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THE SITUATION ROOM

Secret Chinese Army Unit Tied To Hacking; Attacking Ashley Judd; Royal Baby Bump

Aired February 19, 2013 - 16:59   ET

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


WOLF BLITZER, CNN HOST: And you're in THE SITUATION ROOM. Happening now, a secret Chinese military group allegedly based in this building blamed for relentless cyber attacks on U.S. corporations and government agencies.

She's not even a Senate candidate yet so why is the actress, Ashley Judd, already being hit with a barrage of political attack ads?

And a man who used multiple usernames on a Christian dating website is charged with raping a woman he meant online. Police fear there may be other victims.

We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in the SITUATION ROOM.

(BEGIN VIDEO CLIP)

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BLITZER: A secret Chinese army unit is now being tied to a massive cyber spying campaign aimed at U.S. corporations and government agencies. A study released today says dozens of organizations have been hit worldwide. The targets, according to various reports, Coca-Cola, RSA, a security company known for its secure I.D. token, and most frightening, potentially, a software firm that gives remote access to pipeline and power grids across the United States.

Our Brian Todd is looking into all of this. Brian, what's going on?

BRIAN TODD, CNN CORRESPONDENT: Wolf, there's new report. It's the first of its kind to tie a massive cyber attacking campaign to a specific unit of the Chinese military. It says that secretive units responsible for thousands of hacks against more than 100 companies In North America.

(BEGIN VIDEOTAPE)

TODD (voice-over): It's a dreary looking 12-storey office building in Shanghai, but according to a new report, it houses part of a shadowy Chinese military unit responsible for thousands of hacks into American businesses and government agencies. The report from the cyber security firm, Mandiant, says the group goes by the suit (ph) code names like unit 63198. His nickname, the Comment Crew, and a secret division of the Chinese military sanctioned at the top levels of the government.

What are they stealing?

KEVIN MANDIA, CEO, MANDIANT: That's a great question. And it actually sort of depends on industry. But at the end of the day, it's hard to eliminate anything, its word documents, power point documents, e-mail, PDF documents, excel spreadsheets

TODD: It gets more ominous. Mandiant CEO, Kevin Mandia, says Chinese hackers in general, he wouldn't say this specific unit, have targeted vital American services. We got more specific information.

(on-camera) Cyber security researchers say that Chinese military unit also trains its attack on infrastructure in North America, electrical grids and switchers like this one, oil and gas facilities, water treatment plants.

One prominent cyber security researcher told us that last September, a company that designs software giving oil and gas companies and power grid operators access to things like valves and switches was successfully hacked by that military unit.

(voice-over) That firm, Telvent, says it's working with its customers and law enforcement. Mandia says even though information may have been hacked on utilities, none of them have been actually disabled. Mandia says the typical hack from this unit starts with so- called spear fishing. An e-mail sent to a company official in the U.S., masquerading itself as being from someone familiar.

The victim opens an attachment or zip file and their computer is infected. Mandia says his firms tracked this military units hacking for six years. How? He says Mandiant would monitor the infected computers of victims who hired his firm and go back click by click, one key stroke at a time.

MANDIA: We saw somebody log in to the victim network here in the United States and then check start checking their Gmail account. Well, it's in plain view. We're catching the traffic. Law enforcement would call this a wiretap. We just call it full content monitoring.

TODD: The Chinese government has blacked out some of CNN's reporting on this story even as it emphatically denies sanctioning hacking.

HONG LEI, CHINESE FOREIGN MINISTRY SPOKESMAN (through translator): Making baseless accusations based on premature analysis is irresponsible and unprofessional and it doesn't help solve irrelevant issues. China resolutely opposes to any form of hacking activities.

(END VIDEOTAPE) TODD (on-camera): The White House, Pentagon, and state department are all aware of the Mandiant report. The White House says it's taking steps to strengthen computer networks, protect infrastructure, and to confront senior Chinese officials about hacking. Senate Intelligence Committee chair, Dianne Feinstein, says she has raised this with Chinese officials, and she says they're in denial -- Wolf.

BLITZER: Brian, there's a downside to the firm, Mandiant, going public with its findings, isn't there?

TODD: That's right. The firm, itself, says that its own techniques as described in this report are more effective if the attackers do not know about them. It says once the Chinese hackers read all this, it's going to become harder to track them.

BLITZER: Brian Todd, thanks very much. Let's get firsthand now what's going on with this investigation of Chinese hacking. Kevin Mandia, the man you just saw in Brian's report, the CEO of the firm, Mandiant, is here in the SITUATION ROOM. Kevin, thanks very much for coming in.

MANDIA: Thanks for having me.

BLITZER: So, what about the downside of all the details emerging in your report? Will it be harder to deal with these hackers?

MANDIA: Well, you know, when we've been responded (ph) to these guys for seven years, they've kind of anchored themselves into certain behaviors. I feel confident, because a lot of companies have dealt with them for so long that if we do change their behaviors, first, we're giving them a Mike Tyson upper cut with what we're doing with 3,000 indicators being released today. But, we're going to be able to see where they migrate to.

