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THE SITUATION ROOM

W.H. Releases Benghazi E-Mails; Old Bad Blood?; IRS Scandal

Aired May 15, 2013 - 17:00   ET

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


WOLF BLITZER, CNN HOST: Jake, thanks very much.

Happening now, breaking news. The White House has just released the e-mails showing how the Obama administration planned its public response to the deadly Benghazi attack last September 11. Will that defuse the first, first, of this wave of scandals?

There's already bad blood between the attorney general of the United States, Eric Holder, and House Republicans. Can he survive his latest grilling on the judiciary committee hot seat?

And we're also hearing right now from O.J. Simpson, this, for the first time since he was sent to prison for armed robbery and kidnapping. You're going to see him take the witness stand in a bid for freedom.

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

ANNOUNCER: This is CNN Breaking News.

BLITZER: We've got breaking news we're following right now. Battered by controversies, the White House makes a very bold move to defend its response to the deadly attack in Benghazi, Libya. Just now, it has just released the e-mails showing how officials tried to decide what to say to lawmakers and to the American public. You'll recall this was the attack that killed four Americans, including the United States ambassador to Libya.

The administration and Congressional Republicans have battled for months over the initial response in which the U.N. ambassador, Susan Rice, called the attack a spontaneous protest. We have since learned there was no protest at all outside the consulate in Benghazi, Libya. Republicans have suggested the truth was deliberately covered up for political reasons to try to help the president get re-elected.

Our chief White House correspondent, Jake Tapper, is here. He's been going through these documents. Jake, you have them right there, about a hundred pages of e-mails. What's going on here?

JAKE TAPPER, CNN CHIEF WHITE HOUSE CORRESPONDENT: A hundred pages of documents. A lot of the names of career bureaucrats has been redacted, but their job titles have been there. What you see is an interagency process of individuals from the FBI, from the CIA, from the state department, the National Security Council, weighing in on the talking points, what to say to Congress, what to say to the American people. Here's a quote from one of the quotes. This is an e-mail from CIA public affairs officer to Victoria Nuland. They say, "That being said, there are indications that Islamic extremists participated in the violent demonstrations." The question, of course, being who to blame for the attacks that killed these four Americans, including the ambassador. Then, we see, this is a big oft discussed part of the e- mail chain.

State department spokesman, Victoria Nuland, writing in an e- mail, "The penultimate point could be abused." This is a point about the fact that the CIA warned the state department that the CIA put in the talking points. Nuland from the state department objects to this. "The penultimate point could be abused by members of Congress to beat the state department for not paying attention to agency warnings, so why do we want to feed that either? Concerned."

There have been a lot of issues about that statement because people think it suggests that Victoria Nuland was trying to protect Hillary Clinton and the state department from political concerns. But, Wolf, a senior administration official tells me that long before the CIA heard about that issue, the deputy director of the CIA, Mike Morell, independently decided to remove that point about all the warnings that the CIA had given the state department.

They say he did that because, one, the talking points are supposed to be about what happened in that day, not six months before, and, two, that he didn't think it was professional or fair for the CIA to say they did provide the state department with all these warnings. So, this is a real window into the decision making process, a hundred pages with all sorts of individuals weighing in and offering their suggestions.

BLITZER: Because it goes through the various agencies of the U.S. government whether the state department, the Pentagon, the CIA, the National Security Council. They're all weighing in, what to put in these talking points, what to tell members of Congress, members of the House and Senate Intelligence Committee, what to tell the American public. And so, there's a treasure trove of information there.

TAPPER: That's right. And you see specifically four changes that the CIA makes. In the original draft, they say that we do know that Islamic extremists participated in the attack, but they change it to something else because they don't want to state with certainty that there was complicity, so there is a back and forth about that. They change attack to violent demonstration.

Then, because they had changed it to violent demonstration, they also changed a word from attack to something else because the idea that an attack evolved into an assault, they said, doesn't make a lot of sense. They took out the al Qaeda reference, because again, they say they did not want to get ahead of the FBI investigation.

They weren't certain at that moment. Remember, this is just a few days after the attack. They weren't certain who had killed these four Americans, and the last thing, of course, was they added this section that the state department objected to about all the warnings about the deteriorating security conditions in Libya at the time.

BLITZER: Let's bring Gloria Borger into this conversation, our chief political analyst. So, what are the e-mails tell you about this exchange, the sort of internal bureaucratic battle that was going on within the Obama administration?

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Let me set the scene for you and Jake can talk about this as well. You have David Petraeus, former CIA director, going up to the Hill after this to brief members, and he tells them what he knows. And they say, oh, that's kind of interesting. What can we say to the American public about that? And he said, "OK, guys. I'll get back to you on that."

He goes back and he says, we need to come up with these so-called talking points that members of Congress can use when they talk about this publicly. The more they go through the iterations of this, there are questions as Jake was just pointing about, what's classified, what was unclassified? What the CIA wanted to say. And, most of all, Wolf, and you can talk about this is, there is a conflict between the state department and the CIA here.

This was a CIA outpost. Four people from the state department were there for probably 30 or so people from the CIA. They weren't talking about that. The state department was a little anxious that it would look like they had gotten all of these warnings that they hadn't paid any attention to.

So, what they're saying here is this was not about politics. This was about figuring out what we could say to the American people that was unclassified and that was accurate. As it turned out, of course, it was completely false.

BLITZER: Because I know in some of these documents, Victoria Nuland who was the spokesman -- spokeswoman for the state department, she was very concerned about the reputation understandably so of the state department.

