Return to Transcripts main page


Will Israel Attack Iran?; President Obama Targets Big Oil; Lawmaker Removed for Wearing Hoodie; Romney's Rich-Guy Image; Back and Forth On Russia; Spike Lee Apologizes to Florida Couple; Plan to Recover Apollo 11 Engines; Best Buy to Close 50 Stores; Jobless Claims Fall to Four-Year Low; Mixed Day on Wall Street; GOP Budget Passes House

Aired March 29, 2012 - 16:00   ET


GLORIA BORGER, CNN ANCHOR: Happening now: Americans say they are being hit hard by gas prices. And President Obama tries to hit back, why he's going after big oil.

Renewed concerns that Israel may strike at Iran's nuclear sites after a report that Israel has secretly been given access to air bases across Iran's northern border.

And fresh fallout from Mitt Romney's suggestion in THE SITUATION ROOM that Russia is America's number one geopolitical foe. The White House today is reminding Mitt Romney that the Cold War ended more than two decades ago.

Wolf Blitzer is off today. I'm Gloria Borger and you're in THE SITUATION ROOM.

The average price for a gallon of regular gas today is about $4. Make that $3.92. Our new poll shows nearly half of Americans expect that price to hit $5. That's $5 this year. And most blame the oil companies.

President Obama tried to hitch a ride on those sentiments today.

Chief White House correspondent Jessica Yellin is here.

Jessica, is the president really going after big oil again?

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Believe it or not, yes. It really felt like today was let's play politics with gas prices day in Washington.


YELLIN (voice-over): The president played his part from the Rose Garden.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Think about that. It's like hitting the American people twice.

YELLIN: He called on the Senate to pass a bill that would have eliminated billions in tax breaks for oil companies. OBAMA: American oil is booming. The oil industry is doing just fine. With record profits and rising production, I'm not worried about the big oil companies.

YELLIN: Up on Capitol Hill, Republicans charged that the White House was demonizing oil companies for political gain.

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: Somehow they thought that doing this would set off some kind of political win for them, which, frankly, I don't understand. I mean, I can't imagine anybody giving them any high-fives for not lowering gas prices.

YELLIN: The bill died in the Senate, but will no doubt live on in the presidential election. Can't you hear it now, Democrats saying the GOP voted for big oil?

Actually, that fight has already begun. The American Energy Alliance, a group with ties to the oil industry, is up with this ad in eight states.

NARRATOR: Tell Obama we can't afford his failing energy policies.

YELLIN: The head of the Democratic Party hit back.

REP. DEBBIE WASSERMAN SCHULTZ (D), FLORIDA: The American Energy Alliance is a front group for big oil.

YELLIN: Yes, there's a lot of hot air in the gas fight, but here is the policy. The Obama White House argues the president is trying to limit U.S. reliance on foreign oil through investments in alternative energy, new fuel-efficiency standards, and increased oil production in the U.S.

The Republican Party says gas prices have more than doubled under the president's watch.

Here's what an independent analyst says.

FRANK VERRASTRO, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES: In the short term, the ability of any president to affect gasoline prices in a meaningful way is extremely limited.

For purposes of comparison, when President Bush took office in 2001, the price was $1.55 and when he left office, it was $4.25.


YELLIN: Interesting comparison. Now, the White House argues accurately that oil imports are down since President Obama has taken office, but the GOP argues accurately that that's thanks in part to policies put in place by George W. Bush.

Now, I should also point out that the Obama campaign points out that Mitt Romney, who they expect to be their opponent, does not plan to eliminate oil and gas subsidies as part of his tax plan, although they say they're lowering the tax rate for everyone so it's a different ball game.

BORGER: Excuse me for being just a little cynical about this issue. But on the one hand, the administration is saying, OK, the Republicans are wrong for pushing more drilling. On the other hand, the White House has just come out calling for more exploration, which will lead to more drilling, right?

YELLIN: What they say is that they're for -- quote -- "all of the above." So they're taking a page from the Republicans' book.

BORGER: Right.

YELLIN: And, yes, in recent months, the president's administration has approved two plans for Shell Oil that would pave the way for them to potentially begin drilling in Alaska. They have also announced plans to do a new assessment of oil and gas resources in the Atlantic.

So big picture, yes, they're looking to say that they're expanding drilling potentially, too.

BORGER: Surprising that both sides want to take advantage of this issue. Jessica, thanks so much.

And the high price of gas has politicians pointing a finger at speculators also, but how do oil markets really work?

CNN regulation correspondent Lizzie O'Leary went down into the oil pits of the New York Mercantile Exchange to find out.

And Lizzie is here now to show us what she learned.