Anyway, we're taking control of things by saying, we're going to put this kind of measures in place, knowing they have to go over here now. So, I think we'll be able to predict what --

BLITZER: What's the worst case scenario? What could they do?

MANDIA: Well, throughout my experience of responding to Chinese hackers, they've actually had rules of engagement, meaning they come in and they steal intellectual (ph) property. What I haven't seen them do is destroy computer systems or make data unavailable. So, unless, they change their code of ethics with their rules of engagement, right now, they're stealing things, but it's still intact for the victim companies to use and access.

BLITZER: Is there sort of an understanding among international hackers, government agencies, if you will, don't go too far?

MANDIA: Well, I think that one of the reasons we've tolerated this for as long as we did is because there wasn't destruction, but what we're seeing right now is some other nation states starting to move towards more destructive-base attacks. BLITZER: Like which ones?

MANDIA: From what I've heard, Iran is one of the countries that is also more destructive should they break in. So, they have a different rule of engagement.

BLITZER: What a viewer watching right now, whether here or around the world, in the United States or around the world, what could they do? Potentially, are they at risk?

MANDIA: Not really. The groups of the threat actors that we track, what they do is they hack American companies. So, they're not interested -- well, in your case, they might be interested in you and what you do, but they're not interested in sole individuals, unless, you're very high worth, very prominent in some capacity. So, I would say the biggest concern is organizations that have innovation and lots of I.P.

BLITZER: How difficult is it for a hacker to steal someone's information? I'll give you an example. A year or so ago, I was speaking to a high-level U.S. intelligence official who said to me, when he goes to China, he doesn't even take a laptop with him because he's fearful the stuff on that laptop could be stolen.

MANDIA: Right. If you go to China, most firms ideal with have throwaways. If they take a Blackberry to China, they've thrown it away when they come back, same with anything that they bring to China. Even throwaway laptops. Nobody's going there with one device and coming back and maintaining its use.

BLITZER: Because if you go there, what potentially could happen? You go in with your laptop, your Blackberry, your smartphone, potentially, walk us through the problems that could develop. If you're targeted, let's say.

MANDIA: If you're targeted, the thing is, the attackers only do the type of attacks that are successful. So, if someone is not very good at attacking you and they're trying to break in, and they can't succeed, generally then, the B team will come in. If the B team is not successful, then we see the A team come in.

But if you are going to China, access to your device is access to your information. And that's been the rule of thumb is that high level diplomats and high level executives in U.S. when they go to China, they aren't using that equipment when they return.

BLITZER: In other words, they just throw it away?

MANDIA: Absolutely.

BLITZER: They go in with a clean smartphone a, clean laptop or iPad or whatever, and then, there's no information on the hard drive or whatever that potentially could be damaging?

MANDIA: That's exactly right. They're going with the clean site (ph), and they come out and throw it in the palm (ph).

BLITZER: And that's it. A lot of people you know do that?

MANDIA: Absolutely.

BLITZER: That's the advice I got when I went there as well. But I didn't know how serious it was. So, walk us through that Coca-Cola, the hacking on Coca-Cola, because they were involved in a sensitive negotiation with China.

MANDIA: Well, I can't comment specifically on Coca-Cola. What I can do is tell you what the threat actors normally do. If you do mergers and acquisitions in China, it's very common that a specific group will attack you for the communications. So, they'll usually go after the organization as do (ph) in the M&A work and they go out for the law firms as well. And law firms have been traditionally insecure. So, those are the folks that are normally targeted during M&A negotiations.

BLITZER: Because they're looking for an advantage of the negotiations --

MANDIA: Absolutely.

BLITZER: -- if they can steal what you're is, they might have an advantage on those negotations.

MANDIA: Absolutely.

BLITZER: Got to be really sensitive. Kevin, thanks very much for coming in.

MANDIA: Thank you very much.

BLITZER: Kevin Mandia is the CEO of Mandiant cyber security analyst as well. Appreciate it.

Another chilling day in court for the Olympic "blade runner," Oscar Pistorius, who revealed in detail what he says happened in the moments before his girlfriend was shot and killed. Lisa Sylvester is monitoring that and some of the other top stories in the SITUATION ROOM right now. What's the latest, Lisa?

LISA SYLVESTER, CNN CORRESPONDENT: Wolf, in a statement read by his lawyer at the bond hearing, Pistorius said he thought an intruder was in the house that night. Not wearing his prosthetic legs and too afraid to turn on the lights, he says he moved toward the bathroom and fired into the door. It was only after he called out for his girlfriend who he thought was still in bed that he realized something was wrong.

