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Search for Cruise Ship Survivors Continues; Mitt Romney's Tax Rate; "The Real Romney"; Wikipedia's SOPA/PIPA Blackout; Deadline In Wisconsin Governor Recall Battle

Aired January 17, 2012 - 16:00   ET


WOLF BLITZER, HOST, CNN'S THE SITUATION ROOM: Happening now: As divers work to recover the dead aboard a capsized cruise liner, shocking transcripts show the outrage of coast guard officials after the captain left his sinking ship. We're going to show you why the massive cruise ship ended up on its side and why some aboard were unable to escape.

And Mitt Romney isn't ready to show his tax returns, at least not yet, but the multimillionaire reveals his tax rate is a lot lower than what many middle-class families pay. We will explain what's going on.

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

Dramatic new developments today in the cruise ship disaster off the coast of Italy. After blasting holes in the capsized Costa Concordia, search divers found five more bodies. And that raises the confirmed death toll to 11. Nearly 12 people are still reported missing from the ship, which lies semi-submerged just offshore.

The massive liner hits rocks and ripped open its hull Friday night. This infrared video shows the dramatic escape as people clamor off the sinking vessel. The ship's captain is now under house arrest, and he may face charges of manslaughter and abandoning ship.

Now a stunning a new twist to the drama. It's revealed in transcripts of conversation between the captain and outraged authorities onshore.

Our senior international correspondent, Matthew Chance, is watching all of this unfold.

What's the latest, Matthew?

MATTHEW CHANCE, CNN CORRESPONDENT: These transcripts and these recordings that have emerged are really astonishing because they show conversations that were taking place between the captain of the Costa Concordia, that founded ship. His name is Francesco Schettino.

Speaking to the Italian coast guard, and the coast guard basically asking him what the situation was. He doesn't give a very clear picture at all. He sounds confused. Then it emerges, much to the astonishment of the coast guard, that the captain has abandoned the shi\p, this while hundreds of passengers are still on board, clinging to the sides of the vessel for their lives. Some bodies are there as well.

This is something that has absolutely shocked the coast guard. He becomes very angry. He orders the captain to get back on board and to coordinate the rescue efforts, which the captain says he will do, but apparently never actually does. That captain now, of course, being held and facing charges of abandoning his post and of manslaughter.

Take a listen to the conversation between these two figures.


CHANCE (voice-over): As passengers tried to escape the stricken Costa Concordia, shocking exchanges have emerged between a frustrated Italian cost guard and a captain now accused of abandoning his ship.

GREGORIO DE FALCO, ITALIAN COAST GUARD CAPTAIN: Captain, you are not able to tell me an exact figure? About a hundred people, it seems?

FRANCESCO SCHETTINO, SHIP CAPTAIN: Commandant, I am not able to give you an exact figure because let me explain... while we were evacuating the last passengers.

CHANCE: An astonished coast guard questions why he left his ship in the first place while his passengers still languished on board.

DE FALCO: And with 100 people on board, you abandon the ship?

SCHETTINO: I did not abandon any ship with 100 people. The ship skidded. We were catapulted into the water.

CHANCE: Regardless, the coast guard demands the captain returns to the ship to take the women and children still on board.

UNIDENTIFIED MALE: You go on board. It is an order. You cannot make any other evaluations. You have declared abandoning ship. Now I'm in charge. You get on board. Is it clear?

SCHETTINO: Commandant...

PORT AUTHORITY: Are you not listening to me?

SCHETTINO: I'm going.

CHANCE: But amid the chaos, the captain now facing charges of manslaughter and abandoning his duties never returned from his lifeboat. He may find that hard to explain.

Matthew Chance, CNN, London.


BLITZER: So what caused this massive ship, the size of a skyscraper, to end up lying on its side half-submerged? And why were some people simply unable to get out? CNN's Chad Myers is joining us now. He's got a closer look at what's unfolding.

This investigation, I suspect, Chad, only just beginning.


People ask me all day how can there be a hole in the left side of the ship, the left side, the port side, and yet it leaned over and it fell on the right side? That's because the captain did turn the ship back towards shore, and as that turns happens, it kind of like when you're in your car, you kind of lean when the car turns to the left or turns right.

The boat leaned, the boat listed right there and literally fell over onto its side with a huge hole in the bottom. Obviously, there is a lot of water going into this. When the captain said that we have lost power, it's because the engine room probably got flooded.

But there it was. It came very, very close to the shore, hit a rock that was just offshore right there, began to take on water, only went one more mile. And this is about one full hour to go this one mile distance. Then as it turned to the left, the entire boat fell over on to right.