OK, so what's it like?

LIZZIE O'LEARY, CNN CORRESPONDENT: Look, it's a big market and Jessica is right, the thing that influences the price of gas is the price of oil, and the price of oil is set on a daily basis between many, many, many people trading lots of dollars and we wanted to show you what it looks like.


O'LEARY (voice-over): It looks like chaos, but what these guys are shouting about will determine how much that gallon of gas you put in your car will cost.

UNIDENTIFIED MALE: If they weren't shouting, I wouldn't have a job.

O'LEARY: This is the world of oil traders.

(on camera): OK, so think about it this way. Every single energy product that you use, whether that's home heating oil or gas that goes in your car or crude oil that makes up that gas, even the fuel that goes into fertilizer used on a farm is traded on this exchange. (voice-over): Ira Eckstein has been doing this for 20 years.

IRA ECKSTEIN, CEO, AREA INTERNATIONAL TRADING CORPORATION: This is a trillion dollar game and there are billion dollar players.

O'LEARY: And almost none of them will ever see a drop of the gooey stuff. They are trading the chance to buy or sell oil at a certain price in the future. It works like this.

If you buy an option at $120 for next month and oil goes to $150, you make money. That's long before the barrels of oil ever make it to their final owner, like an airline or an oil company.

And right now, regulators are debating whether all this trading is pushing up the price. The big players make expensive bets.

(on camera): How much money do I have to have to buy a contract?

ECKSTEIN: It's a good contract. It's a 1,000 barrel contract and crude is trading, you know, at $110, $110,000 to own the contract.

O'LEARY (voice-over): Those of us who don't have that much can do it this way.

(on camera): Do people call you and say, I noticed that I'm paying a lot more for gas and I see oil in the news. I want to get in on that.

UNIDENTIFIED MALE: Of course, of course.

O'LEARY (voice-over): Jeff Goldberg makes investments for ordinary people. You want oil. You can buy a fund that goes up when it goes up and down when it goes down.

JEFF GOLDBERG, BRANCH MANAGER, TD AMERITRADE: Buy low, sell high. That's the key.

O'LEARY: Pretty simple.

GOLDBERG: Sounds simple.


O'LEARY: Regulating this isn't simple. Congress passed a law that says one trader can't hold too much of any given thing, but traders down on the floor will tell you there's so much oil in the world and so much is traded on that exchange, the law really doesn't have that much of an effect on prices.

It's also worth remembering, to put this in a very consumerish standpoint, you actually kind of benefit from high gas prices. Most people already own a little bit of oil without realizing it in a 401(k), a mutual fund, maybe a couple of shares of Exxon in a retirement account. So even if gas is $4 a gallon, your 401(k) is growing. BORGER: That's a lot of comfort to us who have been filling up at the pump here in D.C. for $4.75 a barrel. Thanks so much for that, Lizzie.

And Israel has reportedly been given access to air bases on Iran's northern border, raising fresh concerns about a strike against Iran's nuclear sites. Citing American officials, "Foreign Policy" magazine reports that Iran's next-door neighbor, Azerbaijan, has quietly granted Israel permission to use the bases, part of a growing security relationship. AFP quotes Azerbaijan officials as hotly denying the arrangement.

CNN's Tom Foreman is here to sort this all out for us.

Tom, a little bit complicated.

TOM FOREMAN, CNN CORRESPONDENT: It is complicated and it's created somewhat of a firestorm here in D.C. as people debate this report in "Foreign Policy" magazine.

Let's talk about what would be involved if this is correspondent. Israel is over here. If Israel decided that in fact it was going to strike Iran over here, it faces one inherent problem, and you can see it right here. There's more than 1,000 miles of distance between the two countries.

An attack of this size according to previous analysis would involve 100 to 125 different planes flying this distance. Over that distance you really have to refuel the planes which means you will probably carry fewer armaments because you're trying to get most out of your weight of fuel and armaments that you have to get over there, which gives you basically one big strike to hit Iran.

However, if they wanted to do this, and if American Foreign Policy is correct with this, then you might be talking about Azerbaijan up here. We know there are about a half-dozen bases, some of them former Russian bases. But Azerbaijan and Israel have been building closer ties for a number of years now, diplomatically and in terms of their economies and in terms of defense systems back and forth.

How tight, we can't entirely say, but we do know these bases are up here. And if the Israelis in fact gained access to these through some kind of cooperative deal, which the Azeris are currently denying, look at the difference. Now the strike distance from up here in Azerbaijan to down in here will be somewhere between 400 and 500 miles.

