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Mass. Man Charged in Alleged Terror Plot; Many Line Up for H1N1 Vaccine; Forced Pay Cuts at Bailout Firms

Aired October 21, 2009 - 17:00   ET

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


BLITZER: Happening now, a Massachusetts man is charged in an alleged terror plot. Authorities say he wanted to train with the Taliban, kill U.S. troops abroad and attack a shopping mall here at home. Stand by for details.

The line stretched for blocks as people wait for a swine flu vaccine that's in short supply right now. But despite growing warnings about the H1N1, others want nothing to do with the vaccine.

And as a hula hooping first lady tells kids to exercise and eat right, we'll visit a school cafeteria where it's not so easy to get away from pizza and processed foods.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

Federal authorities say he wanted to attack U.S. troops in Iraq and target a shopping mall right here in the United States. A Massachusetts man is linked to an alleged terror conspiracy.

Let's bring in our homeland security correspondent, Jeanne Meserve.

She's working the details for us.

So what do we know about this -- Jeanne?

JEANNE MESERVE, HOMELAND SECURITY CORRESPONDENT: Well, Tarek Mehanna is charged with conspiring to kill, kidnap, maim or injure people, including American soldiers, overseas. He was in court today in Boston. He initially refused to stand for the judge. And when, at his father's urging, he finally did, he tossed his chair on the ground.

The government alleges that Mehanna and others traveled overseas to Pakistan, Yemen, Iraq, trying to attend a terror training camp. When they had no success, the government says they discussed killing two unnamed officials in the executive branch of the U.S. government and also schemed to shoot up a U.S. shopping mall. They drew their inspiration, the government says, from the Washington snipers. But they were unable to get automatic weapons and abandoned those plans -- Wolf.

BLITZER: Were computers involved in this -- Jeanne? MESERVE: Yes, the government makes that claim. It alleges that Mehanna ran a blog that promotes jihad. And there are also allegations that Mehanna translated and distributed via the Internet a document promoting jihad. Court papers also say investigators found videos relating to jihad on computers he used, including one showing the mutilation and abuse of the remains of U.S. personnel in Iraq.

BLITZER: Who else was supposedly involved in this?

MESERVE: Well, the government has named one man, Ahmad Abu Samra, who is believed to be in Syria. He and Mehanna allegedly were in contact with Daniel Maldonado. He is now in jail after being picked up fighting against the government of Somalia.

There was a press conference today with the lawyer for Mehanna. He says that he is confident Americans will put aside their fare -- fears and be fair in this case.

BLITZER: Thanks very much. Jeanne Meserve with that story.

The line stretching now for blocks. As the swine flu toll mounts, many people want to get vaccinated. But many others aren't convinced -- at least not yet. They're not convinced that it's safe.

CNN Congressional correspondent, Brianna Keilar, has more.

(BEGIN VIDEOTAPE)

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: (voice-over): Dressed for the cold and huddled together in the pre-dawn darkness in Rockville, Maryland. Around the country, people like these are lining up to get the swine flu vaccine.

UNIDENTIFIED MALE: We got here around 1:00 in the morning.

UNIDENTIFIED FEMALE: He was a premature baby. I want him to get it this morning. Look at the lines. They're bad.

UNIDENTIFIED FEMALE: We have a limited amount of injectable vaccine.

KEILAR: Many are disappointed when they can't get a shot.

UNIDENTIFIED MALE: With the year advance that they had on this disease, I am -- I am amazed at the lack of response by the medical community in the United States.

KEILAR: The lines are fueled by the newly available H1N1 flu vaccine and warnings from government officials trying to avert a wider outbreak. The secretaries of Homeland Security, Health and Human Services and Education testified before a Senate panel today.

KATHLEEN SEBELIUS, HHS SECRETARY: There are actually 86 H1N1 lab confirmed pediatric deaths since we began reporting this in April. And the number is equivalent to the entire flu season of past years. So we are already at that level. KEILAR: Despite the scary statistics, many Americans have no plans to get the shot, concerned about the safety of the vaccine. In a new CNN/Opinion Research Corporation poll, 43 percent of respondents said they were afraid the vaccine could lead to death or serious health problems.

SEN. SUSAN COLLINS (R), MAINE: They want to know if it's safe to give to their children, what kind of testing was done and whether it contains any dangerous additives.

KEILAR: But just steps from where high risk Congressional staffers were receiving their H1N1 vaccines, officials told Congress it is safe.

SEBELIUS: We have a vaccine. Go get vaccinated.

(END VIDEO TAPE)

KEILAR: And like everywhere else, this outbreak is hitting close to home, Wolf. Congressman Greg Walden of Oregon became the first member of Congress to be diagnosed by his doctor with the swine flu, with H1N1. We found that out -- that that happened this week -- Wolf.

BLITZER: How far behind, Brianna, is the rollout of this vaccine?

KEILAR: They're running about 25 percent short. That's what officials say. They were hoping to have 40 million vaccines ready by the end of this month and they're about 10 million, at least, short of that, Wolf. But they're hoping this will be widespread -- available widespread by the end of this month, maybe the beginning of November.

