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Mitt Romney Calls Health Care Law a Tax; No Power, No Food in West Virginia; Interview with Congressman Joe Walsh

Aired July 4, 2012 - 18:00   ET


WOLF BLITZER, CNN ANCHOR: Happening now: crisis in West Virginia. Storm victims stuck for days without food.

Mitt Romney contradicts his own campaign.

And the loophole that lets corporations pay pennies for property tax.

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

I'm really concerned about a situation happening right now right here in the United States. Under normal everyday circumstances, there's no reason why anyone in this great country should go hungry. Despite of all our economic problems, we are still a wealthy country with enormous food resources.

Having said that, the situation is by no means normal right now in West Virginia because of the severe weather disaster of last Friday night. Days later, thousands of West Virginians still remain without power. And many of them right now have no food. The Charleston, West Virginia, "Daily Mail" reports 3,000 people in one housing complex in Nicholas County alone had no food for two days.

And our own CNN reporters have found people who said they didn't have anything to eat even longer. So how can this be possible in the United States of America?

I know that President Obama declared an emergency exists in West Virginia last Saturday. The Federal Emergency Management Agency or FEMA has deployed assistance teams to the state, including water, generators and 100,000 meals.

On Monday, the U.S. Department of Health and Human Services sent in medical personnel. Governor Earl Ray Tomblin says he's grateful to FEMA and other federal agencies, but a lot of people in his state remain hungry.


GOV. EARL RAY TOMBLIN (D), WEST VIRGINIA: Food is at a shortage right now, but we have made a lot of progress since Friday night when the storm hit.

(END VIDEO CLIP) KING: The storm compounded an already desperate situation, poverty. The same kind of poverty that has a record 46 million Americans requiring food stamps simply to survive.

West Virginians are the fourth poorest in the country and the government is struggling to find a way to tell those residents, especially in the rural areas, where they can go for help. These challenges should not be insurmountable. Our government needs to find a way to give the storm victims of West Virginia some relief and quickly.

We're going to go much deeper into this story. A lot more is coming up this hour.

But let's check in with Kate Bolduan. She's got some other important stories we're following right now.

KATE BOLDUAN, CNN CORRESPONDENT: We will stay on the story right now.

As of this morning, West Virginia's governor said 300,000 customers were still without power in his state.

Our Brian Todd is in West Virginia right now.

Hey there, Brian. So what are you seeing there?

BRIAN TODD, CNN CORRESPONDENT: Hey. We are seeing people scrambling to get food and to get -- and officials scrambling to get some foodstuffs and some non-perishables to shelters and other places like that so that they connect the people who need it with the people who have it and can get it to them.

It's been a real struggle here and we talked about how this all developed. First you had the storms on Friday night. The unyielding heat wave that unfolded and the power outages. Those outrages really triggered the food crisis because grocery stores got knocked offline and they had to dump spoiled food. There's been mass dumpings of spoiled food all over the state.

And then the two main food banks in this state, one in the central part and one in the southern part, basically got depleted of non-perishable food as of yesterday. The governor's office, FEMA and others are coordinating this massive effort to try to get the word to people on where they can go to get food and then try to get them to those places, maybe offer transportation or at least advice on how to get there.

It's a logistical nightmare. They are just catching up with it now and they say they are making great progress. We caught up with one person in a shelter, her name is Ylonda Wilcox. For the better part of about three days she and her family were struggling to find food and went without food for a good part of it. Here's what she had to say.

(BEGIN VIDEO CLIP) YLONDA WILCOX, STORM VICTIM: It's hard. You are used to being independent and being able to get the food when you need it, when you want it. But right now we are not able to do that. So it's hard but yet still we thank God that it is a place that we can come and get food.


TODD: So local charities as well as the Red Cross and FEMA are combining to provide hundreds of thousands of meals to people like Ylonda who are in need. They are trucking in just basically tractor- trailers full of water for people in these areas.

One of the problems, Kate, is that it's been hard to get word to people in these remote areas. Many, many people who were hardest hit live in very, very remote areas. And just to get word to them on this and how to get food has been very difficult.

BOLDUAN: That's an excellent point. A very tough Fourth of July for many. You are doing great work out there, though. Thank you very much, Brian Todd.

Turning overseas now, there are new calls to exhume the body of one-time Palestinian leader Yasser Arafat to confirm or deny suspicions he may have been poisoned. He died after a sudden illness in 2004.

In a report broadcast on Al-Jazeera, a doctor revealed new tests detected the poisonous radioactive substance polonium in Arafat's toothbrush and clothing. I'm sure much more on that to come.

We are still over three weeks away from the opening of the Summer Olympics, but a lot of London residents are already coming down with a bit of a case of the security jitters. That's especially true for folks getting some scary new neighbors, anti-aircraft missiles just in case terrorists could possibly attack from the sky.

