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Arraignment for 9/11 Mastermind; Jobs Report Released; Romney, Santorum Meet; Britain Sends Largest Warship To London; Violent Clashes At Egypt Protests; Flooding Strands Truck In Michigan; Hang- Glider Accused of Eating Evidence; Are The Job Numbers Good Or Bad?; Yahoo! CEO Caught Padding Resume; Navy Stealth Ship Up For Sale; Beastie Boy MCA Dies

Aired May 4, 2012 - 16:00   ET


WOLF BLITZER, CNN ANCHOR: Happening now: a disappointing new jobs report throwing fuel on the political fire heating up between President Obama and Mitt Romney.

We will also go live to Guantanamo Bay in Cuba, where the self- proclaimed mastermind of the 9/11 attacks is only hours away from arraignment.

And a rare conversation with the American Alan Gross. He called me from the Cuban prison where he's been held since 2009.

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

It's not only the number one issue for most Americans. It's also the issue that will determine who wins the White House in November. We're talking about jobs. And the latest unemployment report is not nearly what the Obama administration was hoping for.

And it's giving Republicans fresh ammunition only six months away from Election Day. We're covering all the angles of this story, beginning with our White House correspondent, Dan Lothian.

Dan, what's the reaction over there to these latest jobs numbers?

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, aides here and the president himself point out that when you compare the situation now to the depth of the recession, that progress is being made, but they also note the obvious, that there's still a lot of people out of work, there's still a lot of work to be done.

On that point, Republicans agree with the president, but they believe it's time for someone else to try and fix the problem.


LOTHIAN (voice-over): In a good news/bad news scenario, President Obama offered Americans the good news first.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Our economy created 130,000 private sector jobs in April, and the unemployment rate ticked down again. LOTHIAN: Down to 8.1 percent, but the reality, 115,000 jobs created in April, far below expectations and the smallest increase in six months.

CHRISTINE ROMANS, CNN CORRESPONDENT: All of this is a weak recovery. Post-recession recovery, you want to see more jobs growth than this.

LOTHIAN: There have been dips, spikes and flat lines as the president has struggled to turn the economy around. It's a fundamental component of his reelection strategy, but disappointing numbers feed the Republican argument that's Mr. Obama's policies are failing.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: This is a sad time in America, when people who want work can't find jobs.

LOTHIAN: House Speaker John Boehner was quick to accuse the president of wasting time by distracting people with -- quote -- "gimmicks and fake fights," a much different argument from the president's top economic adviser, Alan Krueger, who called the latest report more evidence that the economy is continuing to heal.

That's backed up by the unemployment rate in these battleground states, including Ohio and Virginia, where the president will be campaigning this weekend, all lower since he took office. But it's a mixed picture since unemployment over that same period has ticked up in these swing states.

Republicans sense an opportunity, even in states that embraced Mr. Obama's message of hope and change in 2008.

PETE SNYDER, VIRGINIA REPUBLICAN PARTY CHAIRMAN: America needs a turnaround artist right now.

LOTHIAN: The president believes his policies have put the country on the right path and urged young people at a suburban Virginia high school to put pressure on lawmakers who stand in the way.

OBAMA: There's too much at stake for us not to all be rowing in the same direction.


LOTHIAN: Now, as this campaign really heats up for the president this weekend, he does face a big challenge. And that is, since World War II, no president other than Ronald Reagan has been able to win reelection with unemployment above 6 percent.

So you see the president really turning to young people who were critical in his campaign in 2008, speaking to students today about keeping those interest rates on federal loans, student loans low so that they can have some of the burden removed off of their backs when they finally enter the work force -- Wolf.

BLITZER: Dan Lothian, thank you.

As disappointing as the latest numbers are, the real unemployment situation may be even worse than the latest report suggests.

CNN's Tom Foreman is taking us inside all of these numbers.

Tom, there's more here than meets the eye.


It's interesting to see people speaking to young people, because especially among them, the numbers are more than meet the eye. They have got almost a already 25 percent unemployment rate for young people in this country.

Let's look at the big difference here. The White House would like you to look at this, 8.1 percent, down 0.1 percent since March. You look at that and you say that's good. This is the problem number over here, 115,000 jobs created. That doesn't even keep up with how many people are entering the job market, so when you're creating that many jobs, you're losing ground.

So, if that's true, how can this be going down? The reason this is going down has to do with the monthly survey that the federal government does. This is how we figure out unemployment in this country. They call about 60,000 families. They talk to the people in the families and they establish who is employed, who is unemployed, meaning they would like a job and they're looking for a job, they just can't find one, and who is out of work force.