Why does that make a big difference? This is why it makes a big difference, because the simple truth is if you start flying with F-15s and F-16s bringing in bunker-buster bombs like this, you will be traveling at anywhere from one to two times the speed of sound, depending on how fast you come in. Covering the shorter distance now gets cut down to maybe 40 minutes and something like that.

You're able to come in. These planes can carry these armaments and they can strike very fast in all conditions day or night, no matter the weather and they're good at defending themselves as they try to get out because we also know that the Iranians have very good air defense systems and they seem to have some of these around these nuclear facilities.

Why does all of this matter? The simple truth is if that's what happened and if in fact we were able to see this sort of thing happened if it went that way, being that much closer would give the Israelis an advantage of speed. Obviously, they come in faster. With speed comes surprise.

You're no longer flying over several different airspaces of different countries that might alert the Iranians that this was under way and they could possibly engage their targets in Iran longer because they'd be closer to being able to refuel and maybe fly another sortie and maybe hang around longer because they have more fuel and they're closer to overall support if one of their planes gets shot down. A helicopter from Azerbaijan could come in and rescue someone.

They could get more fuel and they could do all sort of things that might make a difference. All of this is theory, Gloria. We don't know that this is necessarily what would happen, but this is why it would make a difference. If in fact it did happen, an attack from up here is much, much easier than an attack from over here -- Gloria.

BORGER: So, Tom, we understand from Israel's point of view why this would be their plan, but aren't there some risks and a real downside here?

FOREMAN: Well, I do want out that from the point of view from everyone involved, nobody seems to be saying this is happening and this seems to be based on U.S. intelligence sources and what "Foreign Policy" found out.

Yes, but there are risks here. Among the risks, the simple truth is Israel would absolutely face a counterattack from Iran if it did this. Part of your force is now up here, which means it's not over here to help with the counterattack as much as it might be able to and you're also committing a substantial portion of your air force up here. If it had a problem, you have lost it and you also run the worldwide risk of dragging that would scare a lot of people of dragging other people in, including the Caucasus region up here between the Black Sea and the Caspian Sea, the bridge to Russia.

This is an area that's had a lot of troubles. If you had counterattacks this way and that dragged in other countries or even Russia, you have a totally, totally different confrontation than before. Again I want to stress, this is all nothing but essentially theory at this point, and sources that were reported by "Foreign Policy" magazine. We don't know that it would work this way, but you can see some of the complications and some of the potential advantages and disadvantages if it did -- Gloria.

BORGER: Thanks, Tom. And as you point out, far from reality at this point.

Newt Gingrich cuts back from his campaign, but is that the right move? Jack Cafferty is next.

And one congressman was escorted out for wearing a hoodie on the House floor, but are lawmakers being treated equally when it comes to their attire?

And Mitt Romney's a rich guy running for president as voters struggle to recover from a brutal recession. Will his gaffes about his wealth turn off the average guy?


BORGER: And Jack Cafferty is here with "The Cafferty File." What do you have, Jack?

JACK CAFFERTY, CNN ANCHOR: Gloria, good to see you.

There's a couple of ways to exit a political race. A candidate can withdraw gracefully or there's Newt Gingrich. The guy cannot take a hint and at this point he is likely hurting not only his party, but his own political legacy. As "Politico" describes it, quote, "The former speaker of the house has decided to cap off a historic career by spending the final weeks in the campaign in a political purgatory," unquote.

But that won't stop Mr. Newt. He's pledging to stay in the race all of the way to the convention in Tampa. He's hoping against hope for some extraordinary situation where Romney can't get enough delegates and Santorum is seen as unelectable. The problem is he's out of money. His big sugar daddy super PAC donor Sheldon Adelson, who has $15 million, says, quote, "Gingrich is at the end of his line," unquote.

There are no debates left to boost Gingrich. He can't afford to travel. He's fired much of his staff. And the media is starting to ignore him. People using words like laughing stock and delusional to describe the former speaker of the House. It's sad, really.

For his part Gingrich insists he's staying in the race to shape the political conservation and talks like $2.50 gallon gas. The trouble is nobody is listening to him any anymore.

CNN estimates that Gingrich has 137 delegates, Romney has got 571 and Santorum even has almost twice as many, 264. A CNN/ORC poll shows six out of 10 Republicans say Gingrich should drop out of the race. Also, a majority of Republicans say his party's nomination should be determined by the primaries, not the convention. It is so over.

The question is this, why won't Newt Gingrich face reality?

Go to, post a comment on my blog or go to our post on THE SITUATION ROOM's Facebook page.

Sort of pathetic, Gloria, really.

BORGER: Thanks, Jack.

You know, and this is a politician who cares about his legacy, right?

