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The Nerve to Apologize to BP; Desperate for Relief in Oil Spill; Sealing the Mexican Border First; Kagan Cautious in Final Q&A; How Gen. Petraeus Will Run the War;

Aired June 30, 2010 - 17:00   ET

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


SUZANNE MALVEAUX, CNN ANCHOR: Thanks, Rick. Happening now a new wave of misery for the Gulf Coast. Hurricane Alex is closing in on southern Texas disrupting oil cleanup operations along the way.

Also, President Obama delivers a one-two punch to Republican critics showing new disdain for the GOP congressman who apologized to BP.

And an alleged Russian spy shows her powers of persuasion in a flirty and polished interview just months before her arrest. Now you can see and hear the woman at the center of this real-life thriller for yourself.

Wolf Blitzer is off today. I'm Suzanne Malveaux and you're in THE SITUATION ROOM.

We have just learned that Hurricane Alex is gaining strength with winds up now to 90 miles an hour. Now it could slam into southern Texas and northeast Mexico just in a matter of hours.

It is a category 1 storm right now. Just shy of being upgraded to a category 2. Alex is unleashing heavy rains and winds along much of the Gulf Coast. Now that is creating delays in the oil cleanup operation in the hard hit region that it simply cannot afford.

Oil skimming ships have been forced back to shore by 12-foot waves now. And cleanup personnel were kept off Louisiana beaches this morning because of those rough waters. Officials are bracing for more oil to wash ashore depending on how powerful this storm gets.

(BEGIN VIDEO CLIP)

ADM. THAD ALLEN, NATIONAL INCIDENT COMMANDER: We fully expect that if there is a two or three storms surge we could see oil moving further inland or into marshes where we hadn't -- hadn't experienced that before.

We have skimming task forces standing by ready to be deployed as soon as the weather abates and we will be out there hitting them hard.

(END OF VIDEO CLIP)

MALVEAUX: We're going to have more on the storm and its impact on the oil spill just ahead but now I want to go to the politics of the oil spill. Today the president went after one of his toughest Republican critics on the disaster. The Texas congressman who publicly apologized to BP.

Our White House correspondent Dan Lothian, he traveled with the president to Wisconsin.

And, Dan, we know that this is about politics, midterm elections that are right around the corner, and obviously still an ongoing problem for this president, how to clean up that huge oil spill.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: That's right. And what you heard the president say here today is that for decades the oil industry has been essentially writing its own rules. There have been insiders who've been in charge of oversight and the president pointing out that this is something that needs to stop.

But the president also calling out Joe Barton, as you've pointed out, for comments that were recently made criticizing that $20 billion deal that was reached between the government and also BP. And he called it a shakedown.

Here's what the president had to say about that today.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The top Republican on the Energy Committee apologized to BP. Did you all read about that? He apologized to BP that we had made them set up this fund. Called it a tragedy that we had -- that we had made them pay for the destruction that they have caused.

Now, I got to say, they pulled it back after. He meant it but then they kind of walked it back.

I mean, the tragedy is what the people of the Gulf are going through right now. That's the tragedy. And our government has a responsibility to hold those who caused it accountable.

(END OF VIDEO CLIP)

LOTHIAN: As the president pointed out, Barton did retract his comments after pressure not only from Democrats but also Republicans but what you heard from the president today is that Republicans time and time again have been setting up roadblocks to progress -- Suzanne.

MALVEAUX: And, Dan, I understand that the president is really going on the counteroffensive here. He's not just going after Barton but there are others on the list who he has been very vocal about in trying to push back really hard on his domestic agenda. Tell us about it.

LOTHIAN: That's right. You know, really strong words aimed at Republicans today and this in particular at John Boehner, the House Republican, who made those comments about financial regulation.

And you know, I talked to one administration official today who said, listen. This is not the president playing politics here but rather showing out some policy differences between Republicans and Democrats.

And so the president views those comments made by John Boehner into basically a seize on those comments to make a point here today. Take a listen.

(BEGIN VIDEO CLIP)

OBAMA: The leader of the Republicans in the House said that financial reform was like -- I'm quoting here -- using a nuclear weapon to target an ant. That's what he said. He compared the financial crisis to an ant.

This is the same financial crisis that led to the loss of nearly eight million jobs. Same crisis that cost people their homes, their life savings. I -- he can't be that out of touch with the struggles of American families.

(END OF VIDEO CLIP)

LOTHIAN: Now Representative Boehner said that he was criticizing financial reform, not minimizing the economic crisis, and he said that the president should be paying more attention to more critical problems like fixing that oil disaster in the Gulf instead of, quote, "messing with his choice of metaphors" -- Suzanne.

