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THE SITUATION ROOM

Interview With Goldman Sachs CEO Lloyd Blankfein; Susan Rice Under Fire

Aired November 28, 2012 - 18:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


WOLF BLITZER, CNN ANCHOR: And you're in the THE SITUATION ROOM.

Happening now, the embattled U.N. ambassador back on Capitol Hill, reaching for a lifeline from a Republican moderate, but Susan Rice comes up empty-handed.

President Obama talks fiscal cliff with more than a dozen of the country's top business leaders. We will go inside that meeting with one of them.

Plus, a murder mystery in the Gulf. The victims? Innocent dolphins shot to death by humans. We're going up in the air and into the water looking for answers.

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

A second day of meetings with Republican senators didn't go much better than the first day for the embattled U.N. ambassador, Susan Rice. She is under fire, accused of making misleading statements about the deadly attack on the U.S. Consulate in Benghazi, Libya.

But after two days on Capitol Hill, Republican criticism remains sharp, and her future as a possible nominee for secretary of state is uncertain at best.

Our senior congressional correspondent, Dana Bash, is working the story for us.

Dana, what happened with Susan Rice today?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, you know, Wolf, it was one thing for Susan Rice to get some harsh criticism after yesterday's meeting with three Republican senators, McCain, Graham, and Ayotte, because they have been leading the charge against her. It was quite different to hear that kind of concern from one of the last remaining centrist Republicans in the Senate.

(BEGIN VIDEOTAPE)

BASH (voice-over): Of all the GOP senators, moderate Susan Collins would be one of the most likely to throw Susan Rice a lifeline. It didn't happen.

SEN. SUSAN COLLINS (R), MAINE: I continue to be troubled by the fact that the U.N. ambassador decided to play what was essentially a political role at the height of a contentious presidential election campaign.

BASH: After meeting with Rice for more than an hour, Collins emerged questioning her judgment in giving the public what turned out to be incorrect information in the days after the deadly attack in Benghazi. And the Maine Republican was lukewarm about the prospect of Rice as secretary of state.

(on camera): If President Obama were to nominate Susan Rice to be the next secretary of state, could you support that nomination?

COLLINS: I would need to have additional information before I could support her nomination.

BASH (voice-over): Collins has gone out of her way to support Rice in the past, even introducing Rice, who has family ties to Maine, at a confirmation hearing for U.N. ambassador.

COLLINS: The people of Maine are proud of what this remarkable woman has accomplished.

BASH: Whether Collins supports Rice now for a promotion is crucial because of the raw numbers. Rice would likely need 60 votes to overcome a filibuster by these GOP senators. Assuming all 55 senators who will caucus with Democrats next year vote to confirm Rice, she would still need five Republicans to get to 60. It's hard to see where those five GOP votes for Rice would be if even moderate Collins doesn't support her.

To be sure, the president has not nominated Rice for the post yet. Another Republican senator who met with Rice made clear he thinks it would be a mistake.

SEN. BOB CORKER (R), TENNESSEE: We want someone of independence. I would just ask the president to step back for a moment and realize that all of us here hold the secretary of state to a very different standard than most Cabinet members.

BASH: But hours later at a White House Cabinet meeting, the president offered Rice fresh, full-throated support.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Susan Rice is extraordinary. Couldn't be prouder of the job she's done.

(APPLAUSE)

BASH: With that, members of Obama's Cabinet broke out in applause, with Susan Rice looking on, smiling broadly.

(END VIDEOTAPE)

BASH: Now, Wolf, I spoke with two members of the Senate Republican leadership today who said they think at this point it would be very tough to Susan Rice getting confirmed by the Senate, especially after the difficult meetings she has had here this week.

On the other side, I have also spoken to Senate Democratic sources who say they're not so sure, because if the president does decide to spend the considerable political capital it would take to push Susan Rice's nomination through, he could win. Why is that? They say because so far her explanations for giving incorrect information about the Benghazi attack have, for the most part, been in private meetings, and she has not been able to do that in public.

If she does it in public and if she does it well, they think at that point it would be hard for Republicans to block her. But that would be committing to a long road by the president.

BLITZER: A tough road, indeed. Dana, thanks very much.

Let's dig a little deeper.

Kate Bolduan is here of course with us as well.

KATE BOLDUAN, CNN ANCHOR: CNN national security Peter Bergen writes about Susan Rice and her Benghazi remarks in a new piece on CNN.com and he questions some Republican theories.

In the piece, Peter write in part -- he says: "This is not conspiracy, this is fog of war."

BLITZER: Peter is here in THE SITUATION ROOM joining us, and our national security contributor Fran Townsend is here as well. She is in New York and she is a member of the CIA's external advisory committee.