He then he said he broke down the door at one point using a bat. He picked her up and he carried her downstairs where she died in his arms. Prosecutors are disputing that claim and the charge against Pistorius has been upgraded to premeditated murder. His girlfriend was laid to rest today. In other news, a source tells CNN investigators have evidence Sandy Hook School gunman, Adam Lanza, was obsessed with other mass murders. This following a CBS report that Lanza may have been tried to outdo the man behind the 2011 Norway massacre that killed 77 people. Connecticut State police dismissed that report but didn't deny investigators may have looked at the Norway shooting. A final report on Newtown is expected this summer.

And Transocean Deep Water Incorporated will pay $1 billion in civil penalties for that 2010 oil spill in the Gulf of Mexico after a federal judge signed off on the company's deal with the justice department today. Last week, Transocean was ordered to pay a $400 million fine. That's the second largest in U.S. history for a criminal violation of the Clean Water Act. A separate civil trial to determine the cause of the accident is set to begin on Monday.

And the cash-strapped. U.S. Postal Service is making an unlikely jump into the clothing and accessory business, announcing a new line that it plans to call rain, heat, and snow. The unofficial motto has been licensed to a Cleveland-based company which will design and finance it.

The new line could generate new revenue for the postal service which just reported a $1.3 billion loss for the end of 2012. And I, for one, am going to be curious to see, Wolf, what exactly that new clothing line looks like. But we do know the name rain, heat, and snow. So, we can let our imagination wonder with that, Wolf.

BLITZER: So, what you're saying is, you can go to the post office in addition to buying some stamps or roll of stamps, you can buy a new outfit? Is that what you're saying?

SYLVESTER: Yes. You know, who knows what it's going to be. I'm guessing with the name that it might be maybe jackets, maybe some outerwear, something like that. But, certainly, it's a novel idea to help the postal service and they certainly could use the money right now.

BLITZER: Yes. Maybe they'll be doing coffee producer over there.

(LAUGHTER)

BLITZER: Who knows?

SYLVESTER: That's right. Postal service coffee.

BLITZER: Thanks very much.

Much more news coming up, including dire warnings about drastic cuts, painful forced spending cuts that could soon start sweeping across the federal government. We're going to tell you what it potentially means for you.

And the pictures everyone have been -- a lot of people, at least, have been waiting for, a pregnant Catherine duchess of Cambridge. Stay with us. You'll get a closer look.

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BLITZER: Borrowing some kind of last minute deal. The federal government will be hit by automatic force spending cuts 10 days from now, totaling $85 billion through the end of this year. The cuts were meant to be painful, so painful, in fact, the Congress would be forced to compromise. President Obama added to the drumbeat of warnings today.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: So, these cuts are not smart. They are not fair. They will hurt our economy. They will add hundreds of thousands of Americans to the unemployment roll. This is not an abstraction. People will lose their jobs. The unemployment rate might tick up again.

(END VIDEO CLIP)

BLITZER: CNN chief national correspondent, John King, has been looking at the impact we can expect from these cuts.

(BEGIN VIDEOTAPE)

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT (voice-over): Webster defines sequester as to set apart or segregate. In Washington, it's a fancy word for force spending cuts and an example of how political leaders in both parties are failing to do their most basic job.

JOHN BOEHNER (R-OH) HOUSE SPEAKER: The president will offer up more the same.

OBAMA: They doubled down, in fact, on the harsh, harmful cuts that I've outlined.

KING: Here's what happens if there's no deal before the March 1st deadline. $85 billion in federal budget cuts kick in. That's nine percent of non-defense spending and 13 percent of the Pentagon budget over the next seven months. What's protected? Medicare and Social Security, so are Medicaid and food stamps. Military personnel and the V.A. also are examined.

But most federal agencies would make cuts and the White House warns, among other things, furloughs at the FBI, the border patrol, and food safety inspections. The president says vital government services would suffer and the economy would weaken. But Republicans say agencies have had plenty of warning and that it's past time the government joins American families in making tough budget choices.

(on-camera) A couple of facts amid the typical Washington blame game. While the president rails against the cuts now, the idea for this deadline was his. Two years ago, the president believed the threat of defense cuts would pressure Republicans into a big deficit cutting grand bargain. (voice-over) And yes, this all may sound familiar. After all, it's been 16 years since the country had a real budget. But this president and this Republican opposition are taking Washington's dysfunction and trust deficit to new levels.

(END VIDEOTAPE)

BLITZER: And John King joins me now along with CNN chief White House correspondent, Jessica Yellin, and our chief political analyst, Gloria Borger. John, do both sides really see a sense of urgency in these final ten days?

KING: I would argue almost no. Publicly, they say yes. Publicly, you heard the president saying, yes, let's do a deal. Let's get this done. But the president hasn't picked up the phone and called either Speaker Boehner or Leader McConnell in recent days. I just checked in to see if there would be a secret -- you know, Joe Biden goes up to the Senate as we've seen in some of these past crisis.

And they say, no, there's been no such in treaty, and in fact, Leader McConnell in the Senate says they're not going to do that again this time. So, publicly, you're going to hear, especially from the White House, how horrible this is. Privately, both sides seem to think they get short term, at least short term, political gain here.