I want to show you the size of this rock, because this is so significant, in my opinion. There's the rock right there. There is the entire -- now, this right here, Wolf, that's the waterline. This would be above water. Below this, this dark area, that's below water. This may only be five feet. I'm giving him the benefit of the doubt, maybe three feet below the waterline, where this rock was actually located.

So clearly no sense of saying too close to shore, no matter about that at all. But as the boat tipped over, there it is from the view. This boat's going to be here a long time. They will have to pump this water off. Something else is going on. There are still people missing on this boat. There may be doorways that simply will not open.

As the boat now is on its side, it's no longer a square boat. It's now becoming more of a parallelogram. This whole top structure is kind of sliding or bending. You put a door into a parallelogram hole, that door may not open at all and may absolutely jam shut and those people that are still -- 20-something people that are still missing may still be alive in that boat somewhere. They are certainly looking for them right now.

BLITZER: This whole notion -- I want you to show our viewers once again the route it was supposed to take, but they went so close to this island. And now there are all these reports that the captain wanted to just show off to people on the island so they could wave, get excited by seeing what was going on. It was obviously, clearly a reckless move to get that close to the shore, a huge vessel like this. I assume you agree, Chad? MYERS: I agree. It should have been two miles offshore. That's the shipping lane. That's where all the other ships we watched -- you can go to and you can actually watch where the ship went minute by minute by minute.

It turned clearly to the right. Then as it came in here, it was going to make a very close pass to show the people on the port side of the boat the beautiful island here. As it turned, I believe the way that hole in the stern looked, in the port side looks, it looks like the boat was almost sliding sideways, because it almost hip-checked that rock, and it would be that rock right there, as it was turning back then and was coming around.

It didn't even slide. It didn't make a glancing blow at this rock. It slammed into the side of the ship, making that huge hole, and then obviously taking on so much water. I understand they do this a lot to show people the beautiful shores and the beautiful coastlines, but you can't do it when there's a rock in the way.

BLITZER: Yes. Once it hit the rock, they should have just stopped, they should not have gone another mile and then made the U- turn. They should have just stopped and gotten everyone off. That boat would have never tipped over as it did, if they would have just stopped at that point and dealt with the hitting of the rock, instead of trying to move on. That's what a lot of experts have suggested to me over the past day or so.

Chad, thanks very much.

When thousands of people go to sea aboard a massive ship, any accident can become a massive disaster. And the cruise liner sinking off Italy could have even been much worse.

So who's making and enforcing the safety rules for these giant ships?

CNN's Mary Snow is joining us now and she's taking a closer look at this part of the story -- Mary.

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, it's an agency under the U.N. that is responsible for the safety of ships.

And under the International Convention of the Safety of Life at Sea, that's a treaty that came after the Titanic disaster, but there are questions how much power that agency really has.


SNOW (voice-over): As investigators search for answers into what caused the Costa Concordia disaster, one U.K. maritime union says the tragedy should serve as a wakeup call. Safety regulations haven't kept up with the growth of the cruise industry.

One concern, the ship's size, roughly the length of two football fields. The group says many ships are effectively small towns at sea, and the sheer number of people on board raises serious questions about evacuation.

The Costa clearly had issues with evacuation, as several people were trapped on board.

Michael Crye is with a trade group representing the cruise line industry. He says if the disaster is caused by human error, that is something that can't be regulated.

MICHAEL CRYE, EXECUTIVE VICE PRESIDENT, CRUISE LINE INTERNATIONAL ASSOCIATION: The fact is that this industry is remarkably safe. It has had a history that is very good, compared to virtually any other means of transportation.

So do they pose more safety risks? I don't know. Bigger, more people on board, the impact in a disaster might be greater. However, the regulations have kept place -- or kept pace with the increasing size of the vessels.

SNOW: Safety rules are set through the International Maritime Organization, which is an agency of the United Nations, and they apply them around the globe. But as one maritime attorney describes it, the agency has no teeth.

RICHARD ALSINA, MARITIME ATTORNEY: There is no general policing out there. They pretty much run their own show. They're very well politically connected. They have very strong lobbies. And it's a -- you know, it's a poor money business. And that's the interest, the money.

SNOW: Costa is effectively owned by Carnival, based in Miami, but it's operated in Italy, so it doesn't have to follow U.S. laws.


SNOW: Now, the International Maritime Organization did come out with a statement yesterday saying that the agency must not take the accident lightly, and that it should, in it words, seriously consider the lessons to be learned, and, if necessary, reexamine regulations on the safety of large passenger ships in light of the investigation being done.

