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THE SITUATION ROOM

Economy Loses More Jobs; Steele: "It Is morning in America;" Dems Accused of Helping the Tea Party; Where Are the Jobs?; Bush Tax Cuts Set to Expire; Wrestling Tycoon in Senate Fight; Some Republicans Bailing on Bush Tax Cuts; Senate Majority Leader Scolds Franken; A World With No Nuclear Weapons

Aired August 6, 2010 - 17:00   ET

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


WOLF BLITZER, HOST: Don, thanks very much.

Happening now, growing frustration with the Obama administration when it comes to the key issue right now. We're talking about jobs and the economy.

Where have all the jobs gone?

Is it time to change course?

I'll ask the Labor secretary, Hilda Solis.

Plus, he's a decorated U.S. Army doctor with 18 years experience in the United States military. Now he's refusing orders to deploy to Afghanistan because, he says, President Obama is not his commander-in- chief.

And some Democrats now are being accused of collaborating with the Tea Party. My interview with the author of an explosive new report.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM. .

President Obama now attempting to put an optimistic face on new employment numbers that have many distressed Americans asking, where are the jobs?

The president used an appearance at a small business here in Washington, D.C. to encourage patience.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We know from economic statistics what the stories of America's families have been telling us for quite some time, that the recession that we're still recovering from is the most serious downturn since the Great Depression. We also know from studying the lessons of past recessions that climbing out of any recession, much less a hole as deep as this one, takes some time. The road to recovery doesn't follow a straight line. Some sectors bounce back faster than others. So what we need to do is keep pushing forward. We can't go backwards.

(END VIDEO CLIP)

BLITZER: Let's bring in our White House correspondent, Suzanne Malveaux, to help us break down these new numbers. It's clear -- one thing is clear, the president clearly feels a need to talk about this all the time.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Absolutely, Wolf. One of the points that we want to make here is that the president and his team have been trying to get ahead of these numbers by emphasizing the progress of the economy. I was just in Chicago yesterday, Wolf. And -- and he was at a Ford assembly plant, pumping up the comeback of the auto industry. Now, this is an area they can point to and say, look, there are jobs being created here, not all is lost.

but I want you to take a look at the these jobs numbers today. And, really, despite the fact that the unemployment held at 9.5 percent, there is a revealing back story here. And that is that economists had expected that number to edge up to 9.6 percent. But 381,000 people stopped looking for work altogether last month, so they were no longer counted as part of the labor force.

I also want to put these job numbers in perspective, if we can, because last month, when you had 131 fewer jobs, that was better than June, if you take a look at June's numbers with a loss of 221,000 jobs.

In July, the private sector posted a modest gain of 71,000 jobs, which is much more modest than some of the previous months that we've seen. But most economists say that there needs to be a gain or so of about 150,000 jobs each month just to break even. So if we take a look at the math, it breaks down to about 90,000 jobs each month.

BLITZER: Yes, it's a serious problem. But the president has a bigger problem -- the Democrats have a big problem, a perception out there -- a widely held perception that it doesn't look like things are getting much better.

MALVEAUX: That's a big problem for them because when you take a look at this, the administration, in fact, they realize that the economy is slowly recovering, but jobs are coming back even slower. So a lot of people are not feeling any good news. And I want you to check out some poll numbers. This is from the CNN/Opinion Research Corporation poll. Seventy-eight percent here believe that the economic conditions are poor. Twenty-two percent believe that they are good.

Now, how is the president handling the economy?

Well, take a look at the these numbers. We are talking about 57 percent disapprove, 42 percent approve and a good 60 percent of folks say that it's the economy and the deficit that are the most important problems that are facing this country today.

So a lot of people are talking about this, thinking about this. It's a proba -- it's a problem for them.

BLITZER: What, if anything, does it mean that two of his top economic advisers, the budget director, the chair of the Council of Economic Advisers now, that they're leaving?