BLITZER: Gloria, you wrote an excellent column on CNN.com today. Obama can't kick his legacy down the road. In title, among other things, you said, "A draconian plan designed to force the two sides to get together is now turned out to be too weak to do that." And what does that tell us?

More about the collapse of the political process that it does about the merits of any budgets cuts. So, is anybody taking responsibility for this?

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: No. Of course not. Of course not. As John pointed out, this was something that was hatched by all of them, voted on by all of them, and now, they're saying, you know what, privately, OK, in the short term, liberal Democrats are saying, you know what, we're not going to get defense cuts that are any better than these and conservative Republicans are saying five percent across the board on domestic spending, OK, I'm down with that.

I can live with that, and then, what they've got coming up, which will be the big PR problem for them is, of course, closing down the government at the end of March, March 27th. So, they're all a little worried about that. But right now, in the short term, they figure that they can each get some political pluses out of this. So, they've abdicated completely, Wolf.

BLITZER: What's the White House strategy in all of this? What's the president trying to do it having these photo-ops, for example, as he did today? JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Well, he's using the bully pulpit to wage warfare against the Republicans in essence. There's two strategies here. First, it's the picture. So, we're going to see more events like we did today where the president standing in front of the kind of people who will lose their jobs when these cuts go into effect and he'll say it's all the Republican's fault effectively for not reaching a reasonable compromise who'll argue with Democrats.

And then, in addition to the picture, there's the message, the timing. He started this conversation on his own while Congress is out of session. So, he gets to dominate the microphone and he gets to argue that the debate should be on his terms, which means the ultimate deal should include tax increases and that's what Democrats want. Republicans don't.

BORGER: But do you mean to tell me that the White House honestly believes that Republicans, having six weeks ago voted for tax increases, that they honestly believe that the Republicans six weeks later are going to say, OK, yes, bring on more tax increases?

YELLIN: I know. They're in two different universes on this, but the answer is yes. The White House will say that, at this point in the discussion about the fiscal cliff, Republicans thought there is no way we're going to do tax increases, no give, and that ultimately they did and they say it will happen again this time, they insist on tax increases.

BLITZER: This is an opportunity for the president, politically. He thinks he has the upper hand.

KING: He does think he has. He does if you look at the public opinion data. He does in terms of the American people support what the president calls the balance approach. He has that polls quite well. The American people blame Congress, and specifically, Republicans in Congress more for where we are right now. Yes, you can find polling data.

So, on the short term, there's no question, and the president has the bully pulpit which no other --

BORGER: And he's more popular than Congress.

KING: And he's more popular. No question the short-term he does, but if you're a second-term president and your whole idea is looking toward a legacy, if the economy teeters again, if economy tips in a recession, if the unemployment rate goes up, if there's less money coming into Washington and brought (ph) somehow as restricted even more by this, he could win in the short-term, Wolf, but lose in the long-term if they don't get a deal here and the economy heads south.

BORGER: You know, you can kick the can down the road when it comes to these forced spending cuts, but you can't kick your legacy down the road. If he wants to get something done on everything else, on immigration, even on the government shutdown on -- BLITZER: On guns?

BORGER: On guns, on energy, climate, he has to figure out a way to talk to these people. And, you know, you talk to people in the White House --

(CROSSTALK)

YELLIN: Not yet. They argue that they're not going to talk until they start seeing -- that the Republicans aren't negotiating until they start seeing -- and so, there's no point in talking yet. But I'll tell you, the president is personally very concerned about the effects on the economy. They think the economy is already hitting in anticipation of these budget cuts. And if there's going to be any job growth, they can't let this go on too long.

BORGER: Then pick up the phone, OK? Then pick up the phone. If the president is that concerned, pick up the phone. They said at the White House, you know what, you people in the media believe there's a myth and there's a myth that your propaganda (ph) which is essentially that if the president picked up the phone, John Boehner would come to the table and they would get things done. That's not going to happen. But my point is, just try it.

KING: This is our third consecutive two-term president. They all have known this generational ticking time bomb of the Social Security and the Medicare system out there. Clinton can do it in the second term. He had the Lewinsky scandal. Bush lost public support because of the Iraq war and Katrina, couldn't sell a Social Security plan.

This president, Democrat, Republican, whatever, doesn't matter. This president and this Congress owe it to the country to deal with something that has been kicked and kicked and kicked and the longer you kick it, the bigger the problem and the harder it gets to fix.

BLITZER: They want comprehensive immigration reform. You know what, they should also do -- they should do comprehensive immigration. They should also do comprehensive tax reform, comprehensive entitlement reform, at the same time, deal with Social Security, Medicare, Medicaid, deal with taxes, get rid of those loopholes, get rid of some of those deductions, and then, they could work on a grand scheme, if you will, and maybe the country will move along.