BLITZER: And this investigation, as they say, it is only beginning.

Mary, thanks very much.

I want to show our viewers. We have some live pictures of the ship right now. It's obviously nighttime over there off the coast of Italy. But you can see workers there, rescue workers, and others dealing with this crisis. And what a crisis it is. These are live pictures coming in to us courtesy of Reuters. We will stay on top of this story -- much more on this story coming up.

Also, other news we're following. He's certainly a multimillionaire presidential candidate, but is Mitt Romney's tax rate lower than yours? (BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: What's the effective rate I have been paying? Well, it is probably closer to the 15 percent rate than anything.


BLITZER: Will he release his tax returns? And what impact will all this have, if any, on his front-runner status?

Plus, a controversial debate moment with Newt Gingrich. Jack Cafferty is standing by with "The Cafferty File."


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

JACK CAFFERTY, CNN ANCHOR: Wolf, Newt Gingrich is clueless when in comes to African-Americans. So writes Peter Beinart in a pretty tough Daily Beast column using Gingrich's own words from last night's Republican debate as proof.

Before we start here, keep in mind is a debate that was held on Martin Luther King Day in South Carolina.

One of the moderators, Juan Williams, who is black, asked Gingrich whether some poor and minority voters might be insulted by his comments, like when Gingrich said that poor kids lack a work ethic and black people should be instructed to demand jobs, not food stamps.

Gingrich, a native Georgian, pretty much dismissed the question, and the crowd applauded. So Williams tried again, asking if Gingrich's words aren't belittling to the poor and to blacks.


JUAN WILLIAMS, DEBATE MODERATOR: You saw some of this to a black church in South Carolina, where a woman asked you why you referred to President Obama as the food stamp president. It sounds as if you're seeking to belittle people.



GINGRICH: First of all, Juan, the fact is more people have been put on food stamps by Barack Obama than any president in American history. Now, I know among the politically correct, you're not supposed to use facts that are uncomfortable.


CAFFERTY: Gingrich finished this exchange, he got a standing ovation from the mostly white crowd.

Beinart (ph) writes what's fascinating here is that Gingrich is not a racist and he believes the former House speaker genuinely cares about black and poor people. Beinart suggests Gingrich's problem is ignorance, suggesting blacks and their leaders don't consider jobs important shows how out of touch Gingrich is with African-American politics and the priority that black leaders have put on jobs.

What's more -- and this is probably the worst part, it's all pretty tough -- Gingrich doesn't get why calling Obama the food stamp president is highly offensive to blacks, given the history of blacks in this country. Beinart writes, quote, 'The most plausible explanation is that Gingrich inhabits a cultural and intellectual bubble, a bubble called the Republican Party," unquote.

Tough stuff, and not very encouraging for the Republican Party when it comes trying to get blacks to vote for them.

Here's the question, then: does New Gingrich just not have a clue when it comes to African-Americans? Go to Post a comment on my blog or go to our post on THE SITUATION ROOM's Facebook page -- Wolf.

BLITZER: Jack Cafferty, thanks very much.

Newt Gingrich, by the way, is going to be here in THE SITUATION ROOM with me tomorrow.

Mitt Romney, meanwhile, isn't ready to make his tax returns public, but the multimillionaire Republican candidate has now revealed his tax rate is maybe a lot lower than yours.

CNN's Jim Acosta is out there on the campaign trail in South Carolina.


JIM ACOSTA, CNN POLITICAL CORRESPONDENT (voice-over): After weeks of sending mixed signals over whether he would ever release his tax records, Mitt Romney peeled back the curtain over his personal fortune just a touch.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: What's the effective rate I've been paying? It's probably closer to the 15 percent rate than anything, because my last 10 years, I've -- my income comes overwhelmingly from investments made in the past.

ACOSTA: Romney, who has an estimated net worth of up to a quarter billion dollars, effectively acknowledged his 15 percent tax rate is lower than what many middle-class families pay. It's actually closer to what billionaires like Warren Buffett pay, a fact that won't be lost on the president whose own tax rate, by the way, is roughly 26 percent.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Right now, Warren Buffett pays a lower tax rate than his secretary, an outrage he has asked us to fix.

ACOSTA: Gingrich, who has vowed to release his own tax records this week called on Romney to do the same before Saturday's primary.

GINGRICH: What is he saying to the people of South Carolina, you're not important enough for me to release my income tax?

ACOSTA: Romney is also taking hits from Rick Santorum. This new ad argues the former Massachusetts governor is just like the president.

NARRATOR: Obama gave us radical Obamacare that was based on Romneycare.