Here's our own senior international correspondent, Nic Robertson, with more.


NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Kate, there's no doubt this has come as a really unwelcome shock to some of the residents living in the apartment buildings close to where the missile systems will be positioned.

The government is saying however that even if the residents bring legal action, they will fight it in the courts. The Ministry of Defense is saying it is absolutely confident it will win the case.

Six missile defenses placed close to Olympic Park, two of them on apartment buildings. The British secretary of state has said that Britain has a responsibility to make the Olympic Games safe. And that's why they are positioning the missile systems where they are putting them. The missiles themselves fly at three times the speed of sound and have a range of about three-and-a-half miles and are designed to take down slow, low-flying small aircraft.

And what the government is saying is this is part of the range of defense mechanisms against any would-be terrorist attack. They have fast jets just outside of London they can scramble if there's a bigger threat coming in from the air, if you will, towards the Olympic Park.

They have 800 marines stationed on a ship on the River Thames just a few miles away. They can come in. Special forces have been training in helicopters to be deployed to Olympic Park, 7,500 soldiers providing additional security and 12,500 police providing security around the Olympic Park and the surrounding area as well.

This is what the government says. This is what they are going to do to make the Olympics safe. It does seem unfortunately for the residents, even despite their protests, these missile defense systems are going to go in place and they are going to stay there throughout the duration of the Olympics, Kate.


BOLDUAN: Nic Robertson in London. Thank you so much. The opening day of the Summer Games to remind you is July 27.

Security, Wolf, has to be paramount when all eyes of the world will be on the city.

BLITZER: It should be. The price tag they are going to have pay for the security, it's going to be enormous. But better to be safe than sorry.

BOLDUAN: That's why we say it.

BLITZER: Other news we are following, Mitt Romney and one of his top advisers apparently are not on the same page when it comes to the health care reform ruling by the U.S. Supreme Court.

In fact, Romney directly contradicted that adviser earlier in the day.

CNN's Dana Bash spoke to Romney. She's in New Hampshire and she is joining us now with details.

Tell our viewers what's going on, Dana.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Damage control. Those are really the best two words to describe what happened.

And the fact is that Mitt Romney chose today, a day where people are probably more focused on barbecues and fireworks than politics to try to clear up his message on a dicey issue for him, and that's whether or not a health insurance mandate is a tax.


BASH (voice-over): At first, the ever-disciplined Mitt Romney refused to answer. Earlier, Romney taped an interview with CBS to give a carefully crafted response to a thorny question for him, whether the health insurance mandate is a tax.


MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: I told you. Take a look at it.

BASH: But, finally, he gave CNN the news.

ROMNEY: The Supreme Court is the final word, right? Isn't that the highest court in the land? And they said it was a tax, didn't they? So it's a tax. Of course, if that's what they say it is.

BASH: The main reason the already cautious Romney was especially careful here is because the GOP message on the mandate is already muddled. Earlier this week, a top Romney adviser said the candidate did not think the insurance mandate is a tax, but rather a penalty, what Democrats call it.

ERIC FEHRNSTROM, SENIOR ROMNEY CAMPAIGN ADVISER: The governor believes that what we put in place in Massachusetts was a penalty and he disagrees with the court's ruling that the mandate was a tax.

BASH: That infuriated Republicans in Washington preparing to pound the president for imposing what they call the biggest tax in American history. Democrats here shadowing Romney's event didn't miss a beat.

RAY BUCKLEY, CHAIRMAN, NEW HAMPSHIRE DEMOCRATIC PARTY: I think people see the president as being a strong leader standing up for his principles and moving forward. We will let Mitt Romney argue with himself.

BASH: Romney's news came during a brief bit of Independence Day action in an otherwise quiet week with his family at their New Hampshire vacation home.

(on camera): Here comes Mitt Romney down the parade route. This is exactly the kind of scene you see from politicians all over the country on July 4. But there's nothing more important than a Republican presidential candidate on July 4 before Election Day. It's very clear watching Mitt Romney working this crowd.

ROMNEY: Happy Fourth of July, guys. How are you?

BASH (voice-over): But the large Romney family, 30 counting grandchildren, hardly had the parade route to themselves. Team Obama was there in full force, since New Hampshire's four electoral votes are critical for the president's prospects for reelection.


BASH: Republicans around the country are clearly hoping that the Supreme Court helped their case against the president, especially in states like New Hampshire, which is very tax-adverse, and other states around the country, and that is why the presidential candidate on the Republican side tried to clear it up and make sure that he's on the same page as his fellow Republicans.

But there's one important follow-up question that he was asked by CBS in the interview today, and that is what about the mandate he signed into law in Massachusetts? Is that a tax? In the past, Wolf, he said it is not. The way he answered it is by again citing the majority of the Supreme Court, saying that Chief Justice Roberts says that when it comes to states they can mandate it without having to call it a tax to make it constitutional -- Wolf.