MALVEAUX: Dan, obviously the White House very deliberate, saying that the Republicans accusing them of being out of touch. Clearly it looks like that's a line that they're testing out for the midterm elections, huh?

LOTHIAN: That's right. I mean, you know, I was talking to another senior administration official today about the issue of the politics here and I said, well, isn't this really all about the midterm elections?

And this official pointing out that, listen, everything is done with that in the backdrop but this is not again about politics as this official pointed out. He says this is the president going out on the road, letting Americans know that there are some contrasts here. There are some differences between Republicans and Democrats, and he wants them to remember that.

MALVEAUX: All right. Dan, thank you so much. Good to see you.

Well, partisan bickering and that hurricane threaten to distract from the most pressing problem in the oil disaster, and that is plugging the leak that has been gushing now for more than two months.

Our Brian Todd is here with the latest on this.

And, Brian, this afternoon I understand there's a strategy meeting scheduled with Energy Secretary Chu, Interior Secretary Salazar. Give us a sense. Are they changing their approach to stopping this well? BRIAN TODD, CNN CORRESPONDENT: Well, Suzanne, they are debating right now a very key question and that is on the collection system. The question -- should they disconnect everything and upgrade it to look a little bit like this diagram?

Now right now if a hurricane or other storm threatens they have -- they have to allow about five days to disconnect everything. Right now these are the only two riser pipes going up to containment ships. They have to disconnect these and they need five days to do it.

Now if they reconfigure they could install a quick disconnect system which would look a little bit like this free-standing riser here. Disconnect it from a ship that could be reconnected later.

And also if they add a new cap and more hookups they might be able to double the amount of oil that they're capturing right now. The downside? To reconfigure it all they would have to disconnect everything and not capture any oil during that time.

Currently, they're catching about 25,000 barrels of oil a day. If they have to remove this cap temporarily estimates say as much as 60,000 barrels a day would be escaping into the sea.

Suzanne, this could be gushing for quite sometime.

MALVEAUX: So, Brian, how are they doing with the solution that clearly everybody is counting on? And that is drilling those relief wells. How is that going?

TODD: Well, as of last night they said the first relief well is about 16,900 feet and the second one is somewhere just over 12,000 feet. They're running parallel going down to the gushing well and they think they need to get about 18,000 or so feet down.

The first run -- the first, excuse me, relief well running parallel just 15 feet now away from the gushing well and they have to stop frequently to take measurements to make sure they're on course.

Now how do they do that? Well, here is the probe. We're going to show you the probe into the relief well that they put into it to figure out where they are and how they make sure that they're on course.

Now how they do that? They pull out the drill and they put in the probe or the transmitter. This is the probe here. And they put in a transmitter. That puts out electric current here in yellow. And that current through the formation creates a magnetic field in the blown well here in purple and they use the sensors on the probe to measure the distance and the direction of that magnetic field.

Their mission is to hit a seven-inch pipe five miles under ground but experts say killing a well with a relief well, it does have a good track record of succeeding in the past. That's what everyone is counting on right now. They think they're going to be at that -- the first relief well will get there still around August sometime.

MALVEAUX: OK, Brian, thank you so much. Very impressive graphics, by the way. The display. Very impressive. Thank you.

Well, she is an accused Russian spy but just months ago she was promoting herself in front of the camera. Stand by to see the woman likened to a James Bond movie character in action.

And General David Petraeus gets the green light to take charge in Afghanistan. How soon might Americans see changes in the war?

And as Elena Kagan's confirmation hearings wind down, has the Supreme Court nominee been playing it safe?

(COMMERCIAL BREAK)

MALVEAUX: Jack Cafferty is here with "The Cafferty File."

Hey, Jack. How are you doing?

JACK CAFFERTY, CNN ANCHOR: Hello, Suzanne.

Don't expect a lot when President Obama delivers a speech about immigration reform tomorrow. Officials say he won't introduce any new policy initiatives and he won't announce whether the federal government has decided to sue Arizona.

Instead, expect more of the same which is nothing. Homeland Security chief Janet Napolitano recently said, quote, "You're never going to totally seal the border with Mexico." She said it's a big border with some of the, quote, "roughest, toughest geographical terrain in the world," unquote, and she insists the border is, quote, "as secure now as it's ever been."

The governors of Arizona and Texas are criticizing the Obama administration for not deploying enough National Guard troops to their states. Arizona gets 524. Texas gets 250 as part of a total increase of 1200. Arizona Governor Jan Brewer had asked for 3,000 troops just for her state of Arizona.