ACOSTA: It was a counterattack to this pro-Romney super PAC ad on Santorum.

NARRATOR: And he even voted to let convicted felons vote.

ACOSTA: Santorum accused Romney of dirty politics.

RICK SANTORUM (R), PRESIDENTIAL CANDIDATE: We don't need someone who supports lies and promotes lies and stands behind those lies in order to get elected president.

ACOSTA: Romney's response? What's the big deal?

ROMNEY: I hear that Rick Santorum is very animated that the super PAC ad says he's in favor of felons voting. Well, he is.

ACOSTA: He insisted he would get rid of super PACs if he could.

(on camera): Isn't it convenient now to say that you'd like to do away with super PACs after the damage have been done to several of your rivals?

ROMNEY: And to me. Have you not noticed that the super PACs have gone after me and the campaigns have gone after me? That's the nature --

ACOSTA: Well --

(voice-over): Romney also defended his claim at Monday's debate that he helped create 120,000 jobs at his investment firm Bain Capita. That's more than the 100,000 jobs he's touted in the past.

ROMNEY: They weren't businesses I ran, but invested in, ended up today having some 120,000 jobs.

ACOSTA: Romney got testy when asked about the new figure.

ROMNEY: Four companies created 120,000 jobs, OK? It's very simple.


ACOSTA: Romney did say today that he will release his 2011 tax returns in April, but by then, he may have already wrapped up the GOP nomination, that is, if he survives South Carolina first -- Wolf.

BLITZER: We'll see what happens Saturday night. Thanks very much, Jim Acosta.

We're going to get a lot more about Mitt Romney's taxes. We'll discuss it in our strategy session. Paul Begala and Terry Holt, they're standing by.

We'll also talk with the authors of a brand-new book about Mitt Romney and what he really did at Bain Capital, his leadership role in the Mormon Church, and a lot more. Stand by for that interview.

And why President Obama wants to see -- get this -- Betty White's birth certificate.


BLITZER: Lisa Sylvester is monitoring some other top stories in THE SITUATION ROOM right now, including one of the most popular Web sites apparently going dark.

What's going on, Lisa?

LISA SYLVESTER, CNN CORRESPONDENT: Don't panic, but for one day, you won't be able to use Wikipedia. The popular Web site says it would go off-line to protest the stop online piracy act. The bill will impose strict roles on Web sites that contain illegal copyrighted content.

Many media companies, including CNN's parent company Time Warner, support the bill. Most major tech companies however strongly oppose it on freedom of speech grounds.

And country singer Garth Brooks is in an Oklahoma court after suing a hospital. The two-year-old suit stems from a $500,000 donation Brooks made to the hospital. Brooks claimed the hospital promised to name a new wing after his mother, but the money is now being spent on other projects. The hospital claims it was an anonymous and unconditional gift.

And news you may be happy to hear. In every single state last year, the average credit card debt decreased, adding up to an 11 percent decline nationwide. Financial Web site reports Wisconsin, Mississippi, Alabama had the lowest credit card debt. Mortgage debt held steady nationwide and auto loan debt had actually increased -- Wolf.

BLITZER: Thanks very much, Lisa.

Searching for the real Mitt Romney. Two investigative journalists have a new book out on the GOP frontrunner. They're here to talk about what they've learned.

And Republican presidential candidate Rick Perry isn't backing off those controversial remarks he made about a close U.S. NATO ally. My interview with Governor Rick Perry, that's coming up in our next hour right here in THE SITUATION ROOM.


BLITZER: I'm Wolf Blitzer. Here are some of the stories we're working on for our next hour.

It's a disaster scene, possibly a crime scene as well. What's next with the Italian cruise ship. We're taking a closer look at how the massive salvage operation might unfold.

Also, my review with Republican presidential candidate Rick Perry. We'll talk about the race, his rivals, and the controversial remarks he made at another important NATO ally.

And why Stephen Colbert is asking people in South Carolina to vote for Herman Cain.

Stand by. You're in THE SITUATION ROOM.


BLITZER: As Mitt Romney has emerged as the Republican frontrunner, questions have raised about his family history, his corporate background, his wealth, his Mormon religion. Now, there are some answers.

And joining us now, Michael Kranish and Scott Helman, the authors of the brand new book, "The Real Romney." It's a hot new book and we want to get to the real Mitt Romney.

Guys, thanks very much for coming in. Thanks very much for writing this book.

Michael, let me start with you. Tell us a little about the role that Mitt Romney played when he ran Bain Capital.