TAPPER: Well, that's one of the issues that Gloria just touched on is the fact that there was a huge CIA presence in Benghazi. And when they evacuated 30 individuals out the morning after, more than 20 of them were from the CIA, and the state department thought that this, especially the CIA annex, that it was unfair that they were wearing a state department jacket.

The official idea was that this was a state department outpost, and now, the CIA was going to blame the state department for a problem that they, themselves, were also responsible for. They're responsible for their own security, the CIA. The state department had their own diplomatic security, obviously, inadequate at the time.

BLITZER: Because, Gloria, the question obviously remains. Why didn't they just release these documents a long time ago, end this controversy, if in fact it will end the controversy. Why have they waited so long as part of this damage control operation? BORGER: OK. So, if Wolf Blitzer sends me an e-mail and I just thought I want to release it, I can release it because it's not classified. OK? And, these are -- lots of these e-mails have to get declassified. And I think the White House is doing it now because they're in damage control mode, obviously. And they believe that these e-mails make their case that what was going on was not political.

It was just about being consistent and figuring out a way to be on the same page and figuring out a way to give people information that they thought to be the most accurate at that particular point in time. Of course, the only thing that survived was something that was inaccurate.

BLITZER: Let me just button this up, because what really emerged from all of this was Susan Rice's appearance on those five Sunday morning television shows in which she blamed a spontaneous demonstration, angry reaction to that YouTube anti-Muslim video, which by then even, according to these documents, I suspect, they knew was not necessarily true.

TAPPER: No, not according to these documents. According to these documents in all, I believe it's 14 iterations, of the talking points, the CIA is saying that this was related to the demonstration in Cairo, which was because of the anti-Muslim video. That is what comes through here. Susan Rice did work off these talking points and, of course, we all had sources in the U.S. government.

We were hearing from the prime minister of Libya, the president of Libya. Others who were saying this was something more than just a demonstration. But the official position of the CIA at that point was that this was as a result of being inspired.

BLITZER: Because (INAUDIBLE), the number two diplomat who became the acting ambassador testified that he immediately was told by the -- by Chris Stevens, the U.S. ambassador who was slain, we are under attack. It had nothing to do with these anti-Muslim videos on YouTube.

BORGER: Right.

TAPPER: It's staggering.

BORGER: And what Petraeus may have told folks in that briefing, I mean, we weren't there, but he may have gotten a little out over his skis, as the saying goes, in that briefing and said, OK. I'll get this stuff together for you and then the bureaucracy and the people in each of the departments said, wait a minute. We can't do that. That's classified. So --

TAPPER: The question is, the political imperative, obviously, the White House was talking about that al Qaeda was on the run. This was in the weeks before the presidential campaign. So there was this idea that this was part of the president's re-election pitch. Al Qaeda is on the run. We're defeating terrorism. All of a sudden, there is what is obvious to most of us at the time, a terrorist attack, a preplanned terrorist attack on 9/11 in a very vulnerable outpost.

That indicates, A, an intelligence failure, B, inadequate security, which ultimately we all know now the state department was not appropriately prepared for, and then C, questions about why the Obama administration in supporting the Arab spring is letting everything spiral so much out of control.

BLITZER: Bottom line, the release of these documents, is it going to end the controversy over Benghazi?

(CROSSTALK)

TAPPER: No, no. It will not end the controversy, but I think what it does do is it does suggest that those alleging that the only reason that people were blaming this on that anti-Muslim video was political. That case is undermined because you have the CIA repeatedly arguing and the CIA, it is clear, that they are the ones taking the leadership role here, they are pushing that.

BORGER: And I think in the end, what you may discover with most things in government is that it could be more bureaucratic and -- than anything else and, also, the unwillingness of people to go beyond what they had already stated, particularly, at the state department. What the concern was at the state department was, don't get out ahead of what we've already been able to say or why wouldn't we have been able to say it if it was unclassified.

BLITZER: I think the controversy will survive, bottom line right now, because it was such a dangerous place, Benghazi. The British had pulled out. The international Red Cross had pulled out. There had been numerous warnings about al Qaeda. Ansar al-Sharia, the al Qaeda affiliate targeting westerners, including Americans.

For the United States Ambassador to be in Benghazi on September 11th, the anniversary of 9/11, to be there on that date with limited security, that's going to be the continuing scandal, the continuing crisis. Why were all of these Americans in Benghazi at such a dangerous time when other allies had pulled out because it was so dangerous? Why -- who made that reckless decision for those Americans to be there when it was so, so dangerous?

BORGER: And why were they allowed to stay overnight there?

TAPPER: And when you listen to the testimony of the career diplomats, the whistleblowers, that's what they focus on.

BLITZER: Yes. I mean, there are four dead Americans --

TAPPER: Yes.

BLITZER: -- because someone said, go to Benghazi and be there. Whether they were CIA, clandestine officers, or whether they were state department diplomats or diplomatic security, someone made a decision, you should be there on the anniversary of 9/11 even though there were numerous warnings that this was crazy. This was dangerous. Don't be there especially at night. They went there and we know what happened. So, I think that -- this investigation will continue to try to follow those actions.

BORGER: Make sure it doesn't happen again, Wolf.

TAPPER: And even more so, Wolf, if I could just say, why wasn't there enough security? Why when diplomat after diplomat, security officer after security officer in Libya is saying, we need more security, why was the state department rejecting those requests? That is what the diplomats, the whistleblowers who have testified, that's what they have been focused on.

They have not been focused on the talking points, the whistleblowers. They have been focused on the inadequate security for these brave men and women who go to these dangerous places in the service of the country.

BORGER: And that's what Ambassador Pickering's report was about.

