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Penn State Students Riot Over Firing of Football Head Coach; Rick Perry Makes Gaffe at GOP Debate; One Witness to Child Abuse at Penn State Still Working on Football Coaching Staff; Herman Cain Continues to Raise Money for Campaign; GOP Debates as Must-See TV; Remains of Fallen Soldiers Dumped in Landfills as if Medical Waste; Bill Clinton's Advice for President Obama

Aired November 10, 2011 - 17:00   ET


WOLF BLITZER, CNN ANCHOR: And you're in THE SITUATION ROOM. Happening now, anger at Penn State University over the firing of coach Joe Paterno. Head are rolling amongst school officials who knew early on about a child sex abuse scandal. This hour why is a witness to alleged rape being allowed to stay on?

Also, mortgage giants Fannie Mae and Freddie Mac are costing U.S. taxpayers billions of dollars, but top executives are on track right now to get big, fat bonuses. And now some lawmakers are saying no way.

And the Republican presidential candidates are turning this into the year of the debate. Rick Perry's "oops" moment just a latest in a series of must-see moments. We want to welcome our viewers in the United States and around the world. Breaking news, political headlines, and Jeanne Moos all straight ahead. I'm Wolf Blitzer. You're in "THE SITUATION ROOM."

We begin now with a story many of you almost all of you I'm sure will find simply outrageous. I know I did. It's the latest example of executives who are way out of touch with the country and who apparently think they deserve big, fat bonuses even though their companies are floundering. This time, the chiefs of the mortgage giants Fannie Mae and Freddie Mac. Our Brian Todd has been looking into the bonuses and the backlash. Simply outrage, Brian, what's going on, but update our viewers.

BRIAN TODD, CNN CORRESPONDENT: Wolf, there is bipartisan outrage over these bonuses. Members of Congress trying to stop them. But a lot of the bonus money has been paid out and that's causing even more frustration.


TODD: You may not know Michael Williams, but you probably want to be paid like him. Same for Ed Haldeman. They're the respective CEOs of Fannie Mae and Freddie Mac, the government sponsored firms which back at least half the mortgages in America. According records from the Securities and Exchange Commission, Williams and Haldeman each made about $900,000 in salary last year and each is getting paid about $2 million in bonuses. Earlier this year the federal government approved nearly $13 million in bonuses for Williams, Haldeman, and eight other executives from the two firms despite the fact that millions of Americans are still struggling to make it through the housing crisis and that Fannie and Freddie have been hemorrhaging cash this year. They lost $10 billion in the last quarter and just asked Congress for more money.

SEN. JOHN THUNE, (R) BUDGET COMMITTEE: This is completely excessive and uncalled for.

TODD: Republican Senator John Thune is spearheading an effort by 60 Democratic and Republican senators to cancel the bonuses. They've sent a letter to the government body that oversees Fannie and Freddie, the Federal Housing Finance Agency, asking it to revise the compensation policy for those execs. The FHFA approved those bonuses.

THUNE: Why would you be rewarding this kind of behavior or this kind of performance, at least, at a time when we've got all these national economic issues and people across the country are very frustrated?

TODD: Contacted by CNN, officials at Fannie and Freddie wouldn't comment. Their overseer says, the FHFA says it's reduced executive pay at Fannie and Freddie in recent years, that those firms have to pay that kind of money to attract the kind of talent needed to manage $5 trillion in mortgages.

And officials here tell CNN the reason they got those bonuses is because they took the right steps to turn things around at Fannie and Freddie after the meltdown, a meltdown which triggered a massive bailout from the Feds.

(on camera): How big was the bailout compared to the auto bailouts and some of the others?

CLIFF ROSSI, UNIVERSITY OF MARYLAND: It was about 170 billion so far from both entities, both Fannie and Freddie, and I think the estimated tally from what I understand from the Congressional Budget Office is somewhere in the neighborhood of about $250 billion. So from that standpoint it's large relative to these other bailouts.


TODD: Analyst Cliff Rossi, who once worked at both Fannie and Freddie, says the current execs at the firms were put in place since the bailout to clean up the mess from before. He says they have started to do that, but also says they have not done enough to modify more homeowners bad mortgages, so he's kind of on the fence about whether they deserve those bonuses, Wolf.

BLITZER: Can the president of the United States intervene and do something about this?

TODD: Well, Senator Thune wants the White House to step in. The White House says these are independent agencies, that it doesn't have a role in assigning pay for their executives. I think Senator Thune really wants to pave the way for somebody to step in in the future.

BLITZER: And remind our viewers, Brian, before the bonuses these top executives are making how much a year?

TODD: It's $900,000 each.

BLITZER: So $900,000 they make, but that's not enough.