MICHAEL KRANISH, CO-AUTHOR, "THE REAL ROMNEY": Right. Well, Mitt Romney, we tell a very detailed story that's different than perhaps when we hear from Mitt Romney or his opponents really explaining how he started out in venture capital, which is starting a new company like Staples, but then switching over to a more controversial field call leveraged buyouts. He was the head of this company. He was there for 15 years and this was basically an investment fund.

So, people who wanted to invest in this fund sort of like a super mutual fund, if you will. The minimum is typically a million dollars or more. You put your money in that fund. They then use that money to buy into existing companies. Sometimes that meant they shrunk the companies, employees might have been laid off, factories in some cases were closed, in some cases, jobs were created.

But there's a 15-year history. And I think what I've seen so far in a lot of the stories is a couple of companies are mentioned, everything sort of collapsed together. What really try to do is to give you a good sense about how and why he started this business, what actually happened, what were some of the winners and losers, and also what you can learn about his management style that perhaps he would bring to the presidency.

BLITZER: And, Scott, at the debate last night in South Carolina, he said -- he said this.


MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: The report is pretty darn good. You look at places like Staples, Bright Horizons, that steel company I talked about, the Sports Authority, they alone added 120,000 jobs as of today.

BLITZER: He also said maybe about 10,000 jobs were lost then went on to say you do the math. Is he right in his numbers?

SCOTT HELMAN, CO-AUTHOR, "THE REAL ROMNEY": The short around is this is impossible to say. This is a private equity firm. A lot of the records are unavailable publicly. There are no SEC filings. Some of the companies they were involved with were later bought, carved up or resolved.

So problem is and you know, in some ways it's good for him and in some way it's bad. It's impossible to be able to say this is -- these number of jobs he created. In fact, take the Staples Steel. Years ago he was careful to say I helped to create the jobs at Staples.

I helped create the jobs at the Staples and in fact most of the jobs at Staples were created after they had gotten their money back out. Now he does he get some credit for putting in VC money and starting that, sure, of course, but now I think he's adding those to his tally, if I'm not mistaken, of the jobs he's created.

So, you know, it's sort of all in your definition of the word "create." Did he help some, spark some? Absolutely, but did he have a hand in creating everyone those jobs? I think that's a hard fist to me.

BLITZER: That's a good point. When did, Michael, this to you, when did Mitt Romney decide he wanted to be president of the United States?

UNIDENTIFIED MALE: You know, some friends who know him would say he always wanted from a very early age to make up for his father's failure when his father, George Romney sought the presidency and failed to do so.

Clearly it's something according to his friends that he's had in mind for a very long time. We tell a story in the book that right after the passage of his health care measure as the governor of Massachusetts.

He walked across Boston common, went to the Ritz Carlton Hotel and met with Iowa leaders, Republicans, who he felt could help him become president. So it was something that he certainly was thinking about.

He'd set up committees almost shortly after he had become governor that you can now look back and see these were -- to set up a national political network so he could run for president.

HELMAN: And even long before that, I mean, as Michael said, I mean, you look back in history. He's been very careful from the very early age to do things that he knew might be examined some day. So he was very cautious about the business deals that he entered into.

A friend of his told me a story how many years ago someone came to him, an investor, and said why don't you go into this real estate deal with me. This friend said there was nothing illegal about it, but it was kind of shady, Romney was a little uncomfortable.

And his explanation was, look, if I have run for office, this is not something that I want people to know about. This was three, four decades ago, so I think for a very long time throughout his life he has very carefully at least kept open the possibility of being in public life.

And so it's, of course, no surprise to anybody who knows him that he's doing just that.

BLITZER: You write extensively in the book about Mitt Romney and his Mormon faith. He's been very active, of course, in the Mormon Church. Michael, what was his role as a leader in the Mormon Church?

UNIDENTIFIED MALE: I should kick it over to Scott who wrote the chapter.

HELMAN: I mean, this is something that's very important to understanding Mitt Romney, right? There is no Mitt Romney without Mormonism. It is central to who he is. It's central to who his family is and has been over the years.

His family was very involved in the creation, really, of development of this young faith from the 19th Century. So Romney held several roles as a church leader in suburban Boston. He was in charge of the congregation.

Then he was president of what's called the Boston State, which is essentially like a catholic diocese. It's a collection of different congregations. This was his first big leadership test. I mean, he was -- in the Mormon Church you have lay leaders who have incredible authority, great authority over the people in the church.

It's not like Catholicism or you know, Protestant churches where you have paid clergy. He was the clergy, so to speak. So he's counseling people on their marriages. He's delivering sometimes harsh messages from the church to sort of what the church thinks is the appropriate behavior for someone.