BLITZER: So they're saying by November, everybody who wants one shouldn't have to wait, they should be able to get one right away?

KEILAR: That's what we heard today in this hearing.

BLITZER: Secretary Sebelius, the Health secretary, she was saying that?

KEILAR: That's what Secretary Sebelius, as well as, I believe, Secretary Napolitano was saying.

BLITZER: All right. We'll stay on top of this. There's a lot of concern out there.

Thanks, Brianna, very much.

Let's go to Jack Cafferty right now for The Cafferty File.

I know you got the seasonal flu vaccine, as did I, Jack.

What about swine flu -- H1N1?

Are you going to get that vaccine? CAFFERTY: Well, I suppose, if it ever becomes available. I have firsthand knowledge of one -- of a little follow-up to that swine flu deal. One of the largest pediatric practices in New York City, right here in Manhattan, told somebody that I see every day here at CNN yesterday, we don't have the vaccine, we don't know when we're going to get the vaccine, we don't know how it's coming, where it's coming from, when it's going to get here, nada.

And -- and this person said well, can you let me know?

And they said, no, because we don't know. You've got to call here every week until we get some more information.

The government has told these people nothing. And as I said, one of the largest pediatric medical practices in Manhattan. And they don't have a clue when they're going to get this stuff.

BLITZER: And the children are the most vulnerable, apparently, right, to this swine flu.

CAFFERTY: And these -- these clowns in Washington sit there and spit these platitudes out about, oh, it's coming and we're this many percent behind. It -- there isn't any, at least, at least not in this city. Of course, hey, it's only New York.

When it comes to health care reform -- speaking of things medical related -- it shouldn't be surprising that our beloved lawmakers are up to their same old stuff. Bloomberg News reports Senate Democrats are making exceptions to the health care legislation in order to benefit their constituents -- trying to protect for people who keep them in office for measures that will actually pay for the more than $800 billion health care reform.

Let somebody else's constituents pay for it, right?

For example, Majority Leader Harry Reid's home state of Nevada would get help with its Medicaid bills. Seniors in Florida and New York would get extra Medicare benefits. And those in high risk professions, like firefighters or construction workers, would get a break on the tax on expensive insurance plans, those so-called Cadillac plans. Republicans say these provisions ought to be applied equally to all 50 states. And they're absolutely right. They say making exceptions will hurt the bill and raise the level of cynicism about Washington politics.

Like it could go any higher.

But Democrats are anything but contrite. Harry Reid, whose job approval rating in his own state stands at a whopping 35 percent -- he is probably going to lose for re-election and that would be wonderful -- says, "I make absolutely no apologies -- none -- for helping the people in my state, even though it's probably at expense of the other people in the country."

The language in this health care bill, now at 1,500 pages, so convoluted at some points that even Congressional aides say they have no idea what it means.

Here's an example. When describing Medicare changes, those eligible for extra funds would include retirees in "counties where the Medicare Advantage benchmark amount in 2011 is equal to the legacy urban floor amount."

Who writes this crap?

Here's the question -- should lawmakers be allowed to stick goodies into the health care bill for their own constituents?

Go to CNN.com/caffertyfile and post a comment on my blog -- Mr. Blitzer, back to you.

BLITZER: Yes, they're just getting started with these bills. They go from 800 pages to 1,000 to 1,500. Just wait. We're not done yet.

CAFFERTY: Oh, yes. Somebody said it would be 2,300 pages...

BLITZER: I know.

CAFFERTY: ...the final thing.

BLITZER: Yes. And try reading it.

CAFFERTY: No. I'm not going to read it.

BLITZER: Jack Cafferty, thank you.

Will taxpayers ever get all their money back from the massive bailout of those big banks?

The federal government's special watchdog says don't get your hopes up. We're going to be speaking with the special inspector general, Neal Barofsky. He's got news to make.

And we told you about a young gay man who says he suffered abusive treatment while serving in the United States military. Now the Navy is taking direct action.

And a stunning turnaround in a racially-charged case that shocked the country. Six people are already in jail.

But guess what?

The victim now says she lied.

(COMMERCIAL BREAK)

BLITZER: The Obama administration will order the companies that received some of the biggest government bailouts to slash the compensation of their top earning executives.

CNN has confirmed that seven companies that received the most government help will have -- will have to cut the salaries of their 25 highest paid executives by an average of about 90 percent from last year.

On the other hand, you probably shouldn't count on seeing all of those bailout tax dollars ever again.

And joining us now, Neil Barofsky, the special inspector general for the Trouble Asset Relief Program, better known as TARP.

Mr. Barofsky, thanks very much for coming in.

NEIL BAROFSKY, SPECIAL INSPECTOR GENERAL OF TARP: My pleasure.

BLITZER: We're talking nearly $700 billion that you've been investigating.

How much of that money is actually going to come back to the American taxpayer?

This is money that was given to these financial -- these troubled financial institutions.