The problem right now is that this group down here is growing. We talked about those more than the 100,000 jobs created in this last survey. More than 300,000 people dropped out, said they're no longer looking. Now, maybe they decided to retire early or maybe they went back to school. It doesn't matter. They're out of the workplace.

And the result of that is really this whopping figure over here, 63 percent of Americans over 16, so people who would likely be in the work force, 63 percent are in the labor force. That is the lowest percentage of people in this country in the labor force since 1981, no matter how you spin that, a crushing, crushing number for anybody who's in office.

And then you have this other factor which people keep talking about. A job is a job. I think we are going to hear more about this particularly from the Republicans even as this goes on. The simple truth is when the government does that survey, Wolf, to determine who is in what sort of job, one of the things they're doing is saying simply, are you employed?

So if you lost a job where you made $120,000 a week running some sort of small company and you get a job where you make $30,000 a year, that's still counted as a job. So the bottom line is, this is probably what we have to look at, the 12.5 million people who are unemployed in this country. If you look at that number and say does that number substantially come down, that's the real key as to whether or not our employment situation is getting better, probably more so than the percentages at this point.

BLITZER: Because you make a good point. A lot of people do have jobs, but they are underemployed. They don't have the jobs they necessarily used to have or would like to have and are qualified for having, but it's a job and it puts food on the table, pays the bill.

Tom, thanks very much.

Let's a little bit dig deeper right now with our chief business correspondent. Ali Velshi is here to give us some further context.

Ali, 150,000 jobs in April certainly didn't meeting expectations, but it's not all bad news for the president.


No, look, this is one of those tough ones. Usually, the job report falls squarely into the category of either the president or his opposition about what they can do about it. This one is a tough one. Everything that Dan said is correct. The opposition -- the Republicans have a really good argument that this isn't enough.

And for a lot of those numbers that Tom just gave you, that's an argument they're using again President Obama. But take a look at this. Since President Obama took office -- and he likes to say don't hold me responsible for what happened before I took office.

Since he took office in January of 2009, 4.6 million jobs have been lost in America. As of this morning, four million have been gained back. So, 572,000 remain for President Obama to deal with about those things that happened on his watch. You divide that up between now and October, because it will be the October jobs report that comes out around Election Day, President Obama needs to see 95,000 jobs created per month.

That is something most economists say is easily achievable. So one of the lobs that Republicans threw at him is that more jobs were lost under your presidency than gained. That is one of the criticism he will probably be likely to fight back.

Notwithstanding all the rest of it, what Tom said, that there are people unemployed, and they're still not feeling good, and in some parts of the country, as Dan showed you, it's still not feeling like a recovery, on that one point, President Obama continues to be able to fight back against the Republicans.

BLITZER: Ali, do you see anything out there on the horizon that would make you think we won't necessarily be able to create even 95,000 jobs a month from now until November?

VELSHI: There are two things that could affect this.

The one, which is not likely, but we're going to be watching these elections in France and Greece very carefully this weekend, is if things go worse in Europe than they're going right now. If Europe has hit bottom, we should be OK. The big thing that could happen is Iran. Iran will spike the price of oil, and that will send us back into a recession, but, today, oil dropped by more than $4, so the world is not betting on that either, Wolf.

BLITZER: Ali, thanks very much.

Investors didn't like the jobs report at all. It helped push down all three major indices on Wall Street. The Dow was down more than 168 points, the Nasdaq almost 68. And the S&P lost 22 points, posting its worst week of the year.

A court hearing years in the making -- we're going live to Guantanamo Bay in Cuba, where accused 9/11 plotters are about to arraigned.

Plus, a call from a Cuban prison -- my exclusive conversation with the American Alan Gross. He used his one phone call a week to call me to talk about his case. You will hear the conversation. That's later here in THE SITUATION ROOM.


BLITZER: How quickly things can change in the world of politics.

Mitt Romney had an hour-and-a-half one-on-one meeting with Rick Santorum today. Santorum aides say he was pleased with the meeting, but that he isn't formally endorsing his one-time rival, at least not yet.

Let's discuss what is going with our senior political analyst, Gloria Borger.

What's going on? Why can't Santorum simply -- we know in the end he is going to endorse him.


BLITZER: What is this dance all about?

BORGER: I actually give him some credit, because he's not pretending they're BFFs. You know, they're never going to be good friends.

He won 11 states. It was a very hotly contested fight. He's very conservative. He's still worried about Mitt Romney on that front. He wanted to get some assurances from him that Romney is going to continue to talk about the issues that are important to the cultural conservatives, to the evangelicals and to get an assurance from Mitt Romney that he's never, ever again going to be for a health care mandate. That's very important to Rick Santorum.