This was controversial often when it involved women. We tell a story in the book about how he counselled a single mother to give up her child up for adoption because the Mormon Church does not look kindly upon single motherhood.

So he's really involved in all facets of people's lives and was for years, really up to the moment he challenged Ted Kennedy for the Senate in 1994.

BLITZER: I don't know if this is your impression, Michael, but when I spent several hours with Mitt Romney out on the campaign trail in Iowa a few weeks ago, very charming, very outgoing, very friendly, certainly not robotic or any sense that you sometimes get in these debates or on television. Tell us a bit about Mitt Romney, the man on a personal level.

KRANISH: Well, certainly that's exactly right, if you talk to his friends, his family, they're sort of mystified by this public image of him as sort of cold and robotic.

But it is true also that he's had a bubble around him in many parts of his life, very controlled. The campaign has been very controlled over time about interviews. People he interacts with and so forth.

So I think both of true, and obviously he's had trouble connecting with typical voters. This is why you've seen so many stories over the last year about why can't he get over a certain percentage of the vote. So it's a challenge that he has in order to be successful if he is the nominee.

He's going to have to make that bridge between what he sees and those who see him close up and the way he does come across in public, which can be rather awkward and has its share certainly of awkward moments.

BLITZER: It's a really, really good book. I learned a lot about Mitt Romney. I'm sure anybody who reads it will as well. Michael Kranish and Scott Helman, thanks for writing "The Real Romney."

HELMAN: Thanks for having us, Wolf.

BLITZER: We'll have more on Mitt Romney and today's tax revelation.


ROMNEY: What's the effective rate I've been paying? It's probably closer to the 15 percent rate than anything.


BLITZER: Paul Begala and Terry Holt are standing by for our "Strategy Session."



ROMNEY: What's the effective rate I've been paying? It's probably closer to the 15 percent rate than anything because my last 10 years -- my income comes overwhelmingly from investments made in the past rather than ordinary income or greater than earned annual income. I get a little bit income from my book, but I gave that away and then I get speaker's fees from time to time, but not very much.


BLITZER: Let's talk what's going on in our "Strategy Session." Joining us our CNN political contributor, the Democratic strategist, Paul Begala along with the Republican strategist, Terry Holt. He made almost $400,000 in speaker's fees --


BLITZER: It depends on your definition of "much."


BLITZER: But the fact that most of his income over the past 10 years has been investments. He's already paid interest on all of that income once when he earned it, right? He's paid the taxes on that when he earned it.

Now this is investments. He's re-investing it so he pays the maximum of 15 percent. You got a problem with that?

PAUL BEGALA, CNN POLITICAL CONTRIBUTOR: A huge problem. It's what we've been calling the Romney rule. You know, first was Warren Buffett who raise this and he said that it's unfair for millionaires and billionaires to pay a lower tax rate than working people.

By the way, Ronald Reagan said the same thing. He called it crazy. That was Ronald Reagan's word, crazy. He said for a bus driver to pay a higher tax rate than a millionaire. Well, that's the Romney rule. Romney seems to believe that's a good thing for millionaires and billionaires to pay a lower tax rate than working people and I think most working people going to think it's an outrage.

BLITZER: On the $400,000 in speaker's fees, he does have to pay the higher tax rates, but on investments the rule is what, 15 percent.

TERRY HOLT, REPUBLICAN STRATEGIST: You can hate the rate, but don't hate the candidate. He's paying taxes according to the law and according to what the IRS --

BEGALA: Mr. Buffett wants to change it.

HOLT: Paul, you already had your turn. Since Ronald Reagan was president, millions and millions of Americans have been taken off the federal tax rules completely.

There are millions of people who don't pay taxes that get federal government services. You wouldn't say that they should pay something -- they're underpaid already.

The fact of the matter is you can hate the tax rate, the 15 percent or the 35 percent, but this man is paying taxes according to the law, and if he is then you should leave him alone. BEGALA: The law is rigged to -- I'm with you, I think millionaires and billionaires should pay their fair share. Mitt Romney thinks there should be a Romney rule. He gets special treatment, he and his wealthy friends --

HOLT: Three years, three and a half years, he hasn't done anything. Where is his bill? Has he come to the Congress and argued for it?

BEGALA: The last state of the union address, and I'll bet in a couple weeks it will be in there again. This is fundamental fairness.

HOLT: I think most Americans would have the opportunity rather than the security of a guarantee. They would rather have the opportunity to go out and do something for themselves. I think at least Republican voters would rather say, I want the chance to be successful, not to have success guaranteed --

BLITZER: Is this a big deal or little deal that he will release his tax returns in April as opposed to now.

