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'Traumatized' by Health Care Debate; Lockerbie: 20 Years After Pan Am 103; Private Firm in the Hunt for al Qaeda

Aired August 21, 2009 - 15:59   ET

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


WOLF BLITZER, CNN ANCHOR: And happening now, harsh condemnation from President Obama and the White House, blasting the homecoming for the Pan Am Flight 103 bomber.

Also, wounded warriors fighting a new battle as the Veterans Affairs Department drowns in a flood of backlogged claims, 400,000 of them, with more coming in.

And dramatic new video of the largest jewelry heist in British history, $65 million worth. And now three men are charged as new details of the case emerge.

I'm Wolf Blitzer in CNN's command center for breaking news, politics, and extraordinary reports from around the world.

You're in THE SITUATION ROOM.

It's a scene that angered people around the world, a hero's welcome home to Libya for the man convicted of bombing Pan Am Flight 103. Now President Obama and his press secretary, they're using their harshest language yet, calling the spectacle outrageous, disgusting, and highly objectionable.

Our senior White House Correspondent Ed Henry is here in the situation room working the story for us.

It seems, Ed, as if the White House is ratcheting up the rhetoric.

ED HENRY, CNN SR. WHITE HOUSE CORRESPONDENT: They really are, Wolf. I'm told by top White House officials that in recent days, in private, White House officials were very direct with the Scottish authorities in saying they found this whole situation unacceptable and they were pressing to make sure it did not happen. They don't feel they had enough leverage to stop it, however, and I'm told that while the president did not personally intervene in the case, he did instruct White House aides that he wanted White House aides, in addition to State Department officials, to call the Scottish authorities and register these protests.

Nevertheless, despite that private intervention, publicly it seemed to some that maybe the White House wasn't speaking out enough. Yesterday, Robert Gibbs got a question in the briefing, where is the outrage? So, today, you heard Robert Gibbs call the situation disgusting, and the president himself weighed in, as well.

(BEGIN VIDEO CLIP) QUESTION: What about the hero's welcome in Libya, sir?

QUESTION: Do you consider Libya a terrorist state, sir?

BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES: I think it was highly objectionable.

(END VIDEO CLIP)

HENRY: You hear that, "highly objectionable," from the president. His strongest comments yet.

White House officials, as well as State Department officials, are adding that in the days ahead, they're going to be watching Libya very closely. Obviously, Libyan officials have been trying to reach out to the U.S., sort of thaw relations. The U.S. now warning they're watching very closely.

BLITZER: And we're going to have more on this part of the story coming up, but I want to get to health care right now.

HENRY: Sure.

BLITZER: This is priority number one for the Obama White House right now, even as the president prepares to go on vacation.

HENRY: Absolutely. And today on my radio show, "44," I talked to Senator Ben Nelson. He's a moderate Democratic senator. He's somebody the president is hoping to be a swing vote, to come to his side. He's still undecided. And in a worrisome sign, he told me that based on his town halls, he thinks that the public mood right now is very, very bad.

Listen to how he put it.

(BEGIN AUDIO CLIP)

SEN. BEN NELSON (D), NEBRASKA: What I found in Nebraska is that there's an awful lot of concern, fear, anxiety, frustration. I think America has been traumatized by the debate because of the labeling of certain situations such as the hospice panel being called the death panel. There's an awful lot of misinformation out there, a lot of misunderstanding.

(END AUDIO CLIP)

HENRY: But on the positive side, Senator Nelson said he received favorably the idea the president was being more flexible this week about potentially dropping a public option. What Nelson is saying is that he thinks if the White House gets serious about scaling back the health care reform bill, just focusing on insurance reform, and then using the public option as sort of a fallback, instead of the front of it, just as a trigger if the insurance companies don't kick in all these reforms, he could be on board.

So, we'll see whether -- the White House isn't quite there yet. They've been getting this advice from other conservative Democrats in the House and Senate. But if they keep getting pushed, this may be where they go in September. They're not there yet, but they may be heading in that direction.

BLITZER: The president's going to have to rest up, because he's got a lot of work ahead of him when he gets back from Martha's Vineyard.

All right. Stand by, Ed.

We're going to go to Capitol Hill a little bit later. Dana Bash is working this story, as well. There's movement on this health care reform legislation in the Congress.

But let's get back to the controversial homecoming right now for the convicted Pan Am Flight 103 bomber.

Libya is keeping Abdelbaset Ali Mohmed al Megrahi out of sight today amid the international uproar over his hero's welcome. A British official says plans for an even larger spectacle were scrapped at the last minute. Al Megrahi has terminal cancer and was granted what the Scottish authorities call compassionate release. The justice secretary of Scotland made that announcement yesterday.

But back in Lockerbie, many residents will be glad to close this chapter of the horror story that started more than 20 years ago.

CNN's Diana Magnay reports.

(BEGIN VIDEOTAPE)

DIANA MAGNAY, CNN CORRESPONDENT (voice-over): This was the crater left by the 747 airliner that was Pan Am Flight 103, brought down over the small Scottish town of Lockerbie in December 1988 by a terrorist bomb in the cargo hold of the plane.