So, I think they have some things they wanted to iron out. I was talking to his campaign, and I said, is this about getting Romney to help you raise money to pay down your debt or getting a speaking position at the convention? And they say, oh, no, no, no, of course not, because they say Santorum just wants some assurance on the issues, and eventually of course he will come out and endorse.

BLITZER: He will eventually.

BORGER: Eventually.

BLITZER: Here is what write in your column on, an excellent column, I must say...

BORGER: Thank you.

BLITZER: ... among other things: "After this combative primary season, watching Mitt Romney's former GOP rivals struggle with ways to endorse than one-time nemesis is painful. It's like they're trying to find ways to snuggle with Darth Vader. At the very least, the contortions are a tad awkward and unseemly. And in the real world, as opposed to the political world, the result is completely unbelievable. It's also a perfect example of why voters don't trust politicians."

BORGER: It is. It is. And that's why...

BLITZER: Strong words.

BORGER: Well, and that's why I'm giving Santorum some credit here, because he didn't turn on the dime.

I mean, you had Michele Bachmann, who, by the way, pulled out of the race in January, waited until yesterday to endorse Mitt Romney -- but she had told ABC News there's no way that Mitt Romney can beat Barack Obama. Now, she is endorsing the man she thought was going to lose.

And we have the case of Newt Gingrich. Take a listen to something he said January and what he said yesterday.


NEWT GINGRICH (R), FORMER PRESIDENTIAL CANDIDATE: I don't know of any American president who's had a Swiss bank account. I'd be glad for you to explain that sort of thing.

I'm asked sometimes, is Mitt Romney conservative enough. My answer is simple -- compared to Barack Obama? You know, this is not a choice between Mitt Romney and Ronald Reagan. This is a choice between Mitt Romney and the most radical leftist president in American history.


BORGER: So it was tortured, Wolf, I thought, but it was a way of saying, look, I'm not saying I really love Mitt Romney. What I am saying is that we need to beat the president of the United States, who is worse than we could ever imagine Mitt Romney being. So, again, to me it was a bit tortured, but to most people, you know, who don't cover politics day in and day out, well, it's a big sort of never mind.

BLITZER: Politicians do it all the time.

BORGER: They do it all, of course. You'll recall Hillary Clinton and Barack Obama. This time around, John McCain came out and endorsed Mitt Romney. Last time, of course, he beat Mitt Romney in the primaries. They do it all the time.

But we have a word for that. It's called politics. Not the way most of us live our lives. But it's politics.

BLITZER: And if our viewers want more, they should read your column at

BORGER: Thank you.

BLITZER: Thank you.

It was years in the making, but a self-proclaimed mastermind of the 9/11 attacks finally going on trial. We're going live finally to Guantanamo Bay in Cuba with the details.

And Osama bin Laden's driver is interrogated. We're going to show you the videotape. It's revealing. It's just been released by the Pentagon.


BLITZER: It's a day that's been years in the making, spanning two presidential administrations, a U.S. Supreme Court case and congressional uproar. But tomorrow, the case against Khalid Sheikh Mohammed, the self-proclaimed mastermind of the 9/11 terror attacks, begins in earnest with arraignment at Guantanamo Bay in Cuba.

Our Pentagon correspondent Chris Lawrence is already on the scene for us. He's joining us now live with a preview. Chris, tell our viewers what we can expect.

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Well, Wolf, that is the key -- what will Khalid Sheikh Mohammed say? What will he look like?

Remember, it's been years now since anyone in the public has laid eyes on this man. And that is why a lot of the victims' families have come here to see him for the first time in years and no one knows what he is going to say.


LAWRENCE (voice-over): The man accused of masterminding the 9/11 attacks will have the stage again this weekend. The question, what will Khalid Sheikh Mohammed do with the spotlight?

REAR ADM. DON GUTER (RET.), FORMER NAVY JUDGE ADVOCATE GENERAL: And I've had conversations with other people that think the circus is going to begin, with the first appearance. So, I think you have to tune in and find out what's going to happen.

LAWRENCE: Former judge advocate general, Don Guter, felt the Pentagon shake on 9/11. One of his staffers was on the plane that hit the building, but Guter opposes trying suspected terrorists at Guantanamo Bay.

GUTER: This is a risky way to take care of these trials, these important trials.

LAWRENCE: In 2008, Khalid Sheikh Mohammed pled guilty to murder and said, "I'm looking to be a martyr." But that military commission got canceled.