CAFFERTY: Well, apparently. But he's doing a lot of damage, I think. This isn't helping.

He's not going to be the president and he does have a history that he can put into a book and be somewhat proud of, but he's just sad at this point. It's pathetic.

BORGER: Well, it will be interesting to see what our viewers think. Thanks a lot, Jack.


BORGER: And a hoodie does not make a hoodlum. That's the point Congressman Bobby Rush wanted to make when he wore one on the House floor. But when he was forcefully removed solely because of his attire, it got us to thinking, how often is this rule actually enforced?

CNN senior congressional correspondent Dana Bash is on the case.

So, Dana, how rare is this?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, look, you see members of Congress running on to the House floor with sneakers, with jeans, things that they're not supposed to be wearing. So that's not rare, but what is rare is for a lawmaker to be called out on it like Rush was.

So, today, some people are saying if these rules are going to be enforced, they need to be done so across the board.


BASH (voice-over): Bobby Rush's hoodie on the House floor sure got attention.

REP. BOBBY RUSH (D), ILLINOIS: Racial profiling has to stop.

BASH: Especially since he was escorted out for breaching rules of decorum.


BASH: The incident intended to highlight Trayvon Martin's case is also raising questions about attire in the House, like members may not wear a hat and must wear appropriate business attire in the chamber.

This memorable outfit donned late last year by Democrat Barney Frank, tight t-shirt with no tie certainly did not qualify, but he was allowed to speak.

Congressional Black Caucus Chairman Emanuel Cleaver tells CNN the rules which he supports are unevenly enforced.

(on camera): You just came from the House floor just from voting moments ago. You've seen people who are not in proper attire?

REP. EMANUEL CLEAVER (D), MISSOURI: Oh, absolutely. And everybody up there will tell you that happens every day. People will get in the back of the room with all kinds of things on, and we've allowed it to slide. I don't think we can tolerate any of that anymore. And --

BASH: Because of what happened with Bobby Rush.

CLEAVER: That's right.

BASH (voice-over): Translation, House officials must start cracking down on dress code so no one can say Rush was singled out because of politics, party or race.

House Speaker John Boehner is famously fixated on appearances.

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: Jake, you could button your shirt and pull up your tie. You don't have to look like a reporter.

You do have to do something with that hair of yours. Get a brush, will you?

REPORTER: (INAUDIBLE) haircut, you'll pay for it.

BOEHNER: No, just a brush would do.

BASH: Such a stickler, minutes after an emotional farewell to Gabby Giffords he made this announcement.

BOEHNER: The chair would remind all members to be in proper business attire when you come to the floor of the House.

BASH: What about Cleaver's concern the rules are often ignored.

(on camera): There are members who go on the floor who are not in proper attire.

BOEHNER: Listen, I think the rules are enforced evenly. I've asked members on both sides of the aisle to leave the floor myself. I know the sergeant at arms has asked members to leave the floor. We expect all members to follow the rules, and the rules make it clear that members will be on the floor in proper business attire.


BASH: Now, an interesting footnote to this, the Congressional Black Caucus Chairman Emanuel Cleaver also told me that other members of Congress brought hoodies to the House floor yesterday and several asked him personally to put one on, but he declined again, primarily because he, like the House speaker, respects the rules of the House -- Gloria.

BORGER: But, Dana, the dress code has really changed over the years, right? I mean, I remember when women members of Congress could not go on the floor wearing slacks.

BASH: Oh, that's right. Nancy Pelosi talked about that just today, saying that she remembers when she wasn't allowed to wear pants. Barbara Mikulski who just became the longest serving female member of Congress said that she had to ask special permission to wear and she said when she walk on the Senate floor, it was like she was walking on the moon.

Now, the other ironic thing here, Gloria, is that the whole reason for this -- for this attire is to keep decorum in the House and these are among the most partisan times in the House of Representative and Congress in general. A little ironic.

BORGER: So, maybe there's a good reason. Thanks a lot, Dana.

And he's a millionaire running for president in very tough economic times. Well, Mitt Romney's tone-deaf references to wealth -- will they turn off the average voter?

And the White House sneers at Romney's suggestion that Russia is America's number one geopolitical foe.


JAY CARNEY, WHITE HOUSE PRESS SECRETARY: I'm pretty sure the Cold War ended when some of the folks in this room were still in elementary school.



BORGER: Mitt Romney has picked up two more big presidential endorsement. Tea Party favorite, Senator Marco Rubio of Florida, is now on the Romney bandwagon. He might have a shot at being number two on the Republican ticket. And Romney is to meet shortly with former President George H.W. Bush to receive his formal endorsement.