Explain what you mean by fog of war, in the context of Susan Rice, and what she said for example on those five Sunday talk shows five days after this attack in Benghazi.

PETER BERGEN, CNN TERRORISM ANALYST: We know from any major news event -- just think about the coverage of Osama bin Laden when he was killed. The first story, he died in a firefight and he used his wife as a shield, and that all turned out to be wrong.

That was not a conspiracy. That was just bad information about a chaotic event on the other side of the world in the middle of a battle situation. And I think the central premise of the Republicans' attack against Susan Rice basically went away when Petraeus testified behind closed doors.

He said the talking points she was using was had been changed by the intelligence community. That was reaffirmed by Mike Morrell yesterday, the acting director of the CIA. So instead of a political conspiracy to rewrite the talking points, it was the intelligence community not wanting to tip off the group that they suspected of the attack. It was not misleading the American public. It was intended to mislead America's enemies.

BLITZER: But, Fran, it's pretty surprising to me -- maybe it's even shocking -- that yesterday when they were all up there, Michael Morrell, the acting CIA director, with Susan Rice, meeting with these Republican lawmakers, at one point Mike Morrell suggested it was the FBI in fact that had removed some of the words about al Qaeda in these talking points, only much later, several hours later, in the day, to call them back and say he misspoke and it was really the CIA that did that.

Here's the question. Two months after all of this, how could he get that wrong?

FRANCES TOWNSEND, CNN NATIONAL SECURITY CONTRIBUTOR: Wolf, it's confounding even to me.

But I will tell you, I think what we're seeing here is Susan Rice is being held to account for what have been a whole series of missteps by the administration in both the substantive handling of this and their ability to explain what happened. And every time they may one more mistake, it fuels this conspiracy theory that as Peter suggests that there is some sort of political conspiracy behind this.

I will tell you, Wolf, having lived through my share of crises in the White House when I was serving, you can't chalk off as malevolence or sort of deception what can easily be explained by, as Peter says, the fog of war or just incompetence, that they're not coordinating, they have not looked at each other's information, and they just -- they continue to repeat these mistakes that fuel the ire of Congress.

BOLDUAN: And, Fran, she has had this series of briefings on the Hill now, and I want to play something that Susan Collins, Senator Collins, said after her briefing with Ambassador Rice. Listen to this.

(BEGIN VIDEO CLIP)

SEN. SUSAN COLLINS (R), MAINE: I'm also very troubled by the fact that we seem not to have learned from the 1998 bombings of two of our embassies in Africa at the time when Ambassador Rice was the assistant secretary for African affairs.

(END VIDEO CLIP)

BOLDUAN: He has her facts right there, but the question is, is it fair for the senator to be drawing comparison between the 1998 bombings and what has just happened this year in Benghazi, do you think?

TOWNSEND: Kate, what is factually accurate is, in fact, during the Clinton administration, Susan Rice was the assistant secretary of state for Africa, but that's sort of where the facts stop here.

There was an accountability review board after the East Africa embassy bombings in Kenya and Tanzania, just as there is being conducted now. There is a report. There were lessons learned from that. And in fact the lessons that were learned from East Africa affected across multiple administrations embassy security.

We did learn those lessons. Let's remember Benghazi was a consulate. It got temporary waivers from those security requirements. And so this is really quite different. It is also a failure in terms of the security precautions, but it's quite different than the East Africa embassy bombings.

BLITZER: I just want to bring Peter back into this conversation.

One of the things they're going after Susan Rice is on those Sunday talk shows, she said that the U.S. has decimated al Qaeda, and these Republican lawmakers saying al Qaeda seems to be OK right now, even though bin Laden is dead, some of the top leadership is dead. They're still out there, all of these al Qaeda affiliates, sympathizers.

BERGEN: Yes, the Arab spring is now almost two years in the making and obviously it's been a complicated process.

But if al Qaeda's -- if the full extent of its ability to attack the United States is killing four Americans, obviously a great tragedy, in Benghazi in countries -- there are many countries in the Middle East where these kinds of activities are happening -- it's not a very good score for al Qaeda.

Bear in mind, Wolf, that the Benghazi consulate was not an embassy in the kind of conventional sense. It was lightly defended. It was an easy target. It was overrun. So I don't think you can sort of say al Qaeda is suddenly back because they managed to attack and kill four Americans in a Middle Eastern country recently ravaged by war.

You know, certainly, it's worrisome, but it doesn't mean that al Qaeda in any way is reestablishing itself.

BLITZER: Peter, thanks very much. Fran, thanks to you as well.