LT. COL. NEAL PUCKETT (RET.), FORMER MARINE CORPS LAWYER: The original set of rules and laws that were set down under the Bush administration for the trial by military commissions were basically struck down by the Supreme Court. And so they had to start over, and basically put together a new framework.

LAWRENCE: In 2009, Attorney General Eric Holder announced he was moving KSM to New York, to be tried in federal court.

ERIC HOLDER, ATTORNEY GENERAL: Those allegedly responsible for the attacks of September the 11th will finally face justice.

LAWRENCE: The back lash, public and political, was fierce.

UNIDENTIFIED MALE: It's an unnecessary risk to the city of New York.

LAWRENCE: Holder reversed his decision last year, taking KSM back before a military commission and this weekend's arraignment.

PUCKETT: And that's definitely a political question, definitely a question for whichever administration has Gitmo on their plate.


LAWRECE: Chris Lawrence on the scene for us at Guantanamo Bay. We'll get back with him.

We're also getting a look at controversial videos of terror suspect interrogations.

Brian Todd is working this part of the story.

Brian, what are you finding out?

BRIAN TODD, CNN CORRESPONDENT: Wolf, these tapes are very revealing on the dynamic between detainees and their interrogators. These tapes got a thorough security review by the Pentagon before they were released.

Now, on the most notable tape, we don't see waterboarding, but the atmosphere is tense for everyone in the room.


TODD: He's sat down in a dingy cell with a hood on. A few seconds later, it's removed, revealing the face of Salim Hamdan, Osama bin Laden's former personal driver. He's interrogated with the machine gun-toting guard watching him the whole time.

This video just released by the Pentagon. It was played in open court, part of the military commission's process for prominent detainees. In this interrogation, believed to have been done in Afghanistan in 2002, Hamdan is grilled about missiles and other weapons found in his car.


INTERROGATOR: Whose car was it?

HAMDAN: It belonged to a friend of mine who was in Kandahar. I am telling you the truth, even if you don't believe me. You don't believe me, but it's true. But he never told me. I do not know how to use them.

TODD: Hamdan was eventually convicted of providing material support to al Qaeda, cleared of more serious charges of conspiring with al Qaeda. He served more than five years at Guantanamo, but has since been released and is now believed to be back in his home in Yemen. He's appealing his conviction in U.S. civilian court.

We spoke with an attorney whose organization helped detainees like Hamdan challenge their detention.

SHAYANA KADIDAL, CENTER FOR CONSTITUTIONAL RIGHTS: This larger question of whether we ought to be interrogating people lawyers present, you know, this tape kind of focuses the public I think on that question.

TODD: Among other videotapes just released -- grainy, jagged images from Tarnak Farms, Afghanistan, al Qaeda's main training camp in 2000. There's no audio, but you see Osama bin Laden addressing his fellow jihadists.

In this scene, recognize the man smiling on the right? That's Mohammed Atta, the lead hijacker on September 11th, sporting a beard and what looks like a warm-up suit. He's believed to be giving his last will and testament.

The other man later seen next to him also believed to be a 9/11 hijacker. On the Hamdan interrogation tame, some gamesmanship, the detainee turns the table on his interrogator.

HAMDAN: Can I ask you a question?

INTERROGATOR: What question?

HAMDAN: You won't get mad? Where are you from?

INTERROGATOR: I don't understand. Why do you need to know?

HAMDAN: It's just a question. I told you not to get upset.


TODD: The interrogator never answers that question. The translation was provided by the Department of Defense, Wolf. Some very interesting back and forth between the two there.

BLITZER: So, with Hamdan's appeal, what's the main legal issue here?

TODD: Well, whether the charge that he was convicted of at Guantanamo, material support of terrorism, whether that's actually a war crime or not. Hamdan's lawyers say that it is not a war crime under international law, so it can't be charged to him in this military system commission. The government says it is a war crime under common laws of war. So, they're going back and forth.

This is being argued in the U.S. civilian court. I think it's the first time that's ever been done in a U.S. civilian court with the detainee's case.

BLITZER: Which is different than the military tribunal at Guantanamo Bay.

TODD: That's right.

BLITZER: Brian, thanks very, very much.

Let's dig a little bit deeper. Right now, joining us, our CNN national security contributor, Fran Townsend. She's a former homeland security adviser to President George W. Bush. She's also a member of both of Homeland Security and the CIA external advisory boards.

You know, I spoke with Jose Rodriguez earlier in the week, Fran. He was in charge of clandestine operations for the CIA, involved in interrogations, some of those enhanced interrogation techniques, as they were called. Is it my sense -- he says there are far fewer interrogations nowadays than there used to be. Nowadays they just send drones out and kill these guys, as oppose to trying to capture them to interrogate.