TODD: Well, again, the argument is --

BLITZER: I know the argument. You told us the argument. But they say $900,000. They can't live on $900,000. They wouldn't be attracted to these jobs if it were just $900,000.

TODD: That's the argument they're making, that they're not going to get people who are attracted to these jobs that are very complicated, very tough without paying that kind of money.

BLITZER: I suspect there are a lot of talented, qualified people who would be more than happy to come to work for a federal government agency for $900,000 a year when the president of the United States makes $400,000 a year, senators, lawmakers make $200,000 a year. Timothy Geithner, who is the Treasury secretary, makes about $200,000, but these guys can't live on $900,000 a year, that's what they're telling you?

TODD: They're not really saying it in those words, but they say they deserve those bonuses because they started to turn things around that really needed to be turned around at those agencies.

BLITZER: But the Treasury Department can attract Timothy Geithner, but Fannie and Freddie can't attract people for $900,000 a year?

TODD: I suppose not.

BLITZER: That's their argument. I just want to be precise. Thank you.

Herman Cain keeps racking in campaign cash, huge amounts while controversy swirls around his presidential campaign. The Republican reporting he's raised more than $9 million since October 1st, almost $2.5 million in the 10 days since the allegations of sexual harassment surfaced. Herman was asked about the allegations during last night's debate in Michigan.


MARIA BARTIROMO, DEBATE MODERATOR: Here, we're focusing on character and judgment. You've been a CEO.


You know that shareholders are reluctant to hire a CEO where there are character issues. Why should the American people hire a president if they feel there are character issues?

HERMAN CAIN, (R) PRESIDENTIAL CANDIDATE: The American people deserve better than someone being tried in the court of public opinion based on unfounded accusations. (END VIDEO CLIP)

BLITZER: Let's bring in our chief political analyst, Gloria Borger. She's been reporting on this story. Herman Cain's response to the sexual harassment allegations within the Republican Party ranks, or at least that conservative base, Tea Party activists, they're with him right now.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: You heard the boos when Maria Bartiromo asked the question. Look, Herman Cain supporters, it's very clear, remain Herman Cain supporters. When he talks about the Democrat machine, when he blames the media for the story, he gets contributions. Wolf, he's raised two and a quarter million dollars since this story started 10 days ago. That's almost as much as he's raised in the last three months of his campaign.

Having said that, though, Wolf, that's not all Republicans. There are Republicans who are upset with this. His unfavorable ratings have doubled in the last month. And I talked to some Republicans today who say every time he's got to answer a question about sexual harassment it's a gift to Barack Obama with women voters.

BLITZER: Speaking of women voters, Nancy Pelosi, the minority leader, the former speaker of the house, he called her "Princess Nancy," to which he sort of apologized. I'll play the clip.


CAIN: I apologize for calling her "Princess Pelosi," if you couldn't understand the audio. If that's the biggest story you all have, OK.


BLITZER: "I apologize," he said "for calling her "Princess Pelosi, if you couldn't understand the audio. If that's the biggest story you all have, OK." That was his so-called apology.

BORGER: Not exactly an apology. It's not good for him with women voters. You know, the first rule of politics, when you're in a hole, stop digging. It's probably not a good idea when being accused of sexual harassment to denigrate one of the most accomplished women in this country, no matter whether you agree or disagree. Again, for his supporters, they don't like Nancy Pelosi, and that's fine. But this was not the moment for him to do that.

BLITZER: Here's what you wrote in your column today up at "If he," referring to Herman Cain, "If he wants to get this behind him, how about getting the facts out. Give the restaurant association's board permission to release the results of their investigation in 1999."

BORGER: Now, he says they did an internal investigation and Cain says he was cleared and there's no -- that the charges are absolutely baseless. Well, he can go to the association and say release your internal investigation, and it would clear everything up. If he were to become the presidential nominee, Wolf, he would end up having to do that anyway. So why not ask them to do it, get it out of the way and get on with his campaign?

BLITZER: He says their investigation vindicated him although the National Restaurant Association in their singular statement that they released, they didn't say that.

BORGER: They did not say it. We do not know who did the investigation. At one point, he said there was an internal general counsel. We've heard different stories. So why not just release it? Redact some names if you feel like you have to, but release the facts.

BLITZER: What's the latest on this joint news conference that at least two of these women accusing him of sexual harassment are ready to do, assuming some others don't participate as well.

BORGER: It looks like there's not going to be a tell-all news conference with the four accusers. Karen Kraushaar, who wanted to organize it, who works at the Treasury Department, has not been able to reach two of the women. And as we reported earlier today that she does not want to do it alone with Sharon Bialek, the woman who's already come out.