But while he's lining up the establishment figure, Mitt Romney the millionaire may still have some problems with the average voter because of his tone-deaf references to his personal wealth.

CNN senior correspondent Joe Johns is with us.

Joe, what about that?

JOE JOHNS, CNN SENIOR CORRESPONDENT: Well, Gloria, this is not his first rodeo. It's the second time Mitt Romney's run for president which sometimes makes it hard to understand why he's repeatedly getting hit for saying things that are either off message or inartful.


JOHNS (voice-over): Call them Mitt Romneyisms.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: You don't think it affects everybody -- y'all on a direct basis.

JOHNS: When he says something that seems to hit the wrong note for a guy who is running for president.

ROMNEY: I'm not concerned about the very poor. We have a safety net there.

JOHNS: It's hard to keep calling these things gaffes because he does it so often.

ROMNEY: I like being able to fire people.

Ann drives a couple of Cadillacs, actually.

JOHNS: Especially when he says things that seem to tell us something about the way he thinks. Latest example, an anecdote he shared on a conference call that he said was supposed to be funny.

But not so much to Romney's critics because it's basically about the state of Michigan losing an automobile plant.

ROMNEY: One of the most humorous relates to my father.

JOHNS: It's a simple setup. The candidate was talking about his famous father George Romney, who was president of a Detroit automaker more than 50 years ago before running for Michigan governor. He was in a parade with a band that didn't know how to play the Michigan fight song, but they knew the fight song of the Wisconsin Badgers.

ROMNEY: So every time they'd start playing "On Wisconsin, On Wisconsin," my dad's political people would jump up and down and try to get them to stop because they didn't want people in Michigan to be reminded that my dad had moved production to Wisconsin.

JOHNS: Republicans generally say they don't care about statements like this. Strategist Ron Bonjean point out the Democrats misspeak from time to time, too. Most notably, Vice President Biden.

RON BONJEAN, REPUBLICAN CONSULTANT: Being under the microscope 24 hours and seven days a week it is unlikely that people are going to view this as windows into his soul rather that these are sometimes turbulence that just occurs during a long campaign.

I mean, if you look at where Vice President Biden comes from, he comes from a long line of gaffes and people got used to it right and they don't view as who he is as a person. I think the same is for Romney.

JOHNS (voice-over): But there's another question whether Romney has done it so many times that now the media are scouring the record for every word that can be construed as a gaffe and giving it more play than something other candidates might say. ROMNEY: The trees are the right height.

KURTZ: The danger for Romney is that his own gaffes are feeding a media narrative that he's not just wealthy, but kind of clueless and out of touch with ordinary Americans. Once that becomes cemented, it is very hard to erase like an etch a sketch.


JOHNS: Howie Kurtz there talking about a controversial statement actually made by a top Mitt Romney staffer suggesting the campaign can reset like an etch a sketch for the general election.

There actually is a real question whether so-called gaffes like this get traction with voters anyway. A recent poll by Pew suggests 55 percent of Americans never heard etch a sketch story. Romney has all, but admitted that he needs to work harder on keeping on message -- Gloria.

GLORIA BORGER, CNN ANCHOR: Joe, I have to ask you about this report today in "The Washington Times" that Mitt Romney actually had a secret meeting, sounds ominous, with Newt Gingrich, of all people and our Shannon Travis ran into Newt Gingrich on an airplane today so --

JOHNS: Right.

BORGER: So can you tell us a little bit about what Gingrich had to say?

JOHNS: Well, it's funny. Gingrich didn't say too much. He basically said no comment when asked that. I mean, we've also made calls. I made calls personally to the campaign to try to get some real and solid confirmation. It doesn't seem like the kind of thing that would have to be that secret, quite frankly.

On the other side, we've reached out to the Romney people and they're not denying or confirming either. So the question is, number one, did this meeting occur? And number two, what did they talk about? We haven't gotten any information on either side so big mystery surrounding the meeting right now.

BORGER: Yes, but you know, lots of times, Joe, when you say no comment that actually is sort of a confirmation, but we'll have to wait to get more information. Thanks a lot, Joe.

JOHNS: Tells a lot.

BORGER: Right. And now joining me for today's "Strategy Session" on politics our Melody Barnes, she is President Obama's former domestic policy adviser and CNN contributor, David Frum. He is a former speechwriter for President George W. Bush.

Welcome to you both. Let's talk a little bit, David, about what Joe Johns was talking about, which was Mitt Romney's propensity to have gaffe after gaffe after gaffe. He's still making unforced errors and it's been a long campaign. Is it going to get any better? DAVID FRUM, CNN CONTRIBUTOR: We had very rich men run for president before. John F. Kennedy, Lyndon Johnson. You can handle it with a humor that connects you to people. Robert Carol reminds us in his new book of John F. Kennedy's way of dealing with this.