Meanwhile, the president has been quietly moving forward on immigration reform. Meeting with grass root leaders this week talking about the need for a bipartisan solution and saying the true border security requires comprehensive immigration reform.

Same old same old.

Most Americans want their border -- it's their border -- secured before there's any talk of a pathway to citizenship or amnesty. A new CNN Opinion Research Corporation poll shows 60 percent of those polled say the focus of U.S. policy should be deporting illegal aliens and stopping more of them from coming into the country.

But these days what most Americans want doesn't seem to matter much, does it?

Here's the question. Can immigration reform be done without first sealing the border? Go to CNN.com/caffertyfile and post a comment on my blog. Here is a hint. No, it can't. Here's another hint. The government will try and convince us otherwise -- Suzanne.

MALVEAUX: They got -- they got the hints then. Jack, we'll see what they've got to say about it.

Elena Kagan promised today that she will cast aside her past political positions if and when she puts on the robe of a U.S. Supreme Court justice. Well, there doesn't seem to be much "if" left after three days of Senate hearings.

Our senior congressional correspondent Dana Bash has been covering it all along.

Dana, putting in some long hours there. I know it's almost, almost towards the end here. But White House officials think she's done a pretty good job. What's your sense?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, you know, the goal certainly all along but especially today for her was to convince this panel behind me which is wrapping up shortly in terms of the public questioning of Elena Kagan, convince them that she has no ideological agenda and she has -- yesterday she really did use humor to try to disarm the senators.

Today she's been much more restrained in part that's because Republicans for the most part have asked some technical, legal questions. But also it's because she really has one goal in mind. Finish this up without tripping up.

(BEGIN VIDEOTAPE)

BASH (voice-over): With her confirmation hearings taking on the feel of a fait accompli Elena Kagan's watch word was caution.

ELENA KAGAN, SUPREME COURT NOMINEE: I couldn't go any further than that.

BASH: Declining to comment on cases.

KAGAN: I will not to, in any way, prejudge any case that might come before me.

SEN. CHARLES GRASSLEY (R), IOWA: That's your right. So you don't want to say anymore. Is that what you're saying?

KAGAN: I think I'll leave it there.

BASH: Careful not to criticize potential fellow justices.

KAGAN: I'm sure that everybody up there is acting in good faith.

BASH: Arlen Specter's frustration boiled over.

SEN. ARLEN SPECTER (D), PENNSYLVANIA: You haven't answered much of anything. KAGAN: Senator Specter, I do have to read briefs and listen to arguments and discuss --

SPECTER: Why do you have to read briefs on a standard?

BASH: Specter voted against Kagan as solicitor general for not answering questions and warned he may again.

SPECTER: It would be my hope that we could find some place between voting no and having some sort of substantive answers.

BASH: GOP senators pressed Kagan, sometimes sparred with her, on issues critical to conservatives from same sex marriage to abortion, and questioned whether she tried to skew medical findings about late- term abortion while helping craft the Clinton administration's position on the issue.

SEN. JOHN CORNYN (R), TEXAS: My question, did you write that memo?

KAGAN: I'm sorry. The memo which is?

BASH: After a medical association concluded late-term abortion isn't the only way to save a woman's life or health, Kagan's memo said for political reasons this of course would be disaster.

CORNYN: The political objective of keeping partial birth abortion legal appears to have trumped what a medical organization originally wrote and left to its own side to thicken inquiry and that they had -- they had concluded.

BASH: Kagan denied that.

KAGAN: This was an incredibly difficult issue for everybody who was associated with that for obvious reasons.

BASH: Few Democrats showed up for the second round of questioning. This Democrat did come to make a point. Girl power.

SEN. DIANE FEINSTEIN (D), CALIFORNIA: If you are confirmed, and I believe you're going to be, you will be only the fourth female justice in history and the Supreme Court will have three women serving concurrently for the first time ever.

(END VIDEOTAPE)

BASH: And during one of the breaks today the Senate Judiciary Chairman Patrick Leahy said point blank that Elena Kagan will be confirmed, and I don't think you can find a Republican on the panel behind me who would dispute that.

The open question now is how big of a vote margin she'll get in the full Senate and more immediately when this committee votes probably next month -- Suzanne.

MALVEAUX: And, Dana, just to understand, when do we think -- you said the full vote will happen in a couple of weeks. That's not something that will take place either tonight or tomorrow?

BASH: No. They're going to take some time as they -- well, first of all, most immediately once this public session is done they're going to go into closed session with the -- with the solicitor general and then tomorrow they're going to have additional outside witnesses.

Then it usually takes several weeks for them to go back and forth with follow-up questions with the nominee.

MALVEAUX: OK. Thank you, Dana.