BAROFSKY: You know, it's almost impossible to know exactly how much. But I think what is clear, it's not going to be a dollar for dollar return. We're not going to see a profit. It's very unlikely. A lot of this money went out -- some of it, for example, in the mortgage modification program. That's $50 billion that's never intended to come back.

We'll also see, I think, tens of billions of dollars of potential losses in the auto companies and we still don't know about AIG and Citi and some of the other larger institutions.

BLITZER: Well, is it realistic that AIG will actually return some of that money to the federal government?

BAROFSKY: I think they're certainly going to return some of that money. It's unclear whether they are going to return all of it.

BLITZER: How much did you give them?

BAROFSKY: Through the TARP, they have a line of credit of $70 billion. They've drawn down about $43 billion.

BLITZER: And how much have they returned?

BAROFSKY: Well, they haven't returned anything to us. They had a total available of about $180 billion, including what the Federal Reserve had given them. Right now, the total balance is about $120.

BLITZER: Now, let's take a look at these Wall Street financial institutions -- Goldman Sachs, JP Morgan, two companies.

They're making a lot of money now, aren't they?

BAROFSKY: They sure are.

BLITZER: And they're giving their employees huge bonuses, right? BAROFSKY: Yes.

BLITZER: Anything wrong with that?

BAROFSKY: Well, from the TARP perspective, they've paid their money back from the TARP.

BLITZER: How much did they pay back?

BAROFSKY: $25 billion and $10 billion, respectively, for JP and then Goldman.

BLITZER: JP paid back $25 billion?

BAROFSKY: Yes.

BLITZER: And Goldman Sachs paid back $10 billion?

BAROFSKY: $10 billion. Plus they repurchased some of their warrants for a little bit more than $1 billion.

BLITZER: Did they pay back with interest or just paid back?

BAROFSKY: They paid back interest, as well.

BLITZER: All right. So the taxpayers made some -- a little bit of money on that.

BAROFSKY: No, no, absolutely.

BLITZER: All right. So they repaid.

So why is, you know, the president of the United States and his advisers complaining about the bonuses that these companies are handing out?

BAROFSKY: Well, I think it's a frustration in that, in addition to the TARP money, they're the beneficiaries of other federal programs, whether it's loans from the Federal Reserve or guaranteed debt from the FDIC, that's enabled these banks to make huge profits because of their reliance on cheap government money, whether guaranteed or lent to them. And the source of these profits has been the largesse of the American people.

BLITZER: Because while you're investigating the $700 billion through the TARP money, another, what, $3 trillion in taxpayer money was sent out to help these companies through all sorts of other ways.

BAROFSKY: Exactly. And -- and, look, I mean, the financial system as a whole, what would have happened, absent the TARP money, without these capital infusions. It may have collapsed. So, they're beneficiaries of -- of all of this -- of all the support. So it's a frustration to see them getting these monies.

BLITZER: What has changed, in terms of regulations and oversight, over the past year, since the disaster of a year ago? And you've been in this business now for almost a year.

What has significantly changed to make sure it can't happen again?

BAROFSKY: I think, actually, what's changed is in the other direction. These banks that were too big to fail are now bigger. Government has sponsored and supported several mergers that made them larger. And that guarantee -- that implicit guarantee of moral hazard, the idea that the government is not going to let these -- these banks fail, which was implicit a year ago, it's now explicit. We've said it.

So, if anything, not only has there not been any meaningful regulatory reform to make it less likely, in a lot of ways, the governments have made such problems more likely.

BLITZER: So the situation is worse now, potentially, than it was a year ago?

BAROFSKY: Potentially, we could be in more danger now than we were a year ago.

BLITZER: And what's taking so long for everyone to react -- the Congress, the executive branch -- and get these regulations in place to make sure that the disas -- people, you know, losing their homes, losing their livelihood a year ago, that it can't happen again?

BAROFSKY: I mean I know that there are proposals right now pending in Congress. The White House has put forward some proposals. And we're just going to have to wait and see.

BLITZER: Do you believe that the top economic advisers to the president -- the financial advisors, whether Timothy Geithner, the secretary of the Treasury; Lawrence Summers, a top economic adviser; Rahm Emanuel, the White House chief of staff, who made a lot of money in the private sector when he was out of government -- are they too close to these fat cats on Wall Street?

BAROFSKY: I mean, I don't know the answer to that question. But I think that the fact that you're asking this question and so many people are asking this question and that there is a cynicism about where they came from makes the need for more transparency so important. And it's one of our -- our big criticisms of Treasury, is that there's been a failure to be transparent and they have to be transparent so -- so people aren't running to that question.

BLITZER: So when you ask Timothy Geithner that question -- he's the secretary of the Treasury -- what does he say?

BAROFSKY: Well, so far they've said no. They've refused to adopt some of our most important transparency recommendations. But we're going to keep pressing them, because we think it is so important.

BLITZER: The -- the best thing that's happened over the past year is what?

BAROFSKY: I think the fact that our financial system did not collapse. And I think the Treasury and the TARP deserve some credit for that.