He was at a candidates meeting and one after another stood up and said I came up through life the hard way. I worked for everything I ever had and when it was Kennedy's turn he said I guess I'm the only person who didn't come up the hard way and didn't work for everything he had and that was --

BORGER: He was comfortable.

FRUM: He was comfortable so just be who you are. You don't have any choice.

BORGER: Well, what does this tell us about a candidate? I mean, President Obama when he was candidate Obama had a very long primary process and lots of people said he emerged as a better candidate when it was over. What does this tell you about Mitt Romney?

MELODY BARNES, FORMER DOMESTIC POLICY ADVISER TO PRESIDENT OBAMA: Right. I think it did, and in fact, the president would say that, in fact, that process made him a better candidate.

Look, I think what happened here is we don't know what sits in Mitt Romney's heart, but we do know that unforced errors start to tell people something about a candidate and the way they respond to questions.

The way that they process issues, the filter that they use to process issues and that after a while starts to set in the minds of the public and starts to create a narrative in the minds of the public and they start to respond.

Again as David was saying, this is the way they tell you whether or not they're comfortable with you and whether or not they want you in their living rooms.

BORGER: Whether you care about people like me, which is, of course, the big political question.

FRUM: You don't have to be like me, but you have to care about me.

BARNES: You have to get me.

BORGER: Well, that gives me segway to the issue of health care because health care reform is so important. We just had three grueling days at the Supreme Court on health care and the conventional wisdom kind of got turned on his head.

People expected the law to be upheld. Now lots of legal experts of which I am not one are saying no, no, no, it's going to be overturned. If this entire bill is struck down, not just the mandate, over 400 other provisions would go away.

And I want to put up on the screen some of the more popular ones such as children can stay on their parents' plans until age 26. Insurers have to cover pre-existing conditions. There are incentives to bring doctors and nurses to underserved area.

So David, if this were to happen, is there a Republican plan B?

FRUM: There is no -- there is no plan b and that's a -- I've been begging here, boom, boom, boom, for the past three years. You don't undo universal coverage when it comes. What Republicans need to do is focus on the things that are most obnoxious to Republicans.

The Medicaid burden that is going to be heap on the states, most of the new coverage that comes under the president's plan doesn't come from his exchanges in the mandate. It comes from Medicaid, a crashing burden on the states that the federal government only temporary --

BORGER: Republicans say repeal, repeal, repeal.

FRUM: I would say revise and reform because there are things in the bill that are good, that you can work with. But one more thing about the Supreme Court case, this is an example how journalists often are tempted to be theater critics when they should be -- that was a show. It doesn't tell you that much of what the court's going to do.

BORGER: Let me ask you this, Melody, because you were in the White House, very involved neck deep when this health care reform was written.

BARNES: Right.

BORGER: Now the White House is saying publicly there is no contingency plan if the Supreme Court strikes down. How can that be?

BARNES: Well, a couple of things and part of this goes to what David was saying. Look, everyone needs to take a good, long, deep breath. What happened in the Supreme Court is that tough questions were asked. That's what happens on the court.

I worked on a Senate Judiciary Committee as well. Courts do this and in fact, what we know from the lower courts is that Republican appointed, Democratic appointed judges upheld the constitutionality of this bill.

So I think that the tough questions were part of the normal, rigorous process of the court. At the same time, we also had a rigorous process in Congress. This bill was debated for over a year, almost a year and a half in Congress.

Exactly, who could forget that and all of the ideas were put on the table. This has been a process underway for over 70 years. The issues were debated. Congress voted. We came up with a plan that in fact brings a lot of good things to the American people. Things that we've talked about -- BORGER: Right. You know, you may be in a new environment with the Supreme Court. I'm going to have to have you folks hold it right there.

We'll be back in just a minute so don't go anywhere and Mitt Romney says Russia is America's number one geopolitical foe. We'll talk to these people about what the White House thinks about that in a minute.


UNIDENTIFIED MALE: Any suggestion that Russia is America's number one geopolitical foe is represents a profound or unique understanding of recent history.


BORGER: Well, Russia has been a hot political topic this week. It all started when president Obama was caught on a hot mic talking to the Russian president about the planned U.S.-led NATO missile defense system in Europe?


BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: This is my last election. And after my election I have more flexibility.


BORGER: When asked about that right here on this program, Mitt Romney told Wolf Blitzer this.