General David Petraeus officially has his marching orders to take command in Afghanistan. The Senate voted unanimously today to confirm Petraeus to replace the ousted war commander General Stanley McChrystal.

I want to bring in our senior political analyst David Gergen.

And, David, thank you for joining us. Petraeus today was confirmed by a vote of 99-0. Very clear he's got the support of the Senate and the Congress behind him. But when you take a look at what's happening on the ground in Afghanistan, a very different story.

We heard from Senator John McCain. And here's how he described it.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: Our operation in Kandahar is getting off to a slower and more difficult start than expected. The performance of the Afghan government over the past seven months is not as even or as rapid as we had hoped.

Some of our key allies plan to withdraw their forces soon. And it looks increasingly unlikely that NATO will meet its pledge of 10,000 troops.

None of this is to say that we are failing or that we will fail in Afghanistan. It just means that we need to give our strategy the necessary time to succeed.

(END OF VIDEO CLIP)

MALVEAUX: David, so when do you think Americans are going to start to see a change on the ground in Afghanistan? Is it going to happen any faster for General Petraeus?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Well, Suzanne, I do think we ought to pause for just a second over the fact that he was unanimously confirmed by the Senate. That's a very strong sendoff for him.

You know, it often seems that in this Senate you couldn't get a unanimous vote in favor of Mother's Day. So for him to come out with 99-0 strengthens his hand in Kabul with Karzai. It strengthens his hand with NATO. It strengthens his hand in Pakistan.

And by the way, it strengthens his hand with the White House, too, because this is now -- you know, the president has now got a man who is very, very powerful and looked to almost in an iconic way heading up to this and he could -- he could really -- if he splits with the president on the withdrawal date, that gets to be very difficult.

But what that allows, Suzanne, is that he's going to move forward very rapidly, see if he can -- he's already moving forward on the diplomatic front flying off to Brussels right away. Interestingly he has invited the Ambassador Eikenberry to meet him there in Brussels and fly back with him to Kandahar showing that there's a united team now for the first time on the field.

All of that is good news but he's got to get results. And I think in his mind he probably thinks he has to get results by the end of the year.

MALVEAUX: Well, it was President Karzai, the Afghan President Karzai, who said -- who was very close to General Stanley McChrystal. He -- Karzai said that he wanted McChrystal to stay.

How do we expect that General Petraeus is going to deal with the Afghan government? What kind of relationship are we anticipating between those two men and even the officials?

GERGEN: Well, it was interesting. I had a chance to talk to General Petraeus last Friday and he told me right up front, I've already had a chance to talk to President Karzai twice. I want to establish a closer relationship with him. He had a third conversation with him just this week.

He intends to be as -- you know, to reach out to him and develop the kind of relationship McChrystal had but he's not going to take orders from Karzai. There was some indication, there were some hints that McChrystal was a little too deferential.

I don't think Petraeus is going to go in that way. He is -- he carries the complete support of the president and Karzai must know that unlike McChrystal who had a somewhat strained relationship with President Obama.

MALVEAUX: Right.

GERGEN: General Petraeus and President Obama have gotten very close.

MALVEAUX: All right. David Gergen, thank you so much.

GERGEN: Thank you.

MALVEAUX: There's heart-wrenching testimony on Capitol Hill. The widow of a killed oil worker tells lawmakers how the disaster has devastated her family and what she wants them to do about it. Plus, supermodel Naomi Campbell may be forced to do something she doesn't want to do -- testify at a war crimes trial about blood diamonds.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

MALVEAUX: Lisa Sylvester is monitoring the top stories that are coming into THE SITUATION ROOM right now.

Hi, Lisa. What are you working on?

LISA SYLVESTER, CNN CORRESPONDENT: Hi there, Suzanne. Well, investigation is underway after a military apache helicopter made a hard landing today in Colorado. The two pilots were removed from the wreckage with nonlife threatening injuries.

Military officials say they were conducting high altitude mountain training in preparation for deployment to Afghanistan.

Prosecutors in France want to put Manuel Noriega in prison for 10 years. The former Panamanian dictator is on trial in Paris for money laundering. In closing arguments today prosecutors painted Noriega as a head of state who put his personal interests ahead of his official responsibilities.

Noriega says he is innocent. His attorney says a 10-year prison term would be like a death sentence for the 76-year-old Noriega.

Supermodel Naomi Campbell may be forced to testify at the war crimes trial of the former Liberian president Charles Taylor. Prosecutors say Campbell received a so-called blood diamond from Taylor back in 1997. They say her testimony will prove the former president used rough diamonds to enrich himself and fuel Sierra Leone's bloody civil war.

Campbell has said she doesn't want to be involved in the case.