Twenty years on in the town's quiet memorial garden, it is hard to imagine the carnage. But George Stobbs, who was one of the first policemen at the scene, remembers it vividly.

GEORGE STOBBS, POLICE INSPECTOR: Houses were just slowly burning, and more houses were catching fire. The windows were popping, the doors were burning. Everything was just -- it was like hell.

I remember also seeing a wrought iron gate in the distance. And I could see it was actually dripping like melted butter, just drip, drip, dripping away.

MAGNAY: All 259 people on board the flight, most of them Americans on their way home for Christmas, were killed, as were 11 residents of the town. The debris from the wreckage scattered over a vast area.

MAGNAY (on camera): We're three miles from the actual crash site at Lockerbie here, but this is where the nose cone landed. And between here and the tip of the horizon, they found 120 bodies.

(voice-over): Search teams combed 845 square miles for clues as to what brought the plane down, a trail which led Scotland's criminal justice system to a Libyan businessman and suspected intelligence officer Abdelbaset Ali Al Megrahi.

JOHN GAIR, LOCKERBIE RESIDENT: The houses that were here were destroyed.

MAGNAY: John Gair was never entirely convinced Megrahi was the man who destroyed his neighbors' homes, but he says the politics behind the bombing was always only a distant reality for the people of this town.

GAIR: The politics of the Middle East were and still are immensely complicated. The ordinary citizen has no means of judging these things.

MAGNAY: Policeman George Stobbs said most Lockerbie residents never really cared who was behind it.

STOBBS: They're not interested in the politics of the thing. And they just want to go on with their lives. And I think Lockerbie has got to that stage now.

MAGNAY: Two hundred and seventy people from 21 nations met their deaths in these beautiful hills and in the backyards of Lockerbie. Twenty years later, homes are rebuilt. The events of that terrible night are buried here, but not forgotten.

Diana Magnay, CNN, Lockerbie, Scotland.

(END VIDEOTAPE)

BLITZER: Let's go to Jack Cafferty right now. He's got "The Cafferty File."

I've got to tell you, Jack, I got a flood of e-mail myself. I know you always got a lot of e-mail. Reaction to that interview I did yesterday with that Scottish justice secretary defending that decision.

JACK CAFFERTY, CNN ANCHOR: There is no defense for what he did, and that homecoming thing that they put on in Libya was an international insult to decency.

President Obama still defending his plan for health care reform. Americans and some lawmakers have no shortage, though, of complaints about what's on the table as this debate rages on. And that includes the so-called public option.

This would create a government-run insurance program that would provide competition for the private insurance companies, the idea being that it would force them to bring down costs. It would also provide an affordable option for the 47 million Americans who currently have no health insurance.

Americans speaking out at health care town hall meetings have voiced numerous objections to the plan, including privacy issues. Republican Senator Mike Enzi of Wyoming says it would be a bureaucratic nightmare. Is Medicare? Maybe it is. Senator Kent Conrad, Democrat from North Dakota, he said earlier this week the public option is dead simply because there are not enough votes in the Senate to pass it.

The White House has indicated some willingness to back away from this part of the plan. But House Speaker Nancy Pelosi is out now saying that no bill will pass the House without a public option, all of which ought to make for a very interesting September when the Congress returns from its August recess. You think there's fireworks on the Fourth of July?

Here's the question: Can health care reform happen without the so- called public option?

Go to CNN.com/caffertyfile, post a comment on my blog.

This thing's going to explode into some kind of conflagration when they all get back at their desks, I think.

BLITZER: Yes. They better all rest up in their remaining little vacation time, because it's going to be tense here in Washington.

CAFFERTY: Yes, it is. Tense.

BLITZER: All right. Jack, thank you.

Bracing for a brush with Hurricane Bill. We're going to show you the very latest on how Bermuda is faring. And by the way, Bill and Hillary Clinton have just left ahead of the storm.

Also, reports that a controversial private American contracting firm is now playing a key role in hunting down Osama bin Laden and al Qaeda.

Plus, President Obama's vacation destination: Martha's Vineyard. There's more to the president's pick than meets the eye.

We're going there.

(COMMERCIAL BREAK)

BLITZER: Is a private company playing a key role in a hunt to try to kill al Qaeda leaders? There's a stunning report in "The New York Times" saying that contractors are working at a secret base -- actually, several secret bases -- in Pakistan and Afghanistan, loading smart bombs and missiles on drone aircraft. And that's just for starters.

(BEGIN VIDEOTAPE)

BLITZER: Let's talk about this with CNN executive producer Suzanne Simons. She's the author of a brand new book entitled "Master of War: Blackwater USA's Erik Prince and the Global Business of War.

Suzanne, thanks very much for coming in.

SUZANNE SIMONS, CNN EXECUTIVE PRODUCER: My pleasure.

BLITZER: And thanks for writing this book.

I want to talk about it in a moment, but first let's talk about this story in "The New York Times" that Blackwater has been used to put the bombs, actually, to place the bombs on these drones, these pilotless aircraft that go in over Pakistan areas and elsewhere in Afghanistan and try to kill suspected terrorists.

What do we know about this?