FRAN TOWNSEND, CNN NATIONAL SECURITY CONTRIBUTOR: Look, we should be very clear that the most effective technique is to go out and capture them and debrief them for their intelligence value, so they can tell you, you know, potential plots, they can tell you other actors. I mean, that's the preference.

And even John Brennan, President Obama's homeland security adviser, acknowledged that. John Brennan's response to Jose's statement was, if we could capture them and interrogate them, we would. We use the drones when that's not a viable option.

BLITZER: The trial of Khalid Sheikh Mohammed, which is about to begin tomorrow at Guantanamo Bay, should there be any serious concern of blowback, if you will, from the terrorists out there, as they watch all of this unfold?

And Chris Lawrence, our man, is on the scene for us. We'll obviously like other news organization have extensive coverage of this trial.

TOWNSEND: You know, Wolf, I don't think so. I mean, look, there are those who will be in Afghanistan and the Taliban, people who will be watching for things they can use to either recruit or fund- raise or inspire troops, but the fact is from our enemy's perspective, it's years ago, and it's not really relevant to today's fight. He really is a relic of the past, as was bin Laden, but he's not the same sort of inspirational figure in al Qaeda that bin Laden was.

And so, I think you will see blowback, but I think you will see them try to use things that come out at the military commission for their own purposes, for their own propaganda.

BLITZER: You think Khalid Sheikh Mohammed will actually take the stand?

TOWNSEND: You know, that's interesting. That's always been the concern. It was a particular concern at the point where Attorney General Holder suggested he was going to try him in federal court. That would have been an absolute circus, because he was entitled to do that. He may still try to do that, Wolf, and have his moment, where he can espouse sort of unrestrained his ideology, his sort of hatefulness.

He said he wants to be a martyr. I don't think he really fears the system or what it can do to him, so I think we ought to expect that he very well might. And I would imagine that would be very disturbing to the victims' families who are there in Guantanamo to watch.

BLITZER: I think the only question I have really is he's going to be convicted, but will he be sentenced to execution or life in prison without parole? What's your guess?

TOWNSEND: You know, Wolf, look, the down side to him being executed is he will get what he says he wants. And that is he will be made a martyr. That said, I must tell you on balance, given his responsibility for the deaths of nearly 3,000 Americans, it's certainly warranted in this case.

And so, I don't think it should be a shock to anyone if that's what he get, if he winds up being executed. I'm not so worried in his case.

You know, when it was the -- we've had other trials where they were not executed. That was probably warranted then, the East African embassy bombings, for example, but Khalid Sheikh Mohammed is such a class apart and responsible for the blood on his hands of so many Americans.

I don't think anybody would argue that if he is convicted, it's certainly warranted in this case. BLITZER: Fran Townsend, thanks very much.

Britain meanwhile is taking every possible security measure ahead of this summer's Olympic games in London. Fighter jets and missiles are being deployed. The Royal Navy has sent its largest warship to the capital carrying a number of helicopters and our senior international correspondent, Dan Rivers.


DAN RIVERS, CNN INTERNATIONAL CORRESPONDENT: Well, this is "HMS Ocean" 21,500 tons of warship sailing right up the River Thames into the heart of London and will become the focus of the massive security operations for the Olympic Games involving 13,500 military personnel.

On board are these lynx helicopters. These ones will be used to patrol the river, and if necessary, snipers on board will take out any threatening boats on the river. These green helicopters over here belong to the army.

They are tasked with patrolling a huge no-fly zone that will encircle the Olympic stadium 48 kilometers across. Rear Admiral Ian Quarter told me why it's so important to have such a massive warship right in the center of London.

UNIDENTIFIED MALE: If we do detect a suspicious vessel, then the helicopters alongside police boats and some of our own boats will close on that vessel, and we'll go through a range of measures to try to ascertain what it's up to action and then if necessary, to try and stop it.

RIVERS: Part of this undoubtedly a show of strength by the British government. Secretary of State for Defense Philip Hammond insists that they have every eventuality covered.

UNIDENTIFIED MALE: We have a robust security plan in all three domains -- on the land, in the river where we are providing supporting assets. And an in the air defense plan, which is an extension of our usual 24/7 air defense arrangements, but stepped up with additional assets for the Olympics.

RIVERS: This is the first time that "HMS Ocean" the biggest ship in the Royal Navy fleet has ever come up the Thames. It's been quite an operation to get her navigated safely through at the barrier, through the Millennium Dome, and finally into Greenwich, where she will remain throughout the Olympics with her 400 personnel aboard. Dan Rivers, CNN, on "HMS Ocean" in London.