BEGALA: It's a very big deal. You can tell -- you know, my old boss, mentor friend, Zell Miller, used to say a hit dog barks. Romney is almost robotic, he's so smooth.

If you watch him on that clip, he was stumbling and stammering, he did it last night in the debate when he's asked about taxes. He hates talking about this because he knows there's a problem there, right? So that's why he won't release those tax returns. He's going to have to now.

BLITZER: If it's 15 percent, he's already told everybody it's 15 percent so he's sort -- if that's the issue.

HOLT: In a lot of ways, he's told us the bad news first, because I think a lot of people don't really quite understand the tax code. I don't understand the tax code myself.

But ultimately if something is going to come out, let it come out. It's part of the process. He's left the door open for that and I think eventually that's what will happen.

BLITZER: Now, listen to Rick Santorum. He's another, by the way, Republican presidential candidate you've been following.

BEGALA: That $250 million behind Mitt Romney.


RICK SANTORUM (R), PRESIDENTIAL CANDIDATE: We're going to win this election because people are going to be excited and inspired by a leader who's going to bring real change to Washington, D.C., not someone who is going to be a manager and that to me is the real difference.


BLITZER: Sort of a modest, manager, I guess he's referring to Mitt Romney, right?

HOLT: I get that impression. Look, Rick has run a good campaign. He's been able to really attract some attention to a campaign that I think a lot of people had written off completely.

He did well in Iowa. He still has that -- to catch fire and I think Newt Gingrich is the main reason why Rick Santorum isn't the main alternative to Mitt Romney right now.

BEGALA: We'll see. He was endorsed by 100 or more Christian conservatives, mostly Evangelical leaders. Let's see if they can deliver. I suspect they can't, and I think that Terry is probably right. You know your party better anyway. I think Newt probably is taking the conservative vote away from Santorum. Both of them help Romney because they split the conservative.

BLITZER: Can Newt Gingrich stun the world and win South Carolina Saturday?

HOLT: I would be very, very surprised. You know, this is the last cheap contest. As we go along, you have Florida, five media markets in Florida, this is the last place where an underdog like Newt Gingrich or Rick Santorum has a chance, and I think they've all sort of squandered the opportunity because they're dividing --

BLITZER: If he has some billionaire friends who can fund "Super PACs," they can go into Florida and buy a lot of commercials.

BEGALA: They can, but -- Newt and his allies have -- they haven't focused their fire. They should pick one indictment. Maybe Romney is for the Yacht Club, not just the Country Club or maybe that he changed positions on issues that matter to conservatives like abortion or maybe that he was a moderate.

They're on too many different things. If they focus -- that whole debate last night, I didn't think I heard Romneycare brought up once. It's maybe his biggest negative with Republican primary voters and nobody in his opponents had the sense to bring it up. We'll see if they do. When is the next?

BLITZER: Thursday night right here on CNN.

HOLT: I think it's true that if you have too much of other people's money, you don't really spend it as wisely as you should. It doesn't matter how much money you have.

We both have been in campaigns where a little money can go a long way. If you got a great candidate, you got a great message. If you have millionaire donors, the money still has to be spent wisely on messages that resonate with voters. If that's not happening then it's money down --

BLITZER: That's why these guys hire guys like the two of you.

BEGALA: And I do advise a pro-Obama "Super PAC." Our viewers should know that, Bill Burton and I. HOLT: Good luck with that, Paul.

BEGALA: Thanks a lot.

BLITZER: It's as long as three football fields and weighs more than 100,000 tons, looking at a live picture right now. So what will they do with a capsized cruise ship? We're examining the options.

But first Betty White turns 90, and the comic actress gets a pretty funny birthday message from the oval office. That's coming up next in our Political Ticker.


BLITZER: Here's a look at some of the other political headlines making news on the CNN Political Ticker.

Democratic officials have announced that Charlotte's Bank of America's stadium will be the site of President Obama's speech accepting his party's nomination for another term.

It will come on September 6th, mark your calendar, the final day of the Democratic Convention in Charlotte. In 2008, then candidate Barack Obama gave his acceptance speech in a similar venue, Denver's Invesco Field.

A critical day for Wisconsin Democrats trying to recall Republican Governor Scott Walker. Today is the deadline to file the 540,000-plus signatures needed to force the vote.

State Democratic officials tell CNN they have collected more than a million signatures, which they'll submit by the close of business today. The effort was parked in 2010 when Walker joined Republican legislators in strictly limiting collective bargaining rights for public employees.