SIMONS: Well, what we do know is that the relationship between the CIA and the company goes well back to nearly a decade now, and that they do, in fact, work at two sites, one in Afghanistan, the other in Pakistan. Now, what they -- what sources have told me in the course of writing the book is that, yes, they provide security at those sites. They didn't tell me that they were loading HELLFIRE missiles on to predator drones. That's something that "The New York Times," as you mentioned, came out with yesterday.

However, I was actually at the CIA base in Jalalabad with Prince back in 2007, and it was kind of an unusual situation. I was there as an author in the course of writing this book and doing research, and sort of seeing how he brought the business aspects to the military and sold the services. Now, a lot of the guys he was talking to -- and he wouldn't talk to them within earshot of me -- but a lot of the guys he was talking to I assumed were part of these teams that go out with case officers, and they were hunting for those hard-target al Qaeda operatives.

BLITZER: Suzanne, what did you learn about these reports now that the CIA actually wanted to use Blackwater operatives to go out and kill al Qaeda suspects and others? Apparently, the new CIA director, Leon Panetta, canceled that whole operation, nothing ever came of it, but it's pretty dramatically reported.

SIMONS: And here's interesting thing about it. Like, the thing people don't really know -- in fact, we can say that Blackwater was hired to provide training for the CIA, so we know that much. Were they ever actually going to pull the trigger?

I mean, being that they're contractors and it's a classified contract, the CIA is not commenting on it. Nobody really knows for sure whether they were actually going to be the ones sent into the field. But it brings up a great debate in Washington, which is really sort of the crux of why I wrote the book, as well.

Senator Feinstein talked about it today. It's the issue of, what is inherently governmental? How many of these contractors who we hire, various government agencies hire to take on tasks, are doing things that really shouldn't be in the hands of hired people and should be only for government work?

BLITZER: Because it seems over the past dozen years or so, so much of the work of the U.S. military, so much of the work of the U.S. intelligence community, has been outsourced to these private contractors like Blackwater.

SIMONS: There was a little slip a couple years ago when the intelligence community was presenting its budget, and it's classified information usually, but they said that 70 percent of the intelligence budget was going out to private contractors -- 70 percent. Now, I talked to a former very high-ranking official at the CIA also in the course of writing the book and he told me, hey, "When I started my career" -- and he was a career CIA man -- "When I started my career, the contractors were parking cars in the parking lot." Today they're doing practically everything, including analysis and interrogations, which is a whole other sort of box of worms.

BLITZER: In your book, "Master of War," you write extensively about Erik Prince, who created Blackwater. What ever happened to him?

SIMONS: He's still around. He's still running the company. He's still got his fingers on a number of government contracts.

They changed the company name earlier this year after -- you might remember they got kicked out of Iraq. The Iraqi government said after a shooting, a horrible shooting in September, 2007, we don't want you here anymore.

It took the State Department a good 16, 18 months to be able to find a replacement for the company. That's how integral they had become to the mission in Iraq, and they were finally able to do that.

And Erik Prince realized the name "Blackwater" has almost become radioactive and we really need to do something to change it. So, he changed the name of the company. He's got different people working there. His former executives have almost all left, but he still has a great number of contracts with the government today.

BLITZER: And the new name of the company is XE. It's spelled X-E, but it's pronounced "Zee."

What does that mean, if anything?

SIMONS: It's like some sort of an inert gas that is undetectable, which I kind of laugh at, because I think that's exactly what he'd like his company to be, is undetectable. But I just don't think it's ever going to happen.

BLITZER: The book is entitled "Master of War: Blackwater USA's Erik Prince and the Business of War."

The author, Suzanne Simons.

Thanks very much for coming in, Suzanne.

SIMONS: My pleasure always, Wolf.

(END VIDEOTAPE)

BLITZER: The airport is closing, the surf is pounding. Bermuda right now bracing for Hurricane Bill. We're planning to go there live for you.

Plus, advice for President Obama on health care reform from a former adversary, Mitt Romney, speaking from his own experience.

(COMMERCIAL BREAK)

(NEWSBREAK)

BLITZER: Learning a health care lesson from Massachusetts. That state now has near universal coverage even without a public option. But is it the answer the White House and the Congress are looking for?

Plus, captured on tape, the largest jewelry heist in Britain's history. And now three suspects are in custody and facing charges.

We'll unveil the stunning video for you that may be the police's biggest clue.

(COMMERCIAL BREAK)

BLITZER: You're in THE SITUATION ROOM.

Happening now, borders are no limit for Mexico's brutal drug cartels. Killings and kidnappings are right now on the rise in Arizona, but we'll tell you how federal agents stopped gangsters in their tracks.

Stand by.

CSI unmasked -- we're taking you where few civilians ever go, inside a real-life crime lab and on the hunt for evidence to put criminals behind bars.

And move aside, Cash for Clunkers. Now it's your old appliances that could get you much-needed money.

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

They're known as the Gang of 6, three Democrats and three Republicans on the Senate Finance Committee. They're trying for months now to try to hammer out a bipartisan health care reform bill. There are new developments in this effort that's been under way, as well as efforts in the House of Representatives.

Our senior congressional correspondent, Dana Bash, is here with the latest.

Dana, there was a conference call. Stuff is going on even though these guys are on recess.