BLITZER: He's allowed only one phone call a week. Just a few hours, an American imprisoned in Cuba used it to call me. My exclusive conversation with Alan Gross that is coming up later in THE SITUATION ROOM.

Plus a bizarre case of alleged obstruction of justice. Video evidence in a hang gliding death swallowed by the suspect.


BLITZER: Mary Snow is monitoring some of the other top stories in THE SITUATION ROOM right now including fierce clashes once again in Egypt. Mary, what's going on?

MARY SNOW, CNN CORRESPONDENT: Wolf, one person is dead. Almost 300 people are wounded during violent protests against Egypt's military government. You can see security forces beating people in this video after the protesters threw rocks at the police.

Thousands descended on downtown Cairo to demand the resignation of Egypt's interim government, which they say is delaying the transition to civilian rule.

Heavy flooding is causing problems for commuters in Flint, Michigan, especially for this truck driver, who had to stand on top of his truck to stay dry when he got stranded. He said he was driving down a highway when it suddenly turned into a lake. Crews were able to rescue him using a small boat.

A hang glider pilot is accused of swallowing evidence after a woman plunged hundreds of feet to her death. Investigators are trying to figure out why she fell and accused the instructor, William Orders, of eating the memory card containing the video recording of the flight. X-rays confirm the card is in his body, but don't know if it's still usable. He's been charged with obstructing justice -- Wolf.

BLITZER: Wow. All right, Mary, thank you.

Let's take a look at this hour's "Hot Shots." In New Zealand, a mass demonstrator protests the sale of public assets by the government.

In Hongkong, a child points at the preserved remains of a baby mammoth. In Sri Lanka, a student rides her back down the road in the northern of Japna.

In Moscow, look at this, a sculptor walks by his work, a model made out of the sand. "Hot Shots," pictures coming in from around the world.

So how good or how bad are the new jobs numbers? President Obama is going to tell you one thing. Mitt Romney will say something else. We're trying to cut through the spin on this key election-year issue.

To make its case to women, the Obama campaign lays out a woman's entire life on its web site. Why a leading Republican now says he doesn't want his daughter to grow up like, quote, "Julia."


BLITZER: Some news. A new jobs number mean the economy is actually improving, or is it such a small increase that it's actually a bad sign? The answer, of course, depends on who you ask, especially during this, an election year. Here's CNN's Jim Acosta.

JIM ACOSTA, CNN POLITICAL CORRESPONDENT: Wolf, the Romney campaign sees this new jobs report as a gift, just one day before the president kicks off his re-election campaign, but Mr. Obama is already campaigning, knowing full well the jobs market isn't heating up. But the issue of jobs is.


ACOSTA (voice-over): There they were, President Obama and Mitt Romney at nearly the same time, two separate events, two different takes on the new unemployment numbers.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: Our economy created 130,000 private sector jobs in April, and the unemployment rate ticked down again.

ACOSTA: But the president acknowledged the obvious. The new rate 8.1 percent is not good enough.

PRESIDENT OBAMA: Which means that we've got to do more.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: People across the country are having hard times, wondering why it is.

ACOSTA: Romney was also crunching the numbers, arguing the jobless rate should be much lower.

ROMNEY: Anything over 8 percent, anything near 8 percent, anything over 4 percent is not cause for celebration.

ACOSTA: But the rate hasn't been below 4 percent since December of 2000 when it stood at 3.9 percent. Romney appeared to be setting a new political benchmark, after spending much of his campaign blasting the president's stimulus plan for failing to keep the unemployment rate below 8 percent.

ROMNEY: Three years ago, a newly elected President Obama told America if Congress approved his plan to borrow nearly a trillion dollars, he would hold unemployment below 8 percent. It hasn't been below 8 percent since.

UNIDENTIFIED MALE: Under President Obama, is America moving forward or backward?

ACOSTA: Still, Republicans smell blood, seizing on the sluggish recovery in web videos.

And mocking a new Obama campaign web tool called "Julia." It allows visitors to click through the various stages of the imaginary woman's life from cradle to grave, showing how government programs from Headstart to the new health care law are there to help.

Conservatives see "Julia" as the poster child for government dependency. CNN political contributor, Ari Fleischer tweeted that based on the bad unemployment report, it appears that "Julia" has given up looking for work.

Answering "Julia's" critics, Obama campaign manager, Jim Messina tweeted, I feel great about our "Julia" web tool and love the Republican freak out.