The question remains is, if there isn't going to be a big press conference, will we hear more from Kraushaar? Will she release the documents?

BLITZER: What's the answer?

BORGER: We don't know. She has not decided yet, I'm told. She's still trying to figure it out.

BLITZER: Gloria, thank you.

BORGER: On to politics now and the Rick Perry moment. I've been watching debates for decades. I've probably never seen anything as dramatic as what happened last night. Jack Cafferty is here. He was watching as well together with the whole world. Jack, it was a pretty amazing moment.

JACK CAFFERTY, CNN CONTRIBUTOR: You didn't see anything like this at the Lincoln-Douglas debate?

BLITZER: I missed that one, but I read about it.

CAFFERTY: Not since Sarah Palin sat down with Katie Couric as a candidate for one of the nation's highest offices disgraced himself the way Rick Perry did last night.


RICK PERRY, (R) PRESIDENTIAL CANDIDATE: And I will tell you, it's three agencies of government when I get there that are gone. Commerce, education and the -- what's the third one there, let's see.



PERRY: Five, OK. Commerce, Education, and the --


PERRY: EPA, there you go.



UNIDENTIFIED MALE: Seriously, is the EPA what you are talking about?

PERRY: No, sir. We are talking about the agencies of government -- the EPA needs to be rebuilt. There's no doubt about that.

UNIDENTIFIED MALE: But you can't name the third one?

PERRY: The third agency of government I would do away with, the Education, the Commerce, and let's see -- I can't. The third one, I can't. Sorry. Oops.


CAFFERTY: Oops. Right after the debate on CNBC, Perry rushed over to the spin room where he tried to make light of what he had done, quote, "I'm glad I had my boots on tonight. I really stepped in it," end quote.

Note to Mr. Perry. It's time to go away now. This wasn't the first time you came off as an intellectual lightweight in these debates. And this "ah, shucks" grade school stuff might play in Texas, but I for one, sir, don't want you anywhere near the nuclear launch codes. We have a world on the brink of economic collapse and the Middle East on possibly the brink of another war. There is trouble all around. And you claim to being able to run the country with what amounts to half a loaf. That saying is half a loaf is better than none. In Rick Perry's case, that's not true. Please just go away.

Here's the question -- is it time for Rick Perry to withdraw from the presidential race? Here's the answer -- you bet. Post a comment on my blog or go to our post on "THE SITUATION ROOM" Facebook page. It really did remind me of the Sarah Palin train wreck with Katie Couric. That was just painful to watch.

BLITZER: Yes. It didn't hurt her career as far as making money though, as you well know.

CAFFERTY: It hurt her political career. She's not running for anything. She's no longer the governor of Alaska.

BLITZER: But she's made about $20 million if not more since that train wreck, so she's done OK.

CAFFERTY: Stupidity sells. I won't argue with you about that.

BLITZER: All right, jack. He's going to be on Letterman reading the "Top 10 List" tonight.

CAFFERTY: There's something to look forward to.

BLITZER: We'll be watching. Rick Perry may have been at a loss for words, but his wife isn't. Hear what she's saying about her husband's debate embarrassment.

Also, an actual witness to the alleged child sex abuse at Penn State University still is on the coaching staff while Joe Paterno, the coach, was fired. We're going to ask why.


BLITZER: Joe Paterno's replacement says the Penn State university football team will be ready to play this Saturday without the coach who's been at the helm for four decades. Protests and even rioting broke out on campus last night when Paterno was fired by the university's board of trustees along with the school's president, Graham Spanier. Both have been criticized for their response to the child rape charges against the former assistant coach, Jerry Sandusky. Paterno spoke with supporters outside his home.


JOE PATERNO, FORMER PENN STATE FOOTBALL HEAD COACH: Get a good night's sleep, all right? Study, all right? We still got things to do and pray a little bit for those victims.


BLITZER: Today, Penn State's new interim head coach Tom Bradley called Paterno a great man, promised to help the team and the university heal.


TOM BRADLEY, PENN STATE FOOTBALL INTERIM HEAD COACH: First off, I grieve for the victims, the families, deeply saddened with that. It's with great emotion that I say that. And you know, the football part, we will get working on that right away. Right now, I think you should know where our team is toward this whole issue and towards those children, toward their families and our thoughts and our prayers with them.


BLITZER: A preliminary hearing has been set for December 7th for Sandusky accused of sexual offenses with eight young boys. And the two failing to report the abuse will appear in court on November 17th.