They lead some of the country's biggest companies, and they have just wrapped up a major meeting over at the White House about the so- called fiscal cliff. They met with the president. We will find out what they talked about. The CEO of Goldman Sachs, he is here. He's standing by to join us live.

Plus, tonight's half-billion-dollar Powerball jackpot. One expert tells us the first thing the winner needs to do.

(COMMERCIAL BREAK)

BLITZER: Lots of talk about the so-called fiscal cliff, but little action as the country faces across-the-board spending cuts and tax hikes at the tend of this year unless Congress and the White House reach a debt reduction deal.

BOLDUAN: Big question that everyone is asking.

There is no public evidence of progress in fiscal cliff negotiations as of this moment. Sometimes, on Capitol Hill, people suggest no leaks is actually good news. But others suggest the two sides are still simply staring each other down on the key obstacles and of course posing for pictures in the meantime.

(BEGIN VIDEOTAPE) BOLDUAN (voice-over): There were plenty of public photo-ops around town.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: If we can get a few House Republicans to agree as well, I will sign this bill as soon as Congress sends it my way.

BOLDUAN: But, in private, few signs of progress among negotiators trying to avert the fiscal cliff, though one veteran House Republican is making waves, essentially agreeing with President Obama.

REP. TOM COLE (R), OKLAHOMA: My view is 98 percent of my constituents certainly don't need a tax increase. And if the other side agrees with that, then let's take that out and then let's go fight over the remainder.

BOLDUAN: Democrats wasted no time jumping on Congressman Tom Cole's remarks.

SEN. PATTY MURRAY (D), WASHINGTON: I applaud Representative Cole for that commonsense and brave position.

BOLDUAN: But one key sticking point in the battle remains taxes. Democrats want to extend the Bush era tax rates for the middle class while allowing tax rates to jump for wealthier Americans.

Republicans have long opposed a tax rate increase on anyone. And Cole stressed he still does not support a tax hike on the wealthy. Rather, he says he is suggesting a stronger negotiating strategy by removing some of the Democrats' leverage.

COLE: We all agree that we're not going to raise taxes on people that make less than $250,000. We should just take them out of this discussion right now, continue to fight against any rate increases, continue to try to work honestly for a much bigger deal.

BOLDUAN: Is this the sign of a movement? Not so fast. It was just as quickly shot down by the top Republican negotiating any deal, House Speaker John Boehner.

QUESTION: I want your take on the comments and more importantly is this the direction that the conference is going?

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: I told Tom earlier in our conference meeting that I disagreed with him. We're willing to put revenue on the table as long as we're not raising rates.

BOLDUAN: Fellow conservatives piled on.

REP. RAUL LABRADOR (R), IDAHO: I think he is wrong and I think most of the conference thinks that he is wrong.

BOLDUAN: So talks continue behind the scenes with the photo-ops out front.

(END VIDEOTAPE)

BOLDUAN: I'm told Speaker Boehner was surprised by Congressman Cole's remarks when he heard of them today. Cole and another Republican told us that they believe a measure to extend just the middle-class tax cuts would pass if brought for a vote in the House, but Republican aides say there are no plans for that as the moment, no surprise there.

But important to note, Wolf, we did learn late this evening that Treasury Secretary Timothy Geithner, as well as Rob Nabors, kind of the congressional liaison for the White House, they are going to be coming to the Hill tomorrow to meet with Boehner, other House leaders, other Republican leaders, Reid, McConnell, all the congressional leaders in separate meetings.

So that is a very important meeting as these negotiations continue. What comes of that, of course, is...

BLITZER: That is encouraging.

BOLDUAN: It is encouraging. We will see what comes of it. That's the big question.

BLITZER: Timothy Geithner obviously the point man right now for the administration in these day-to-day negotiations.

BOLDUAN: Yes. So we will be watching tomorrow.

BLITZER: Let's see what they can come up with.

By the way, later tonight on "A.C. 360," I will be speaking with the Congressman Tom Cole, the Oklahoma Republican Kate just mentioned in her piece. We will talk about why he decided to side with the president on the issue of the middle-class tax cuts at 8:00 p.m. Eastern only here on CNN.

BOLDUAN: A race again time to solve crimes against dolphins. Someone is killing the creatures near a crucial breeding ground. That's ahead

(COMMERCIAL BREAK)

(NEWS BREAK)

BLITZER: It's the question all of us certainly would like to face. What's the first thing you would do after winning half a billion dollar lottery jackpot? Expert advice, that is ahead.

(COMMERCIAL BREAK)

BLITZER: Some of the country's top business leaders have just wrapped up a meeting with President Obama over at the White House focusing in on the fiscal cliff.