PETE SYNDER, VIRGINIA VICTORY 2012: The president is talking to students and their parents about amassing more debt.

ACOSTA: With so much writing on the jobs fight, Romney operatives were spinning outside the president's event in Virginia where Governor Bob McDonnell could end up on the GOP ticket.

GOVERNOR BOB MCDONNELL (D), VIRGINIA: Independent voters will control outcome of the election in Virginia. They care about jobs in the economy.

ACOSTA: But as he points out in this pro-McDonnell PAC ad, he states jobs picture is getting better.

MCDONNELL: Virginia is growing strong again and so is our future.


ACOSTA: Romney and the president are in battleground states mode months ahead of schedule with candidates and their surrogates heading to Virginia, Ohio and other swing states repeatedly over the coming days -- Wolf.

BLITZER: All right, Jim, thank you. Jim Acosta reporting.

Let's dig a little bit deeper in our "Strategy Session." Right now joining us the Democratic strategist and CNN contributor, Hilary Rosen and also joining us our CNN contributor Erick Erickson. He's the editor in chief of

Erick, last August, the unemployment rate was 9.1 percent. Now it's 8.1 percent. That looks like it's moving in the right direction.

ERICK ERICKSON, CNN CONTRIBUTOR: Well, it does look like it's moving in the right direction. There are two problems with it moving down from 8.2 to 8.1 percent. The biggest problem is that a population the size of Albuquerque, New Mexico has dropped out of the size of the workforce.

That's why it went down by 0.1 percent. Not because it added 130,000 jobs. We're talking 522,000 people are now gone from the work force, which an accelerated trend. There are less people in the workforce now than it was when Ronald Reagan became president, which is troubling.

The other big problem though is this right here, this dollar bill, for the people who are still in the workforce. You can buy less with that dollar bill today than you could three years ago.

That's a real problem for Barack Obama. No president has been re-elected when the purchasing power of the American worker has gone down.

BLITZER: You're saying because of inflation, the value of the dollar has gone down, but inflation has been relative modest.

ERICKSON: It's not just inflation -- that's the problem. The cost of milk has gone up, the cost of gas, the cost of basic staples have gone up. Gas has gone up. That's transcended into plastics, so Americans' pay is not keeping up with inflation right now.

BLITZER: Well, let me let Hilary respond to all of that. The basic point he's making though is the unemployment number went from 8.2 to 8.1 percent, has about 350,000 people simply dropped out of the work force. Go ahead, Hilary.

HILARY ROSEN, CNN CONTRIBUTOR: Well, actually, there have been private sector jobs created. We heard President Obama say that in the earlier piece. You know, we had 26 straight months of job creation, but it is not enough.

The interesting thing I thought was the earlier report from Ali Velshi, where he said that actually President Obama has just about now succeeded in restoring all of the jobs that were lost in the year before he became president.

You know, that was not an easy thing to do. I do think that people understand how hard that is. Here's what's troubling me, though, in addition to the slowing economy. What really trouble mess is the disparity now between kind of the haves and have-nots. The stock market is now at an all-time high.

CEO pay is at an all-time high, so really we have the wealthiest people holding on to their money, not investing in making this economy grow, and those are actually the people that the Republicans are trying to give additional tax cuts too, to, additional incentives.

That's not the priority we should be focusing on right now. What we need to focus on are the middle class and working poor struggling to find jobs. That takes investment.

BLITZER: I don't really understand, Erick, maybe you have a better appreciation. Hilary makes a fair point, the Dow Jones Industrials were below 7,000 or so around the time the president was elected.

Now they're over 13,000, so a lot of investors who have stocks, whether in their portfolios or 401(k)s, retirement plans, they have made money if they invested in stocks, but it's not trickling down in creating the huge number of jobs that need to be created.

ERICKSON: You're right. One of the problems is that a lot of the money that's out there, to some degree, is tied up in stocks. They don't want to get the money out. They don't want to reinvest. There's still a lot of uncertainty out there as to where that money should go. What will the president do when the president goes out and says he wants to raise taxes on people?

Well, you know, there are people right now who make a lot of money, have a lot of debts, and they don't know what the situation is. There are people in the middle class, who would like to invest to get ahead and they don't think they can.

Wolf, frankly there's a larger problem that neither party seems to want to address right now. That is we haven't had net new jobs in this country since 1998 neither Democrats or Republicans have been able to figure out how to create new jobs.

As long as the president doesn't want to tackle real tax reform and as long frankly as the Republicans don't seem to want to tackle real tax reform, we won't be able to transition the economy. We're in the 21st Century and we have an early 1900s tax system set up still.