BLITZER: Fascinating political development. Thanks very much, Dana, for that.

It's a giant loophole, a loophole that allows some property owner and even corporations to pay just pennies in taxes on their land. We expose fake farms. That's coming up.


BLITZER: In these tough economic times, cities need every penny they can get, but some of them are losing out on millions and millions of dollars in property taxes because of an unbelievable loophole, fake farms.

CNN regulation correspondent Lizzie O'Leary explains.



J.J. KUNARD, NEIGHBOR: It looks like a weed field. It looks just like an empty weedy field.

O'LEARY (voice-over): But, according to the constitution of Kansas, it's not a weed field at all. It's a farm.

How is that possible? Because here in Kansas, vacant ground even in the middle of a subdivision filled with swing sets can be taxed as agricultural. That means whoever owns it pays much lower property taxes. The bill on this lot? Thirty-eight cents a year. Once meant to give farmers a break from encroaching suburbs, the law has become a loophole exploited by developers and even giant corporations.

CALVIN HAYDEN, JOHNSON COUNTY COMMISSIONER: It's just sad. It's just not fair. It's just not fair.

O'LEARY: Calvin Hayden is a Johnson County commissioner who says these tax breaks are making tough economic times even worse.

(on camera): Where would that money go?

HAYDEN: It would go to the taxpayers, it would go to fire departments, it would go to police departments, it would go to schools. I mean, we have got so many different taxing entities, it would go everywhere.

O'LEARY (voice-over): It would also go to cash-strapped libraries which are cutting hours, to county government eliminating 400 jobs, to schools slashing budgets for everything from special ed to janitors.

PAUL WELCOME, APPRAISER: This is definitely agriculture activity.

O'LEARY: Paul Welcome has been the county appraiser for 20 years. He's gone to court over designation of properties like this over the years and lost. The result, just about any vacant ground can be taxed as agricultural.

(on camera): This land that we are on...


O'LEARY: ... would be taxed what, $500, $600?

WELCOME: If it didn't have agriculture use, that would be about right. So the developer would be paying $500 for this lot. Every year that it's not developed, they would be paying that tax.

O'LEARY: And right now they are probably paying a dollar?

WELCOME: They are paying about a dollar.

O'LEARY: Because this is on it?

WELCOME: This is there and this is there.

O'LEARY: Come on.

WELCOME: That's the way it is.

O'LEARY (voice-over): Almost every state has some kind of tax break for agriculture. And some recipients stretch the definition of farmer.

In Florida, landowners can use beehives to get a tax break. And in Texas, they can cut some brush, feed and count the deer to qualify. But here in Kansas, just about all you need is a strip of grass.

(on camera): So what's going to happen to this grass?

WELCOME: I don't know. I didn't say you have to harvest it.

O'LEARY: So I could just toss some seeds out and we are cool?

WELCOME: We are cool.

O'LEARY (voice-over): It is not just builders taking advantage of the law.

(on camera): This 20-acre stretch of land was supposed to be a Wal-Mart, but county records show it is now listed as farming and ranching to land.

(voice-over): To hold on it to, the $200 billion company paid just $40 last year in property taxes. Wal-Mart told CNN they paid $50 million in Kansas taxes overall and they are following the current law on the books.

DOUG KNOP, PROPERTY TAX CONSULTANT: I think it is an excellent law, I really do.

O'LEARY: Doug Knop used to be a local mayor. He is now a consultant helping developers lower their property taxes. He says it is one of the things that kept them afloat during the housing crisis.

KNOP: If you owned the ground out there as a developer, what would you do?

You don't have to answer, but the people that I talk to, every single one of them says, of course I would do it.

O'LEARY: And they would do it because it is legal. I went to the legislature in Topeka to ask why they have not closed the loophole. One of the politicians we talked to, Senate tax committee chair Les Donovan, said he used the law himself. He rented out 18 acres he owns in Wichita to grow hay.

(on camera): You believe you're paying your fair share on that?

LES DONOVAN, KANSAS STATE SENATOR: I was paying my legal share, let's put it that way.

O'LEARY (voice-over): His taxes dropped from $120 to $8. He said the law should change, eventually, but that someone else should do it.

DONOVAN: I'm not judging whether that's a good law or a bad law. I'm just telling you the way it is.

O'LEARY (on camera): But you are in the legislature. I mean, it is sort of your job to judge whether something is a good law or a bad law. You could change it.

DONOVAN: Well, you got to understand, you have to look back, where did Kansas come from? What is Kansas many, many years ago when the legislature was passing laws and doing that? It was basically an agricultural state.

O'LEARY (voice-over): Such an agricultural state that changing any farm law could be political poison, leaving other taxpayers to foot the bill.