DANA BASH, CNN SR. CONGRESSIONAL CORRESPONDENT: That's right. And this conference call which happened late last night, I'm told that, basically, they decided to keep at it, which is kind of a big deal against the backdrop of the White House, the Democratic leaders saying that, you know, they don't think they're actually going to get this done. They said they're going to keep working until September. I'm told that they focused, Wolf, on two big issues -- affordability and cost. That is because that's what they're hearing most from back home.

And on the specific issue of cost, I spoke with Senator Kent Conrad, who of course is one of the six negotiators, and he said that on the issue of cost containment, that's something that they talked about many -- you know, a lot before they went back home, but they're hearing about it loud and clear from their constituents.

Let's look at a quote from our conversation.

Senator Conrad said to me, "It is very clear from every member of the six-person group reporting on what they've heard in this break is that containing costs is what we heard over and over again."

On the issue of money, it's not just cost containment in terms of medical costs. It's also the cost to taxpayers, this overhaul.

Now, they had been working on a bill that was about $900 billion, but, you know, basically what Senator Conrad told me is that they're trying to bring that number down now. Why? Because every one of these six senators who are from conservative states, even the Democrats, they heard from their constituents, wait a minute, you spent all this money, nearly a trillion dollars, on a bailout, nearly a trillion dollars on the stimulus. No more spending from Washington, not like that. We want you to bring the cost of this down.

That's what they're going to try to do now.

BLITZER: Now, on the House side, Nancy Pelosi is suggesting something very different than what a lot of Democrats and Republicans in the Senate are saying. Listen to what she said.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA), HOUSE SPEAKER: There's no way I can pass a bill in the House of Representatives without a public option.

(APPLAUSE)

(END VIDEO CLIP)

BLITZER: When she refers to a public option, she means a government- run insurance agency, in effect, to compete with the private sector. But Steny Hoyer, her number two, he seems to be saying something different.

BASH: That's right, a case of mixed messages. He actually did a conference call with reporters today, and, again, I'll put up on the wall what he said.

He said, "I'm for a public option, but I'm also up for passing a bill." He went on to say, "The public option is a necessary, useful and important aspect of this, but, you know, we'll have to see, because there are many other aspects of this bill as well." So, again, some serious mixed messages here. But, you know, basically, the problem is this is a great illustration of what we've seen all week long from Democrats. Because on the one hand, Steny Hoyer is saying what Nancy Pelosi is, that they do believe that they need that so-called public option to get this through the House, because so many Democrats really want that. On the other hand, he's acknowledging what the president is and what they are in the Senate, that it will be very hard to get that through the Senate and ultimately to the president's desk.

Again, a perfect illustration of the struggle playing out among Democrats.

BLITZER: They're going to have to get their message coordinated a little bit better.

BASH: And their policy.

BLITZER: Yes. That's also true as well, although she's always been so much more liberal than he has been.

BASH: That's right.

BLITZER: He's much more of a moderate Democrat. She's always a liberal Democrat.

BASH: Yes. And again, he says he's for it just like she is, it's just he's being I think more realistic in terms of ultimately what will potentially happen.

BLITZER: Dana, thank you very much.

The former governor of Massachusetts and Republican presidential candidate, Mitt Romney, has some advice for President Obama when it comes to health care reform, and he's speaking from experience.

CNN's Jim Acosta sat down with Romney.

JIM ACOSTA, CNN CORRESPONDENT: Wolf, earlier this week, the White House took a lot of heat from Democrats when it seemed to back away from a public option in its plans for health care reform. So, what does reform look like without a public option? Experts say it looks a lot like RomneyCare.

(BEGIN VIDEOTAPE)

ACOSTA (voice-over): If Washington wants to reform health care with bipartisan support, consider what former Republican presidential candidate Mitt Romney did as governor in Democratic Massachusetts.

MITT ROMNEY (R), FMR. MASSACHUSETTS GOVERNOR: You don't have to have a public option. You don't have to have government get in the insurance business to make it work.

ACOSTA: Three years after enacting its own version of reform, Massachusetts now has near universal coverage. Taxpayer watchdogs say it's affordable.

MICHAEL WIDMER, MASSACHUSETTS TAXPAYERS FOUNDATION: And there is this widespread assumption that is now treated (ph) as back that is breaking the bank in Massachusetts.

ACOSTA (on camera): And is it?

WIDMER: It's not breaking the bank at all. It's not even costing much at all relative to what we were spending four years ago.

ACOSTA (voice-over): And health care experts say it's popular.

ROBERT BLENDON, HARVARD UNIVERSITY SCHOOL OF PUBLIC HEALTH: Seven in 10 people in the state support the program, and no more than one in 10 would repeal it.

ACOSTA: Unlike Democratic proposals that would give Americans the choice of joining a government-run health care plan, Massachusetts has no public option. Instead, people in the state are mandated to buy private insurance. The poor get subsidies.

Analysts say Romney-care is basely Obama-care, minus the public option.

(on camera): If the president drops the public option, will you come out and support him?

MITT ROMNEY (R), FORMER MASSACHUSETTS GOVERNOR: Well, it depends on what's in the rest of the bill.

(SHOUTING)

ACOSTA (voice-over): Romney says Democrats only have themselves to blame for those rowdy town hall meetings.