BLITZER: Yes, it's a crazy tax system. I think everybody agrees on that, Hilary, but so far no one has had the guts to come up and deal with it.

ROSEN: Well, you know, I think President Obama just two months ago put a tax reform proposal on the table. I think he invited Republicans to come and sit down and negotiate a package that's about tax fairness, not just about tax cuts for the wealthy.

But also about tax fairness for the middle class, and for the working poor, and what we have seen is, instead of trying to work together, what we've seen is kind of the Republican is, no, let's get rid of the tax credits for the working poor. Let's get rid of things like college loans and interest rates that help folks.

ERICKSON: Nobody wants to do that.

ROSEN: That is part of the problem we've had, Erick, is that people are cutting the budget instead of thinking how to invest in people.

ERICKSON: Part of the problem is saying we're going to cut college loans when those aren't proposals on the table from the Republicans right now.

ROSEN: Actually that's not true.

ERICKSON: -- Paul Ryan wants to shove grandma off the cliff, but no, I mean, those are not --

ROSEN: Eliminating the tax credit is absolutely in the Paul Ryan proposal and in the Romney tax plan. I think what we need to do is a point that Erick made, which is get people to agree on a basic set of priorities.

And once you do, the budget comes together much more easily. What President Obama has focused on is let's invest in education, energy, invest in infrastructure. That would get the economy moving, but Congress has not held its own on that.

BLITZER: Very quickly, Erick. I'll give you the final word.

ERICKSON: Maybe government should just stop investing and let the private sector do it. That's one reason why you don't see the private sector investing in these things because every time they do, the president says he wants to be the arbiter of what's fair or not. I don't want Barack Obama to be the arbiter of fairness in this country because I fully disagree with what he believes is fair and unfair.

ROSEN: Well, government jobs have actually gone down so we're not seeing an explosion of government. Part of the job loss problem we have is that government jobs have been reduced in the last two years.

ERICKSON: And government spending keeps going up.

ROSEN: That's not true.

BLITZER: Guys, we'll continue this debate down the road. There's no doubt about that. Thanks so much for coming in.

Coming up a rare and exclusive conversation I had with an American citizen who's being held in a Cuban prison. He's been there now for almost two and a half years. Alan Gross used his one call a week to phone me, to talk about his controversial case. Stand by.

A woman at the center of that Secret Service prostitution scandal is now speaking out. Her shocking allegations about the agents from the United States Secret Service that she met in Colombia.


BLITZER: Mary Snow is monitoring some of the other top stories in THE SITUATION ROOM right including Yahoo's CEO under fire for apparently lying about his college degree. Mary, what's going on here?

SNOW: Wolf, Scott Thompson has repeatedly said he holds a degree in both accounting and computer science, but his alma mater, Stonehill College confirms he never got the computer science degree.

A shareholder firm that wants more control of Yahoo is raising the issue. It's calling for four new Yahoo board members. Yahoo calls it, a quote, "inadvertent error."

You have about one hour left to own your very own Navy ship. A government agency is taking bids on a ship built in 1983 that the Navy no longer uses. The top bid is around $140,000 right now.

If you buy it, don't expect to take it out for a spin. The Navy is dismantling it first and just selling key parts. It's the inspiration for a James Bond film "Tomorrow Never Dies."

And if you're out celebrating Cinco De Mayo tomorrow, make sure you look up round 11:30 Saturday night, you could see a so-called super moon.

The moon will appear very large and very bright, about 16 percent brighter to be exact. It will appear bigger, because it would be closer to earth than at any time all year. By close, we still mean about 221,000 miles away, pretty cool. Be sure to look out for it.

BLITZER: At 11:30 p.m. Eastern. All right, thanks very much for that, Mary.

He's serving a 15-year sentence at a Cuban prison. The American Alan Gross talks to me about his controversial case. That's coming up.

Plus details of the death of the Beastie Boys' cofounder.


BLITZER: Sad news, especially for fans of hip-hop. MCA has died from cancer at the age of 47. He was one of the three members of the pioneering group Beastie Boys known for such hits as "Fight For Your Right," "Sabotage." Here he is rapping.

Just last month the Grammy-winning group was inducted into the Rock and Roll hall of fame. Known for his signature raspy voice, he announced his cancer back in 2009.


ADAM YAUCH, BEASTIE BOYS: I called my doctor, I saw him when I got back. This was about two weeks ago. And he sent me to a specialist and they did tests and I actually have a form of cancer in the gland that's over here.


BLITZER: Yauch also directed several Beastie Boys music videos and was active in the Tibetan independence movement, starting a nonprofit organization. He will definitely be missed.