BORGER: So, then, why propose the closure of the loopholes now when in fact --

(CROSSTALK)

BLITZER: Republicans are never going to agree to that.

BORGER: -- down the road, right?

YELLIN: They disagree. I know it sounds absurd, politically, but the White House is convinced. The president is convinced that they'll give on that, that they will close the loopholes because if they --

BLITZER: Some Republicans will, but the majority of the republicans in the House of Representatives --

YELLIN: The president has won on the other fights. He thinks to win on this, too.

BORGER: Very confident.

BLITZER: We've got 10 days to figure it out.

BORGER: We'll see.

(LAUGHTER)

BLITZER: All right, guys. Thanks very much.

Most Americans will feel an impact from these forced budget cuts. And if you want to know how, go to CNNMoney.com. They've got a great article. Fifty-seven ways, not 56, not 58, 57 ways the sequester could sting.

Coming up, an alleged rape. The latest horror story to emerge in the age of online dating on a website you may least expect.

(COMMERCIAL BREAK)

BLITZER: In an age where millions of people are going online to find dates, there are also plenty of horror stories, the latest one involves a website you may not expect. Let's go to CNNs Miguel Marquez. He's following this story for us. Miguel, what happened?

MIGUEL MARQUEZ, CNN CORRESPONDENT: Yes, Wolf. A California man has been charged with rape after authorities say he preyed on a woman on the dating website, christianmingle.com.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Christian Mingle is this vehicle which God did use to bring my wife and I together.

MARQUEZ (voice-over): The promise of love, a relationship, a powerful message.

UNIDENTIFIED FEMALE: It's exciting to see who's out there, who's interested in you.

MARQUEZ: Police say, this man, Shawn Banks (ph), preyed on a woman in La Mesa, California, east of San Diego, meeting her on ChristianMingle.com, gaining her confidence.

LT. MATTHEW NICHOLAS, LA MESA POLICE: The victim was comfortable enough to invite him to her residence.

MARQUEZ: An online dating no-no. Police say the woman reported the crime immediately and only ever knew him by his online name, Rarity. Among his fake names, say police, not only Rarity but Rylan, Rylan Harbough and Rylan Butterwood. All profiles on the Christian Mingle site all using fake information that may tracking Banks difficult.

NICHOLAS: This individual traveled around a lot, and we are concerned that there are people, obviously, outside of La Mesa, or potentially, outside of San Diego County that could be a victim.

MARQUEZ: Banks, who worked in naval intelligence, was honorably discharged as a lieutenant in 2003. No blemishes on his record. Police say Banks has ties to North Carolina, South Carolina, Texas, Coloradi, Virginia, and Michigan, possibly doing I.T. computer work after leaving the navy.

Sparks Network, the owner of Christian Mingle and other faith- based dating websites said in a statement it is fully cooperating with police and as far as the millions of profiles on its website goes, the spokesperson says it has experts manually review all profile content and photos and has developed several proprietary automated tools to ensure the highest possible level of safety and privacy for our communities.

(END VIDEOTAPE)

MARQUEZ (on-camera): Now, Wolf, I also want to show that you on their website, when you go to sign up to it, right at the bottom of it, it says that they do not perform background checks on the members or subscribers to the website. Mr. Banks has pled not guilty to the charges and is currently free on a half million dollar bond -- Wolf.

BLITZER: So, obviously, an extreme case. Is it, though, isolated? Are there more examples of these kinds of allegations? Or is this something totally, totally rare?

MARQUEZ: Well, certainly where there are -- there's a lot of Web sites where these allegations have been made before. Many famous ones out there. This particular case authorities is believing that Mr. Banks may have preyed on women in other states, possibly throughout southern California. They are not entirely sure that he used another Web site other than Christian Mingle. One reason they are putting this story forward, though, obviously, is to get the press attention, to see if any more victims come forward.

So far, I just got off the phone with police, and so far no other victims at the moment. We do understand, though, that his preliminary hearing is coming up on the 14th of March. So, his process is moving along, Wolf.

BLITZER: Yes. Cautionary tale for everyone on these Web sites. Be careful. Just don't rush into things like that and check everything out. Miguel Marquez, thanks very much.

Up next in our Strategy Session, a war of words on immigration reform between Senator Marco Rubio and the White House. But there's new information coming in right now.

(COMMERCIAL BREAK)

BLITZER: There's been a war of words over the past couple of days between Senator Marco Rubio's office and the White House over immigration reform and just how much contact the Obama administration has had with the Florida senator.

But now there's new information. The White House has just issued a statement saying that the president called Senators Rubio, John McCain, and Lindsey Graham today to discuss a shared commitment to, quote, "bipartisan commonsense immigration reform and to commend the senators for bipartisan progress."

Let's discuss what's going on in our Strategy Session. Joining us, our CNN contributors, Democratic strategist Paul Begala and Republican strategist Ana Navarro.

Ana, just first, major outreach, I think, directly from the president to Senator Rubio, Senator McCain, Senator Graham on this issue of immigration. How key is it?