ROMNEY: This is, without question, our number one geopolitical foe. They fight every cause for the world's worst actors. The idea that he has more flexibility in mind for Russia is very, very troubling indeed.


BORGER: Well, as you'd expect this opened up a firestorm and today White House Press Secretary Jay Carney decided to say something about it.


JAY CARNEY, WHITE HOUSE PRESS SECRETARY: I'm pretty sure the cold war ended when some of the folks in this room were still in elementary school and any suggestion that Russia is America's number one geopolitical foe is -- represents a profound or unique understanding of recent history.


BORGER: We're back with President Obama's former Domestic Policy adviser, Melody Barnes and former speechwriter for President George W. Bush, David Frum.

So why is the White House getting involved in this war between the candidates, David?

FRUM: I so wish I was there for the follow up question, which is OK, Jay, so what does President Obama think is America's number one geopolitical foe?

BORGER: Did he get that question?

FRUM: He did not because, of course, President Obama's view is we have no geopolitical foes maybe Israel, but -- well --

BARNES: Not quite.

FRUM: What Mitt Romney was saying there I think is true. When you look at the range of problems the United States confront, that Russia has been the single most obstructionist and difficult country to work with, worse than China and worse than anybody on Iran, on Syria and Libya on a range of issues, they are the biggest obstruction there is.

BARNES: Well, actually, first of all, Jay was responding to a question that he was asked and that's why he made that comment, but al Qaeda, Iran --

BORGER: I think he had it in his hip pocket.

BARNES: Al Qaeda, Iran, cyber warfare, those are the threats that I think present the greatest threats to the United States and indeed off to the world. The president has made it clear where he stands on issues of nuclear non-proliferation.

He's made clear with where he stands on missile defense. It's consistent with what he said and what was overheard and he's come out and made that clear as well today.

I think, you know, he came out and covered the mic. He knows what he's talking about and he's got a score, a slew of foreign policy victories behind him.

This is an area where he stands very, very firm and very clear and I think that actually poses some problems for Republicans because they've got to throw out the playbook.

FRUM: If Russia were not backing Iran up, they have made it consistently more difficult --

BORGER: I'm not sure the White House would disagree with you on that. Of course, it would be easier. Thanks to both of you. Sorry, we have to cut that off there.

And to change topics, Spike Lee may be a great director, but he's got work to do on his tweeting. We have an update on the tweet that got him in some really hot water. That's next.


BORGER: Lisa Sylvester is monitoring some of the other top stories in THE SITUATION ROOM right now including an apology from Director Spike Lee. Lisa, what do you have on that?

LISA SYLVESTER, CNN CORRESPONDENT: Hi there, Gloria. Well, Spike Lee says he made a mistake by tweeting the wrong address of George Zimmerman, the man who killed Florida teenage Trayvon Martin.

The couple who lives at the address moved into a hotel after their address went viral. Lee is now asking his 250,000 Twitter followers to leave them alone.

Meanwhile, George Zimmerman remains in hiding and new video is raising questions about what happened the night of the altercation since Zimmerman appears uninjured on the tape. We'll have all of the latest from Florida in our next hour,

And days after James Cameron traveled to the bottom of the ocean, founder Jeff Bezos is announcing another stunning deep sea goal. He wants to recover engines from the rocket that carried Neil Armstrong and the Apollo 11 mission to the moon. The engines were found 14,000 feet below the surface, but after 40 years, it's unknown what shape they are in.

And potentially bad news if you work at Best Buy. Despite posting better than expected quarterly results, the electronic giant says it plans to close 50 U.S. stores by next year, prompting stock of the company to dive almost 7 percent. Best Buy is growing in at least one place though. Say they are opening 100 smaller stores in China.

And there's another sign of the improving job market. The number of people filing for unemployment benefits fell to a four-year low last week with 5,000 fewer people filing than the previous week.

Now despite the promising signs, though, it was actually below expectations leading to a mixed day on Wall Street. The Dow added 20 points while the Nasdaq dropped 10 points and the S&P slipped 2 points -- Gloria.

BORGER: Thanks, Lisa.

And a terrifying escape from an inferno. As wildfires spread through Colorado, one family captures their race to safety on video.


BORGER: The Republican-controlled House today passed the Republican leadership's 2013 budget. The plan written by Budget Chairman Paul Ryan calls for deep cuts and could still take nearly a quarter of a century to balance the budget, but it has no chance, absolutely none, to pass in the Senate.

CNN's Erin Burnett is with us and, Erin, look, this is a huge problem, but we've got a divided Congress so what do we do?

ERIN BURNETT, HOST, CNN'S "ERIN BURNETT OUTFRONT": Well, that is the key question. You know, I just talked to Senator Kent Conrad, obviously the chairman of the Senate Budget Committee, the man in charged with coming up with the Democrats' plan.