BOLDUAN: Among those taking part, the CEOs of Home Depot, Coca- Cola, Macy's, Yahoo!, AT&T, Goldman Sachs, and more than a half a dozen other companies.

BLITZER: Lloyd Blankfein was there representing Goldman Sachs, the company he heads. He is joining us now from the White House.

Lloyd, thanks very much for joining us. You were there. You met with the president. You were on Capitol Hill today. Where do you stand on this issue, a sensitive issue, of raising taxes for families making more than $250,000 a year?

LLOYD BLANKFEIN, CEO, GOLDMAN SACHS: Wolf, we have to have a solution to this budget crisis.

It's going to take more revenue, and it's going to take cuts in entitlements. And I think as soon as people leave their ideological perch, and realize that we have to have a reasonable compromise, I think the better it is for everybody.

BLITZER: So, does that mean that you would support the president when he says go ahead and increase that highest marginal tax rate from 35 percent to 39.6 percent, where it was in the Clinton administration for families, for incomes above $250,000 a year?

BLANKFEIN: I think if that's what it took to make the math work, when you look at the entitlement side and when you look at the revenue side, I would not preclude that.

Of course, we would have to do that if the numbers drive that way. There is nothing -- that's not an extreme point of view. I would not be cemented about that at all.

BOLDUAN: From what I know, that's a stronger position that you have taken than in the past. What changed your view here?

BLANKFEIN: It's consistent with the positions I have taken in the past. I said that there has to be balance, there has to be -- it has to be responsible, and I think both sides have to yield.

At the end of the day, it's a divided country. But we have to govern the whole country and people have to throw in. It's not a winner take all in this, because we don't want to careen off one wall, and then go off the over wall when the administration changes or every two-year congressional cycle.

So, I think there has to be compromise. Now, I have said in the past that the numbers will drive you to more revenue. And, again, I'm not ideological. I would prefer and I think it's better to have as low a margin rate as possible, because that's the incentive, is the marginal rate. But if we had to lift up the marginal rate, I would do that.

BLITZER: And what about the Republican argument, though, if you raise taxes on anyone during a time of economic distress, it is only going to hurt economic growth?

BLANKFEIN: I think that's true. And I think it is also going to hurt the economy as a whole if we have a widening budget deficit that gets harder and harder to finance, because the credibility and the credit of the United States is at risk.

I think these are all bad alternatives. Look, if this were easy, we would not be standing here having confabs at the White House about how to achieve it. It's going to be difficult. I think what we try to do is we try to get in as good of a place as we possibly can.

I would rather have more of the taxes deferred to beyond a period where the economy is weak. I would rather have the pain of release of expenditures also rolled forward, maybe changing -- you know, means- testing and maybe raising entitlement -- and dates, and have that kick in at some future time. But also there are other values that are at stake here, namely, trying to get those lines to start to converge, so that the budget isn't permanently -- the budget deficit isn't permanently expanding.

BOLDUAN: Now if Republicans do get to a point where they would agree on raising those -- those tax rates on wealthier Americans, that's a major move. I mean, I was on the Hill today, Mr. Blankfein, and the Republican leaders made clear they are not -- they're not going for that, they're not going for that at least right now. If Republicans would do that, you know it takes two to tango. You know politics, even though you're not an ideologue. Where do Democrats specifically, do you think, need to give, then?

BLANKFEIN: You know, I don't speak for the Democrats or Republicans. Listen, I'm not a member of the Democratic leadership or a member of the Republican leadership.

BOLDUAN: But they're seeking your advice.

BLANKFEIN: Well, I'll give you my advice, I'm a citizen of the United States. The success of my business, and the success of me, and my family personally correlate with the success of the United States. I'd like to see us be a successful country. I'd like not to have a crisis which will wreck the economy and derail the recovery.

And I would like the upside of tapping into all the energy that's starting to well up in this country that really favors the competitiveness of the United States like all of the money that's on the sideline, like we finally chewed through a lot of the problems that we've worked -- that we've had over the last several years, like the great energy situation that's available in the United States.

I think we're at the -- we're at the -- I wouldn't talk so much -- we're only talking about the fiscal cliff. How about being on the precipice of great advantages for the United States? And I'd like to take advantage of that. That's my personal interest; that's my business interest.

BLITZER: And from your business interests, I think from investors across the board, everyone who invests has money in 401(k)s. What would happen if the country goes over the so-called fiscal cliff, and let's say in February or March, there's still no deal. And then all of a sudden, you've got to deal with raising that debt ceiling again. Where does America's credit worthiness rating stand? BLANKFEIN: Wolf, I don't know exactly what will happen, but I know it will be bad. You have -- you, again, the United States has great credit. The United States still borrows cheaply. But at some point, there will be competitors to the United States for that.