ANA NAVARRO, CNN CONTRIBUTOR: You know, it's key that it happened. I'm glad that it finally happened. Frankly, though, it's mind blowing. It's amazing that it's taking this long for it to happen and that it's taken a leap.

You've got a White House that has shown tremendous dysfunctionality this week. First of all, there was a leak of a bill that was drafted unilaterally without seeking any input from any of the Republicans. They just talked today. This is weeks after the bill was drafted, and days after the bill was leaked.

So I'm saying to the White House, if you are serious about passing immigration reform, and I hope you are, you need to coordinate better. There are Republicans that are working on this, and they need to be part of the formula and be part of the overall strategy. The president has spent more time meeting with Univision personalities and Hollywood actors on this than he has with Republicans who are making the policy.

BLITZER: How delicate of a dance is this for the White House, Paul? Did the White House miscalculate by not engaging these Senate Republicans earlier?

PAUL BEGALA, CNN CONTRIBUTOR: No, not at all. Look, usually I defer to Ana. She's a lot smarter than I am. But on this one I just disagree. The president's better at the outside game. These Republicans only respond when the president brings outside pressure from the American people. That's why it's smart for the president to talk to Univision. Very smart for the president to call Senators Rubio and Graham and McCain today because you want to nudge them and support them.

But the truth is, you if you want to get Republican support for something that President Obama supports, it's best for the president to play the outside game instead of the inside game because Republicans are so pathological in their hatred for the president. Particularly the Republican base, the conservative Tea Party base.

So, if he were in the middle of this insider game and meeting with them in a high-profile way, it would actually diminish the chance for real success here. I think the president is handling this absolutely right. Keep going, Mr. President. You're going to get your bill.

BLITZER: Let's go to another issue. The Supreme Court will once again tackle the politically tricky issue of campaign finance laws. The Court could decide to throw out the limits on donations by individuals in federal election campaigns. The challenge comes from an Alabama donor supported by the Republican National Committee. The argument is that the strict limits on contributions for individuals violate the First Amendment.

Paul, let's go to you. Citizens United, as we all know, had a huge impact on how political races play out. But if individual donations can be limitless, how much of a game changer would that be?

BEGALA: I think what it would do is almost go back to the time when there were pretty much no laws and regulations. I think that's a bad thing. Now you know, Wolf, our viewers should know, I advised the pro-Obama Super PAC in this last election. We under the laws as interpreted by the Supreme Court, were able to raise unlimited amounts of money. So that (INAUDIBLE) part of the problem.

Maybe that gives me the perspective, though, to say, I think that the lower court, the D.C. Circuit Appeals Court, was right when they sustained the current laws which limits the amount of money that people can give to politicians. And interestingly, the court's ruling, the lower court's ruling, the district appeals court for the District of Columbia, was written by Janice Rogers Brown, one of the most conservative members of the federal bench. Appointed by George W. Bush. She's nobody's idea of a liberal.

I still worry. I think my fear is that the Supreme Court is going to continue to allow big money to have a bigger and bigger role in our politics and that's not good.

BLITZER: Why do you think if you do, Ana, that this would be a huge financial advantage for Republicans and it would give them an upper hand?

NAVARRO: Look, I don't know that it would give them an upper hand, and I don't know that the current law violates the freedom of speech, but it does violate rationale and it does defy logic. It makes very little sense to be able to have unlimited amounts of money going to super PACs and yet have very limited caps on what can be given to candidates and party committees who have a lot more scrutiny and regulations on how they can spend the money than these super PACs.

We have big money in politics already. It's just that it's going to super PACs which, in my view, has helped make the process much more negative because it gives candidates a deniability, an arms' length from some of these very negative advertising. BLITZER: OK, guys, hold on for a moment. There's more to discuss. She's not even a Senate candidate yet but the actress Ashley Judd is already being hit with a barrage of political attack ads. That's just ahead.

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BLITZER: Actress Ashley Judd may be testing the waters but she's still not a candidate for the United States Senate in her native Kentucky. That hasn't stopped potential opponents from attacking her like a candidate. Already, our national political correspondent Jim Acosta is here in THE SITUATION ROOM taking a closer look at what is going on. What is going on?

JIM ACOSTA, CNN NATIONAL POLITICAL CORRESPONDENT: Well, Wolf, first it was Karl Rove's super PAC, and now the attacks on Ashley Judd are coming from the man she may be taking on, Senate majority leader Mitch McConnell himself. But one of Judd's own relatives is not so sure a run for the Senate is the best role for the actress to take on.

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ASHLEY JUDD, ACTRESS: From the Volunteer State, I proudly stand to nominate --

ACOSTA: For Ashley Judd, it's like a bad movie sequel. For the second time this month, the actress amd potential Kentucky candidate is a target in a political attack ad.

JUDD: I can never anticipate what is going to push me over the edge.