TAPPER: Yes.

BORGER: When he took a look at what was dysfunction in many ways about this whole event, and also in terms of security at the state department, he was quite critical. They've implemented, you know, more than the 28 or 29 things that they were told to do, but I think this is an issue that the state department obviously will be looking at and the CIA will be looking at.

BLITZER: We have viewers who are just tuning in right now. And I just want to recap, this is the document that has just been released. It's about a 100 pages.

TAPPER: One hundred pages of e-mails.

BLITZER: E-mails that back and forth between the state department and the CIA, the Pentagon, the White House, the National Security Council. What should be told to members of Congress about the killing of the United States Ambassador and three other Americans, the attack on the diplomatic outpost there, the CIA operation that was under way.

What should be told to members of Congress in a classified version and in a public version, and then, what should be told to the American public? But both of you are now saying based on what you've read, and I've gone through these documents as well, this uproar and we're going to be hearing later from Republicans and some Democrats, this uproar over Benghazi will continue.

TAPPER: Well, I think so, because this is only the -- there are three focuses of the uproar of the controversy. Before the attack, why wasn't here enough security. During --

BLITZER: Why was the ambassador even there?

TAPPER: Why was the ambassador there? During the attack was enough done by the military? And then after the attack, was the administration trying to cover up? This adds to public understanding of the last one, was the administration --

(CROSSTALK)

TAPPER: The talking points. Why were mentions of al Qaeda and extremist groups scrubbed from the talking points? Why were the fact that the CIA had been warning the state department and why was that taken out of the talking points?

What you see here in this hundred pages, and I think we have it all online at CNN.com, what you see here is an interagency process of people from the FBI, people from the CIA, people from the office of the director of national intelligence, the National Security Council, the national -- others -- the national security staffers, all of them weighing in trying to come on the same page about these things.

And you see the process of why the mention of Islamic extremists is taken out. Why violent demonstrations has put in instead of attack? Why all these decisions are made? You can believe it or not, but it's the reason we see in black and white the CIA making their objections, the state department making their objections.

BLITZER: We posted, by the way, all of those documents on CNN.com.

BORGER: You know, the important thing to keep in mind is that these so-called talking points were being put together to give to members of Congress who would then talk to the American public about it. And there was a real concern, particularly, on the part of the state department, don't get in the way of the investigation and don't get out ahead of ourselves.

Don't talk about classified information that the state department had not been able to talk about itself. After all, you were giving this to members of Congress. And there is not a great deal of trust.

BLITZER: And you know, I interviewed the chairman of the House Intelligence Committee, Mike Rogers, the next day, September 12th. He was here in the SITUATION ROOM. He had been briefed. He had been briefed by the CIA. He had been briefed by others in the U.S. government. And in the exchange I had, because I pointed out to him, I don't believe in coincidences.

On the anniversary of 9/11, this looked like a pretty sophisticated terrorist attack. It looked like it was an assassination plot against the United States ambassador, and he basically said the same thing. He didn't say anything about this video, this anti-Muslim video. He had already been told, apparently, that this was a pretty concerted, direct assault on the U.S. operation in Benghazi.

And then for Susan Rice to say a few days later, well, it looks like it was a response to the anti-Muslim video, that's what makes so many people upset. TAPPER: And what's significant about that, also, is that that video was causing a lot of demonstrations, violent demonstrations, throughout the Arab and Muslim world, in Tunisia, in Cairo, Egypt, and other places.

BLITZER: That's true. In Cairo and other places.

(CROSSTALK)

BLITZER: There was an American restaurant in Beirut that was attacked. But that doesn't necessarily mean --

TAPPER: No. Of course --

BLITZER: -- that the Benghazi operation was --

(CROSSTALK)

TAPPER: Intelligent sources at that moment, intelligence sources on the ground, did not think that it was in response to that anti- Muslim video.

BLITZER: Right. That's what we heard from --

BORGER: But it was completely non-controversial at that time to assume that it might have had something to do with this at that particular moment in time.

BLITZER: Yes, but five days later, they knew pretty much what was going on.

BORGER: As it turns out, I think the question will still be asked, about why that really was the only thing that actually survived.

TAPPER: The scrubbing of the talking points.

BORGER: In the scrubbing of the talking points.

BLITZER: And I think -- Jake makes an excellent point. As controversial as the talking points were and we focused in, and this document focuses on the talking points, the two other issues that are not addressed by the release of these documents, why was the U.S. ambassador there to begin with? At such a dangerous time, why was he there with limited security?

And then, why didn't the U.S. military, special operations forces, do more once the attack started to try to save those Americans?

BORGER: And those are the questions that were asked at the Congressional hearing particularly by Mr. Hicks.

TAPPER: And one other point to make about this talking points that were released and the e-mails that surrounding them is everybody is talking now about the deputies meeting. That's the meeting that took place at the White House, the Saturday --

BLITZER Saturday morning.

TAPPER: -- Saturday morning after the attack but before Susan Rice went on the Sunday shows the next morning. The deputies meeting. Now, what I've been told by senior administration officials is that the talking points were a very, very small part of that meeting.

When they were talking about it, what they were concerned about was the fact that the Arab spring was spiraling out of control, that there were demonstrations here, demonstrations there, in Tunisia, Cairo, Yemen, and they wanted to make sure Americans were safe and that was the focus.

At the end of the meeting, according to a senior administration official, Mike Morell, the deputy CIA director stands up. He says, I am going to take -- essentially, I'm going to take ownership of the talking points. I hear the state department's concerns. I have concerns. I am going to take control of this. Denis McDonough, now the White House chief of staff says, thanks, Mike. And that I'm told was the only discussion of the talking points in that meeting.