BLITZER: The worst thing that has happened over the last year is what?

BAROFSKY: I think this cynicism, this anger, this distrust of government, that's borne, in part, from the lack of transparency, could have far-reaching ramifications, whenever there's the next crisis or when -- any time the government is going to call on the American people, the taxpayer, to -- to support necessary programs.

BLITZER: Anything wrong, from your perspective, with the president of the United States going to a Democratic Party fundraiser in New York City, having a lot of these fat cats from Wall Street show up and give the party money?

Is there anything wrong with that?

BAROFSKY: That -- that's a little bit outside of my line, Wolf.

BLITZER: You're not going to get into that?

BAROFSKY: No.

BLITZER: Appreciate if very much.

How much longer have you got this job?

BAROFSKY: As long as the United States government owns a troubled asset. It could be for quite a few years to come.

BLITZER: Well, good luck.

We're counting on you.

BAROFSKY: Thank you very much.

BLITZER: We want to get back to our top story right now. The Obama administration getting ready to take some significant action in cutting salaries of some of those high paid executives working for these troubled industries -- the car industry, the banks.

Our senior political analyst, Gloria Borger, you've been doing some reporting. You've got some specifics.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: That's right.

BLITZER: Jessica Yellin is working the story.

What are we learning?

BORGER: Well, Jessica Yellin has been working it from New York and I've been working it here from D.C. Wolf. And what we learned is that they're going to really cut the cash to the 25 best paid executives by more than 90 percent from last year. Of course, that is a huge pay cut.

BLITZER: Right.

BORGER: For all executives, total compensation will probably drop by around half. Lots of their cash will be replaced by stock that they will be able to receive, but they're restricted from selling the stock immediately.

Now, one source that I spoke with at Treasury made the point that don't forget, the people that we are talking about are still getting sizable pay packages, Wolf, he said, by anyone's definition. And what they are trying to do, he said, is really strike a balance here between making sure the taxpayers are protected and that these companies can still grow their way out of TARP. They want the companies to repay the TARP money.

Now, this provides pretty good incentive, Wolf, because if you're under these restrictions, so long as you're taking taxpayer money, you're going to want to repay it.

BLITZER: And these are the companies we're talking about.

BORGER: Yes.

BLITZER: You can see the logos up there -- AIG, Bank of America, Citi, G.M. Chrysler, GMAC, Chrysler Financing. As long as they haven't repaid the TARP money to the U.S. Treasury...

BORGER: Right.

BLITZER: ...the U.S. government is going to say we're going to control salaries of your top executives. But the other companies that have repaid, like Goldman Sachs or JPMorgan...

BORGER: Right.

BLITZER: ...they're not going to be included in these restrictions?

BORGER: That's right. And, Wolf, they're also going to take a look at perks. For example, if you used to get country club memberships, limousines, whatever, town cars...

BLITZER: Private planes.

BORGER: Private planes, whatever, you're going to have to apply to the United States government and say, I need this country club membership because. And then the government will say, well, we think that's a valuable expense or we don't think that's a valuable expense.

So business is being done in a very, very different way.

BLITZER: And we're be all over this story.

Gloria, thank you.

BORGER: Sure.

BLITZER: Yesterday, it looked like a victory for the United States when Afghanistan's Hamid Karzai agreed to a runoff of the presidential election. But now the reality is setting in of having to pull off a new election in only two weeks.

CNN's Chris Lawrence reports from Kabul. That's coming up.

Plus, you've heard a lot about who lost money in that Ponzi scheme run by Bernard Madoff. You'll be surprised to see who ended up a winner.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Fredericka Whitfield is monitoring some other important stories incoming into THE SITUATION ROOM right now -- Fred, I take it we have an update on what's happening with that hostage situation in Canada?

WHITFIELD: We do, indeed. This situation is still ongoing in Edmonton, Canada. And according to the Canadian Press Association, an armed man is holding nine hostages in the workers' compensation board building in downtown Edmonton. The rest of the building has been evacuated and police are preparing to negotiate with that hostage taker. And, of course, we also understand, according to the Canadian press, that he does have a hunting rifle and that a special hotline has actually been set up for any loved ones of any of those nine hostages that may be inside. There's a phone number that many of them can call to get the latest updates from police.

Meantime, they may be a lot of fun, but are they safe?

We're talking about ROVs -- recreational off road vehicles. The Consumer Product Safety Commission decided today to regulate the popular vehicles, also known as side by sides. One hundred fifteen people have died in ROV accidents since 2003 and over 150 have been injured, including young children.

And awareness of taser guns is so widespread these days, the phrase, "don't taze me, bro" is now very popular. But there's a new warning to police about using the tasers -- don't tase a person in the chest. That's from a company that actually makes the stun guns. Taser International says by not stunning a person in the chest, police can avoid controversy if the person being stunned suffers a "adverse cardiac event."