ROMNEY: I think any time you're dealing with people's health care and their ability to choose their doctor, their ability to decide what kind of health care plan they want, you're going to find people are going to respond very emotionally.

ACOSTA: As for that other former governor's now debunked claim that reform would lead to death panels...

(on camera): What did you think about Governor Palin talking about death panels?

ROMNEY: You know, I hadn't read that into the bill.

ACOSTA: You think it's OK for the governor of Alaska to be talking about death panels and...

ROMNEY: I'm not -- I'm not...

ACOSTA: ... pulling the plug on grandma and...

(CROSSTALK) ROMNEY: I'm not going to tell other people what they can and cannot talk about.

ACOSTA (voice-over): But Romney does warn the president bipartisanship is the only road to health care reform.

ROMNEY: I think right process for the president to pursue on health care on an issue that is so emotional and so important to all Americans is to go through the lengthy process of working on a bipartisan basis. He promised that.

ACOSTA (on camera): The Massachusetts model does have its problems. Experts say it does not control rising health care costs, something even Mitt Romney says has to be tackled on a national level -- Wolf.

(END VIDEOTAPE)

BLITZER: Jim Acosta, thanks very much.

The politics of homeland security -- the former Homeland Security Secretary Tom Ridge now suggesting he may have been pressured to raise the terror alert level to influence the 2004 presidential election. Tony Blankley and Jamal Simmons, they will both -- they are both standing by to weigh in, in our "Strategy Session."

And thousands of vets facing a new battle at home, as their cases pile up on VA desks, the backlog -- get this -- now 400,000 and growing.

Plus, that record-breaking jewelry heist in Britain -- we're going to show you new video of the bold robbery.

(COMMERCIAL BREAK)

BLITZER: They served on the front lines of Iraq, Afghanistan, and other war zones, but even, after coming home, the battle is not over for almost half-a-million disabled veterans.

Now the enemy is bureaucrat red tape as well.

Our Pentagon correspondent Barbara Starr tells us what veterans are enduring to get their disability claims resolved.

(BEGIN VIDEOTAPE)

LAURIE EMMER, DISABLED U.S. ARMY VETERAN: Fort Benning, Georgia.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Laurie Emmer served with the 82nd Airborne Division in Afghanistan in 2003. But after getting hurt in a truck accident there and retiring in 2005, she faced a new battle. She's still trying to get the Department of Veterans Affairs to settle her disability claims.

EMMER: So, I think they're doing the best they can, but, sometimes, they don't know where your file is. They can't tell you where you are on the process. And, so, you're in limbo. STARR: When VA Secretary Eric Shinseki was nominated by President Barack Obama, he told Congress it was a priority to reduce the number of backlogged claims. Today, some 400,000 cases are still pending.

GENERAL ERIC SHINSEKI, SECRETARY OF VETERANS AFFAIRS: If you were to walk into one of our rooms where adjudication or decisions are being made about disability for veterans, you would see individuals sitting at a desk with stacks of paper that go up halfway to the ceiling.

STARR: The flood of claims keeps coming, and they're growing more complex, with issues like traumatic brain injury so many new vets are suffering.

From fiscal year 1999 to 2008, the VA processed 60 percent more claims, but the number of claims still pending jumped 65 percent. Simply put, claims are coming in faster than they can be processed.

President Obama is promising to help.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Cut those backlogs, slash those wait times, deliver your benefits sooner.

STARR: The VA turned down our request for an interview. They did tell us they're trying to improve efficiency.

But, with two wars, claims continue to mount.

Elliot Miller, a veteran himself, helps other vets with their paperwork.

ELLIOT MILLER, AMVETS NATIONAL SERVICE OFFICER/FORMER VETERANS ADMINISTRATION WORKER: Constantly getting new claims in, and the VA goes out and advertises and does outreach to get more claims in. They also don't have the power to handle all the claims they're getting in.

STARR: Former Master Sergeant Emmer says, the VA also should communicate better.

EMMER: We can't be left in limbo, because this just adds the stress.

(END VIDEOTAPE)

STARR: Well, Wolf, there's even more broken government at the VA.

The inspector general there just issued a report saying that some employees are inappropriately getting bonuses, $24 million over the last two years, one employee getting a bonus of $60,000, and even getting the VA to pay some tuition for friends and family -- Wolf.

BLITZER: Wow. All right. Barbara, thanks for that story.

Meanwhile, arrests were made in the biggest jewelry heist in British history. London police charged three men today in connection with a $65 million diamond theft in broad daylight this month.

Abbi Tatton has some of the images that caught the robbers on camera. What do we see in these pictures?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, these were robbers who were firing shots in the middle of London in broad daylight, as you said. So, yes, they were caught on camera multiple times in surveillance video.

The first time, police say, August 4. Police say surveillance video outside Graff Jewelers that you see there captured two men peering through the windows, then exiting the scene. Two days later, they were back again. This time, it was surveillance cameras inside the jewelers that caught them.

Posing as customers, they made their way past security guards there, the cameras getting a very clear shot of them, and, just moments later, police say, brandished handguns, got away with $65 million worth of diamond jewelry.