MALVEAUX: Well, one of the things that it says is that there's really no easy or one fix -- one approach here. The former head of the Office of Management and Budget, OMB, Peter Orszag, he left just a couple of weeks ago. I had a chance to talk to him. He was the main architect in formulating two budgets, the health care reform. But he also -- he wanted to see a greater focus on tackling the ballooning federal deficit.

Today, we saw Christina Romer. She is the chair of the president's Council of Economic Advisers. And she was a part of his economic transition team. I mean, they went back a ways. She announced that she's returning to her teaching at U.C. Berkeley. She said she wanted to be in California, where her son was starting high school. But she also was a big part of the debate. She believed that economic stimulus -- that the spending was much more important than minding the federal deficit. But she also erroneously predicted that with all that stimulus, that the unemployment rate was not going to exceed 8 percent. We now know that it can be much higher and is much higher.

BLITZER: 9.5 percent.

MALVEAUX: Right.

BLITZER: Which is higher than 8 percent. It was almost 10 percent at one point, as well.

All right. Thanks very much, Suzanne Malveaux.

President Obama is honoring the newly confirmed Supreme Court justice, Elena Kagan. The president hosted a reception at the White House for Kagan today and calls her appointment historic.

(BEGIN VIDEO CLIP)

OBAMA: For nearly two centuries, there wasn't a single woman on the Supreme Court. When Elena was a clerk. There was just one. But when she takes her seat on that bench, for the first time in history, there will be three women serving on our nation's highest court.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

ELENA KAGAN, SUPREME COURT NOMINEE: This appointment is not just an honor. Much more importantly, it is an obligation -- an obligation to protect and preserve the rule of law in this country, an obligation to uphold the rights and liberties afforded by our remarkable constitution and an obligation to provide what the inscription on the Supreme Court building promises -- "equal justice under law."

(END VIDEO CLIP)

BLITZER: Elena Kagan was confirmed overwhelmingly by the U.S. Senate yesterday. She's scheduled to be formally sworn in tomorrow.

Republican Party Chairman Michael Steele has a new message for Democrats. The message in two words -- you're fired. Sporting a "fire Nancy Pelosi" baseball cap, Steele is assuring the Republican National Committee's summer meeting that the opposing party's days in power are coming to an end.

(BEGIN VIDEO CLIP)

MICHAEL STEELE, CHAIRMAN, REPUBLICAN NATIONAL COMMITTEE: Ronald Reagan, when asked about how the cold war would end, said very simply, "we win, they lose."

(APPLAUSE)

STEELE: So my friends, on November 3rd, as we wake up, we will realize that it is a morning in America again because we win and they lose. Let's go do it. Get on the bus. It's time to take our country back.

(END VIDEO CLIP)

BLITZER: Let's get some more on this with our senior political editor, Mark Preston.

He's in Kansas City, Missouri, at the RNC meeting that's going on right now.

Also joining us, our CNN senior political analyst, Gloria Borger -- Mark, first to you.

What are they saying out there?

What kind of reception did Michael Steele get from his fellow Republicans?

MARK PRESTON, CNN SENIOR POLITICAL EDITOR: Well, Wolf, before I get to that, let me tell you this first. We have just found out that Sarah Palin has put a fundraising letter out on behalf of the Republican National Committee. This is very big news. Sarah Palin not the easiest person to work with, Republicans will say, because she's very -- has a close-knit community, doesn't often just pen fundraising letters. So she's putting a fundraising letter out to try to help Republicans win back enough seats to take back control of the House and the Senate.

She calls the RNC, Wolf, the common sense conservatives -- the home for common sense conservatives.

As for the mood here, I've got to tell you, Wolf, I would be lying if I didn't say there was a bit of a dark cloud over here. There's been a lot of questions about the stewardship of the committee under Michael Steele.

However, as the meeting had wrapped up today, Michael Steele did get a standing ovation. He talked, as you said in your intro there, he talked about taking back control of America for Republicans. He sported that baseball hat. He's talking about going on a nationwide tour.

So, yes, a lot of questions still about Michael Steele and his stewardship of the committee. But for right now, Wolf, he's OK.