And by the way, even if there weren't, you need the United States and the leadership of the United States to help drive the global economy.

I -- you know, listen, at the end of the day, I don't want to quibble -- you know, you quibble about the tax rate. But the more important thing is to increase the size of the wealth pie, and the idea of keeping rates low and then you pay a low marginal rate of a shrinking pie, because the economy is impaired, I think that's crazy. I'd rather get the country on the proper footing as the most important objective.

BOLDUAN: Now, you have -- you say that you also...

BLANKFEIN: Can I also just say also, can I just add?

BOLDUAN: OK. Go ahead.

BLANKFEIN: But entitlements are also important here. I just came from Europe, and I have a lot of confidence -- last week I was in Europe. I have a lot of confidence they'll work through their problems.

But I'll tell you, it's a lot easier not to get to that place in the first place, than to try to solve the problems of pulling back on entitlements. The problems in Europe is that entitlements vastly exceeded the scale of their ability to -- to generate the revenue.

BOLDUAN: Lloyd Blankfein, coming out of a meeting with the president. Thank you so much for your time this evening.

BLANKFEIN: Thank you.

BOLDUAN: Thank you.

So what do Americans think about all of this? A majority support raising taxes on the wealthy. That's what the polls are showing us. Sixty percent back higher taxes on incomes above $250,000 a year. That's according to an ABC News Washington post poll. Our CNN/ORC International poll finds similar results, with 36 percent saying taxes on the wealthy should be kept low to create jobs. Fifty-six percent say taxes on wealthy Americans should be kept high to help lower income folks.

Speaking of money, we're less than five hours away from tonight's historic $550 million Powerball drawing. Right now people are lining up across the country. They're hoping they will have the winning ticket.

Let's go to CNN's Mary Snow. She's joining us from one of those lines. Mary, what do you need to do first, for example, if you win? It's a question that a lot of people would like to be able to have that answer to; they're looking forward to winning.

MARY SNOW, CNN CORRESPONDENT: Yes, just about everybody we talked to today, Wolf, says they've already thought about the first thing they would do if they're winning.

And as you see, behind me, as we get closer to that jackpot, this convenience store, for one, is seeing more and more people come in and take that chance.

But one lawyer who deals firsthand with winners says yes, it is such a dream, but it's also nerve-wracking.

(BEGIN VIDEOTAPE)

SNOW (voice-over): At this Louisiana food mart, Powerball ticket lines stood in long lines for a shot at a dream. It's a scene playing out across the country.

In New York, storeowners put up these makeshift signs to keep up with the swelling jackpot.

Twenty-six-year-old Juan Hernandez, who's unemployed, decided it was time to buy his first ever ticket.

SNOW (on camera): What made you play today?

JUAN HERNANDEZ, FIRST-TIME POWERBALL PLAYER: I found 10 bucks, so I decided to, you know, grab two bucks of it and play the ticket.

UNIDENTIFIED MALE: Good luck.

UNIDENTIFIED FEMALE: Thank you very much.

SNOW (voice-over): One customer after another shrugged off the astronomical odds of winning the ticket to a new life.

JASON KURLAND, ATTORNEY: There are very few things in life that someone could change that great, that suddenly. So you see the shock in them. You also see the immediate need to want to stay within themselves. They don't want to change.

SNOW: Attorney Jason Kurland has represented big winners, including three Connecticut men who won a $254 million jackpot. He says, since most states don't allow winners to stay anonymous, he set up a trust fund to try and guard their names, since they had to attend a news conference.

KURLAND: Within the hour I got e-mails and calls.

SNOW (on camera): For donations?

KURLAND: Yes, for donations and investments. SNOW (voice-over): Kurland advises his clients to lay low, hire professionals, and lock away the winning ticket until they're ready to claim the prize.

It's a chore all these ticket buyers would like to have to deal with. And one economist who tracks these kinds of jackpots doesn't expect it will be several winning tickets.

STEPHEN BRONARS, ECONOMIST: To close call, probably one or two winners are the most likely outcomes. One or two winners.

SNOW: There's no shortage of people who are dreaming it would be them.

STUART ZUCKERMAN, POWERBALL TICKET BUYER: I would have to sit calmly down, I would hope, and then just start making plans. Wife, three kids, and a business. There's a lot of planning.

(END VIDEOTAPE)

SNOW: A lot of day-dreaming going on, Wolf.