And finally, good news for Mets fans -- yes, they had a terrible season and were knocked out of the play-offs months ago. But they did come out a winner in Bernard Madoff's massive Ponzi scheme. The court trustee overseeing Madoff's assets says that the Mets withdrew $48 million more than they invested. The Mets say this will have no effect on team operations -- Wolf.

BLITZER: I wonder if they could go back, though, and regroup some of that money?

You know, you never know what's going to happen with all that cash.

WHITFIELD: That's right. You never know. And a lot of folks are waiting to find out if they're going to get some of that money back.

BLITZER: Yes. Unfortunately, I -- I wouldn't hold my breath...

WHITFIELD: I know.

BLITZER: At least not now.

All right. Thanks very much for that, Fred.

WHITFIELD: All right.

BLITZER: He says he suffered hazing and abuse as a young gay man in the United States military. Now the Navy is taking action. We have an update for you.

Plus, shocking charges of torture and sexual abuse that put a number of people in jail.

But guess what?

Now there's a stunning reversal, as the victim says she lied.

And the government wants your kids to eat right. We're going to take you inside a school cafeteria where it's not so easy to get away from those more affordable processed foods.

(COMMERCIAL BREAK)

BLITZER: To our viewers, you're in THE SITUATION ROOM.

Happening now, it was dropped from the Senate Finance Committee's version of health care reform, but now support is growing for the so- called public option. Candy Crowley is standing by to tell us why.

Even after hundreds of billions of dollars, some experts say the economy still needs more stimulus.

Will politicians have to sneak the money past the public?

Dana Bash reports on what could be a stealth stimulus package.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

A couple of weeks ago CNN's Carol Costello reported on Joseph Rocha, a young man who suffered degrading and abusive treatment while serving in the United States Navy. He was told it was just hazing, but now Carol is here with an update on this very, very troubling story.

It caused quite a stir when you first reported this a couple weeks ago, Carol. What's the latest?

CAROL COSTELLO, CNN CORRESPONDENT: It was a terrible story, and finally someone has been held accountable. These hazing incidents took place in the navy's military working dog division in Bahrain between 2004 and 2006. They included sailors being hog tied and force-fed liver dog treats, sailors duct taped to chairs and left in dog kennels and sailors forced to simulate gay sex acts. Two sailors from that unit told me the man who ordered those hazing incidents was the man in charge, Michael Toussant even though hazing is against navy rules. Yet Toussant was promoted and transferred for duty with elite navy S.E.A.L.S until today. The navy telling us senior chief Michael Toussant has been removed from his current leadership position. Not only that his enlistment extension has been cancelled which will effectively force him to retire in January. In other words, he will never be in charge of another navy unit. Terrific news for Joseph Rocha, one of the sailors who was hazed nearly every day.

(BEGIN VIDEO CLIP)

JOSEPH ROCHA, NAVAL HAZING VICTIM: I think what it does is I think it gives me and a lot of people a lot of hope in that this is a great day for everyone, for our men, our women, heterosexual, lesbian or gay, for everyone, this re-establishes what navy leadership is, that anything less than leadership that meets the core values will be punished, and I think that our service members, both men and women, are a little safer and feel a little more comfortable today.

(END VIDEO CLIP)

COSTELLO: Rocha feels he was a primary target because some in his unit suspected he was gay. He never told anyone, you know, as is the military's policy. As you can see he has now left the navy and is taking classes at a university in California. We're efforting a comment from Michael Toussant. So far Wolf we haven't heard back.

BLITZER: Does he have any desire to go back into the navy?

COSTELLO: He can't. He had to reveal he was gay to get out of the navy.

BLITZER: If they were to change the don't ask, don't tell as you said, he might like to go back in the navy?

COSTELLO: In a second. He loves the navy. All he wanted was for somebody to be accountable for what happened in his unit and finally someone has been held accountable but there are others like Congressman Joe Sestak from Pennsylvania who want the investigation to continue because he wonders how it could go on for two years and why it wasn't investigated more fully by the navy and why no higher-ups were held accountable. BLITZER: Your reporting contributed to this story. Thanks very much. Good work, Carol. Carol Costello here in THE SITUATION ROOM.

After widespread reports of fraud and an inclusive first round of voting, Afghanistan is now heading into a second runoff presidential election. The Senate Foreign Relations Committee chairman John Kerry, he's back here in Washington after playing a key role in getting the incumbent President Hamid Karzai to accept another vote.

(BEGIN VIDEO CLIP)

SEN. JOHN KERRY (D), FOREIGN RELATIONS CHAIRMAN: Like any leader, he had internal pressures and internal issues of one faction or another that believed one thing or another not to mention the fact that he believed very deeply, personally, that he had won the first round, and so there was a -- you know, a powerful need to overcome both those domestic pressures as well as some of his own personal beliefs.

(END VIDEO CLIP)

BLITZER: Now comes the very hard work of actually getting that runoff vote under way. Our Pentagon correspondent Chris Lawrence is in the Afghan capital.

Chris?

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Wolf, getting a safe and honest election off the ground in a couple weeks was already going to be tough, but a new announcement from the EU just made it that much harder.