O'LEARY: This is a farm state. We talked to other members of the legislature and no one was willing to go ahead and push to change this law, even though they said we know it may be costing some of our taxpayers money. BLITZER: Good report. Do we know how much money the states are losing because of this?

O'LEARY: It is very hard to quantify overall. We know that laws like this exist in almost every state. A lot of reporting has gone into looking at that.

In New Jersey, "The Asbury Park Press" did some good work and found that $82 million lost a year when they did it in 2010. When you look at laws in Texas, more than a billion dollars that would have gone to school funding. So it's sort of a patchwork. There's no overall number, but certainly if you're talking about a local community, it's a lot. In Johnson County, Kansas, they said it's costing them millions.

BLITZER: I could see if they were really raising food or whatever or corn or anything like that, that's fine. But just weeds?

BOLDUAN: But as they pointed out, they playing by the rules that are set for them right now. That's right. Lizzie, thank you so much. Fabulous work.


BOLDUAN: We have fresh pictures just in from the White House. In just a minute you will get a sneak preview of what's happening there tonight. Stay with us. You're in THE SITUATION ROOM.


BLITZER: Nice shot of the White House.


BLITZER: We got other important news we're following here in THE SITUATION ROOM.

She lost both legs in Iraq. He swept into Congress with Tea Party support, and now they are locked in a bitter, bitter campaign that's getting really ugly.

And at 43 past the hour, Iran threatens to launch missiles at U.S. bases. You will find out where -- all that and more coming up.


BLITZER: Happening now: Iran threatens to launch missiles at U.S. military bases in the Middle East.

Mitt Romney contradicts his own top advisers, now saying the health care reform mandate is a tax.

And a heated battle for a House seat turns ugly, with eye-popping rhetoric on both sides.

I'm Wolf Blitzer. You're in THE SITUATION ROOM. It's video that has a lot of people talking right now. An Illinois congressman speaking at a town hall meeting seems to suggest his challenger isn't a -- quote -- "true hero" because she talks too much about her own military service.

Kate Bolduan is still here with us. She's watching what is going on.

It's a story that has generated a lot of buzz.

BOLDUAN: A lot of buzz, a lot of people talking about this, Wolf.

Congressman Joe Walsh, he has clarified what he meant by these remarks. We will talk to him live in just a moment, but that video sure isn't going away. Take a look.


BOLDUAN (voice-over): Here's the town hall video that's created an uproar around Republican Congressman Joe Walsh.

REP. JOE WALSH (R), ILLINOIS: That's what's so noble about our heroes.

BOLDUAN: Walsh suggesting over the weekend his Democratic challenger talks too much about her military service.

WALSH: Now I'm running against a woman who, my God, that's all she talks about. Our true heroes, the men and women who served us, that's the last thing in the world they talk about.

BOLDUAN: The woman Walsh is attacking, Tammy Duckworth, a veteran who lost both legs in a 2004 helicopter accident while serving in Iraq.

Just yesterday, Walsh released a statement clarifying he does think Duckworth is a hero, but he doesn't quite apologize, adding, "Unlike most veterans I have had the honor to meet since my election to Congress, who rarely, if ever talk about their service or the combat they've seen, that is darn near all of what Tammy Duckworth talks about."

Now Duckworth is more than happy to fight back.

TAMMY DUCKWORTH (D), ILLINOIS CONGRESSIONAL CANDIDATE: He's just trying to shift the focus away from the fact that he's done nothing in his two years in Congress other than be an extremist loud mouth for the Tea Party.

BOLDUAN: This isn't Duckworth's first run for Congress. Despite support from then-Senator Obama and high-profile veterans like Senator John Kerry, Duckworth lost a House run in 2006.

REP. JOE WALSH (R), ILLINOIS: Look, this isn't... BOLDUAN: Walsh, a Tea Party conservative, has earned a reputation for making controversial remarks during his two years in office.

LYNN SWEET, "CHICAGO SUN-TIMES": One of the things that's going on in the 8th Congressional District race is that the Duckworth campaign and her Democratic allies are taping everything that Joe Walsh says. Now this is standard operating procedure in most campaigns nowadays anyway, but it's especially so since Joe Walsh speaks very candidly and often provocatively.

BOLDUAN: In May he said Democrats strive to make minorities dependent on the government.

WALSH: They want Hispanics to be dependent upon government, just like the African-Americans depended upon government. That's their game.

BOLDUAN: Walsh also took heat back in September for boycotting the president's big jobs speech before Congress. Right here in THE SITUATION ROOM we asked the congressman why he wouldn't show up.

WALSH: We're beyond speeches. Again, respectfully, it seems like all this president does is try to give a good speech. I don't want to be a pawn in that.


BOLDUAN: Now, keep in mind, they are fighting for a new seat representing the northwest suburbs of Chicago, created as part of the redistricting efforts that are really taking place nationwide.