And New York is just one of 42 states along with Washington, D.C., and the Virgin Islands, that has Powerball. And just to give you an idea of what sales have been like here in this state, lottery officials in New York are saying as of this afternoon they were seeing sales pick up to the tune of about $3 million per hour in sales -- Wolf.

BLITZER: Well, you know, tell those people over there they don't have to waste their time, because I -- Mary, I want you to take a look at this -- I have in my hand...

BOLDUAN: You have in your hand.

BLITZER: I have the winning Powerball ticket.

BOLDUAN: The winning ticket.

BLITZER: I have that feeling. I'm feeling it right now. I believe these, I spent $20, I have ten chances of winning.

BOLDUAN: You have ten chances of winning, and how many? What are the chances again, Mary, of not winning?

BLITZER: A billion to one, is it?

SNOW: Yes, it sounds right. I think it's one in 175 million.

BLITZER: That's if -- that's if you only spend $2. I spent $20, all of...

BOLDUAN: If I win, it's going to be hilarious at work tomorrow. I spent $10.

BLITZER: Ten dollars. There you go. BOLDUAN: Thank you, Mary.

BOLDUAN: Critical advances in a very serious subject coming up. Syrian rebels apparently shooting down regime warplanes and helicopters. We have a reporter on the ground inside Syria. Arwa Damon is there. She's risking her life to bring you this next story. Stay with us.

(COMMERCIAL BREAK)

BLITZER: Syrian rebel forces claim they've shot down three government military aircraft in the last 24 hours. CNN's senior international correspondent, Arwa Damon, is inside Syria right now. She's been there, been to the site where one of those aircraft came down.

Arwa, tell our viewers what you're seeing.

ARWA DAMON, CNN SENIOR INTERNATIONAL CORRESPONDENT (via phone): Well, we were, earlier at the sight of where a fighter jet was shot down using, according to rebel fighters, a surface-to-air missile. And I have to say, at the scene, those who were there, villagers, picking through the remnants, children carrying scraps of metal, in some cases larger than they were on the back of the tractors, carrying, one man saying -- showing us these scraps of metal that he had collected that he wanted to take them to show to other villagers so they could see what had happened to these planes.

Because let's not forget that, on too many occasions, all too often, the sound of these jets overhead would cause nightmares, and now they have become a trophy of war in this one state.

People have really been feeling the brunt of the Assad forces' air power. Many of them saying that this is now the greatest victory.

One eyewitness said he was picking olives very close by. He saw the plane being hit and the two pilots actually ejecting. At that point, everyone in the area fanned out through the olive groves, looking for them. They did find one pilot, who was unconscious with a head injury. We were told that he was taken away to one of these makeshift field clinics. We did see YouTube video of him with his head bandaged in the clinic, still appearing to be unconscious. A voice off camera saying, "This is the fate of your pilot."

This is certainly a very significant development. Because as you were mentioning there earlier, it is not that they brought down this one fighter jet, but in the last 24 hours, two helicopters, as well, Wolf.

BLITZER: Are they beginning to sense they're winning, the rebels right now, Arwa?

DAMON: Well, in this particular area, where this happened, it is around 15 miles outside of Aleppo. They are viewing this as being a significant event. What led to this dramatic development was a pitched battle that was fought very close by at a massive air base just over a week ago. And when the rebels finally took over that base, they found amongst the rocket-propelled grenades, AT-47s tanks. Also stacks of metal boxes, packed with Soviet-era anti-aircraft missiles, hundreds of them, although not all of them are functioning.

But this move, certainly, given what we've seen over the last 24 hours, is shifting the balance ever so slightly. But let's not forget that the regime does still have the military advantage thanks to the sheer size of this arsenal.

We aren't really seeing them gain much more territory than they have in the past. Huge swaths of Aleppo that one would not have been able to drive through, say, in the past month without coming across government forces are now firmly in rebel control.

BLITZER: All right, Arwa. Be very careful over there. Arwa Damon, on the ground for us in northern Syria. Please stay safe.

BOLDUAN: She does amazing work and always has.

Still ahead, an apparent serial killer targeting dolphins. Details of a very disturbing mystery along the Gulf Coast, coming up.

(COMMERCIAL BREAK)

BLITZER: A mystery is unfolding along the Gulf Coast that's as heartbreaking as it is disturbing.

BOLDUAN: Yes. Someone is murdering and mutilating dolphins, and a race is on to find the killer. Here's CNN's Ed Lavandera.

(BEGIN VIDEOTAPE)

ED LAVANDERA, CNN CORRESPONDENT: To reach the crime scenes, you need to catch a ride and take a guide.

(on camera) This island to our left is Deer Island where you found two of them?