When the Penn Football team plays this coming Saturday, Mike McQueary will be part of the coaching staff although some wonder if he should be. Our Mary Snow is over at Penn State University right now. McQueary, Mary, is a witness to this alleged rape. What's the latest on this part of the story? MARY SNOW, CNN CORRESPONDENT: Wolf, Mike McQueary is the only one involved in this current investigation here at Penn State who was said to have witnessed an alleged rape involving Jerry Sandusky and a young boy. And there's increasing scrutiny over Mike McQueary because there are questions being raised about why he didn't act, why he didn't do more after what he allegedly saw, and he's keeping his job.


SNOW: His name is Mike McQueary, an assistant football coach at Penn State, and it's what he saw in 2002, say authorities, that led in part to child sex abuse charges against Jerry Sandusky. McQueary grew up around Penn State, becoming a quarterback for the team. At 28 when he was a graduate assistant, according to a grand jury report, he witnessed Sandusky having sex with a boy believed to be 10-years-old in a locker room shower at Penn State.

McQueary was described as being distraught and leaving immediately, turning to his father, and then going to coach Joe Paterno. Paterno told grand jurors Sandusky was doing something of a sexual nature to a young boy. With Paterno and the Penn State president ousted, questions are now focused on McQueary, who's keeping his assistant coaching job. Tom Bradley is Penn State's new interim coach.

BRADLEY: Mike McQueary will be coaching on Saturday.

SNOW: On campus, there are open calls for McQueary to also go. Many question why he didn't call police.

UNIDENTIFIED MALE: I feel like any normal human being when they see something like that happening and they would react a lot more with better intent than he did.

UNIDENTIFIED MALE: I figure if you're going to fire Joe Paterno, you should fire him, because he did exactly the same thing Joe Paterno did.

SNOW: McQueary's father, John, told us he has been advised not to talk because he has part of the investigation. As for his son, John McQuery is quoted "The New York Times" saying he thinks it is eating up his son to not be able to tell his side of the story, and adds, "He'll make it. He's a tough kid."

And Wolf, Pennsylvania's attorney general stresses that grand jurors found McQueary to be a credible witness. We should also point out we have reached out to him several times and we have not gotten a response from him. But like many involved in this investigation, they have been saying they have been advised not to talk publicly because the investigation is obviously going on. Wolf?

BLITZER: You've been on campus all day. What are the students saying?

SNOW: You know, in the aftermath of last night's anger, I was talking to some students today who say that they felt embarrassed by what they saw when things gone unruly, that the focus cannot be on football. And they also were questioning why Mike McQueary was keeping his job, but in their words, one told me it was like getting kicked in the gut and that there is such a sense of betrayal and really a lot of sadness on this campus.

BLITZER: Mary Snow on the campus of Penn State University. Thank you.

Greece taking some dramatic new steps to try to recover from a dire European financial crisis threatening markets all around the world. We have new details.

And Prince William gets his military orders. You're going to find out where he's about to be deployed.

Lots of news happening right here in "THE SITUATION ROOM."


BLITZER: One of president Obama's top advisers in the Middle East announces he's stepping down. Lisa Sylvester is monitoring that.

LISA SYLVESTER, CNN CORRESPONDENT: Hi, there, Wolf. Well, Dennis Ross, who's also served under the first President Bush and President Clinton, says he promised his wife he'd serve the Obama administration for only two years. The move comes as the White House tries to restart the Middle East peace process despite recent clashes with the Israeli prime minister and a controversial Palestinian bid for statehood at the United Nations.

Greece's interim prime minister is pledging to implement the bailout package European leaders have agreed to as the country struggles to recover from a week of bitter political turmoil and a wider European financial crisis that sent global markets reeling. Greece's new mandated by the country's president is expected to be sworn in tomorrow.

And Prince William will be deployed to the Vulcan Islands next year as a search and rescue pilot. The defense ministry made the announcement today. The prince, who has been flying helicopters for the Royal Air Force for Wales, is expected to live in basic facilities on the base. The deployment comes almost three decades since Britain and Argentina went to war over the Falkland Islands. So he's going to be overseas for a little bit. So hats off to him.

BLITZER: Be safe. Thank you.

We saw Rick Perry freeze up last night. Did other recent debate gaffes come close to that moment? We'll talk about some of the doozies. Plus, Bill Clinton explains why he says he should have been a hero to the Tea Party. Stay with us.


BLITZER: Rick Perry's "oops" moment got me thinking about how significant the Republican presidential debates have been this year. Over the course of some 10 debates so far there have been many memorable moments. Some the candidates certainly would like to forget.

Take a look and listen to some of the highlights and low points.


HERMAN CAIN (R), PRESIDENTIAL CANDIDATE: The statement was, would I be comfortable with a Muslim in my administration, not that I wouldn't appoint one. You have peaceful Muslims and then you have militant Muslims, those that are trying to kill us. And so when I said I wouldn't be comfortable, I was thinking about the ones that are trying to kill us.