And right now, Wolf, the nonpartisan Cook Political Report, I spoke with them today. And they called it the surest Democratic pickups in races across the country.

BLITZER: That Tammy Duckworth will beat Joe Walsh, that's what they're suggesting?

BOLDUAN: That's their prediction, right there.

BLITZER: Let's bring Joe Walsh is joining us from Chicago.

Congressman, thanks very much for coming in. Do you regret what you said about your opponent, who lost two legs fighting for the United States in Iraq, that she's not, in your words, a true hero?

WALSH (via phone): No, not at all, Wolf. It's good to be with you, happy Fourth.

Look, I've called Tammy Duckworth a hero probably hundreds of times. Any man and woman, and I've been on the record, any man or woman who wears the uniform and serves this country is a hero. I've said that repeatedly at all the town halls I've had. I don't know what the story is here. I think the other side is trying to manufacture a story. And let's be honest, everywhere I go, Tammy Duckworth's campaign tapes me. I'm out all the time. I probably hold more town halls than any member of Congress. Tammy Duckworth doesn't get out. All she does is film me, and a couple liberal blogs put this out, and they spread it around. I don't see at all what the story is here.

BLITZER: Let me just...

WALSH: Every veteran is a hero.

BLITZER: Let's just clarify, then, Congressman. Do you believe Tammy Duckworth is a true hero?

WALSH: Oh, my gosh, yes! And I've said that repeatedly.

Wolf, the thing that was making me sick, she is a hero. And that demands our respect. But it doesn't demand our vote. And I don't find it -- look, all she does, guys, is talk about her service. Voters in this district want to just have an inkling of where she stands on the issues, and she never, ever gets directly in front of people.

David Axelrod and Rahm Emanuel drew this district for her. She's their candidate, and they are keeping her away from voters. And I want to know where she stands on issues. I salute her service, but my God, the voters want to know if she has any thoughts on any of the issues.

BOLDUAN: Congressman, you are a smart man. You have been in politics. You're finishing your two years in Congress now. You had to have known that, in questioning something that is beloved by so many Americans, military service, that this was a touchy subject, a risk. I mean, was that a mistake, because you are in a tough re- election battle here?

WALSH: No -- Kate, well, I'll agree with you there. I am in a tough re-election battle because the Democrats drew a district to elect Ms. Duckworth. There's no doubt I've taken a challenge on, but no, my God, I've said that before.

Understand the concept, guys. I am always out there speaking in front of voters, and I'm always being taped. I know that. And I think part of what they're trying to do here is to get me to be silent.

Look, I salute her service. I continually salute her service. But if that's all she runs on, voters are going to find that offensive. I said too many veterans come up to me quietly over the last two or three months and say, "I wish she'd quit talking about that." Veterans don't -- you guys know veterans don't talk about their service. They're so private about it.

And I'm always being taped. I know that. And I can see what they are trying to do here, to get me to be silent. Look, I salute her service and continue to salute her service, but if that's all she runs on, voters are going to find that offensive. I've had too many veterans come up to me quietly over the last two or three months and say, I wish she would quick talking about that. Veterans don't, you guys know, veterans don't talk about their service. They are so private about it.

BLITZER: A lot of veterans do talk about their service. They are very proud of their military service. And I'm sure Tammy Duckworth is one of them, very proud of what she's accomplished.

WALSH: Yes, but Wolf, they don't -- Wolf, they don't throw it in your face. You knew John McCain. You know veterans running for office. They don't throw it in your face. And they at least can move beyond that and tell you why they want to be a congressman or -woman. And I can tell you, there's a lot of frustration in this district, because Tammy Duckworth won't do that.

BLITZER: We've invited, by the way, Tammy Duckworth to join us here in THE SITUATION ROOM. Unfortunately, she couldn't on this Fourth of July, but she's got an invitation to come on, and we'll talk about some of these issues.

I'm glad we did clarify, Congressman Walsh, your point where you are saying right now, flatly, you do believe Tammy Duckworth, your opponent -- you disagree with her on a lot of issues -- but you do believe that what she did in Iraq as a U.S. military personnel, as a U.S. member of the U.S. military, that she is, in fact, a true hero.

WALSH: Absolutely, Wolf.

BLITZER: Thank you.

WALSH: Absolutely.

BLITZER: Congressman Walsh, thanks very much for coming in.

WALSH: Thank you.

BLITZER: We got our clarification.

BOLDUAN: Absolutely. It's good to have him on.

BLITZER: A new threat by Iran. It says it will target U.S. bases all across the Middle East with missiles. That story coming up for you at 43 past the hour.

And up next, the candidates -- the candidate contradicts one of his top advisers. Is it a sign of possible trouble inside the Romney campaign or not? Donna Brazile, Rich Galen, they are here. We'll talk to them. Stand by.