BLITZER: Yes, I suspect he is -- Gloria, this all sounds very familiar to those of us who covered politics for a long time.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Morning in America?

That sounds a little familiar.

Take a listen to this. And this -- of course, we both thought of this immediately -- from 1984 when --

BLITZER: '94.

BORGER: I mean -- no, '84 --

BLITZER: '84.

BORGER: -- when President Ronald Reagan was running for re- election. And remember what the ad talked about.

(BEGIN VIDEO CLIP FROM 1984 REAGAN CAMPAIGN AD)

UNIDENTIFIED MALE: It's morning again in America. Today, more men and women will go to work than ever before in our country's history. With interest rates at about half the record highs of 1980, nearly 2,000 families today will buy new homes, more than at any time in the past four years. This afternoon --

(END VIDEO CLIP)

BORGER: So that is the optimism we heard in Michael Steele, the morning in America, that kind of thing.

But let's turn to something from the 1994 election, which also sounds familiar, when you listen to the fire in Michael Steele's voice.

(BEGIN VIDEO CLIP)

NEWT GINGRICH, SPEAKER OF THE HOUSE: I would like to try to write a health bill today. At any point they give up their fixation on big government, we can sit down. Today.

(END VIDEO CLIP)

BORGER: So there you go. That's Newt Gingrich. And remember, 1994, the House, 52 seats, the Republicans won. And they took back control of the House after about 40 years.

BLITZER: Right.

BORGER: Now they're asking to take back control of the House. They lost it in 2006. But they're making the same case. And they're going to do what Newt Gingrich did, which is talk about big issues that most of the American public agrees on -- less big government, smaller deficits, supporting small business. They're going to come out with a plan in September, just like Newt Gingrich did, and try and take the House back.

BLITZER: And Ronald Reagan delivered in '84. Newt Gingrich delivered in '94.

BORGER: That's right.

BLITZER: And then Bill Clinton delivered in '96 --

BORGER: That's right, but --

BLITZER: -- and got himself re-elected.

BORGER: But it's the optimism of Ronald Reagan comb -- and the anger of Newt Gingrich coming together.

BLITZER: Let me get back to Mark Preston.

He's out in Kansas City for us.

The bottom line, based on everything you're hearing, is Michael Steele, Mark, going to survive?

Is he -- is he going to make it?

PRESTON: Well, he -- he's certainly going to make it for the next three months. He's going to make it into the next election. And so the question is, Wolf, will Michael Steele run for re-election for another two year term at the head of the RNC?

He's fine for now. I asked him that question today. He would give -- he wouldn't commit to it. He said, look, I want to focus on the mid-term elections. We shouldn't be focusing on anything else other than trying to win elections.

But I've got to tell you, Wolf, just from the way he gave and delivered his speech today and some of the things that he said, I think he's probably leaning toward or at least seriously considering running for re-election, even though, Wolf, there is some concern from Republicans about another Michael Steele two year term at the RNC.

So I guess we'll wait and see what happens. But, you know, Michael Steele will be crisscrossing the country. We'll see if he can help energize the base.

But bottom line, Republicans are going to win, no matter what, Wolf, heading into November. The question is, how big will they win? BORGER: You know, Wolf, some Republicans are saying they're going to win in spite of Michael Steele. And that's -- that is his problem. And it may not be his decision to make.

BLITZER: He's got some enemies in the Republican Party.

BORGER: He does.

BLITZER: We've invited him to join us here in THE SITUATION ROOM. Hopefully, he'll come in the next few days and we'll discuss it.

BORGER: Good.

BLITZER: All right, guys. Thanks very much.

Democrats naturally say they'll campaign against the Tea Party movement.

But are some Democrats secretly forming an unholy alliance with Tea Party candidates?

What's going on?

And Republicans announced the schedule for the 2012 presidential nomination process.

How will they stop states from racing to hold their primaries early?

Stay with us. New information coming into THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: On the surface, the Democratic Party and the Tea Party movement seem to have little in common. But in some -- some hotly contested Congressional districts, get this, Democrats are accused of encouraging and even working on behalf of Tea Party candidates in an effort to split the conservative vote.