BRIAN WILLIAMS, MODERATOR: Governor Perry, a question about Texas. Your state has executed 234 death row inmates, more than any other governor in modern times. Have you --

BLITZER: He doesn't have it, and he needs intensive care for six months. Who pays?

RON PAUL (R), PRESIDENTIAL CANDIDATE: That's what freedom is all about, taking your own risk. This whole idea that you have to take care of everybody --


BLITZER: But Congressman, are you saying that society should just let him die?



JON HUNTSMAN (R), PRESIDENTIAL CANDIDATE: To hear these two go at over here, it's almost incredible. You've got Governor Romney, who called it a fraud in his book "No Apology." I don't know if that was written by Kurt Cobain or not.

REP. MICHELE BACHMANN (R), PRESIDENTIAL CANDIDATE: The question is, is it about life, or was it about millions of dollars and potentially billions for a drug company?

BLITZER: You've got to respond to that.

GOV. RICK PERRY (R-TX), PRESIDENTIAL CANDIDATE: Yes, sir. The company was Merck, and it was a $5,000 contribution that I had received from them. I raise about $30 million. And if you're saying that I can be bought for $5,000, I'm offended.

BACHMANN: Well, I'm offended for all the little girls and the parents that didn't have a choice. That's what I'm offended for.

PERRY: Was it before he was before the social programs from the standpoint of he was for standing up for Roe versus Wade, before he was against Roe versus Wade?

UNIDENTIFIED MALE: In 2010, when I was deployed to Iraq, I had to lie about who I was because I'm a gay soldier. Do you intend to circumvent the progress that has been made for gay and lesbian soldiers in the military?

RICK SANTORUM (R), PRESIDENTIAL CANDIDATE: I would say any type of sexual activity has absolutely no place in the military.

ROMNEY: Herman, are you saying that the state sales tax will also go away?

CAIN: No, that's an apple.


CAIN: We're replacing a bunch of oranges.


CAIN: You're mixing apples and oranges. Whether you throw out the existing code and you put in our plan, you're still going to pay that. That's apples and oranges.

ROMNEY: And I'm going to be getting a bushel basket that has apples and oranges in it, because I've got to pay both taxes.

ROMNEY: Rick, again -- Rick, I'm speaking. I'm speaking.

PERRY: Your newspaper -- the newspaper --

ROMNEY: Would you please wait? Are you just going to keep talking or are you going to let me finish with what I have to say?

PERRY: And I will tell you, it's three agencies of government when I get there that are gone: Commerce, Education, and the -- what's the third one there? Let's see.


PAUL: You need five.

PERRY: Oh, five. OK. So Commerce, Education, and the --


PERRY: EPA, there you go. No.

JOHN HARWOOD, MODERATOR: Seriously, is EPA the one you were talking about?

PERRY: No, sir.


BLITZER: We've seen that clip now several times. We don't have to see it again. Obviously, a little bit painful to watch.

Let's bring in our senior political analyst, David Gergen, also our chief political correspondent, Candy Crowley, the anchor of CNN's "STATE OF THE UNION."

David, you've been watching debates for a long time. On my blog today, my SITUATION ROOM blog, I'm call it "The Year of the Debate," but what do you think about what happened last night?

DAVID GERGEN, CNN SR. POLITICAL ANALYST: Oh, Wolf, it's one of those things you never want to have happen to you. It just can kill your candidate. In this case, Rick Perry.

He had one more opening. With Herman Cain possibly fading, there was an opening there for Perry to try again to resuscitate his campaign. And the one thing he had to overcome was the sense he's not quite up to the job. Is he smart enough to really run it?

And he makes the gaffe that just totally reinforces it. And it brought back so many memories of past debates and past years and gaffes that really cost candidates.

I was there in 1976 on the campaign team for Gerald Ford when he went up against Jimmy Carter, and an October debate just before the election. And Max Frankel of "The New York Times" asked him about Soviet domination of Eastern Europe, and President Ford just totally denied that there was Soviet domination of eastern Europe. Frankel was stunned, asked him again. Ford repeated it.

He was trying to tell the Poles and others, don't worry, we're still there for you, but it came out as he didn't understand. And I can tell you, all the momentum we had -- he might have won that election. All that momentum stopped instantly, it took days and days to get going again.

BLITZER: Yes, I remember that, as well. I'm sure Candy does also.

But, Candy, what did you think when you were watching that debate last night and you saw that "oops" moment?

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Yes, I thought it was actually pretty painful. And I tried this morning to sort of think, what if Mitt Romney had done that? What if he said, in my three-point plan, what's the third point? It would not have been nearly so devastating for exactly the same reason as David said.