And then take a look at this. This is mobile phone video. Someone with a mobile phone was waiting outside and caught them as they emerged. Take a look at the center of the screen here and listen to the chaos as they came out.

(BEGIN VIDEO CLIP)

(SHOUTING)

(END VIDEO CLIP)

TATTON: Three men charged today, two specifically with robbery and firearms charges -- Wolf.

BLITZER: Do police say that the men charged are the ones seen in -- in these pictures?

TATTON: Well, this is where it's not clear, and this is where it gets even more like a movie.

Take a look at the pictures that we -- we saw today. The picture on the right is one of the men being led into court. He appears to be a redhead, a young man, doesn't look like either of the men appearing in the surveillance cameras.

But the British press in the last week, multiple British newspapers have been reporting that these men were possibly wearing elaborate disguises, possibly latex masks, had dyed their hair. So, police are saying this is now up for a jury to determine.

BLITZER: Wow.

All right, thanks very much, Abbi Tatton.

New poll numbers are out for President Obama. Is he taking a nosedive from the controversy over health care reform? We're going to reveal the numbers for you. And Tom Ridge's bombshell -- the former homeland security secretary suggesting he may have been pressured by the Bush White House to hike the terror alert. We're taking a closer look at that in our "Strategy Session."

(COMMERCIAL BREAK)

BLITZER: We're looking at some new poll numbers on health care reform. The numbers aren't exactly what the White House would to see.

Let's bring in our national political correspondent, Jessica Yellin. She is working the story for us.

Jessica, do Americans support the health care proposals that are being pushed by the president and the Democrats in Congress?

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Well, Wolf, so far, it appears that the Obama administration and Democrats are not winning any new fans as they sell their plans for health care reform.

This new ABC News/"Washington Post" poll out today shows that 27 percent of Americans strongly support the health care changes Mr. Obama and congressional Democrats are proposing, with another 18 percent somewhat supportive. One in 10 are somewhat opposed, and a full 40 percent are strongly opposed to the president and the Democrats on health care.

And, Wolf, here's one reason why. That same survey shows that just under 20 percent of Americans think that their own health care coverage would get better if the current proposals become law. A third think their coverage would get worse. Nearly half of those questioned say it would stay the same -- Wolf.

BLITZER: Do Americans think that the president is doing a good job handling this whole issue of health care?

YELLIN: Well, four new polls that are out this week indicate that Americans are really split when it comes to the president's handling of health care.

So, his approval rating on the issue is in the low to mid-40s, and his disapproval slightly higher, the mid-40s to about 50 percent. But, wait, Wolf, that does not mean that Americans put more trust in the Republicans. Only 21 percent of people questioned in an NBC News poll approve of how congressional Republicans are handling health care. Six in 10 give them a thumbs down. And other recent surveys, they have similar results.

So, Wolf, it looks like health care is not a winner for politicians in either party -- Wolf.

BLITZER: It's going to be a -- it's going to be an important source of discussion, though, for weeks and months, presumably, to come.

YELLIN: Yes.

BLITZER: Jessica, thank you.

A top "New York Times" columnist says President Obama has a trust problem. Is he right?

Let's discuss that and more in our "Strategy Session."

Joining us now, the Democratic strategist Jamal Simmons -- he is with The Raben Group -- and Newt Gingrich's former press secretary the syndicated columnist Tony Blankley. He's executive vice president of Edelman P.R.

Guys, thanks very much for coming in.

Did I say Raben right?

JAMAL SIMMONS, DEMOCRATIC STRATEGIST: You did. You got it.

BLITZER: Edelman?

(CROSSTALK)

(LAUGHTER)

BLITZER: Yes, Edelman, right? I knew that.

All right, let me read to you what Paul Krugman, the Nobel Prize- winning economist, the columnist for "The New York Times," writes today.

"It's hard to avoid the sense that Mr. Obama has wasted months trying to appease people who can't be appeased, and who take every concession as a sign that he can be rolled. So, progressives are now in revolt. Mr. Obama took their trust for granted, and, in the process, lost it. And now he needs to win it back."

Those are pretty strong words.

SIMMONS: Those are strong words.

I would argue with the case, though, that he was -- spent all of his time falsely going after Republican votes. People cast them as Republicans, but what he was really going after were conservative and moderate voters. And some of those people are represented by Republicans and some are represented by Democrats.

He needed to find a way to get people in states that he lost, like Louisiana, Arkansas, Nebraska, Montana, North Dakota. Those states that have Democratic senators, who they voted for John McCain, he had to win enough of them over to get this bill through the Senate.

BLITZER: Was it always a waste of time, as Paul Krugman seems to suggest, that the president could reach out and find some Republicans who would work with him on this?

TONY BLANKLEY, REPUBLICAN STRATEGIST: No, I -- I think Professor Krugman is almost entirely wrong. The center of gravity of American politics is not in the progressive wing. And if the progressive movement is mature enough. It's going to understand that and support a president who is more liberal than conservative. If they're not mature enough, they can -- they can throttle his -- his chances.

But I do think that, if the president had more shrewdly laid out his case, it would have been harder to have criticized it as effectively as the opponents have.

BLITZER: What you mean to say is that, if he would have come up with a plan, instead of letting the Democrats in Congress come up with a plan.