BLITZER: Hold on for a minute. Our Chief White House correspondent, Jessica Yellin, is joining us for a little context right now. I know you're speaking to officials over there. What are you learning, Jessica?

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Hi, Wolf. Well, as Jake says, officials here are adamant that these talking points should now disabuse the public of the idea that they were up to any kind of political trickery, that, in fact, all they were doing was hashing out a normal kind of e-mail discussion about an ongoing, what they call fluid, very tense situation overseas and a very sort of boring, mundane discussion about talking points over here.

That this wasn't their number one concern. What their number one concern was -- their number one concern was with -- was the ongoing protests that were taking place in Tunisia, in front of embassies, in Pakistan, in front of embassies throughout the region at the time. And these talking points were sort of a very tertiary concern that was even pushed to the back of their deputy CIA director's agenda.

He didn't get to them until hours after they were sent to him on the day he was supposed to review them. That is why, for example, they say he put off reworking them until after his deputies meeting. So, that is their -- that's what -- that's their take and that's what they told us.

As Jake has reported and as Gloria emphasized, they said that it was the CIA who really took out those things that the White House has been hammered for, for example, taking out al Qaeda, changing the word attack to demonstration. All of that came out from the CIA. So, Wolf, that is what senior administration officials are emphasizing.

Now, separately, I would point out that when you look through these papers, there are some other things that the administration isn't pointing out. For example, there is one e-mail from an unnamed person whose name is taken out, which goes through a list of things that happened at the deputies meeting, which they say, the officials say is wrong in every specific.

Every single thing in this e-mail is wrong. They say this person outlines that there was heavy editing in the e-mails because they had to develop more appropriate talking points and that they have to rework it after the meeting to make it better for the Sunday shows. Everything about it they say is wrong. We asked why it was so deep wrong in detail. They couldn't specify.

Also, at the end of the documents, it indicates that director of the CIA, Petraeus, had concerns, and it said "I spoke to the director earlier about the state department's deep concerns about mentioning the warnings that the CIA had made about Libya before and the other work done on this. You will still want to reemphasize that in your note to the director of central intelligence. Thanks."

So, there were a lot of things that they couldn't explain to us that contradicted their story.

BLITZER: All right. Hold on. Everyone hold on for a moment. We are just learning that the president will be making a statement to the American people on the IRS scandal that's unfolding -- a separate scandal unfolding on Capitol Hill right at the top of the hour, 6:00 p.m. eastern. We'll, of course, have live coverage here in the SITUATION ROOM.

The president speaking on the IRS scandal from the White House in about 35 minutes or so from now. We'll have live coverage when the president makes his statement on the IRS. That's a whole separate scandal. We'll get into that in a moment.

But let me bring up Dana Bash up on Capitol Hill. Dana, we're watching all of these investigations unfold, the Benghazi investigation, the IRS investigation, the Associated Press phone conversations investigation. There are three at the same time. It's almost unprecedented, at least, in my opinion, having covered Washington for a long time for three such investigations to be brewing at the same time.

I know you're standing outside the speaker's office, John Boehner. He and other Republicans have been asking the White House to release all of these e-mails involving the so-called Benghazi talking points. Now, they have been released. Are we getting any reaction yet from Republicans up on the Hill?

I think we may have lost Dana, unfortunately. But she's standing outside the speaker's office. And as we know, the speaker and others have been saying to the White House, release all these e-mails. They were shown in private to members of Congress. Now, they have been released. Once again, if you want to take a look at them, you can go to CNN.com. We posted all of them.

All right. So, let's move on and talk a little bit about the IRS, Gloria. You know, all of a sudden, the president now about to go and deliver a statement on the IRS investigation. The fact that the IRS, officials at the IRS decided to specifically target conservative groups, Tea Party organizations, others with the name Tea Party or patriot or groups like that. This is a huge scandal that's unfolding right now.

The president is outraged. He says he didn't know anything about it until he read about it and heard about it from the news media the other day, but he's going to make a statement now.

BORGER: I'm not surprised because in talking to senior advisers at the White House, they believe that this is sort of one of the scandals that they can actually push aside because they're on the same side of the American people as this one. They're not fighting it. The Republicans are on their side. The Democrats are on their side. Nobody is supporting the IRS in any of this.

And so, I was kind of surprised the president didn't last night when the inspector general report came out actually go and make the statement apologizing to the American people and saying we're going to get to the bottom of it. Maybe that's what he's going to do today. I was told yesterday that they intend to take what one adviser told me was meaningful action. So, we'll have to see what that is. He is limited in who he can fire there, most --

BLITZER: He's asked his treasury secretary, Jack Lew, to take some immediate action already.

TAPPER: It's obvious that the three scandals we have brewing right now or controversies, depending on your point of view, one Benghazi, two, the IRS improperly targeting conservative groups and, three, the Department of Justice subpoenaing broadly a number of phone records of reporters of the Associated Press and also other media organizations, it is obvious --

BLITZER: When you say other media organizations, besides the Associated Press?

TAPPER: Well, I'm just saying, they're also in a separate war with the "New York Times" --

BLITZER: Different issue.

TAPPER: About a different leak but that general idea. But my point is just of these three controversies, the fact that the president is going to address this one shows you which one they actually think could hurt them. They obviously do not think that the Benghazi scandal -- they wouldn't have released a hundred e-mails if they didn't think that they needed to do so, but I don't think that they're worried about that long term.