BOLDUAN: Taking a look now at live pictures of the U.S. Capitol, where I think you can see all those colors on the steps. That's all the people gathering here in the nation's capital to get ready for the big celebration on the Washington Mall. And there should be a -- quite a fireworks show. BLITZER: I love -- I love this night in Washington, D.C.

BOLDUAN: Looking forward to that. It is awesome.

BLITZER: It's going to be on television, just so people will be able to see it.


BLITZER: Mitt Romney, meanwhile, speaking out on the Supreme Court health-care decision, contradicting his own campaign advisor -- advisor.

Earlier today, I talked about this with CNN political contributor Donna Brazile and Republican strategist Rich Galen.


BLITZER: As you know, Mitt Romney, he was up in New Hampshire walking around, talking, including to our own Dana Bash. And he clearly disagrees with Eric Fehrnstrom, one of his top strategic advisers, who only Monday said that the mandate was not a tax. It was a penalty, not a tax. He specifically said that.

But listen to Mitt Romney today.


MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: The Supreme Court is the final word, right? Isn't it the highest court in the land? They said it was a tax, didn't they? So it's a tax. Of course. That's what they said.


BLITZER: You got that. He says it is a tax, now that the Supreme Court has ruled. Rich, let me start with you. What's going on? Between Monday and Wednesday there's been a change.

RICH GALEN, REPUBLICAN STRATEGIST: They're finally getting their -- they're finally figuring it out. Here's what it is. The Supreme Court or the chief justice ruled that the mandate, the penalty could not be a penalty on the mandate because of the Commerce Clause, that it was illegal extension of the Commerce Clause. So the only thing it could be was a tax.

BLITZER: Which is constitutional. Congress has a right to write taxes.

GALEN: I got that, but states don't have a Commerce Clause. So it can be a tax in Massachusetts and be perfectly legal because it's not in violation of anything. It's a little bit like quantum physics, where light can either be a point, you know, a particle or a wave. That's the same thing with this.

BLITZER: Let's not get into quantum -- who was right, Eric Fehrnstrom on Monday where he said...

GALEN: Eric is not running for anything.

BLITZER: Eric, but he's a senior strategist.

GALEN: Who cares? That doesn't make any difference. Mitt Romney has it right. As the governor of a state, he doesn't have to deal with the Commerce Clause. It was a tax.

So the Romney campaign gets to say, see, this is the largest tax increase -- not the largest, but it's in the top ten largest tax increases in history.

BLITZER: Having said all that, Donna, you know the Obama administration continues to refuse to acknowledge what the Supreme Court has ruled and saved Obama care, if you will, by saying it's a tax and it's constitutional. Why does the Obama administration continue to refuse to say what Mitt Romney said today, what the Supreme Court said?

DONNA BRAZILE, CNN POLITICAL CONTRIBUTOR: First of all, let's make it clear that Mitt Romney in 2006, after he signed the health- care law in Massachusetts called this provision a penalty. So -- and Mitt Romney is on record in supporting the individual responsibility mandate as a penalty.

That is the same provision, pretty much plagiarized from the Massachusetts law, that became part of the Affordable Care Act. So it is a penalty, Wolf, that individuals who opt not paying health insurance, buying health insurance, will have to pay, not as part of their taxes, but as part of a penalty for not purchasing.


BRAZILE: No, they used the sweeping clause that Congress -- in Article I that Congress has under the taxing authority to consider it a penalty because the IRS will collect.

BLITZER: Donna, it's a penalty, but it's also a tax. The solicitor general, the top lawyer for the Obama administration, argued before the Supreme Court it was a tax. The IRS will administer it. It will be due on April 15 as a tax. That's what they do. That's a tax.

BRAZILE: If you opt out -- if you opt out...

BLITZER: But you guys are reluctant to acknowledge -- why not just say it's a penalty and a tax?

BRAZILE: Well, I don't have a problem with the semantics of it, Wolf. I have a problem with Mitt Romney being inconsistent about it. I mean, he's not only contradicting his senior adviser, who is a very important senior adviser, but he's contradicting himself in some of the things he said before about this very important part of the bill. And it's not the largest -- it's not the largest tax increase in America. GALEN: I said it's in the top ten. But it's -- but that's what I was saying.

BRAZILE: The top 15. Since 1950.

GALEN: Since yesterday afternoon.

BLITZER: Does this show that there's a problem, though, among the senior staff of the Romney campaign, as Rupert Murdoch, Jake Welsh are suggesting they need to get some better people there. If you have one statement saying something on Monday, a very different statement coming out on Wednesday, there might be a problem here.

GALEN: It might be a problem, but wait until we see the Friday unemployment numbers when everybody is going to forget about this.