BLANKLEY: Yes.

(CROSSTALK)

BLANKLEY: I think he allowed himself -- he allowed himself to have what -- his plan with so few details, that people could just paint any -- it was a -- a Rorschach test.

During the campaign, he said, I'm a Rorschach, so people can project anything positive on me. Now they're projecting everything negative on him.

BLITZER: But Bill Clinton tried that back in '93 and '94, and it didn't work.

(CROSSTALK)

BLITZER: He submitted a 1,000-page plan, and -- and Congress didn't like it.

SIMMONS: And had this president done that, everyone would be saying, he didn't learn the lessons of the last time we tried this great endeavor.

I do think, though, he's caught in the worst of all possible worlds. He's caught between two or three different congressional plans, a Senate plan. And he doesn't have anything to go out and campaign and sell.

The sooner they can get resolved on one plan as fast as possible, so he can launch into campaign mode and sell that plan, I think he will be in a much stronger...

(CROSSTALK)

BLITZER: Are you convinced that there will be no Republicans who will support whatever the Democrats decide to do?

BLANKLEY: No, it depends what the politics...

(CROSSTALK)

BLITZER: So, you still it's still possible they could get a bipartisan...

BLANKLEY: Well, I don't know. I mean, if the president's approval numbers were to go back to the high 50s, or low 60s when final passage vote come, then Republicans will think a certain way, and so will Democrats.

If his numbers slip into the mid to high 40s, not only will there be probably no Republicans. There will be a lot of Democrats against him. The president's approval numbers are central to picking up the marginal votes in Congress.

BLITZER: Let me pick your brains on the -- the bombshell comments that former Homeland Security Secretary Tom Ridge has now written about in his brand-new book that is about to be released.

He -- he says he felt there was politics behind an effort just before the reelection effort in 2004 for him to raise the alert level. Let me read to you what he writes.

"A vigorous, some might say dramatic, discussion ensued. Ashcroft strongly urged an increase in the threat level, and was supported by Rumsfeld. There was absolutely no support for that position within our department, none. I wondered, is this about security or politics?"

A lot of people wondered about that at the time, but now to hear Tom Ridge write about that, that's -- that's pretty explosive.

(CROSSTALK)

BLANKLEY: I read the manuscript, because I'm -- I have got a dust cover blurb on the book.

So, I -- and I read pages 235 to 240 very carefully. That's where that comes out.

BLITZER: Two-thirty-six to 237.

BLANKLEY: Well, I would -- I would say the area is a little broader.

But the point is, it was a fascinating discussion. I would never have said anything positive about a book that I thought was merely saying exploitive things for book sales. I know Ridge. I think this book was an extraordinarily honest assessment.

He doesn't say he was pressured. He wondered whether there was pressure.

BLITZER: And he said -- but he went on to say he decided that it was time for him to go, as a result of feeling that there was that political influence.

BLANKLEY: Well, I mean, I think what we got from him -- and I think it's a fascinating book, because it's honest. It's not a kiss-and- tell-all. It is a very honest book by a man in an extraordinarily difficult situation. And anyone who's been in government knows that there is always some politics and some policy mixed in to everything. You can't separate them entirely. And -- and Roosevelt considered the elections before he could support England in the war. I mean, there's always politics.

BLITZER: All right, very quickly.

SIMMONS: Well, surprise, surprise, the Bush campaign, the Bush administration played politics with national security. Democrats have been saying that for absolutely years.

And it's amazing to me that people like Paul O'Neill, who comes out of government, Scott McClellan comes out of government, Ridge comes out of government, they all tell very similar stories about this Bush administration worked.

BLITZER: All right, so, we have got to leave it there...

(CROSSTALK)

BLITZER: ... because, unfortunately, we're out of time. But we will all read the book and we will get some more insight.

BLANKLEY: It's a wonderful book.

BLITZER: I hope he's going to be joining us here in THE SITUATION ROOM pretty soon as well.

BLANKLEY: I'm sure he will.

BLITZER: A Mexican drug cartel kidnapping in the middle of an American city foiled by the DEA -- why authorities may have reached the victims just in time.

Plus, first, it was cash for clunkers. Now clunker appliances may be next -- details of the next rebate program courtesy of the federal government.

(COMMERCIAL BREAK)

BLITZER: Hurricane Bill is losing a little speed, but the Category 2 storm is still very dangerous and it's threatening Bermuda. It's already chased vacationing Bill and Hillary Clinton off the island and a lot of other folks as well.

Let's go to Gary Moreno of Bermuda's ZBM-TV News. He's joining us from Bermuda.

How is it looking, Gary?

GARY MORENO, ZBM-TV REPORTER: Well, the winds are picking up somewhat down here, Wolf.

The businesses in the city of Hamilton have shut down for the day. Most of them are sending their people home. And that was at around 3:30 today. And rush hour here is usually at around 5:00. As you rightly mention, the Cat -- the Bill -- Bill -- sorry -- has been downgraded to a Category 2 hurricane, packing maximum winds of about 109 miles per hour. And she -- it is expected that the hurricane is going to be at its closest point of approach to Bermuda at around 4:00 on Saturday morning, when it's going to be at around 180 miles west of the island.