So, Suzanne, she doesn't want to touch that one.

MALVEAUX: All right. We'll see what she's got to say. Thank you, Lisa.

An alleged spy -- Russian spy in her own words. We're going to show you a recent TV interview of the suspect Anna Chapman. Hear what she has to say and what the producer has to say about her.

And the secretary of the army talks about shocking mistakes at Arlington National Cemetery. There were hundreds of misidentified or mislocated graves. We're going to find out what he plans to do about it.

And Americans are on the no-fly list. And they just don't know why. Now their cases may be headed to court.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

MALVEAUX: There was tearful testimony today from the wife of an oil worker killed in the Deepwater Horizon explosion. Shelley Anderson urged lawmakers to change a law that gives more compensation to families of workers killed on land than at sea.

Our CNN congressional correspondent Brianna Keilar joins us with details of today's emotional hearing.

And I understand that this has been really, really tough for these families but they are determined to make sure that all of their families are compensated for every single one.

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: And that's the point they were making here on the Hill today, Suzanne. Shelley Anderson lost her husband Jason. She was one of two widows testifying before Congress, drawing attention to maritime laws that say they can only seek or really sue for damages that are their husband's lost wages and funeral expenses.

And Shelley Anderson and this other widow said that's just not fair because they lost so much more.

(BEGIN VIDEOTAPE)

SHELLEY ANDERSON, WIDOW OF DEEPWATER HORIZON WORKER: It's the loss of the love of my life. It's very hard to explain but I will try my best and with Jason's help maybe I can convey it to you. It's everything. It's his touch. It's being able to talk to him. It's being able to confide in him and him confide in me. It's being able to ask for his advice on something, not just how to mow the grass or how to take the garbage out. It's not just that. It's having him sit beside me in church and when he understands the message he holds my hand.

It's -- it's the one person, Jason is the one person that I knew would always be there for me no matter what. Even if he disagreed with me he would still be on my side and somehow we would come up with a compromise together. It's not just a job. Jason loves his job. But his job is a husband and his job is a father, too. All of those things are gone. I'd give it all back to have him come home even if he was jobless if I could just have him come home. I know that can't happen. He -- he's everything. He's the breath in my lungs. He's the beat of my heart. He's the skip in my step. And the -- the dances that we shared together. It's all gone. I am trying to convey that to you as best that I can, but the love that I have for Jason is more oil that spilled out in the gulf than anything. More water that's on the earth. More air that's here in this room. It's more than anything. Thank you for letting me say that. Thank you for letting us be here.

BRIANNA KEILAR, CNN CORRESPONDENT: Suzanne, as you can imagine what Shelley Anderson said there, there were a lot of people in this hearing today who teared up because of that emotional testimony. That's why we wanted to bring you some of that in its entirety so you could hear it. But what this emotional testimony and this concern has done is Congress, it appears, is trying to sort of rectify what's going on here. The house and the Senate are both looking at bills, the house a little further along. What it would basically do is say to these widows that they would be able to sue for the amount of damages if this accident had happened, as if this accident happened on land. We could see a vote in the house possibly tonight, maybe tomorrow. We did also speak with Transocean today, a representative there, telling us, Suzanne, that they are trying to work out compensation packages with these families.

SUZANNE MALVEAUX, CNN ANCHOR: That's good to hear. It was heart breaking and emotional and beautiful, her testimony. Thank you, Brianna, for bringing that to us.

Now to the unfolding story. An alleged Russian spy ring. We are getting a provocative new glimpse of the woman emerging as the femme fatale of this saga. I want to go straight to Deborah Feyerick in New York. Anna Chapman one of the alleged spies did an interview not long before she was arrested. Tell us what we know about her. What did we learn from that interview, Deb?

DEBORAH FEYERICK, CNN CORRESPONDENT: What is so interesting about this new interview is this accused spy, Anna Chapman, is 28 years old. She's a real estate entrepreneur. She comes across as very engaging, ambitious, coy, and at times flirtatious. You can hear a hint of a British accent. In the interview she says she was an investment banker living in London and had saved money to buy an apartment but found the search difficult because there was no single website comparing listings. She said that is how she came up with her idea to start a website pulling together all open listings calling it NewYorkCityrentals.com. She returned to Russia then came to Manhattan sometime in the fall of 2009. The interview you're about to see is from an entrepreneur's conference this April where she talks about her plans and what she likes about living in New York.