What is going on?

Jeanne Cummins is an assistant managing editor of Politico.

She's has been looking into these allegations and has a fascinating article that she's written on Politico.

What is going on, Jeanne?

JEANNE CUMMINGS, POLITICO ASSISTANT MANAGING EDITOR: Well, in four states affecting about seven races, there is some evidence that the Democrats' activist base did align themselves with Tea Party candidates and helped those Tea Party candidates get on the ballot, with the idea being, of course, that that would split the conservative vote and help the Democrats who are running in those races capture those seats. BLITZER: Did they actually want these Tea Party candidates to win the nominations -- to win -- to win the elections, thinking that they would be more vulnerable in a general election than the established -- let's -- let's say the establishment Republican candidate?

CUMMINGS: They -- they don't, clearly, they -- they want these candidates running as third party candidates. And so the Republican nominees are already established.

What the Democrats were doing, they were helping provide a third party candidate --

BLITZER: To split --

CUMMINGS: -- to split the conservative vote.

BLITZER: So these were races, basically, where there's going to be a three person race. And if you could have two Republicans, if you will, one representing the Tea Party movement, one not, that would help the Democrat who might be in trouble?

CUMMINGS: Absolutely. And when I talked to the Tea Party candidates, they were unaware, some of them -- they were all really unaware that anything had gone on. And the evidence is mixed. In two of the states, it's very clear that Democratic activists did, indeed, help the Tea Party candidate.

BLITZER: How did they help?

What did they do?

CUMMINGS: Certainly. What they did in Pennsylvania, for instance, was they helped circulate petitions to put the Tea Party candidate on the ballot. And thousands -- more than 3,000 signatures were collected by Democrats. In one case, the head of the county Democratic Party was out there circulating those petitions.

BLITZER: Because there's nothing illegal or -- or -- or criminal about any of this, right?

It's politics.

CUMMINGS: This is politics. And it's not necessarily new, either. I mean, there -- there have been cases where the Democrats have cried foul and said, you know, this Independent is a straw candidate put in there to try to split the vote. We have seen that over and over again in Michelle Bachmann's district each year that she has run.

So it's not a new trick to politics. What's surprising is how clear and obvious they worked.

BLITZER: Well, thanks for writing this piece.

CUMMINGS: You're welcome. BLITZER: Jeanne is an old friend coming in from Politico.

Thanks very much.

Labor Secretary Hilda Solis now admitting that millions of people have given up looking for jobs.

I'll ask her why.

Plus, what prompted the Senate minority leader to tell the former comedian turned senator, Al Franken -- and quoting him now -- "This isn't "Saturday Night Live." The details, ahead.

(COMMERCIAL BREAK)

BLITZER: Mary Snow is monitoring some of the other top stories in THE SITUATION ROOM right now -- Mary, what's going on?

MARY SNOW, CNN CORRESPONDENT: Hi, Wolf.

Well, Knoxville, Tennessee's Mayor Bill Haslam will be the Republican candidate for governor of the state. He won the GOP primary with almost 48 percent of the vote. Haslam is considered a moderate Republican. He'll face Democrat Mike McWherter in November.

And in a high profile Congressional primary in Tennessee, two- term Democratic Representative Steve Cohen overwhelmingly defeated former Memphis Mayor Willie Herenton. Herenton had been urging voters to help him become the state's only African-American member of Congress. The Ninth District includes Memphis and has a large black population.

California Congresswoman Maxine Waters is pressing the House ethics panel to hear her case before the November elections. Waters is accused of violating rules by seeking federal assistance for a bank with financial ties to her husband. The bank received $12 million in bailout funds. Waters says she didn't break any rules and didn't benefit in any way.

And Republicans are taking steps to prevent states from moving up the dates of their presidential primaries to have more influence over the nominating process. The Republican National Committee has agreed on the 2012 nominating calendar. Sticking to traditional order, Iowa, New Hampshire, South Carolina and Nevada will hold primaries or caucuses in February. Other states that try to hold a February primary will be stripped of delegates -- Wolf.