BRAZILE: Well, Wolf, the problem is not the senior staff. The problem is the candidate, who is not consistent on these issues. He hasn't been consistent, from a governor to running for president, and he's not consistent.


BLITZER: Donna Brazile and Rich Galen.

I will say this, that those advisers of Mitt Romney, they brought him this far. They got him through all those primaries and caucuses. They're pretty good.

BOLDUAN: Yes. We'll see. I don't foresee any changes, but I can always be wrong. We'll see.

All right. I want to get us caught up on a couple stories just coming into THE SITUATION ROOM right now.

Mexico's federal election institute has just announced that more than 54 percent of the ballot boxes from this weekend's presidential election will be opened and the individual ballots inside recounted. Enrique Pena Nieto was supposed to return the institutional Revolutionary Party to power after a dozen years in political exile, but supporters of rival Andres Manuel Lopez Obrador allege voting irregularities.

Also, the Australian navy is now taking 162 people rescued from a distressed ship to Australia's remote Christmas Island. Officials won't say, though, whether the passengers are seeking asylum, a controversial issue in Australia.

BLITZER: Other news we're following, Kate. Tension in the region already high, but now Iran is taking it up another notch, threatening to launch missiles at U.S. military bases in the Middle East.

CNN foreign affairs correspondent Jill Dougherty is over at the State Department watching all of this.

Jill, what are you picking up?

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: Well, you know, Wolf, Iran issued this threat as it was holding war games. So the question is, is it bluster or is it real?


DOUGHERTY (voice-over): On edge that Israel may strike its nuclear program, Iran is unleashing a threat of its own. Within minutes it says it would fire missiles at Israel and destroy U.S. military bases across the Middle East, in countries like Bahrain, Kuwait, Qatar and the United Arab Emirates, bases with tens of thousands of American troops.

"All these bases are within the reach of our missiles," a top Iranian Revolutionary Guard commander is quoted as saying. "Meantime, the occupied lands of Israel are good targets for us, as well."

To drive that point home, Iranian forces are extending their so- called Great Prophet 7 missile exercises, boasting they've successfully tested a missile capable of hitting Israel.


DOUGHERTY: Defense expert Anthony Cordesman tells CNN Iran has only a limited number of long-range missiles, and they're not reliable. And the U.S. and its Gulf allies have increasingly accurate missile defense systems.

But the State Department isn't brushing off Iran's bluster.

VICTORIA NOLAND, STATE DEPARTMENT SPOKESPERSON: We obviously remain deeply concerned about Iran's continued missile development activities.

DOUGHERTY: As international sanctions on Iran tighten, Tehran also has threatened to block the Strait of Hormuz, a vital chokehold for the world's oil.

But the U.S. has been beefing up its forces in the region. In spite of Iran's chest thumping, Anthony Cordesman says it's playing a weak hand. And its target audience may be more the Iranian people than Israel or America.

CORDESMAN: To try to convince the Iranian people that Iran is much stronger, that it doesn't have to compromise, that it can ride out the sanctions.


DOUGHERTY: Meanwhile, those on-again, off-again talks with Iran about its nuclear program are sputtering, but they're still alive. And some experts believe this is -- all talk about missiles is a way, perhaps, of trying to gain greater leverage at those talks -- Wolf.

BLITZER: Not very upbeat about the future of those talks, but let's hope for the best. Jill, thanks very much.

That's a tense situation over there.

BOLDUAN: Well, of course it is.

Well, I will say, up next, Wolf will be taking your questions about the news. You don't want to miss this, Mr. Wolf. Stay with us.

(COMMERCIAL BREAK) BOLDUAN: So if you met Wolf Blitzer in person, what would you ask him? Well, now is your chance.

Wolf, we've been soliciting questions on this. And we've been kind of compiling them. We have -- here's our first one. This comes to us from AKlarebear via Facebook. And this person writes, "Mr. Wolf, since most political analysts are saying that neither presidential candidate can fix the economy, what will be the determining factor for becoming president?"

What do you think?

BLITZER: It will be fixing the economy. That will be the determining factor. Who can better fix the economy? That question will be posed to the American people, and they will make the decision.

Do you like what you've seen so far from the president of the United States? Do you think he can continue to move in the right direction? Or do you think Mitt Romney has a better option out there for fixing the economy?

But unless there's a national security crisis, God forbid, or an act of terror or a war or anything like that, the economy will be the determining issue in this election. And the American people -- it will be a referendum: do they like the way the president has dealt with it or do they think Romney can do better?

BOLDUAN: There's always so much talk about likability. Is that still a big factor?

BLITZER: It's an important factor. But when all is said and done, they'd rather have somebody they don't necessarily like all that much if they think their pocketbooks and their kids' welfare, the economy will be stronger. So the likability is important, and I don't belittle that by any means. But the competence in dealing with these economic issues is going to be the key.

BOLDUAN: When people are still hurting, that's what they care about most. All right. Well, there you have it.