(BEGIN VIDEO CLIP)

ANNA CHAPMAN: It was very, you know, personal how all of this started because I wanted to bring value to all of those people that, you know, want to get new place to live and so I launched this business because I wanted to help someone. I think that is the best choice I've ever had to do in my life and I never would go back. That's something I never regret. It was very competitive all the time. Even though I did have a lot of success in doing so but I think the most challenging part of my life really started when I quit all my jobs, really cut all my salaries, and really did something I wanted to do. I was someone who had just arrived in New York, basically just arrived. I didn't know anyone. Like maybe in Europe I know most of the people but here I knew no one. And this was something to start with and that made a difference to me. Now I know I love people to introduce me to someone else and introduce me to someone else. So now I know where to go if I have something to sell. And entrepreneurship is all about solving problems. It's not just going for your dreams. It's not just being successful all of a sudden. It's solving problems. (END VIDEO CLIP)

FEYERICK: Now the interview was done by independent producer John Palacio who was hired to cover this conference New York City entrepreneur week. Here are his impressions of her.

(BEGIN VIDEO CLIP)

JOHN PALACIO, FOUNDER, AND NOW MEDIA: She clearly is well- spoken, very flirtatious, very attractive. When she walked in the room she knew the power of her looks and was able to sort of connect with all of the people in the room male and female. Give them that wink, that smile, and understood the power of her sexuality as well as the power of her information. And so, you know, clearly she makes an impression when she walks in the room.

(END VIDEO CLIP)

FEYERICK: Now, other tidbits. Chapman says that she has a holding company in Europe, that she met a lot of people at the conference who were willing to give advice and help her raise money and she says that the world should really understand that New York is the place to do business because in her words, people care. Suzanne?

MALVEAUX: That's a very fascinating story behind the story. Thank you Deborah.

Well, well known spies from the modern era have used classic espionage trade craft. Arrested in 1985, navy warrant officer John Walker would contact his KGB handlers by using dead drops leaving his information in a garbage bag at prearranged locations. He collects his money the same way. CIA officer Aldrich Ames also used prearranged hiding places to pass secrets to the soviets in Russia. He was arrested in 1994 after investigators noticed a chalk mark on a mail box, a signal to handlers. And FBI agent Robert Hanson spied for the soviets in Russia for two decades. He was actually arrested while leaving a package at a dead drop site in suburban Washington in 2001.

U.S. citizens are outraged they're on the government's no fly list and now the ACLU is suing on their behalf. That's just ahead.

And hurricane Alex. It is barreling towards Mexico and complicating cleanup efforts in the gulf. We're going to have live reports at the top of the hour.

(COMMERCIAL BREAK)

MALVEAUX: Lisa Sylvester is monitoring some of the top stories that are coming into THE SITUATION ROOM right now. Hey Lisa, what are you working on?

LISA SYLVESTER, CNN CORRESPONDENT: Hi again Suzanne. Well, Wall Street takes another sizable hit a day after falling 268 points. The Dow-Jones industrial dropped 96 points today closing at 9,772. Analysts blame investors' concerns over a weaker than expected jobs report. Today's session closed out the second quarter which saw the Dow fall 10 percent.

Army secretary John McHugh is vowing to do whatever it takes to fix what he calls the unimaginable wrongs at Arlington National Cemetery. An army investigation revealed massive mismanagement and failures at the cemetery including 211 graves misidentified or mislocated. He has taken several steps to rectify the situation including restructuring the staff.

A German historian is questioning the centuries old belief Cleopatra committed suicide with a snake bite. He says the Egyptian queen actually poisoned herself with a mixture of hemlock and opium. He deduced Cleopatra would never have chosen to buy by a cobra's bite because they aren't always fatal and he says even when they are it's a slow and painful death. Maybe another mystery solved, Suzanne.

MALVEAUX: OK. Thank you, Lisa.

The top Republican in the Senate says President Obama needs to get his priorities straight. Should energy policy be put on the back burner until the oil leak is plugged?

And the mystery surrounding an Iranian nuclear scientist who vanished. A new video is now surfacing.

(COMMERCIAL BREAK)

MALVEAUX: The Republicans are coming out hard against President Obama's response to the oil spill and that tops today's strategy session. Joining us in THE SITUATION ROOM is Democratic strategist and CNN contributor, Paul Begala, and Republican strategist, Karen Hanretty. Thank you so much for joining us. I want to start off, you know, a lot of people might not be paying that much attention to the oil still spilling in the gulf but it is still spilling. The president is coming out saying energy reform is important. It's necessary. Republicans see an opening here. We heard from Senator Mitch McConnell, who slammed the president today for focusing on energy reform and not focusing on getting the problem at hand solved. Here's what he said. Take a listen.