BLITZER: All right. We'll be ready. February, 2012.

Thanks very much, Mary, for that.

New job numbers coming in showing the unemployment rate hovering still around 9.5 percent. I'll ask the Labor secretary, Hilda Solis, what's being done to create jobs for all Americans, including minorities, where the unemployment rates are much higher. And a professional wrestling tycoon finds herself in a surprisingly tough political fight.

(COMMERCIAL BREAK)

BLITZER: The Obama administration is facing growing frustration after a new report reveals unemployment remains unchanged at 9.5 percent and more jobs are being lost.

(BEGIN VIDEOTAPE)

And joining us now, the Labor secretary, Hilda Solis.

Madam Secretary, thanks very much for coming in.

HILDA SOLIS, LABOR SECRETARY: Great to be here.

Thank you.

BLITZER: Where -- where are the jobs?

SOLIS: Well, the jobs are coming in the manufacturing area. I think the president today helped to outline that, for the last seven months, we have, at least on the average, created about 90,000 jobs per month. That's about 630,000 jobs that have been created in the private sector -- manufacturing, health care, I.T. And in transportation --

BLITZER: Does that include the revision for June, because it went down from about 220,000 to about 100,000 jobs --

SOLIS: It does --

BLITZER: -- in June.

SOLIS: It does include it.

BLITZER: We lost 100,000 jobs in the new revised numbers that just came out today.

SOLIS: Right. And, in part, you have to look at the Census jobs, also, that we knew were going to go away. That's where --

BLITZER: But we're talking about private sector jobs.

SOLIS: Right. Right.

BLITZER: Private sector jobs, they're coming, but in order to just sustain the growth in the population, the new young people coming into the job market, you need at least 150,000 new jobs --

SOLIS: Right.

BLITZER: -- a month, just to keep even, isn't that right?

SOLIS: That's correct.

BLITZER: So -- SOLIS: That's correct.

BLITZER: So this is a disaster, basically --

SOLIS: Well --

BLITZER: -- what we're seeing --

SOLIS: Well, I wouldn't say --

BLITZER: -- 9.5 --

SOLIS: -- I wouldn't say that it's a disaster. I would tell you that if you look back where we were about a year ago, we were losing 400,000 jobs --

BLITZER: Oh, it was much worse then.

SOLIS: So -- and so we have --

BLITZER: There's no doubt about that.

SOLIS: So we have to look at the restructuring that's gone on, the fact that the president made it a priority to go back into the automobile industry, help to restructure. They've paid back since -- G.M. And Chrysler, the -- the moneys that were loaned to them. They've hired up 55,000 autoworkers. And they're not just building regular cars. There are hybrid vehicles, lithium batteries. There are all kinds of new Recovery Act monies that have helped to stimulate new jobs in green and clean energy.

BLITZER: Here's a very disturbing number. And I'm going to read from "The New York Times" that just wrote this report in the aftermath of these new numbers that just came out this morning: "Although the unemployment rate did not worsen" -- it remains at 9.5 percent -- "that was, in part, because people continue to leave the labor force, which means that they simply stopped looking for work during the month of July -- during the month. In July, 181,000 people left the labor force."

That means they've just given up and they're not even looking for work anymore. That is so depressing.

SOLIS: It is depressing. And the president and I and other members of the cabinet are really focused on trying to make sure that we give every opportunity we can -- people nid -- need to get into new training jobs, into new programs that will help them --

BLITZER: These are --

SOLIS: -- either --

BLITZER: -- these are people who have been looking month after month after month --

SOLIS: I agree. BLITZER: -- and they can't get a job.

And so, what, they just give up and say --

SOLIS: Really --

BLITZER: -- I'm going to have to live on food stamps the rest of my life?