There's always a wrap (ph) against a candidate. Sometimes we call it a storyline, but it's -- an Achilles heel, whatever you want to call it. And with Mitt Romney, it's does he flip-flop too much? With Herman Cain, is he really ready for prime time, is he really serious about this?

And for Rick Perry, as David says, it's about, is he up to this job? Is he "smart enough?"

So even though everyone could kind of -- certainly anyone who has ever been on TV -- can understand what that sort of brain lock can do to you when you kind of lose your train of thought, it is especially harmful for Rick Perry, especially at this time. The timing's bad. The nature of the mistake is bad. And the kind of full-on press that he's seen since then has been bad.

BLITZER: Because, you know, David, it was the Energy Department that he forgot. He mentioned Commerce. He mentioned Education. And Energy's been such a big issue for him, especially as a governor of Texas, and the oil and the energy industry in Texas.

You would have thought that one would have jumped into his mind first.

GERGEN: You would think it would be number one, because it has been the centerpiece of his campaign. He's gave that energy speech. He talks about it continuously in the debates.

So, you do -- I mean, he clearly knows it, and you do have to feel sorry for him. As Candy said, I think we all winced for him, as well as just sort of wincing.

But still, this is the big time and this is when you're judged. You're judged as a quarterback on how well you can throw a football. And in politics, increasingly, you're judged by how well you can debate. And believe me, the Republicans know that they've got to put up a very strong debater against Barack Obama, because he's very good at this.

BLITZER: You've got to give him credit though, Candy. He did come out this morning on all the morning shows. He's doing interviews. He's going on "Letterman" tonight to have some fun about this, reading the Top Ten List. So you've got to give him some credit for doing that. I don't know if it will help him, but he's trying.

CROWLEY: That's the problem. I mean, he does seem to be making the right moves, and that is, he came out right after the debate, into the spin room, as I understand it. It was like, boy, did I step in it, sort of the mea culpa, whoa, that was a really bad moment.

Now, he's trying to have some fun with it and to move on. But again, I think there's some -- it's been played so often, as you know, since last night. It's going to be very hard for him to erase that.

I mean, is it fatal? We've got, you know, until January to find out. But it is certainly a roadblock and a huge stumble for him.

BLITZER: All right, guys. We'll continue this conversation. Thank you.

Dumped in landfills like medical waste. Up next, urgent new action the Pentagon is taking following truly shocking revelations about how some remains of America's fallen were handled.

And former president Bill Clinton has new advice for President Obama on how he can get reelected.

Stay with us. You're in THE SITUATION ROOM.


BLITZER: To the Pentagon now, where the defense secretary, Leon Panetta, is stepping up the effort to try to get some answers following truly shocking revelations that some remains of U.S. service members killed in combat were disposed in landfills.

Our Pentagon correspondent, Barbara Starr, has the latest.


BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): This is the Virginia landfill where the Air Force dumped some incinerated remains of America's fallen.

Until 2008, the Dover Air Force Base mortuary which handles war remains had contractors cremate and incinerate bone fragments, tissue, and other DNA material brought back from Iraq and Afghanistan where troops were killed. No bodies were involved.

The ashes were then taken to the landfill and disposed of as if they were medical waste. The Air Force changed the policy and is now burying remains at sea. But Defense Secretary Leon Panetta has ordered an independent review into how Dover handled the remains of the war dead.

LEON PANETTA, DEFENSE SECRETARY: None of us will be satisfied until we have proven to the families of our fallen heroes that we have taken every step possible to protect the honor and dignity that their loved ones richly deserve.

STARR: Some families are distraught.

BONNIE CARROLL, TRAGEDY ASSISTANCE PROGRAM FOR SURVIVORS: It's devastating, it is saddening, and it's shocking for our families to hear what happened.

STARR: There are growing questions about what the Air Force did once it learned of another problem, whistleblower reports of missing body parts at Dover. Panetta has ordered the Air Force to investigate itself again, this time to determine if the whistleblowers suffered reprisals.

SEN. CLAIRE MCCASKILL (D), MISSOURI: What I am concerned about is their investigation into what the Air Force did in response to the whistleblowers, and specifically the fact that the IG of the Air Force, they failed to admit wrongdoing in their report.

GEN. NORTON SCHWARTZ, AIR FORCE CHIEF OF STAFF: There clearly were unacceptable mistakes made. Whether they constitute wrongdoing is another matter entirely.

STARR: But when asked if it was wrong to put remains of the war dead in a landfill, the chairman of the Joint Chiefs said --

GEN. MARTIN DEMPSEY, CHAIRMAN, JOINT CHIEFS OF STAFF: I don't know what right looks like.