I think that they believe that people see it as a partisan divide. Forty percent think the president is telling the truth, 40 percent say he isn't, 20 percent say they don't know, which is pretty much means nothing. But the IRS scandal, that's something every American understands. Big government, big brother improperly going after me because of what I believe. BORGER: And he needs to show the American people that he's on their side with this. That there is no fault line here. That he wants to get to the bottom of this and that his administration is taking responsibility and trying to get to the bottom of it. That's how he can dispose of it, not dispose of it, but essentially, deal with it and say, I am going to fix this. This was wrong. I am with you.

BLITZER: Yes.

BORGER: Because as Jake just said, this is politically damaging.

BLITZER: Because they are clearly in damage control mode right now over at the White House, releasing all these documents after months refusing to release all these documents, and now, the president going out and speaking on the IRS investigation. We're going to hear from him in about a half an hour.

Let's go up to Capitol Hill. I think we've reconnected with our chief Congressional correspondent, Dana Bash. Dana, you're on the phone. You're right outside the speaker's office. Is that right?

VOICE OF DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT: Well I'm in the hallway between the House floor and the speaker's office and the reason is because there are votes going on right now and I'm waiting to try to talk to him. He actually has been swearing in a new member of Congress, Mark Sanford. That's what's going on right now. But as I'm standing here, I just had a chance to talk to the top Democrat on the House Intelligence Committee, Dutch Ruppersberger.

He is important for lots of reason, but most importantly, he is the one who asked for these talking points in the first place right after the attack in Benghazi. So, the members of Congress would have a sense of what they could say to the media, what would not be classified. I just talked to him and he said that he is very happy, very relieved that the White House finally put these out so that, from his perspective, we can all see what really went on with the back and forth and trying to decide what people like him should and shouldn't say in interviews.

And, you know, he is a Democrat, so he -- he believes that what really went on was not something that was nefarious from the White House's point of view but was done to protect sources and methods and so forth from the point of view of the CIA. That's what Dutch Ruppersberger said and when it comes to the speaker who, as late as this morning, had a press conference and called on the White House to release these e-mails. I'm waiting to see what he has to say about that.

BLITZER: Yes. I'm sure he'll welcome the release of these e- mails. And Dana, on the issue of the IRS, the president in about a half an hour will make a statement from the White House on this IRS investigation. He is outraged as I think almost everyone is that officials at the IRS were specifically targeting conservative groups for special treatment when they applied for tax-exempt status, not necessarily targeting liberal groups but only certain conservative groups.

And we heard from the speaker and you're standing right outside hoping to get him. He says people should go to jail as a result of what happened at the IRS.

BASH: That's right. He is not waiting for the criminal investigation to be done to make that statement. That certainly was kind of the thrust of the news on Capitol Hill today with regard to the IRS. The attorney general was here for hours talking to the judiciary testifying before the judiciary committee and she made the point that he is going to take the facts where they lead.

He is going to not just focus on the office where this allegedly started, the Cincinnati office where they deal with tax-exempt issues, but will deal with it all across the country. And he said this is something where these employees could face criminal charges for civil rights violations, for violating the Hatch Act, which makes it illegal for civil servants to do anything political, and maybe even lying to Congress. So that certainly is kind of the thrust of where things stand here now.

Politically, you're going to have a lot of Democrats who have been running to the cameras to say how outraged they are. Very relieved to see the president giving the statement to try to get out in front because they are concerned, as you all have been talking about, the combination, the IRS, Benghazi, and of course these AP phone records that were subpoenaed. This is just really, really bad for the president. And they're concerned this is going to hurt the agenda they want to do here. Namely what I've heard in the hallways, immigration reform. That is the one thing everyone thinks they can do, and they're concerned this will be a distraction and hurt that.

BLITZER: Now, the president has got some critically important issues he wants to get done in the second term, and obviously focusing on these other investigations, three simultaneous ones at the same time, is obviously going to undermine.

Jessica Yellin, you're over there. I understand the president will deliver his statement not from the briefing room, Jessica, but from the East Room of the White House, which obviously makes it a lot more formal and potentially a lot more significant.

JESSICA YELLIN, CNN WHITE HOUSE CORRESPONDENT: That's right, Wolf. And while officials here have not said what he will do, they have signaled all along that the president sees this as the kind of situation where severe action is necessitated.

They pointed out or I -- the GSA scandal. That's another agency scandal, you'll recall, where people on the government dime went to Las Vegas and partied it up and abused their position. And they were dealt with severely. People ended up resigning and losing their jobs. The point there was when government positions were abused, when there was a lack of integrity, the president acted.

And so the point is this is a case where we expect to see the president make some heads roll. So I don't know definitively that the president is going to announce that anybody is losing their job. But I wouldn't be surprised if we see the president say that severe consequences either have resulted from the IG's report or will result from the IG's report.

We do know that he met with senior Treasury officials this afternoon and that Jack Lew, the Treasury secretary is in charge. Directed Treasury Secretary Lew to carry out, make sure that people were held accountable. So, we'll see if he has decided already what the results will be or is telling us that there will soon be consequences, Wolf.

BLITZER: Gloria, what should the president say on this IRS investigation when he shows up in the east room?

BORGER: I think he needs to tell the American people what he is doing, that this happened on his watch, that he is sorry that it -- it occurred, that he is fixing it as Jessica just pointed out. He met with Treasury officials about 4:45 today. So, clearly, something transpired in that meeting. I've been e-mailing trying to find out. And that he has to announce some action. He's got to be in charge of this. He's got to get in front of it. He's going to try and move on from it because this is a problem.

TAPPER: It needs to be the statement of a leader, not a lawyer.

BORGER: Right.