Birthday wishes for Betty White from the oval office. President Obama made a recorded cameo appearance on last night's NBC all-star tribute celebration of the actress's 90th birthday. Take a look.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: Dear Betty, you look so fantastic and full of energy, I can't believe you're 90 years old. In fact, I don't believe it.

That's why I'm writing to ask if you would be willing to produce a copy of your long-form birth certificate. Happy birthday, no matter how old you are.


BLITZER: Happy birthday, Betty from all of us here at CNN as well.

The first lady, Michelle Obama, is also celebrating her birthday, which the president noted as we welcomed the World Series champions, St. Louis Cardinals to the White House.


PRESIDENT OBAMA: It is wonderful to be here. It is wonderful to be joined by my wife. It is her birthday today. When we first married, it was a little controversial that she was 20 years younger than me, but now it seems to have worked out OK.



BLITZER: There's no word on how the first couple is marking Mrs. Obama's birthday this year. Last year, they went out to dinner. A happy birthday to the first lady from all of us here at CNN as well. I saw her Saturday night at the B.E.T. Honors. I must say she looked fabulous.

For a complete political coverage, please be sure to read the ticker on

Coming up in our next hour, the death toll climbs in the "Concordia" crew ship disaster. You're looking live at the partially submerged ship off the coast of Italy.

We're going the tense audio tapes raising new questions about whether the captain abandoned his post.

Plus new details coming in of a possible salvage operation.


BLITZER: Lisa Sylvester is monitoring some of the other top stories in THE SITUATION ROOM right now including layoffs by a major U.S. company. Lisa, what's going on?

SYLVESTER: Yes, that's right, Wolf. Kraft Foods says it plans to cut roughly 1,600 jobs in North America over the next year.

The company says it will split into two public companies by the end of 2012, one focused on the grocery business, the other on snacks. Kraft's brands include Cadbury, Maxwell House, Nebisco and Oreo.

And believe it or not Muhammad Ali is 70 years old today. The boxing legend celebrated his birthday in Louisville, Kentucky, where he was born cashes clay in 1942. Ali came to fame by winning Olympic gold as an 18-year-old and captured the title in a stunning upset four years later.

He also caused a stir in the 1960s with his opposition to the Vietnam War. A champion of civil rights for most of his life. Ali has battled Parkinson's disease since the early 1980s. In 2005, he was awarded the presidential Medal of Freedom.

And Paula Deen is on the defense. The celebrity chef confirms that she's had type 2 diabetes for three years, but is now explaining why she continues to cook food high in fat and sugar. Listen to what she told NBC's "Today" show.


PAULA DEEN: On my show, I share with you all these yummy, fattening recipes, but I tell people, in moderation, in moderation. You can have that little piece of pie. People see me on TV two, three times a day, and they see me cooking all these wonderfully southern fattening dishes. That's only 30 days out of 365.


SYLVESTER: Now, Deen says she didn't come forward earlier because she had nothing to give others with diabetes. She says she is now working with a pharmaceutical company on a new program called diabetes in a new light -- Wolf.

BLITZER: Lisa, thank you. Let's go to Jack. He's got "The Cafferty File" -- Jack.

CAFFERTY: Question this hour, does Newt Gingrich not had a clue when it comes to African-Americans? Some tense moments at that debate in South Carolina last night.

Avery writes, "Newt has no clue. Mentioning black children specifically and linking them to the poor who receive assistance is biased and racist. It's a shame, because if you just take out the black reference his ideas are almost viable.

It will be next to impossible for the general black vote to overcome their view when they have President Obama to compare him to. That's a lot of votes."

Richard in Pennsylvania said, "Newt said nothing that should be construed as negative to black Americans. We should all be treated as equals and if he has taken as racist or sensitive, the liberals are not being realistic.

And are looking to play the race card once again if a job is available, take it, learn from it, don't whine because you think it's beneath you. You'll be a better person for it, whether you're black or white."

David writes Gingrich doesn't have a clue when it comes to anything other than his own precious self." Joshua writes, "No, he doesn't have a clue, but neither does Obama."

Ray in Knoxville says he's not talking to or for the black audience nor does he care about them or what they think. He's talking to the white majority in this country and hoping that he can convince the large block of centrist independence to climb on board the fear wagon that Barack Obama's election created in the ranks of right wing, white America."

And Jane in New Hampshire says anyone who get $60,000 for a speech and has a million dollar credit line at Tiffany's doesn't have a clue about 99 percent of Americans of any color."

If you want to read more on this, you find it on my blog or through THE SITUATION ROOM'S Facebook page -- Wolf.

BLITZER: All right, Jack, thank you.