SEN. MITCH MCCONNELL (R), KENTUCKY: The leak still isn't fixed. For more than two months this pipe has gushed oil into the gulf polluting our waters and our beaches, wreaking havoc on the lives and livelihoods of millions along the gulf. I think it's most people's view that the left wing wish list can wait. Fixing this immediate problem should be the top priority right now.

MALVEAUX: Do you think this is a win for Republicans going to the mid term elections? Are people identifying with what he is saying?

KAREN HANRETTY, REPUBLICAN STRATEGIST: Well, I think the bigger win and I hate to couch it in those terms because it is not a win for the American people is the fact that unemployment numbers still aren't good. American people still do not have confidence in the direction of the economy and the future of America. We're not seeing manufacturing jobs increase. We're seeing a few, you know, folks who are out there with the census bureau, those jobs are increasing but the real, long term jobs aren't increasing. I don't think that the BP oil spill, I would not call that a win for Republicans, it's just part of a much bigger story that this president is not following through on a lot of the promises to, for instance, double exports and get jobs going and improving the economy.

MALVEAUX: Is it smart to focus on the big picture here? He says it's all part of the big picture. There are still a lot of people saying, look, there is an immediate problem that needs to be fixed.

PAUL BEGALA, DEMOCRATIC STRATEGIST: Well, there is, but it's not like the Senate of the United States is going to stop that well. The Senate, what they can do is pass laws to make us less dependent on Middle East oil, make us more energy independent. Our own CNN poll, I looked it up today, 72 percent of Americans support President Obama's proposals to develop alternative energy and reduce our reliance on oil and other fossil fuels. That's how CNN asked the question, not me. 72 percent. So this is a winner. It's a jobs issue for the Democrats. Karen is right. That's what the election is going to be about. Also a good way to pop -- I saw the tape at the beginning of the show. President Obama sat up there and ridiculed the Republicans for defending BP and apologizing to BP. Even though BP caused all the destruction. That was Obama at his best. Of course I always love attacks. He did it with a smile, with humor. It was Reaganesque in the best sense of the word.

HANRETTY: Well, it was a good speech. The problem is we have an energy bill here that is dependent on solar power and wind power and we're not going to explore for more oil off of our own coast. We're not, the EPA is holding up permits for coal so we've got a lot of American energy here in the country that we're not tapping into. I don't know how that makes, that reduces our dependence on the Middle East. It doesn't.

MALVEAUX: I want to pick up a point that Paul mentioned which is the president is out on the road and attacking some of his Republican critics. One of the things we're seeing that is almost passing of course is the Wall Street reform, financial regulatory reform. We heard from John Boehner, who said that, you know, this financial crisis is like a, you take this legislation, it's like hitting an ant with a nuclear weapon and here's how the president came out and responded.

PRES. BARACK OBAMA (D), UNITED STATES: The leader of the Republicans in the house said that financial reform was like, I'm quoting here, using a nuclear weapon to target an ant. That's what he said. He compared the financial crisis to an ant. This is the same financial crisis that led to the loss of nearly 8 million jobs, same crisis that cost people their homes, their life savings. He can't be that out of touch.

MALVEAUX: This totally reminds me of the campaign. They did this all the time. Take one word, pounce on it over and over again. Is this going to help for the mid term elections if they try to paint the Republicans as out of touch?

HANRETTY: I think a better analogy Boehner could have used is this is rearranging the deck chairs on the titanic because this economy is sinking and this financial reform bill doesn't do anything substantial other than increase the deficit.

MALVEAUX: Paul, Boehner said real quick, "The president should be focused on solving the problems of the American people, stopping the leaking oil, and cleaning up the gulf, scrapping his job killing agenda, repealing, replacing Obama care instead of my choice of metaphors." Does he have a point?

BEGALA: Absolutely not. Come on. Mr. Boehner gave an interview to an ultra right wing newspaper and he said just that. He says it's like killing an ant with a nuclear bomb. This is all of a piece. I think, you know, the president gets a c plus for his political rhetoric but there are other times I've been very positive toward him. This was a great speech. He hit them well but with a smile. Good job, Mr. President.

MALVEAUX: Got to leave it there. Thank you so much.

Jack Cafferty will be back in a moment with your e-mail and you may do a double take when we talk more about Elena Kagan's performance at her confirmation hearing. Stand by to meet our very special guest.

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MALVEAUX: We are here with Jack and the Cafferty file. Hey Jack.

JACK CAFFERTY, CNN CORRESPONDENT: It's an exciting moment, isn't it Suzanne?

MALVEAUX: It is.

CAFFERTY: The question this hour is can immigration reform be done without first sealing the border?