TAPPER: It can't be "if this happened the way that it's reported, then therefore it would be outrageous." That's not what people want to hear. That's basically what he said in the East Room, I forget when it was, Monday maybe.

BORGER: That was before the report, right?

TAPPER: Before the report came out but when there were -- before the inspector general report came out.

BLITZER: He used the phrase if this happens.

TAPPER: Yes. If the media is correct, even though the IRS and official had already admitted and apologized and called it inappropriate, it can't be that politically. He has to show anger. He has to show this is unacceptable. He maybe even needs to announce some staffing changes at that organization if he is not constrained by labor laws.

BORGER: Yes.

TAPPER: He needs to really make it clear that this is untenable.

But, Wolf, there is one other thing I wanted to -- you asked if the Benghazi, the release of these e-mails would end the controversy. and as you were saying that I was tweeted by Republican Congressman Jason Chaffetz of Utah, who as you know is on the House Investigative Committee. He's the one that flew over to Libya. He wasn't -- there was a back and forth about whether or not he was allowed to meet with the deputy diplomat there, the deputy (INAUDIBLE). And he e-mails me-- or he tweets me, rather, "The White House should release all the unclassified Benghazi documents and e-mails. Instead they pick and choose." Another tweet that he says, "There are 25,000 documents, but they won't give us to them." So the idea this hundred pages is going to end it for members of Congress on the Oversight Committee especially Republicans - obviously, the tweet speaks a thousand words.

BORGER; The question is whether it ends the sort of hyperbole of calling this worse than Watergate, worse than Iran Contra, and all the rest. I mean, that is a question of whether there is any sort of modulation in the investigation or the tone and whether, in fact, Congress proceeds differently. I mean, it's clear that Jason Chaffetz has not changed -- this has not done anything to change his mind.

TAPPER: Jason - not only - but Congressman Chaffetz, I should say. Sorry, his Twitter handle is @JasonInTheHouse, so I immediately call him Jason. Congressman Chaffetz, his focus has not only been on the talking points. The committee has been looking at everything, both the denials of security and the military responsibility.

BLITZER: Don't go too far away. Stand by. We'll continue our breaking news coverage. Once again, we're waiting for the president of the United States. He is going to be speaking from the East Room of the White House. You're looking at live pictures of the White House right now. Right at the top of the hour in less than 25 minutes if it's on time, 6:00 p.m. Eastern, we'll have live coverage here in THE SITUATION ROOM. The president will speak on the IRS investigation.

I'll also talk about the release of all of these Benghazi e- mails. The IRS scandal, much more. The veteran Democratic Congressman Charlie Rangel is here live in THE SITUATION ROOM.

Also, there is another piece of bad blood developing between House Republicans and the attorney general Eric Holder. He got a grilling today up on Capitol Hill. But he was also dishing it out.

(BEGIN VIDEO CLIP)

HOLDER: No, no (INAUDIBLE). No, I'm not going to stop talking now. You characterized something as something else --

ISSA: Mr. Chairman, would you inform the witness as to the rules of this committee?

(CROSSTALK)

HOLDER: -- that is inappropriate and is too consistent with the way you conduct yourself as a member of Congress. It's unacceptable and it's shameful.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: Right at the top of the hour, the president of the United States will be in the East Room of the White House to deliver a major statement to the American people on the IRS investigation, why officials at the IRS were targeting conservative groups for special scrutiny when they applied for tax-exempt status. This is a huge scandal that is unfolding.

Dana Bash is our chief congressional correspondent. Dana, I take it you're learning what the president may be about to announce.

BASH: Well, in a very cryptic way. A Democratic source familiar with what the president is going to talk about tells me he is going to talk about, quote, "IRS changes." IRS changes. That was again a cryptic e-mail to me. Of course I'm asking the obvious question -- personnel? The acting commissioner of the IRS? Or is it more about structural changes? Don't have the answer to that yet, but "IRS changes" is the nugget that we have so far to go on about what the president is going to talk about.

BLITZER: And in about less than 20 minutes we should know, specifically, what the president has in mind. Jake Tapper, Gloria Borger, Joe Johns. They are here with me in THE SITUATION ROOM. Changes. IRS changes. That could mean almost anything, Jake.

TAPPER: Right. I would imagine there probably would be some sort of changes in personnel and staffing. There will probably be some sort of investigation beyond just the Department of Justice, the criminal investigation into what happened. There may be some sort of panel or way to make sure this never happens again. Because obviously it's untenable, and it cannot happen that the IRS should selectively target individuals because they disagree with their ideological beliefs.

BLITZER: Because as you know, one of the responsibilities of the IRS is to make sure that when an organization applies for tax-exempt status, charitable status or whatever, that it's a legitimate organization.

BORGER: Sure.

BLITZER: So there is nothing wrong with examining that organization and making sure they're doing something for the social welfare, for the social good. What's wrong is if you just go after conservative organizations as opposed to liberal organizations.

BORGER: And (INAUDIBLE) targeting people with names, Tea Party, Constitution, you know, names that are so-called conservative sounding -

BLITZER: Patriot.

BORGER: Patriot. Conservative sounding That's wrong. Possibly criminally wrong. This is what the president has to say, that his administration is going to get to the bottom of it because he understands it's not the way we operate in this country.

BLITZER: And it undermines so much credibility the American public has about the role of government which has already been undermined.

BORGER And government, the popularity of government is now, what, 28 percent. During Watergate, it was higher. And what this is going to do is tank that even more and give the president's political opponents who say, big government is taking over everything. It's bad. You can't trust it. And by the way, it's also incompetent. It gives them an awful lot of talking points as we mate say.