(BEGIN VIDEOTAPE)

LAWRENCE: Afghanistan is trying to pull off an election on little more than two weeks official notice, and these are the problems it's facing, logistics, lack of awareness, fraud and fear.

ABDULLAH ABDULLAH, AFGHAN PRESIDENTIAL CANDIDATE: That people of Afghanistan were threatened. They lost their fingers in the last round of elections.

LAWRENCE: Ink-stained fingers were proof of voting which made them targets of the Taliban, but a U.S. defense official says there are more American and Afghan troops in place now than in August, and a U.N. official says they are reducing the number of polling stations so security teams won't be spread so thin. On Thursday, the U.N. is launching TV and radio spots trying to make voters aware there is another election. It's not a given that people know. Less than 30 percent of Afghans can read.

A high turnout and a safe election, those are fine goals for politicians and officials to have, but what about the Afghan, the ones who may be risking their lives to come out again to cast their vote? We found mixed opinions in this crowded Kabul market UNIDENTIFIED MALE (through translator): We want to build up our country so despite the problems I will go to vote in the next election.

LAWRENCE: Officials threw out more than a million votes because of suspected fraud, and now a European Union official says there will be far fewer election monitors for the runoff because the EU can't deploy them all on such short notice. Do you trust that your vote will be counted fairly?

UNIDENTIFIED MALE: I don't think so.

LAWRENCE: This man can't see how President Karzai or his challenger will improve security.

UNIDENTIFIED MALE: And I'm not sure that Abdullah Abdullah will be able to stop the insurgency in Afghanistan or at least to limit the -- the level of insurgency in Afghanistan.

LAWRENCE: At the least, they want to limit the reach of that insurgency on Election Day.

(END VIDEOTAPE)

LAWRENCE: Officials say they pinpointed trouble spots from two months ago. It can now better deploy security forces to deal with those areas during this election. Wolf?

BLITZER: Chris Lawrence on the scene for us in Kabul, Afghanistan.

Meanwhile, as diplomats try to defuse a potential threat in Iran's nuclear program the Obama situation sees plenty of dangers ahead. Let's go our foreign affairs correspondent Jill Dougherty who has more on this developing story.

What are we learning today?

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: Well, you knowing Wolf, the cold war was bad enough but now secretary of state Hillary Clinton says the world is at a crossroads that's even more dangerous, countries and even terrorists who want to get their hands on nuclear weapons.

(BEGIN VIDEOTAPE)

DOUGHERTY: A stark warning of spreading nuclear danger.

HILLARY CLINTON, SECRETARY OF STATE: Unless these trends are reversed and reversed soon, we will find ourselves in a world with a steadily growing number of nuclear armed states, an increasing likelihood of terrorists getting their hands on nuclear weapons.

DOUGHERTY: Current international efforts to control nuclear weapons haven't stopped North Korea or Iran from developing their nuclear program, says Hillary Clinton. Nuclear and non-nuclear states have to work together she says to stop the spread of these weapons. The secretary of state's speech comes as the U.S. and its allies reach a draft agreement in Vienna with Iranian negotiators. Iran could allow other countries to enrich its uranium for medical and other peaceful purposes, but that agreement still must be approved by Iran's leaders. The U.S. accuses them of stalling.

CLINTON: The door is open to a better future of Iran but the process of engagement cannot be open-ended. We are not prepared to talk just for the sake of talking.

DOUGHERTY: On North Korea, Clinton said current economic sanctions will not be relaxed until the north halts its nuclear program completely. She also raised warnings flags about nuclear- armed Pakistan which has been hit with a series of terrorist attacks.

CLINTON: We don't think that those attacks pose a threat to the nuclear command and control or access but we have certainly made our views known and asked a lot of questions.

DOUGHERTY: The world Clinton warnings is at a crossroads.

CLINTON: A nuclear terrorist bomb detonated anywhere in the world have would have vast economic, political and economic and social consequences everywhere in the world.

(END VIDEOTAPE)

DOUGHERTY: So arms control once again is shaping up to be a battle on Capitol Hill. Secretary Clinton says it's not just starry- eyed idealism, but she will have to make the case it won't jeopardize U.S. security. Wolf?

BLITZER: Mistakes clearly are enormous. Jill, thank you.

Today seven nations have publicly confirmed they have nuclear weapons. They are United States, Russia, Britain, France, China, India and Pakistan. The consensus view that two other nations Israel and North Korea, they have developed and possessed nuclear weapons or at least nuclear weapons capabilities in the caves North Korea. Iran is currently developing nuclear weapons and perhaps in a few years producing a nuclear device. That's being hotly debated right now.

Dramatic excerpts from the 911 call that a father made while the world thought his son was flying away in a balloon.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: We have a new element in the balloon boy story where Richard and Mayumi Heene are alleged to have hoaxed authorities into believing their 6-year-old son might have been trapped in a runaway balloon. Listen to this excerpt from the first 911 call that Richard Heene made.

