taxed as capital gain, if it's regular --

BLITZER: Would you change the law so that would be regular income, instead of allowing this tax loophole right now that defines it as a capital gain?

NORQUIST: If you have to change the law to get more money, that's a tax increase, and Americans for Tax Reform supports all efforts of tax reform, getting rid of deductions or credits or something misclassified as long as you at the same time reduce rates so it's not a hidden --

BLITZER: You'd be open to changing that law so that he would pay a higher income tax?

NORQUIST: If overall tax burden was not increased as long as rates come down. I'm for tax reform, not tax increases.

BLITZER: What about General Electric, which made last year $14 billion worldwide, $5 billion in the United States and paid zero in federal income tax, is that fair?

NORQUIST: Several things. One, if there's a credit or deduction that they're getting and I understand they get a lot of Obama's special tax credits that he put in for alternative make-believe energy. Let's get rid of those and reduce rates for those people who are paying taxes other places, but, again, when businesses pay taxes, you and I pay them. Businesses don't pay taxes. People pay taxes when they buy things from the grocery store. Grocery stores do not pay taxes, nor does General Electric.

BLITZER: But you'd like to see tax reforms so that would be eliminated. So GE would pay some -- some income tax in the United States as opposed to paying no income tax.

NORQUIST: Let's bring rates down other places.

BLITZER: The same with Exxon/Mobil they pay a lot of income tax in Nigeria and other countries around the world, but they don't pay any income tax in the United States because they can deduct that income tax overseas and not have to pay it here. You're open to changing that one?

NORQUIST: Look, we ought to go to a territorial system, which is what the rest of the world operates on. We tax things that happen in the United States and we don't tax things that happen overseas.

Similarly, when people make money in the United States, we tax it and France doesn't. That's a territorial tax system. It's clearly where we're going to, but we ought to move there as quickly as possible.

BLITZER: You're the president of Americans for Tax Reform, it's a very influential group here in Washington. I want to read what former President Bill Clinton said in Aspen, Colorado on July 2nd. Have you heard this?

NORQUIST: I think so.

BLITZER: Let me read it to our viewers who haven't. He said you're laughing, but he, referring to you, was quoted in the paper the other day as saying he gave Republican senators permission on getting rid of ethanol subsidies.

I thought, my god, what has this country come to when one person has to give you permission to do what's best for the country? It was chilling.

NORQUIST: OK. Typical Bill Clinton got everything completely wrong. I wondered where one of those quotes came from. What that was, there was a bill to get rid of the tax credit for ethanol --

BLITZER: Which you support?

NORQUIST: Which we support getting rid of that tax credit.

BLITZER: It would an increase in taxes?

NORQUIST: It would. But there is another bill wrapped around it by DeMint, which would have, one, eliminated the real problem and, two, how to tax cut larger than the other. And we sent the letter to the Hill saying, if you want to make sure you haven't raised taxes, those two bills together do exactly that.

BLITZER: So basically he's right when he says you gave them permission to vote to eliminate the subsidies?

NORQUIST: No. Just made it clear that the two bills together didn't violate the pledge. They chose, when they ran for office, to commit and write into their constituents, not to me. To their constituents is when Bill Clinton gets it wrong.

Nobody promises me anything. They promise when they get elected to the people in their state and their congressional district, I'm not going to raise your taxes.

BLITZER: And the Americans for --

NORQUIST: No. To the American people, it's the American for Tax Reform Pledge, the same wording in all 50 states so people know what it is. They commit to their voters they won't raise taxes.

There was a confusion because Coburn was trying to confuse people, as to whether this was a tax increase. No, it's not. It's not a tax increase so that they could be comfortable that they weren't getting tricked by Senator Coburn into a tax cut.

BLITZER: You like it when people say you're one of the most powerful men in America?

NORQUIST: It's a little silly. The American taxpayers are a powerful force. They don't want their taxes raised. Obama and the Democrats have a fight with the American people, not with me.

BLITZER: Grover Norquist, thanks for coming in.

NORQUIST: Thank you.

BLITZER: A radical effort in California to form a 51st state. Just ahead, you'll meet the man behind a controversial secession drive.

And a female marine is hoping Justin Timberlake will take his own advice and take her to an upcoming ball. The story, that's coming up.


BLITZER: The United States has two Dakotas, two Carolinas, and two Virginias. So what if there were two Californias? CNN's Thelma Gutierrez has details of a secession drive that would split the golden state in two.


UNIDENTIFIED MALE: You really have to try hard. You really have to be an idiot to screw up the state of California.

UNIDENTIFIED MALE: We have hit a nerve with citizens that are just fed up with business as usual in the state.

UNIDENTIFIED FEMALE: You want to secede the state of California? I sure hope you don't want to be governor.

THELMA GUTIERREZ, CNN CORRESPONDENT (voice-over): It's this kind of citizen outrage in Riverside, California, that's fueling one of the most radical political ideas to recently surface in the golden state.

UNIDENTIFIED MALE: I'm talking about a secession plan from the state of California.