MOBY SOLANGI, LEAD BIOLOGIST, INSTITUTE FOR MARINE MAMMAL STUDIES: That's correct.

LAVANDERA (voice-over): A Harrison County, Mississippi, sheriff's chopper and Moby Solangi, the lead biologist from the Institute for Marine Mammal Studies, they took us to see the sights where most of the murdered dolphins have mysteriously emerged along the Mississippi Gulf Coast.

(on camera) How many -- get us up to date. How many dolphins have turned up killed so far?

SOLANGI: We have been dealing with about six or seven. We know that at least three or four of them were killed with bullets, and the other ones have been mutilated. Some have their tails cut off, their jaws cut off, or a screwdriver in them.

LAVANDERA (voice-over): Dr. Solangi performed the necropsies, or the autopsies, for all the murdered dolphins.

(on camera) What do you take away from that? What does it tell you?

SOLANGI: I think it's kind of a sick ritual of some sort.

LAVANDERA: Someone getting a thrill out of doing this?

SOLANGI: I can't see any other reason, other than that of committing a horrific act to do something like that. I don't know.

LAVANDERA (voice-over): The pictures of the mutilated dolphins are disturbing to look at. The bodies clearly show signs of attack: bullet wounds and parts of the dolphins cut off, some too gruesome to show here.

(on camera) Do you think this is a situation where you have a serial killer of dolphins?

SOLANGI: It looks like we have a deranged person that is out there doing something cruel, repugnant, and senseless.

LAVANDERA (voice-over): Federal investigators say they don't know yet if the murders are the work of one dolphin killer or all unrelated. But even in the wild, it's easy for a killer to lure in dolphins.

Katherine Burton trains dolphins at the Institute for Marine Mammal Studies.

KATHERINE BURTON, DOLPHIN TRAINER: They're very curious and I think by getting fed...

LAVANDERA: Even out in the wild?

BURTON: Yes, out in the wild -- they will get fairly close.

LAVANDERA: So they can get themselves in a bad situation, just unsuspectingly?

BURTON: Right, I think sometimes they get close without realizing they're going to be in any kind of danger.

LAVANDERA (voice-over): That's why it's actually illegal to feed dolphins in the wild.

(on camera) This is Ship (ph) Island, where one of the dolphins was found?

RUSTY PITMAN: Right.

LAVANDERA (voice-over): Rusty Pitman is an officer with Mississippi's Department of Marine Resources, one of the agencies patrolling these waters.

PITMAN: I've never seen -- came up on a dolphin that's been shot. That's in 22 years.

LAVANDERA (on camera): It seems so much more difficult to investigate something like this. You know, if you have a murder of humans, you have evidence. There's a crime scene.

PITMAN: Right. This you don't.

LAVANDERA: This crime scene is huge.

PITMAN: They do, on the first dolphin that was recovered, they do have the bullet. They did recover the bullet. How much that will help I don't know. But like you said, you've got so much area here. This is totally different than a crime scene involving humans.

LAVANDERA (voice-over): This part of the Gulf Coast is home to the largest population of dolphins anywhere in the United States, as many as 5,000. In the next few months, females will move in to give birth, and Moby Solangi fears baby calves could be the next victims.

SOLANGI: This is gruesome. It is somebody who's deranged, who's not going to stop.

LAVANDERA: The race is on to catch a dolphin killer before he strikes again.

Ed Lavandera, CNN, Gulfport, Mississippi.

(END VIDEOTAPE)

BOLDUAN: The Marine Mammal Protection Act states that anyone convicted of killing a dolphin could be sentenced to one year in prison and fined up to $100,000. That's the same law that makes it a crime to feed dolphins in the wild.

BLITZER: Don't know why people do that stuff.

He's the man responsible for leaking government secrets around the world. Now the WikiLeaks founder, Julian Assange, is speaking to our own Erin Burnett. Erin is joining us from New York with a little preview.

What does he have to say, Erin?

ERIN BURNETT, CNN ANCHOR: Well, Wolf, we're going to be talking to him live at 7 p.m. tonight. And really looking forward to this, because of course, as you know, Bradley Nanning, who the U.S. government says leaked hundreds of thousands of classified cables, is awaiting pre-trial. Could go to jail for the rest of his life.

And the man at the center of all of that is Julian Assange from WikiLeaks, who published those cables. He is where he is in this picture. He's going to talk to us tonight from the Ecuador embassy in London. He can't leave the embassy, as you know, because he will be arrested, extradited to Sweden, where he is facing sexual assault charges, or to the United States, perhaps, for charges of espionage and helping a foreign enemy. So we're going to be talking to him tonight, Wolf. A lot of questions about that.