ACOSTA: The ad from the man Judd may be looking to unseat, Senate minority leader Mitch McConnell, debuted just days after the movie star met with Democratic donors in Kentucky. Top party leaders in the state say a Judd candidacy could happen.

REP JOHN YARMOUTH (D), KENTUCKY: She's smart. She knows the issues. I think she would be a great candidate.

ACOSTA: Judd spent much of her childhood in Ashland, Kentucky. Portraits of Judd and her mother and sister, both country music stars, all hang in the local museum. But Judd's grandmother, who can still be found in the home where the actress lived as a girl, seems to question the wisdom of a Senate run.

POLLY JUDD, ASHLEY JUDD'S GRANDMOTHER: She is a Hollywood liberal. And I say that -- and that has different meanings for different people. It depends which side of the fence you're on.

ACOSTA: Earlier this month, another attack ad on Judd from the Karl Rove super PAC American Crossroads pointed out the actress lives in Tennessee.

JUDD: And it just clicked. Tennessee is home. ACOSTA: But Judd's toughest hurdle may not be her roots. She still attends basketball games at her alma mater, the University of Kentucky.

JUDD: I love and am proud of being a hillbilly.

ACOSTA: It's that she's a fierce critic of mountain top coal mining, a big industry in the state.

JUDD: The fact that the Appalachians are the Appalachians makes this environmental genocide possible.

ACOSTA: As for McConnell's new TV ad, it appears to be a change in strategy from earlier this month when he said he's not focused on potential Democratic rivals.

SEN. MITCH MCCONNELL (R), MINORITY LEADER: I'm not going to start handicapping who might be an opponent.

(END VIDEOTAPE)

ACOSTA: A McConnell campaign spokesman disputes the notion that the Senate minority leader is worried about a Judd candidacy or his re-election, which is still a long way off in 2014 and the McConnell aide went on to say the senator is in fact a fan of Judd's movies -- Wolf.

BLITZER: Of the movies but not necessarily of her as a potential Senate candidate.

ACOSTA: I think that's a safe one to go with. That's right.

BLITZER: Jim Acosta, thanks very much.

Now let's get back to our panel to discuss what's going on in Kentucky and here in Washington. Our CNN contributor and Democratic strategist Paul Begala and Republican strategist Ana Navarro.

Shouldn't he be worried more right now, Mitch McConnell, Ana, about a Republican challenger, let's say from the Tea Party Movement, than an Ashley Judd challenge?

ANA NAVARRO, REPUBLICAN STRATEGIST: I think he's doing just the right thing. He shouldn't be worried about a primary. He should be doing his job. This was a funny ad. It was witty. I didn't know he had it in him. It really was a cleverly -- a cleverly done ad that highlighted not just Ashley Judd, it was a three-minute Web ad where maybe she was on the screen for 30 seconds.

It was about how the Democrats are having a very difficult time fielding a serious candidate for this race. Even though Senator McConnell is one of their number one targets. So I thought it was a -- it was a funny ad.

You know, it was Ashley Judd in her own words. Nobody was attacking her. BLITZER: Is Ashley Judd the best candidate the Democrats could field, assuming McConnell doesn't have to worry about a primary challenge from the right, shall we say? Is she the best that the Democrats could put up against him, Paul?

PAUL BEGALA, CNN CONTRIBUTOR: Well, obviously the best would be the governor, Steve Beshear, who's a Democrat and very, very popular. He has, I think, little or no interest in serving in the United States Senate which is probably a sign that he's mental health is in good shape.

I do think -- I don't think -- I know McConnell is doing this because he's scared. How do I know? My old friend, mentor, former client, Governor Zell Miller of Georgia speaking the way, I think, Kentuckians can relate, used to say a hit dog barks. Right?

Why is he attacking this proud Kentuckian, this Wildcat alumnus so viciously so far from the election? Because he's scared. And he's scared of the Tea Party first which might -- there's already talk in the Kentucky papers of business people, particularly one businessman in particular who's thinking about running as a Tea Party candidate against McConnell in the primary, they might beat him and even if they don't, they might weaken him so that Miss Judd or some other prominent Democrat could knock him off.

Believe me, McConnell have been a very successful politician but he is running scared.

BLITZER: But do you think, Paul -- maybe Governor Beshear -- Paul --

(CROSSTALK)

NAVARRO: Paul, is Ashley --

BLITZER: Hold on -- hold on a second, Ana.

Do you think, Paul, Governor Beshear would be a stronger Democratic challenger to Mitch McConnell but would Ashley Judd be a strong candidate?

BEGALA: Sure. I mean, she's got a case to make. She's got wide popularity. She has been -- at least for those -- I've worked in Kentucky. I love that commonwealth. It's one of my favorite places. And she for many people has become sort of the face of Kentucky basketball, Kentucky Wildcats. And let me tell you, if you don't believe in the Kentucky Wildcats in that state, they'd call you an atheist.