911 OPERATOR: OK. Tell me exactly what happened. HEENE: My family and I made an experimental flying saucer. It wasn't supposed to fly. We thought we had this thing tethered down. I think my 6-year-old boy ... he got inside and it took off.

OPERATOR: OK. Where is he at?

HEENE: He's in the air.

OPERATOR: He's in the air?

HEENE: Yeah, and he's only six.

BLITZER: Police say he was acting when he was making that phone call. There's another development today as well. Lifetime Network announcing that the episode of "Wife Swap" that featured the Heene family originally scheduled to air next Friday has been pulled from the schedule.

A stunning reversal in a racially charged case that outraged the nation. Many of you will remember this. Now the victim has recanted her story. Six people are in jail as a result of what she initially alleged. What's going on here? Let's ask Brian Todd. He's been working the story for us.

What's going on?

BRIAN TODD, CNN CORRESPONDENT: Well Wolf, Megan Williams now says it was all a lie. Her story that she was held captive for days, attacked and abused by six white people in a trailer in rural West Virginia. In 2007, police found Williams in that trailer with cuts and bruises and rushed her to the hospital. She said she was stabbed and beaten, sexually assaulted, forced to eat feces and that one of the suspects shouted racial slurs at her, but just this hour her attorney says that she, Williams, herself said it did not happen, that she fabricated the whole story to get back at her boyfriend. All the injuries were self-inflicted, the attorney says, except the ones to her face.

Let's see. Now we have to say that six people were given jail sentences after pleading guilty in this case, and the prosecutor who handled the case says he is still confident in the convictions. He tells CNN, "Williams did not testify so the case was not based on her statements. The case was based on the evidence discovered by the police, including the confessions of the six defendants." Now the case was widely covered by the news media and stirred outrage in West Virginia and around the country including several marches to support Megan Williams and demand stronger actions against racial hate crimes. We were only able to reach two of the defendants' attorneys today and both of them declined to comment, Wolf.

BLITZER: A very high-profile case at the time. There was a lot of interest in this, shall we say.

TODD: Reverend Al Sharpton had spoken out again this kind of thing and today interestingly Reverend Sharpton says he hopes the prosecutor will take a look at what Megan Williams said, review the case and if the convictions are based on false information Reverend Sharpton says they should be overturned but the bottom line it's still hard to know who to believe in this case.

BLITZER: All right. You'll stay on top of it for us and we'll get to the end result sooner probably rather than later. Brian, thank you.

How to keep our kids healthy. The first lady was out setting a pretty good example today in our public schools though, a healthy meal can be hard to find, and does our military, do they really reflect America? It depends on whom the pentagon decides to recruit. Chris Lawrence has the whole story.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: The first lady Michelle Obama, she was out on the south lawn today working out with a hula hoop as part of a healthy kids' fair where chefs demonstrated healthy recipes that kids might actually want to eat in the schools, but are our public schools really making any serious effort to have kids meals become a little bit healthier? Kate Bolduan is here in THE SITUATION ROOM looking into this story.

Kate you know this is a very significant story. A lot of kids' health on the line right now.

KATE BOLDUAN, CNN CORRESPONDENT: And a very important question. And Wolf, a recent study found that what many schools were ordering through the federal food program and serving to students was the opposite of that classic food pyramid of what kids should be eating. The Obama administration including the first lady is trying to change that, but it comes at a cost.

(BEGIN VIDEOTAPE)

MICHELLE OBAMA, FIRST LADY: Have you guys ever seen this before?

UNIDENTIFIED FEMALE: No.

OBAMA: Do you know what kind of fruit it is?

BOLDUAN: First lady Michelle Obama hosting her own wellness summit at the white house today.

OBAMA: So with vegetables on your plate, we don't want to hear, I don't want to eat it, it tastes bad, I don't want to it. We don't want to hear the whining, we want you to eat it. Just eat it.

BOLDUAN: It's a call for nutritious change that's echoing in nearby Arlington, Virginia.

Claremont Elementary School Principal Cinta Johnson says they're trying to get away from so much pizza and processed foods but it isn't easy.

This may be very nutritious for the kids, but it's got to be expensive.

CINTA JOHNSON, PRINCIPAL, CLAREMONT ELEMENTARY: You have to put your money, so to speak where things are most important and there is a recognition that nutrition, health, fitness, is important and it's important at a very young age.

BOLDUAN: Arlington school leaders estimate fresh fruits and vegetables cost twice as much as the canned alternative, this at a time when schools need more financial help than ever and demand for free or reduced cost student meals is on the rise. Just this week a government commissioned report recommended new guidelines for schools, more fruits, vegetables, whole grains and limits on calories. Will it work? Some mixed reviews from some tough critics.

What is everyone's favorite food?

Watermelon? Tacos? Chicken?

But the message may be sinking in.

What is the best food that they serve at school?

UNIDENTIFIED FEMALE: Every Friday they serve pizza.

BOLDUAN: Pizza?

UNIDENTIFIED FEMALE: Pepperoni.

BOLDUAN: Do you think the pepperoni pizza is better than the apple?