Jamie in Arizona, "Border state, no, you can't reform immigration without sealing the border. I live in Phoenix and sealing the border needs to be the first thing done and then we can iron out guest worker programs, et cetera. I don't believe it would be fair to give amnesty to those who cut in front of people who respect our borders."

Annie in Pennsylvania writes, "My first question is how does true border security require comprehensive immigration reform? How do they plan to implement their amnesty? Do you really think that the illegal immigrants will come forward and pay their taxes and go to the back of the line and so on? I don't think so. It is going to be more words on paper to appease the American people. I hope that we are smarter this time, and not believing a word they say."

Gary in Ohio writes, "It is a real challenge if the politicians in Washington for once serve the citizens who elected them. It is clear for anyone with a brain that we need to concentrate on the border security first and deportation of illegal immigrants back to their own countries, passing stiff penalties for those employers who hire illegal workers and then and only then talk about some sort of immigration reform. All of the polls are crystal clear that this is what American citizens want. Just do it."

Ray in Georgia writes, "The president needs to tell the illegals that there will not be any amnesty, loud and clear. It is already the message of the U.S. citizens. If amnesty is granted to the illegals this time, there are 20 million more who want amnesty 20 years from now. Those who want to be U.S. citizens have a path to citizenship, and it is already in place. If that law needs to be adjusted, then bring it before the people so it can be examined for modification if need, but no amnesty, period."

And Michael writes, "These days what most Americans want doesn't seem to matter. So true. The sad state of affairs and shows the complete lack of personal integrity of the elected officials. They are our proxy and not the masters. So sad."

So if you want to read more on this, go to my blog, CNN.com/Caffertyfile. Suzanne?

MALVEAUX: All right. Thank you, Jack.

Hurricane Alex is about to hit Mexico, but it is already causing complications in the gulf. Live reports from the region are minutes away. And stuck on the no-fly list. Some Americans are. And the ACLU wants to get them off and it is taking the government to court to do that story after the break. Count on.

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MALVEAUX: We have all heard horror stories about the terror suspects who should have been on the no-fly list and were not or fell through the cracks, but imagine that your are mistakenly on that list and no one will tell you why and you can't even get off of the list and you can't even fly. Let's bring in Lisa Sylvester, because the new lawsuit against the government was filed today. Explain to us, do those people on the no-fly list have any recourse?

SYLVESTER: They do, but I've got to tell you it is a difficult process. Just a little background on, this Suzanne. Since the 9/11 attacks the U.S. government has maintained a list of people barred from getting on a commercial flight to or from the United States. The government says it is necessary to protect the U.S. citizens, but the ACLU says the government has been violating the constitutional rights of some Americans and legal residents.

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SYLVESTER: The lawsuit running more than 50 pages names Attorney General Eric Holder, FBI director Robert Mueller, and Timothy Healy, the director of the terrorist screening center. The American Civil Liberties Union says that ten citizens and legal permanent residents were wrongly placed on the Transportation Security Administration's no-fly list. Since the failed Christmas day airline bombing in Detroit, that list has been expanded.

NUSRAT CHOIDHURY, ACLU STAFF ATTORNEY: The government keeps this list a secret and it keeps the names of the people on the list a secret, the size of the list is secret and we don't even know what the criteria the government uses to put people on the list.

SYLVESTER: Aymon Latif served in the U.S. marines for three years and was honorably discharged in 1999, and yet when he and his wife and two children tried to travel from their home in Cairo where they live now to Miami, they were turned away at boarding. We got in touch with Latif in Egypt via Skype.

AYMON LATIF, ON NO FLY LIST: There is no justification at all for me being on the list. I have never committed a crime in my life. I am a U.S.-born citizen and they have no basis for putting me on the no-fly list.

SYLVESTER: Latif has contacted two U.S. senators, Congressmen, visited with the FBI and the embassy officials, but says that he can't get answers to as to why he is on the list in the first place and how to get his name off of it. We contacted the justice department, but they declined to comment. The FBI in this statement said that it could not comment on specific individuals, but added, "In conducting such investigations, the FBI is always careful to protect the civil rights and privacy concerns of all Americans, including individuals in minority and ethnic communities. The FBI is responsible for bringing to justice those who violate the civil rights of Americans. We are very mindful of the fact that our success in enforcing the law depends upon partnerships with the Muslim community and many other communities."

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SYLVESTER: But in the meantime, Aymon Latif who is a U.S. citizen cannot return to the United States to visit his family. Apparently getting your name off of the list is not easy. You can go online to fill out a inquiry form, but according to the lawsuit, the DHS, the FBI, they all have a hand in adding names to the list, but there is not one single government entity responsible for actually removing a name from the list, Suzanne.

MALVEAUX: All right. Thank you, Lisa.