(END VIDEOTAPE) STARR: Now, Secretary Panetta initially supported the Air Force in its investigation of these allegations of wrongdoing at Dover, but after learning of the potential of reprisals against the whistleblower, he said today he wanted another investigation, but he is still determined. He believes the Air Force can investigate itself -- Wolf.

BLITZER: All right, Barbara. Thanks very much. You'll keep us updated on this.

The former president Bill Clinton is sitting down with "TIME" magazine in a new interview, and among other things, he's giving President Obama some additional advice on getting reelected.

Let's bring in the managing editor of "TIME," Rick Stengel. You can see the new cover, by the way, of the magazine on the screen. "TIME," of course, is the corporate cousin of CNN. A cover story on the U.S. Army, "An Army Apart."

We'll talk about that in a minute, Rick. But let me read to our viewers what the president, the former president, said to you about what's going on in Washington right now.

He said this. He said, "The Republicans can't be completely allergic to taxes. The Democrats can't be completely allergic to changes in health care delivery."

I assume President Clinton's referring to changes in Medicare, Social Security, the entitlements as we call them. Is that right?

RICK STENGEL, MANAGING EDITOR, "TIME": Yes. I mean, I think he's speaking to the idea, Wolf, that Medicare, Medicaid, Social Security is the so-called third rail of American politics, and it's one of the things that Democrats have always stood by and been resolute in not changing. But he's also saying that if we're going to get the economy back, if we're going to reduce these deficits, it can't just be cutting deficits. There has to be revenue associated with it, and both sides have to come together on what, in effect, is a grand bargain.

BLITZER: When you say revenue, the president -- the former president, like the current president, wants to see an increase in taxes, especially on the wealthiest Americans. He made that point to you as well, right?

STENGEL: Yes. I mean, he famously raised taxes in his first year, which ultimately helped him balance the budget at a time that U.S. growth was increasing and jobs were increasing. And he thinks that revenues have to be gotten now, and you would get that through taxes, through taxing the wealthy, the one percent.

BLITZER: And remember, when Bill Clinton raised taxes after he took office in 1993, in 1994, but especially in '93, it wasn't just on the wealthiest. He raised taxes on the middle class at the same time, even though he had promised he wouldn't do it and he knew it would be politically very unpopular. STENGEL: Yes. And again, even though the U.S. was experiencing 4, 5 and 6 percent growth during Clinton's time, taxes were a greater percentage of GDP than they are now by a significant margin.

BLITZER: Here's an exchange you have with Bill Clinton in "TIME" magazine. This is you.

"You balanced the budget and cut the size of the government. How come you're not a hero of the Tea Party?" To which the former president replied, "I thought I should have been their favorite politician. I think because I didn't do it according to the ideology. I raised taxes and cut spending. I did it with a mix of policies that also left us money to invest in our future and in our quality of life."

What he didn't say to you is at the time, when he balanced the budget and saw surpluses, he did it in part because of enormous pressure he was under from the Republican majority in Congress.

STENGEL: Yes. I mean, remember, it was Bill Clinton who famously said "The era of big government is over."

He was under great pressure from Newt Gingrich and the Congress to reduce the size of government. And remember, that was still the era. He was coming after the era -- you know, the Ronald Reagan era of saying that government is not the answer, government is the problem. So he was reckoning with that.

BLITZER: Rick Stengel, you've got a cover story, 45,000 American troops coming home from Iraq in the coming few weeks. What's the biggest problem they will face?

STENGEL: Well, one of the biggest problems, Wolf, is that we're calling them the other one percent. They represent a very small section of America now, and so many Americans don't have a son or a daughter or a mother or father in the military anymore. That, basically, it's about connecting America with its military again and integrating them back into society.

BLITZER: Rick Stengel is the managing editor of "TIME" magazine.

Good story, good work, as usual, Rick. Thank you.

STENGEL: Thanks, Wolf.

BLITZER: Jack Cafferty is asking, "Is it time for Rick Perry to withdraw from the presidential race?" "The Cafferty File" is next.


BLITZER: A picture of the Washington Monument here in Washington.

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

CAFFERTY: Now, there's a lead-in.

The question this hour: Is it time for Rick Perry to withdraw from the presidential race?

Orla from Santa Cruz, "If Perry can't function during a debate, how ever will he function as president in a crisis? Time to send this good old boy out to a Texas pasture."

A Texan writes, "I'm voting for Rick Perry. It's the only way we can get him out of Texas, and I want you folks to suffer like we have for the last 10 years."

Steve writes, "Wow. It seemed like he was channeling his inner George Bush. Texas governors for president, been there, hated that."