GUTIERREZ: that's right, a 51st state called the state of southern California. County Supervisor Jeff Stone says secession may be the only way to get Riverside County and 12 other largely politically conservative counties back on track.

JEFF STONE, RIVERSIDE COUNTY SUPERVISOR: What the state has done is that they've been balancing their budgets on the backs of our local coffers. They've been stealing our sales tax, our property tax.

GUTIERREZ: Stone says the state has turned its back on his constituents who have been hit hard by a tough economy.

STONE: The bottom line for me and my constituents is jobs. We are sending jobs out of the state of California by the trainload. We have some areas this county that have 25 percent unemployment. The average in Riverside County is about 15 percent. Foreclosures, we're the foreclosure capital of the world.

GUTIERREZ: If the state won't work with local government, Stone says he'll rally the troops to part ways.

UNIDENTIFIED MALE: Insanity. I mean, this is major surgery where maybe we need a band-aid.

GUTIERREZ: Political Science Professor Robert Melsh says secession won't fix a thing and will cost a fortune to take to the voters.

ROBERT MELSH, POLITICAL SCIENCE PROFESSOR: It takes millions of dollars to get the signatures necessary to put up an initiative and more millions to sell it.

Where is that money coming from? He hasn't addressed the cost, the establishment of a new government. Where are we going to put the Capitol, Disneyland?

GUTIERREZ (on camera): Even when you came up with this idea of secession, you had to have known that it was a radical one for which you would be criticized.

STONE: Yes, right. Listen, I knew I'd be criticized, I've learned in my tenure of being a public official for 19 years that sometimes you have to do some outrageous things to get people's attention. Now listen, I'm not discounting the fact secession is a possibility.

GUTIERREZ (voice-over): Judging by this pile of e-mails Jeff Stone showed me overwhelmingly in support of his idea, he may have hit a nerve with disenchanted Californians. Thelma Gutierrez, CNN, Riverside, California. (END VIDEOTAPE)

BLITZER: So will he or won't he? Just ahead, the invitation one female Marine hopes Justin Timberlake will accept.


BLITZER: Justin Timberlake certainly gets lots of invitations, but not quite like this. Here's CNN's Jeanne Moos.


JEANNE MOOS, CNN CORRESPONDENT (voice-over): This female Marine is asking Justin Timberlake out on a date --

UNIDENTIFIED FEMALE: I'm going to call out --

MOOS: Hoping he'll take his own advice.

UNIDENTIFIED MALE: Do it for your country.

MOOS: That's what Timberlake told his co-star, Mila Kunis, after a male Marine stationed in Afghanistan tilted his shades and asked Mila out via Youtube.

UNIDENTIFIED MALE: Mila, Sergeant Moore, but you can call me Scott.


UNIDENTIFIED MALE: I just want to take a moment out of my day to invite you to the Marine Corps Ball on November 18 in Greenville, North Carolina, with yours truly. So take a second, think about it. Get back to me.

MOOS: Now chances are the last time Mila Kunis was asked out on a semi blind date was when CNN's own Wolf Blitzer invited her to the White House Correspondents Dinner --

UNIDENTIFIED FEMALE: This is my date, Wolf!

MOOS: And though Wolf is more famous than Sergeant Scott Moore, the sergeant had Justin Timberlake on his side during a Fox News interview.

UNIDENTIFIED MALE: This needs to go down. This needs to happen.


UNIDENTIFIED MALE: Do it for your country --

UNIDENTIFIED FEMALE: I'll do it for you.

MOOS (on camera): Yes, you do it for your country, Justin Timberlake because now this Marine wants you.

UNIDENTIFIED FEMALE: Justin, you want to call out my girl, Mila? Well, I'm going to call you out and ask you to come to the Marine Corps Ball with me on November 12, in Washington, D.C.

MOOS (voice-over): Corporal Kelsey Disantis is the only female Marine at the Martial Arts Center for Excellence at Quantico. She's an instructor with a black belt who sometimes does cage fights.

Kelsey is a fan of Timberlake's. She got the idea to invites him to the Marine Corps Ball after seeing him so enthusiastically tell Mila Kunis to go.

Her friends set up a Facebook page called let's get Justin Timberlake to the Marine Corps Ball with Kelsey complete with an array of photos so impressive -- well, how could Timberlake tell her to go jump in a lake or even a river?

UNIDENTIFIED FEMALE: And if you can't go, all I have to say is cry me a river.

MOOS: The corporal's got a tattoo, too and that's just the one we can see. When we asked the friend who helped set up the Facebook page whether Kelsey could kick Justin Timberlake's butt if he turned her down. She said, yes, for sure. This Marine isn't looking for a few good men, just one.

UNIDENTIFIED MALE: Do it for your country.

MOOS: Jeanne Moos, CNN, New York.

BLITZER: The date's going on.

That's it for me; thanks very much for watching.

I'm Wolf Blitzer. Join us weekdays in THE SITUATION ROOM from 5:00 to 7:00 pm Eastern, every Saturday at 6:00 pm Eastern, right here on CNN, and at this time each weekend on CNN International.

The news continues next, on CNN.