So I would not -- he's clearly worried. It's not even so much what I think. Mitch McConnell is terribly worried. Here he is the most powerful Republican in the Senate and he's scared to death of an actress back home. And that's why he's running these ads. The proof in the pudding is in the negative ads.

BLITZER: How worried should he be, Ana? NAVARRO: I just have to tell you that I think my friend Paul completely mischaracterized this ad. First of all, it's not a vicious attack. She is a little bit -- a tiny little bit and part of that ad. If having Ashley Judd say in her words and have video of Ashley Judd nominating President Obama as a -- from the state of Tennessee, in her own words, is a vicious attack, then that's President Obama and Ashley Judd's problem, not Mitch McConnell's.

I think he has nothing to be scared of. I think he's doing a good job. The best thing he can do is be a good leader in the Senate right now. Do your job well and that's your best safeguard to a primary or to a tough challenge, and the bottom line is, if you look at the entire ad, it's not about Ashley Judd.

There was an enormous amount of candidates who are saying that they want to run against him. A lot of them who are whacky, one of them likes to wear a top hat a lot, another one likes to refer to herself in the third person, and then you've got the ones who are saying they don't want to run, who would be the more serious candidates, the lieutenant governor, some Congress people, et cetera.

So this is not the ad of a scared person. This is the ad of a confident person.

BLITZER: All right. Ana and Paul --

BEGALA: The problem --

BLITZER: Hold up, Paul. I've got to -- unfortunately, we're up against the clock.

BEGALA: All right.

BLITZER: So we can't continue, but we will, one of these days. Thank you.

Coming up, by the way, in our next hour, it sounds like something out of a movie. $50 million in diamonds stolen in a shocking heist. We're going to be right back.

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BLITZER: A Georgia prisoner whose supporters argue is a mentally disabled is set to be executed today.

Lisa Sylvester is monitoring that and some of the other top stories in THE SITUATION ROOM right now.

What's going on?

LISA SYLVESTER, CNN CORRESPONDENT: Wolf, the Supreme Court of Georgia has denied a stay of execution for Warren Lee Hill, who is scheduled to die by injection for the 1990 killing of a fellow inmate. Hill's lawyers argue that because he has an IQ of 70, he should be spared under a 2000 decision barring the execution of the mentally disabled, but a number of state courts says he doesn't qualify. And the Los Angeles police chief says it could take several months or longer before a review of allegations made by ex-cop killer Christopher Dorner can be investigated against the department are made public. Dorner, who led police on a more than weeklong manhunt killing four people and wounding three others, blamed racism and corruption at the LAPD for his termination and he vowed to wage a war against the department to clear his name. He died a week ago in a standoff with police.

And the monster storm system in the western U.S. is expected to pose a triple threat across the country over the next three days, eventually bringing snow to parts of the southwest, a blizzard to the central plains, and severe storms to Texas, Louisiana, and Arkansas. Winter storm conditions are expected in the next 24 hours in portions of California and Nevada and Colorado.

And the Los Angeles Staples Center will become a meat-free zone for singer Morrissey's upcoming sold-out concert. For the first time, vendors inside and the -- and surrounding the arena will all be 100 percent vegetarian when he plays there next week. The singer, who is a vegetarian and animal rights activist, says he wanted to forbid the sale of, quote, "flesh as food," and he is calling the move a victory for the animals.

I mean, that's not a -- that's not a small task at all -- Wolf.

BLITZER: Let's listen a little bit to the music.

(MUSIC)

Always look for an excuse to listen to music here in THE SITUATION ROOM.

SYLVESTER: I like that.

BLITZER: And we had an excuse right there.

SYLVESTER: Kind of -- livens things up a little bit so.

BLITZER: So we do. No, I like music. You know that.

SYLVESTER: Yes. And I'm sure you're a Morrissey fan, as well, right?

BLITZER: I like all kinds of music. Very, very eclectic.

Thank you.

It's been a picture a lot of many people have been waiting for. The Duchess of Cambridge showing off her royal baby bump. You're going to see the video when we come back.

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BLITZER: The picture a lot of people around the world have been waiting for, a noticeably pregnant Catherine, the Duchess of Cambridge, stepping out in public.

CNN royal correspondent, Max Fisher, has details.

(BEGIN VIDEOTAPE)

MAX FOSTER, CNN ROYAL CORRESPONDENT: So the Duchess of Cambridge completes her first official engagement with a visible baby bump. She did nothing to hide it. She didn't wear a coat. Some people thought that she would. There was a huge amount of interest in these images. Have a look at the huge press pack, scrambling, just to get a sense of what she looks like.

It is just a pregnancy, but this is the future queen, who's going to give birth to the future monarch. She's trying to use her fame by highlighting causes she cares about. In there, she met recovering addicts in a charity that she's patron of.

We'll get to see the Duchess in public again next month, as she takes her visit to northern England. There'll be an even bigger press pack, that's really going to build all the time as we head towards the birth in July.

Max Foster, CNN, London.

(END VIDEOTAPE)