(END VIDEOTAPE)

BOLDUAN: Smart girl, those guidelines the USDA is still reviewing as it tries to determine ways to improve the national school lunch program. And congress is due to reauthorize the laws behind that program this session, Wolf, presenting what many say is a perfect opportunity to refocus on healthy.

BLITZER: I think that little platter behind you looks delicious, the corn and the peas, and what is that, applesauce?

BOLDUAN: Maybe mystery, we don't know.

BLITZER: I'm getting hungry, just looking at it. Thank you very much for that.

Let's go to Jack Cafferty. He's got the Cafferty File. He remembers what it was like getting school lunches back in the day.

JACK CAFFERTY, CNN CORRESPONDENT: Yeah, next time you come to New York, I'll take you to lunch at PS 28. We'll dine.

The question this hour should lawmakers be allowed to stick goodies into this health care bill in order to benefit their constituents? Jeff in Virginia, "No, no, no if they want to pass a health care bill, it has to be exactly the same for everyone. It should matter if you're in Nancy's or Harry's or Baucus's voting district."

John in Massachusetts, "They're allowed to do anything they want because their constituents elected to take care of them. We can only blame ourselves for indirectly telling them that anything they do in our name is just fine. Politicians will promise to build bridges, even where there is no water."

George writes, "Yes, they should be allowed to help their voters, that's as American as apple pie."

Gail in Texas writes, "Business as usual, Jack. The Republicans are right on this, all states ought to be treated equally. As far as the wording of the bill that you cited, it's smoke and mirrors so we won't know what the congress is doing. No matter which side of the aisle they're sitting on both parties serve only one god, themselves."

Kim in Minneapolis writes, "Damn I really want this health care bill to pass with the public option, but this is the type of behavior that makes Middle Americans outraged with the behavior of their politicians."

David in West Virginia says, "This is the problem with the health care system. Now lawmakers are sticking it to consumer, I think people are tired of being stuck."

And Tom in Iowa says, "I say let the lawmakers stick all the goodies into the bill they want, then when they are done with the bill they can stick it...well I'm sure you can see where this is going, pun intended."

If you didn't see your e-mail here, go to my blog, CNN.com/Caffertyfile. I made that passing comment about a pediatric office in New York not being able to get the vaccine for swine flu. I heard from people all over the country having the same problem.

BLITZER: Yes, let's hope they fix it because the stakes on this one are too enormous. Jack, thank you.

As America grows more diverse, the face of the U.S. military is changing with a growing percentage of Latino recruits.

(COMMERCIAL BREAK)

BLITZER: As America grows more diverse, the face of the U.S. military is changing with a rising number of Latinos in uniform. Before he left for Afghanistan, our Pentagon correspondent Chris Lawrence did some digging.

LAWRENCE: Wolf, every branch of the service is recruiting at 100 percent or better, but the military still has some work to do on its diversity.

(BEGIN VIDEOTAPE) LAWRENCE: The pentagon's recruiting goal is to make the military look like America. But a new study shows how it spends money dictates who enlists.

BETH ASCH, RAND CORPORATION: Cutting of bonuses would have a more negative effect on black enlistments than, say, white enlistments.

LAWRENCE: The Rand Corporation found that groups respond differently to recruiting tactics. For example the new GI bill was a big incentive for Karen Barrientos.

KAREN BARRIENTOS, ARMY RECRUIT: If I go to college while I'm in the army and I'm doing my years, I can transfer that money to someone else in my family.

LAWRENCE: Compared to five or six years ago, the percentage of Hispanic recruits is up in the army and way up in the navy. But the number of black army recruits is down.

ASCH: So some of that success in the Hispanic market was at the expense of success with African-Americans.

LAWRENCE: Beth Asch says educational benefits don't attract black recruits as much as Hispanics.

ASCH: On the other hand if they cut military pay, that would tend to have a more negative effect on Hispanic recruits.

LAWRENCE: Why does it matter? Because with the unemployment rate as high as it is, it doesn't cost as much to recruit someone to the military. Meaning the pentagon has been spending too much money on recruits.

BILL CARR, DEPT. UNDER SECRETARY OF DEFENSE: Next year we're trimming 11 percent.

LAWRENCE: That means some areas will be cut which could affect efforts to attract recruits like Greg Louis.

GREG LOUIS, ARMY RECRUIT: Basically what I wanted to do was go and find a better future for myself.

LAWRENCE: Some say keeping Spanish speaking recruiters is crucial because sometimes a recruit's decision comes down to convincing their parents.

STAFF SGT. ROBERT HERNANDEZ, ARMY RECRUITER: If you can't connect with the family as whole in the Latino community, you're not going to get through to that person.

(END VIDEOTAPE)

LAWRENCE: Hispanic enlistment is up, but they're still underrepresented compared to the total population. The reasons, lower high school graduation rates and higher rates of obesity. Wolf? BLITZER: Chris Lawrence reporting. We're only three hours away, by the way, from Latino in America, a comprehensive look at how Latinos are changing America,