Plus, the fiscal cliff with John Cornyn of Texas. He's very pessimistic tonight. Back to you.

BLITZER: We'll see you at the top of the hour. Erin, thank you.

BOLDUAN: All right. Still ahead, forget that $4 grande latte -- Wolf's favorite. Now Starbucks is offering a new coffee worth -- get this -- $7. Jeanne Moos gets to the bottom of what all the fuss is about.

(COMMERCIAL BREAK)

BOLDUAN: You probably heard by now that experts have debunked the claim that a Mayan calendar predicts some kind of apocalypse next month. But just in case, we're going to bring you this. A Chinese man spent the equivalent of $160,000 building an ark. According to the China news service, it's about 65 feet long and weighs 80 tons. In case there's no apocalypse, he hopes to make it into a tourist attraction.

What did you say yesterday? Some people have too much time on their hands?

BLITZER: I was a Boy Scout. They always say "Be Prepared." You know, he's ready.

BOLDUAN: (UNINTELLIGIBLE)

BLITZER: That could happen. It may not necessarily be a sign the apocalypse is coming, but Starbucks -- get this -- they just introduced a $7 cup of coffee. CNN's Jeanne Moos went looking for anyone willing to buy it.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): Is that the sound of money being stuffed (ph) from wallets?

JIMMY KIMMEL, LATE NIGHT TV HOST: It's priced at $7 a cup.

UNIDENTIFIED FEMALE: Hi, there. Welcome to Starbucks. How can we be of service for you?

MOOS: How about a bank so we can afford the new coffee made from rare Costa Rican beans, called...

(on camera) Finca Palmilera.

UNIDENTIFIED FEMALE: Finca Palmilera.

MOOS: Finca Palmilera. Actually, $7 is for the medium, the grande. You could skimp and for $6 get a small. (voice-over) It was introduced at 46 Starbucks stores in the Pacific Northwest.

UNIDENTIFIED MALE: Is that something you would buy?

UNIDENTIFIED MALE: No, not at all.

MOOS (on camera): But hold the outrage. For some people coffee tasting is like wine tasting.

(voice-over) People like Melanie Overton, who runs a fan site for Starbucks enthusiasts, some were giddy over the prospect of sampling a rare coffee. Melody attended a special tasting.

MELANIE OVERTON, RUNS STARBUCKS FAN SITE (via phone): I noticed all of these flavors and how it has so much going on in a single cup of coffee. I'm like, "Oh, I like this?"

MOOS (on camera): So what does it taste like?

OVERTON: Fruity, juicy, clean. Definitely a little pineapple.

MOOS: Those are not words I associated with coffee.

(voice-over) This type is expensive because it grows only at high altitudes, and there are fewer cherries per tree.

KIMMEL: And let the Finca Palmilera coffee challenge begin.

MOOS: Jimmy Kimmel's staff asked folks if they could pick the new super-premium Starbucks coffee.

UNIDENTIFIED FEMALE: I think this one, because it has more of a distinctive taste.

KIMMEL: OK, I should mention that we didn't even bother to get the $7 coffee. We got a pot of regular coffee and poured the exact same coffee in both cups.

UNIDENTIFIED MALE: This one is a smoother flavor. The other one is slightly bitter.

UNIDENTIFIED MALE: I believe it's this one. It just tastes richer.

UNIDENTIFIED FEMALE: It kind of has a beanie taste. It tastes like a bean.

UNIDENTIFIED MALE: I would put $2 to $3 on this cup preferably over the second cup.

UNIDENTIFIED MALE: It all tastes the same.

MOOS: That guy is using his bean.

Jeanne Moos, CNN... UNIDENTIFIED MALE: They all taste the same.

MOOS: ... New York.

(END VIDEOTAPE)

BOLDUAN: See, that's me.

BLITZER: Are you going to spend $7 for a grande black coffee?

BOLDUAN: Uh, no. But can you even pronounce it?

BLITZER: No.

BOLDUAN: Finca Palmilera. You have never.

BLITZER: I'd like a vente...

(CROSSTALK)

BOLDUAN: I have an idea. When you win the lottery...

BLITZER: Yes.

BOLDUAN: ... you can buy me a Finca Palmilera cup of coffee.

BLITZER: That's it for us. Thanks very much for joining us. I'll see you back here in one hour, filling in for Anderson Cooper, 8 p.m. Eastern. Don't forget, you can always tweet me, @WolfBlitzer.

BOLDUAN: Tweet me, @KateBolduan.

BLITZER: That's it for us. Thanks very much. "ERIN BURNETT OUTFRONT" starts right now.