Now, the south shore, which is affected to be the most affected area, the winds there are already picking up. And the director of the Bermuda Weather Service, Dr. Mark Guishard, said today that waves are already -- sea levels are already about one meter higher -- one foot higher -- sorry -- than per usual because of a spring tide and something, an oceanic phenomenon, known as a warm eddy.

And with storm surges of about three feet, bringing tides of about three feet higher than usual, they have had to close the causeway at about 8:30 to 9:00.

Now, the causeway, you may not know, connects the eastern parts of the country to the rest of the island. And during Hurricane Fabian a few years ago, five people lost their lives on that particular roadway, hence the reason for it shutting down at around 8:30 tonight.

But, as it stands, the conditions are beginning to pick up a bit. The winds have picked up somewhat. And the seas are much rougher than they would normally be on a summer's day such as today.

BLITZER: Gary, has the airport shut down, or is it still operating?

MORENO: The airport is due to shut down at about 5:30, which is actually around now, and it won't be reopened until about 2:00 tomorrow afternoon.

BLITZER: Be careful over there, and good luck to everyone in Bermuda. Gary Moreno of ZBM-TV, thanks very much for that report.

On our "Political Ticker": When you think of stand-up comedy, you probably don't think of Pennsylvania Senator Arlen Specter, but the longtime Republican who recently turned Democratic took center stage last night at the Pittsburgh Improv, headlining a fund-raiser that took in $32,000 for a local children's charity. Specter had the crowd going with some one-liners.

(BEGIN VIDEO CLIP)

SEN. ARLEN SPECTER (D), PENNSYLVANIA: I'm delighted to be with you. After being at town meetings, I would be delighted to be anywhere.

(LAUGHTER)

(END VIDEO CLIP)

BLITZER: Bada boom.

All right, remember, for the latest political news any time, you can always check out CNNPolitics.com. Let's go to Jack Cafferty.

I think Senator Specter should not quit his day job.

JACK CAFFERTY, CNN ANCHOR: Yes, those guys are all funny in the Senate. Hilarious.

The question this hour, can health care reform happen without the so- called public option?

Tom in Philadelphia writes: "Please. Each side has its own set of facts. There really isn't a plan to argue over yet. This is nuts. We could have insurance reform without single-payer public option, but the reform was supposed to be that your life doesn't end when you get laid off or get sick."

Lucy in San Francisco: "Yes, I think reform can happen this time around without the public option. However, if this does happen, I don't think it's the last we will have heard of the public option. It may even be a good idea to put only a few pieces of reform in place at a time, so that the change is not too dangerously drastic."

Barry writes from Wantagh, New York: "Absolutely not. The public option is key to keeping the insurance companies from complete dominance of the health care market. Without competition, there is no reform."

Ken in Michigan says: "Why not? Better yet, let's fix what is wrong with Medicare and Medicaid first. Then give us tort reform, followed by clamping down on abuses in Medicare and Medicaid. Then create an expansion of Medicaid to cover the uninsured. When a water pump fails on a car, you don't go out and buy a new car, unless you're a Democrat in Congress."

Annie in Atlanta, Georgia, writes: "No. If we can't get a bill that makes health insurance competitive, as opposed to the greed we're dealing with right now, why bother? And wouldn't it be nice if the insurance industry was spending $1.4 million a day on health care, instead of lobbying against reform. It makes me think Obama might on to something."

And Lin writes: "It's not real health care reform without the public option, period. Many of us would have preferred a single-payer plan. So, for us, the public option is already compromise. When my husband's insurance under COBRA expires, I will be considered uninsurable. It's too bad I can't get my cancer to put itself on hold until Social Security kicks in."

If you didn't see your e-mail here, you can go to my blog at CNN.com/caffertyfile. Look for yours there, among hundreds of others -- Wolf.

BLITZER: Jack, thank you.

And, to our viewers, you're in THE SITUATION ROOM. Happening now: Hurricane Bill heading toward Bermuda. It's raising danger signs at the vacation spots all along the U.S. East Coast as well. We have got the latest forecast that has just come in.

What's right with the economy? Home sales jump, stock indices hit new highs for this year, and the Fed chairman says a recovery is near. We're going live to Wall Street.

And hundreds of kidnappings in Arizona alone -- Mexico's drug cartels reach across the border to terrorize U.S. cities. We have the story of one brutal crime that was stopped just in time.

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

Well, we're getting the latest forecast just coming in on Hurricane Bill -- Bill. It's moving toward the island of Bermuda.

Let's go to our severe weather expert at the Hurricane Center, Chad Myers.

What are they telling us now, Chad?

CHAD MYERS, CNN METEOROLOGIST: It's down to 105 miles per hour, Wolf.

Now, that's not too bad. I mean, we have lost a little bit, but we're not -- we're not talking about a Category 3 storm anymore. We're still talking about Category 2. It could gain a little bit of strength, because, as it moves up into this fairly warm water here near Bermuda -- and Bermuda is going to be on the wrong side of this storm.

You have to realize that they're going to get some really big waves from the south smashing right on their shore. And, so, that could get a little bit ugly later on tonight. And you heard the reporter talking about like a 4:00 hour for an arrival of the storm.