BLITZER: Joe, you were up on Capitol Hill listening to the attorney general of the United -- he was grilled before the House Judiciary committee today on several of these emerging scandals.

JOE JOHNS, CNN CRIME AND JUSTICE CORRESPONDENT: Including the IRS, in fact. And he did say during that testimony before the House Judiciary committee that he intended to launch a nationwide, a wide- ranging investigation of the IRS and its practices. There was very little talk about that other issue of course, that unusual investigation of leaks involving the Associated Press. But when you throw all of this into the mix of what's going on on Capitol Hill, it's quite unusual. And they also renewed the long-running feud between Eric Holder and the Judiciary committee.

(BEGIN VIDEOTAPE)

JOHNS: Bad blood between Attorney General Eric holder and the Republican-controlled House Judiciary Committee, which was instrumental in the successful push to get Holder cited for contempt of Congress.

UNIDENTIFIED MALE: Do you swear that the testimony you are about to give is the truth --

JOHNS: Holder went on offense early pointing out that the chairman of the Republican National Committee had asked for him to step down over sweeping subpoenas in a leak investigation involving the Associated Press. Even though Holder had actually taken himself off the case because he'd been interviewed about the leak.

UNIDENTIFIED MALE: Why was such a broad scope approved?

ERIC HOLDER, ATTORNEY GENERAL: Yes, I mean, there's been a lot of criticism. In fact, the head of the RNC called for my resignation in spite of fact that I was not the person who was involved in that decision.

JOHNS: Anger spilled over when Congressman Darrell Issa of California pointed out that United States attorney for the District of Columbia, Ronald Machen, one of the officials put in charge of investigating the leak to the AP, was the same administration appointee who refused to prosecute Holder in court after Congress held him in contempt less than a year ago.

REP. DARRELL ISSA (R), CALIFORNIA: Can he be considered to be independent when in fact when this Congress held you in contempt he was the individual who refused on your orders to prosecute the case? HOLDER: I did not order Mr. Machen not to do anything with regard to -- I won't characterize it -- the contempt finding from this Congress.

JOHNS: And Holder did not back down when Issa asked him about disputed e-mails in an investigation of the president's nominee to run the Labor Department.

ISSA: Yes, you didn't want us to see the details.

HOLDER: I'm not going to stop talking now. I'll characterize something as something --

(CROSSTALK)

UNIDENTIFIED MALE: Mr. Chairman, would you inform the witness as to the rules of this committee?

HOLDER: -- as appropriate and is too consistent with the way in which you conduct yourself as a member of Congress. It's unacceptable and it's shameful.

JOHNS: Meanwhile on the issue of the Internal Revenue Service targeting conservative groups Holder promised a nationwide investigation and suggested potential violations of law now under federal investigation could include criminal civil rights infractions, even lying.

HOLDER: There is also the possibility of thousands -- of false statements, violations that might have been made given -- given at least what I know at this point.

(END VIDEOTAPE)

JOHNS: And we also may have gotten just a precursor of the breaking news here in THE SITUATION ROOM. Holder hinted there on Capitol Hill that we may soon hear details of the federal investigation into the terror attacks at the U.S. consulate in Benghazi. He said they will be prepared shortly to reveal all that they've done.

BLITZER: It was quite a lively performance up there, and that anger, Gloria, that we saw between Darrell Issa, one of the key investigators of one of those subcommittees -- of the committee of the government -- government reform special committee and Eric Holder when he -- when they started going back and forth. That was pretty --

(CROSSTALK)

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: It was a rare -- it was a rare moment of truth.

BLITZER: That was ugly. Yes.

BORGER: And I think Joe would agree about how these two men feel about each other. BLITZER: He's going to join us, by the way, in the next hour, Darrell Issa. We're going to get his reaction to when after the president speaks about the IRS we'll hear what he has to say. Charlie Rangel is also coming in to speak with us, one of the key Democrats on the House Ways and Means Committee. So he's obviously been very, very concerned about what's going on.

JAKE TAPPER, ANCHOR, "THE LEAD WITH JAKE TAPPER": Yes. One of the things I'm curious what Joe thinks about the idea of recusal. The attorney general talked about how he had recused himself from the leak investigation but there didn't seem to be any written record.

JOHNS: Right.

TAPPER: That -- of recusal and I believe there is supposed to be a written record.

JOHNS: Well, it depends on how you read the Justice Department regulations. It's clear that it's the attorney general who's supposed to make the decisions on these subpoenas. The attorney general made the point that because he'd been interviewed as a fact witness previously, he handed that decision off to someone else in the department who effectively became the attorney general for those issues. So whether or not there is required to be a written record, I'm sorry, is something I think you just have to ask --

BORGER: Did he recuse himself or did they recuse him?

JOHNS: He says he recused himself but he says he didn't write it down. Apparently there is not even an e-mail. They actually looked for documents and didn't find any written record of him saying, I'm stepping away.

TAPPER: And the significance of this is because according to the Associated Press that this story they were working on in 2012 about al Qaeda would have undermined again the administration talking about how al Qaeda was on the run because it was a story about how al Qaeda still was driving and plotting.

BLITZER: He recused himself, he says, and he asked the deputy attorney general, the number two official there, to take charge.

JOHNS: James Cole.

BLITZER: James Cole. All right, guys, stand by for a moment. We're getting closer and closer to the top of the hour. That's when the president of the United States will go into the East Room of the White House. You're looking at live pictures right now. And make a statement on the IRS investigation to the American people. Stand by.