If you have more questions for Wolf, please chime in. This is really the only time I can get him -- myself to ask him questions. You see all the ways that you can reach out to us right there on your screen. Facebook, Twitter, iReport, ask away. Lots of good questions.

BLITZER: At Kate Bolduan, you can -- you get some of those, too, right?

BOLDUAN: You can ask -- you can ask @KateBolduan, as well.

BLITZER: Or @WolfBlitzer.

BOLDUAN: Or @WolfBlitzer. We're all ears.

BLITZER: Thank you.

BOLDUAN: Thank you.

BLITZER: Up next, a frustrated subway rider used his camera to make some big changes.


BOLDUAN: Acts of kindness and a young boy's dream come true. Our "Video of the Day" is coming up next.


BOLDUAN: Random acts of kindness in our "Video of the Day." This was yesterday's Nationals/Giants game here in Washington. And watch this.

A fan leans over and scoops up a foul ball. But this was the second one that he got of the game. So he goes and shows it off and then hands it to a man sitting a few seats away.

After a few minutes, that man starts looking around and spots a boy a couple of rows back and gives him a ball. And just look at that boy's face. That look is pretty priceless.

BLITZER: He's a happy little guy. I was at that game last night.

BOLDUAN: You were?

BLITZER: They won -- the Nationals, my team.

BOLDUAN: Your team?

BLITZER: Hash tag "nattitude." I've got nattitude, you know? I love the Washington Nationals.

BOLDUAN: You have some nattitude, Wolf.

BLITZER: They've got some -- Washington has got a great team now.

BOLDUAN: And they played today.

BLITZER: We're in first place. We won again today over San Francisco.

BOLDUAN: Here we go. Here we go. BLITZER: Very excited about this baseball team.

BOLDUAN: I know you are. I'm trying to join in that excitement.

BLITZER: I'm looking forward to the all-star game, as well.

A set of subway stairs is tripping up lots of New Yorkers and generating lots of laughs in the process, thanks to a new music video that's going viral and global. CNN's Jeanne Moos takes a closer look at some embarrassing missteps seen around the world.


JEANNE MOOS, CNN CORRESPONDENT (voice-over): It's hard not to stare when everyone's tripping on the subway stairs, or more precisely on one particular step.

(on camera) Everybody loves to watch people trip, though.

DEAN PETERSON, FILMMAKER: It's true, as long as it's not you.

MOOS (voice-over): But it was him. This is filmmaker dean Peterson's subway stop in Sunset Park, Brooklyn. He videoed all of these other people tripping, because he kept tripping on that one step that's slightly higher than the others.

PETERSON: And I know that it's there, but that doesn't stop me from tripping.

MOOS: and it definitely didn't stop him from editing together and putting to music a montage of trippers: 17 of them, shot over a total of about an hour. There's even a guy carrying a kid.

PETERSON: I felt bad videoing some of the people, and luckily nobody got hurt.

MOOS: But they did get famous, after Dean posted his montage.

(on camera) The next thing you know, the video was on a trip of its own around the world on the Internet.

(voice-over) "Let's all laugh at people tripping on stairs" was the headline out of Australia.

But you know who wasn't laughing? The Metropolitan Transportation Authority. The day after the video went viral, repair guys were pacing the steps. At least this guy didn't trip. Neither did this one. Commuters were happy to see them.

UNIDENTIFIED FEMALE: I almost bust my entire behind on that step.

MOOS: This can't be what the MTA means when they say "have a nice trip."


MOOS: ... New York.


BLITZER: Jeanne Moos is great.

BOLDUAN: Jeanne Moos is great. We are not -- I'm not laughing at someone falling. But you always do laugh when you see that kind of video of people tripping.

BLITZER: It's funny. That's what happens.

You know, they're getting ready for the fireworks right behind us here on the Mall.

BOLDUAN: I know. We've to get out of here.

BLITZER: You're going to be watching this?

BOLDUAN: I'm going to watch the fireworks. It's one of my favorite things to do.

I think we're seeing some more live pictures of the Mall. A lot of people gathering, despite the hot temperatures, the heat, people still dealing with power outages. But people are ready to have some fun.

BLITZER: To all of our viewers here in the United States and around the world, happy Fourth of July.

BOLDUAN: Happy Fourth of July.

BLITZER: Excellent holiday. One of my favorites.

Remember, you can always follow what's going on in THE SITUATION ROOM. I'm on Twitter. You can get my tweets, Or Kate's tweets, You can also follow us in THE SITUATION ROOM on Facebook. Go to You can do all of that.

BOLDUAN: You know how to track us down if you need to.

BLITZER: Good to work with you. Thanks you very much. You're doing well.

I'm Wolf Blitzer in THE SITUATION ROOM. Erin Burnett starts in just a sec.