And he said well, Paul Ryan's budget is political and ideological and that's what you hear from people on the left. People on the right obviously say, look, it's been 1,065 days since the Democrats put forth a full budget and there you have it, Gloria, these two entrenched sides.

It's interesting though, and I will hold out hope, although we're going to be pretty strident in our frustration with Congress tonight, we'll hold out hope that something could happen by the end of the year.

You know, Kent Conrad for example says that he wants his legacy to be reducing the deficit, but he's choosing to pursue that legacy by not running for re-election. The best way to do that is not to be in the Senate and not to be the chair of the Senate Budget Committee.

That's a shockingly awful statement about our system, but we do have, at the end of the year, the expiration of the Bush tax cuts and the $1.2 trillion in sequestration, which as we know, the Republicans don't want the defense cuts and Democrats don't want the Medicaid and Medicare cuts.

That combined with some clarity on the health care front this summer and the election, there is a chance for a grand bargain, and I think we really have to hope we can get one. I don't know if you heard today, you know, Nancy Pelosi saying she felt ready to vote for Simpson Bowles.

I mean, what a shocking statement. In November 10, 2010, the proposal is unacceptable. So I don't mind some flip-flopping if it means people start saying they're going to work together so optimistic, but obviously not much to hope for today.

BORGER: You know, Erin, maybe the fact that the congressional approval rating is what, 10 percent?

BURNETT: I think you're being generous, Gloria.

BORGER: Could get some folks to actually move to get something done because they have to run for re-election, right?

BURNETT: Yes, I would hope so. You know, one of the frustrating things today on the Democratic side is they're saying, well, look, they put out this fact sheet, I don't know if you saw it, Senate Budget Committee fact sheet responding to Republican no-budget claims.

They're saying, you say we haven't done a budget in more than 1,000 days. Well, you're wrong. We put out this Budget Control Act, which is the same thing. I mean, these are all rhetorical games that they're playing and what Americans want is a real budget and a real timeframe with compromise on important issues.

So I'm just going to see some hope that we'll get it by the end of the year, but right now, tonight, it is just a whole lot of frustration.

BORGER: OK, I'm going to be optimistic with you, Erin. Thanks a lot.

BURNETT: Glass half full, let's do it.

BORGER: All right. Way to go.

And a massive wildfire spread through Colorado. One family captures their escape on camera. The frightening video coming up.

New details about a JetBlue pilot's scary meltdown. We're learning what he said in his rant from audio that's now in the hands of the FBI. Stand by.


BORGER: And Jack joins us again with "The Cafferty File" -- Jack.

CAFFERTY: The question this hour, Gloria, is why won't Newt Gingrich face reality? It is so over. Some of you, by the way, are in rare form today.

J.D. in New Hampshire writes, "Gingrich does not live in a reality-based world. He lives in Newtville. It's an imaginary place on the far side of the moon where commoners throw offerings at his feet."

Ed writes, "He does face reality, his version is different than most." Everett in Texas writes, "Newt shows signs of borderline personality disorder, one of the primary behaviors exhibited by such people is the need to create chaos. He doesn't feel warm until everyone around him is in chaos and he's getting all the attention because of the chaos he created."

Olive in El Paso, Texas, "Ambition can blind a man." Paul in North Carolina, "He is facing, reality, Jack. It's all about future speaking engagements and selling books. His political legacy isn't much to speak of anyway and as for the Republican Party, they have so many self-inflicted wounds no one is going to notice a few more."

Ken in Seattle writes, "Newt Gingrich is a megalomaniac and is greatly distorted view of reality, he's indispensable to the future of the party, the country, the world and probably the universe or at least the future of the moon. He thrives on the attention he's getting and probably has nightmares of the moment in time that it all goes away and he's forced to face his irrelevance."

Mike in Minneapolis writes, "I don't know, but I'll bet he won't get many dinner party invitations after this. The host will have to spray to get rid of him."

If you want to read more on this, you go to my blog file or to our post on THE SITUATION ROOM's Facebook page -- Gloria.

BORGER: Thanks a lot, Jack. And you're in THE SITUATION ROOM. Happening now, a terrifying escape from red-hot wildfires. This hour, the feverish battle against an inferno in Colorado and one family's race to safety captured on video.

Plus your child or grandchild may be the target of identity theft. It turns out youngsters are at high risk for a crime that could scar their financial record for years to come.

And a record lottery jackpot, more than half a billion dollars and climbing. We'll reveal exactly what you have to do if you want to beat the astronomical odds and win.