(COMMERCIAL BREAK)

BLITZER: We're following breaking news. Within the next few moments, the president of the United States will go into the East Room of the White House. You're looking at live pictures from the East Room right now. The president will make a statement on the IRS scandal that has been brewing now for the past few days. The president will certainly condemn what happened at the IRS. With official word now from the inspector general of the Treasury Department that officials at the IRS inappropriately targeted conservative organizations for special treatment in advance of getting tax-exempt status. Organizations involving Tea Party supporters and others.

Totally inappropriate for the Internal Service to be doing that. The president will be making a statement. We'll see what announcement he has. I don't think he's going to be answering questions. He'll just be making a statement to the American people. He clearly, according to all of his aides, is outraged by what happened.

All of this coming only an hour after the White House did something that earlier they resisted doing for weeks, indeed for months, releasing all of the e-mail traffic between officials from the State Department, the White House, the CIA, the Pentagon. Officials determining what should be told to the American people, what should be told to members of Congress about the attack on the U.S. consulate, the diplomatic outpost in Benghazi, Libya last September 11th, an attack that wound up killing four Americans including the U.S. ambassador to Libya, Chris Stevens.

Jake Tapper is here, Gloria Borger is here, Joe Johns is here. We've got Dana Bash up on the Hill. Jessica Yellin at the White House.

Jake, just recap for the viewers who are just tuning in right now, and you've got those hundred pages of e-mails --

TAPPER: Yes.

BLITZER: -- right now in front of you. The headline coming out of this.

TAPPER: Well, the headline is that the White House did an extraordinary thing and released 100 pages, now Republicans will say that there's still 25,000 pages of documents that they want to see. But this is 100 pages showing the interagency policy -- the interagency process, rather, of individuals in the Obama administration, the State Department, the FBI, the CIA, drafting these talking points for members of Congress and how to discuss what happened at Benghazi, who was responsible, and why it happened.

Then you see the State Department spokesman Victoria Nuland talking about her concerns about the CIA suggesting that they had repeatedly warned the State Department about extremist activity. You see the CIA making changes about -- changing the term Islamic extremists, taking it out, that there was a definitive way that everybody knew for sure that it was Islamic extremists, especially those affiliated with al Qaeda.

Here's one e-mail that we have, it's an e-mail from the CIA Public Affairs Office to Victoria Nuland at the State Department. There -- that being said, it says, "There are indications that Islamic extremists participated in the violent demonstrations." This is about they're debating whether or not they know for certain that an al Qaeda related group or Islamic extremists are the ones responsible for killing four Americans, including the U.S. ambassador, or if it was some other reason.

There's another e-mail, this one we've heard a lot about from Victoria Nuland at the State Department. We see it for the first time here. "The penultimate point," this is about the warnings that the CIA insisted on putting on the talking points, they have given the State Departments warnings. "This point could be abused by members to beat the State Department for not paying attention to agency warnings. So why do we want to feed that either? Concerned."

Now I have been told by senior administration officials that before the CIA heard about Nuland's concerns, this is not reflected in these e-mails, but according to a senior administration official, Mike Morrell, the deputy CIA director, said that he was already concerned because the talking points were supposed to be about what happened that day, not about the six months prior. And also because in Morrell's view, according to the source, he didn't think it professional or fair for the CIA to say that they had provided the State Department with all these warnings.

Now as we've discussed, one of the other reasons unstated is that the biggest presence in Benghazi was CIA, of the more than -- of the 30 or so people evacuated the next day after the attack, more than 20 of them were CIA. So it's almost like the CIA blaming the State Department for inadequate security at their own diplomatic presence.

BLITZER: Yes, it's interesting. The president, Gloria, is going to be making a statement within the next few minutes from the White House on the IRS investigation. I suspect he won't at all refer to the Benghazi incident. I suspect he won't refer to the phone calls that were monitored, if you will, that were -- not recorded, but they were assessed by the Department of Justice, the U.S. attorney and the Associated Press regarding leaks, although in a general way, he may try to address that probably at the end of his remarks. I'm just guessing.

BORGER: Look, as we were discussing earlier, the one problem he's got on his large plate right now that he can actually sort of tackle head on pretty simply, I'm the guy in charge. I want these people fired. This person's going to go. This was wrong. I am sorry it happened on my watch. I promised to the American people it will never happen again. We will get to the bottom of this.

Because don't forget, Wolf, there is nobody out there defending the IRS. Not at the White House, not among Republicans, not among Democrats. Nobody's defending the IRS. And the president knows that he's got to -- he's got to end this right now by saying, I'm fixing it. I'm in charge. It shouldn't have happened.

BLITZER: He's got a major -- he's got a major agenda right now that he's trying to get through Congress, including comprehensive immigration reform, economic issues, job creation, he's got a debt ceiling that's about to explode at the end of July, if you will. He's got a lot of work to do. And this is the last thing he needs, three separate investigations under way.

JOHNS: And I have to tell you, too, just sort of, again, taking the temperature on Capitol Hill, at the hearing today with Eric Holder, the easy part of his testimony was about the IRS because all he did was walk in and say, we're going to expand, make this investigation even bigger. We're going to get to the bottom of this. And that was received very well by both Democrats and Republicans.

So the IRS for this administration is apparently the easiest thing to fix, just by investigating and figuring out what went wrong.

BORGER: You know, Wolf, this has been a political sinkhole for the White House, all of these three things together. And one of the most important commodities at the White House is time. And the people who run the White House right now are talking about this stuff. Rather than the agenda that you're talking about. I mean, the president is -- met with John McCain, trying to keep immigration reform on track. But this is taking up a huge amount of their time, and they need to try and dispose of some of these things so they can get on with talking about what they want to talk about.