John in Florida, "Absolutely not. This is too much fun. Can you imagine Perry as president?"

"As president, I have ordered a nuclear strike on the capital of -- can't remember. Was it Israel? Oops. Morning headline news, 'USA Nukes Wrong Country.'"

"Come on, Jack, Jon Stewart, Colbert, and all the other comedians need this guy."

Steve on Facebook writes, "He's like the guy who stays at the party until the very end, doesn't know when to leave, and can't remember where he put his coat. Show him the door. Call him a cab back to Texas."

Lee writes, "I think Perry could bring back what America once was: a wilderness dotted with train wrecks and groups of survivors sitting around campfires playing their banjos."

D.J. in Houston, "I'll put it this way, Jack: Rick Perry is not one of the stars at night that shine big and bright deep in the heart of Texas."

And D. writes, "Either withdraw or write the talking points on his hand for the next debate."

If you want to read more on this, go to my blog,, or through our post on THE SITUATION ROOM'S Facebook page.

He is good entertainment. I kind of hope he sticks around.

BLITZER: Yes. I'm going to read more of those responses.

CAFFERTY: Oh, it was hysterical.

BLITZER: All right. Good work, Jack. Thank you.

The brain freeze, by the way, is going viral. You're going to want to see Jeanne Moos' take on the Perry gaffe. That's coming up next.


BLITZER: Just want to remind you, go to our Web page. You can read my blog. I write about all the debates. I'm calling it "The Year of the Debate." This Republican presidential season there have been some fascinating moments. We've also posted some of those moments for you, but check out my blog,

It's certainly the freeze that's going viral right now. Here's CNN's Jeanne Moos.


JEANNE MOOS, CNN CORRESPONDENT (voice-over): What do Britney Spears and Rick Perry have in common?

PERRY: Oops.

BRITNEY SPEARS, SINGER (singing): Oops. I did it again.

PERRY: Oops.


MOOS: "Oops" was everywhere from headlines to impersonations.


MOOS: Even Rick Perry couldn't resist repeating himself as he came out of his replayed clip.

PERRY: Oops.

MOOS: When Rick Perry forgot the third department he wants to cut --

PERRY: The -- what's the third one there? Let's see.

MOOS: -- the forgotten Department of Energy gaffe took on an energy of its own.

PERRY: The -- the --

JIMMY KIMMEL, HOST, "JIMMY KIMMEL LIVE": Rick Perry had an amazing meltdown.

UNIDENTIFIED MALE: Completely forgetting his point.


MOOS: One defender described it as a "temporary loss of cabin pressure. We all have it."

Here come the jokes.

JOY BEHAR, "THE VIEW": He could be president if he only has two things to remember.

MOOS: Funny or Die put up a parody quiz asking the governor to name three things.

UNIDENTIFIED MALE: Three legal moves in rock, paper, scissors.

UNIDENTIFIED MALE: All right. You've got rock, paper and -- there's a hawk.

MOOS: The governor's gaffe was gleefully timed.

PERRY: Oops.

MOOS (on camera): Rick Perry's 53-second brain freeze dwarfed previous whoppers.

(voice-over): It made Arizona Governor January Brewer seem like a scholar when she blanked for a mere 13 seconds.

GOV. JAN BREWER (R), ARIZONA: We have -- did what was right for Arizona.

MOOS: At least when President Bush did it, he was answering, what's been your biggest mistake?

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: You know I just -- I'm sure something will pop into my head here.

MOOS: Sometimes what pops out is even worse.

UNIDENTIFIED FEMALE: Such as in South Africa and the Iraq, everywhere like -- such as.

MOOS: "Like such as that" is some conciliation to Governor Perry.

(on camera): After that doozy of a gaffe, Perry come up with a recovery plan, a multi-step recovery plan.

PERRY: I stepped in it, that's for sure.

Obviously, I stepped in it.

I stepped in it last night.

Some of it stuck on my feet.

MOOS (voice-over): Remember how Sarah Palin made sure she wouldn't forget her three priorities?

SARAH PALIN (R), FMR. ALASKA GOVERNOR: We've got to start reining in the spending.

MOOS: Cartoonist Jeff Danziger drew imagined advice, handed down from Palin to Rick Perry: "Write it on your hand, stupid."

Jeanne Moos, CNN --

UNIDENTIFIED MALE: Name three Rice Krispies mascots.

UNIDENTIFIED MALE: Snap, Crackle, Sizzle.

MOOS: -- New York.


BLITZER: Jeanne Moos.

Thanks very much for watching.

I'm Wolf Blitzer, in THE SITUATION ROOM.

The news continues next on CNN.