SOLIS: No, we don't want them to give up. We want them to go into our one stop centers. We have 3,000 of these offices around the country. They give free advice, help with resume, training. There's a lot of opportunity for people to take time right now, when they're out of work, to focus in on building up their skills. There's a lot of people that have been let go from jobs that have been around for 20 years. Now we do have to retrain people for new jobs. There is a contraction that's going on in the economy. But I will tell you, the better prepared, better trained, better certified individuals are going to be able to compete for that job.

BLITZER: Is there a number, how many people have just given up, at least for now, in their search for a job?

SOLIS: Well, we know that there's a substantial number of people --

BLITZER: Is it millions?

SOLIS: -- at the (INAUDIBLE) --

BLITZER: In the millions?

SOLIS: Yes, it is. Yes, it is.

BLITZER: Do we know how many?

SOLIS: Well, I would tell you that there are -- it's a large number. But we know that what has happened is a lot of policies in the past have helped to add to why we have seen a lot of these jobs leave. They've been outsourced. We want to bring those manufacturing jobs back. That's why we're focusing in on --

BLITZER: So in addition --

SOLIS: -- renewable energy --

BLITZER: In addition to the 9.5 percent unemployment, if you added all these other millions of folks who just have left the labor force, it would be much higher?

SOLIS: It would be much higher.

BLITZER: All right, and here's another very disturbing number in today's numbers that just came out. Among everyone, 9.5 percent unemployment. Among whites, it's 8.6 percent. Among blacks, it's 15.6 percent. Among Latinos, 12.1 percent. SOLIS: Right.

BLITZER: Those are among those who are actually looking for work. Let's talk about blacks right now, 15.6 percent.

Is there anything special you, the Labor secretary, are doing to help these folks, almost double the -- the unemployment rate for the country as a whole?

SOLIS: Well, one of the things that we did do through our partnership grants is target areas that had, for example, 15 percent or higher rates of unemployment. So that definitely hits that target population, including other people of color and just people that are dislocated because Michigan, Ohio, other states were hard hit, as well.

We know that we have to do more. We know that education training, those dollars went out to communities that are also being distributed by our state and local government. We've made it a point to get community colleges, community based groups, as well as states based organizations to come in and help us identify where that population is so we can bring them in, identify what their skill sets are and help them get remediation --

BLITZER: But you're sen -- you're sensitive to this concern?

SOLIS: Oh, absolutely. Absolutely.

BLITZER: I just want to make -- make clear, you're a former congresswoman --

SOLIS: Absolutely.

BLITZER: So you know something about --

SOLIS: Yes.

BLITZER: -- the politics of all of this.

SOLIS: Absolutely.

BLITZER: This is going to be a big issue.

Quickly, on the whole issue of tax cuts, Republicans and some Democrats say if you let the tax cuts that Bush approved back in 2001 and 2003, for those making more than $250,000 a year, lapse, which is a tax increase for them, which is what the president wants --

SOLIS: Right.

BLITZER: -- it's going to affect small business owners. A lot of small business owners who are the job creators. At a time of economic distress is that smart to go after these small business owners who are creating jobs but might not if they have a higher tax rate? SOLIS: You know, given that that passage occurred in the previous administration, we didn't see enough jobs being created. Otherwise we wouldn't be in the mess or at least somewhere near where we are now so I think the president is right. Let's give the tax breaks to the middle class. Those are the people, the small business owners, that need it the most. Not the very wealthy that haven't been paying their taxes the way they should have in an appropriate percentage the way lower income --

BLITZER: Aren't you afraid some of these small business owners who are sole proprietors, shall we say, if they're going to be taxed more they won't be able to hire additional workers?

SOLIS: I think there are a lot of incentives available. We did pass the hire act that allows for businesses to hire someone, a $5,000 tax credit if you employ someone out of work for more than two months. That will help draw down that unemployment figure. People aren't taking enough advantage of it and part of it is because we have tight capital and credit. Our financial institutions have to do a better job of making sure that they let, loosen up on the credit.

BLITZER: I'll read to you one quote from the economist Alan Sinai and get your quick reaction. Then I'll let you go back to work. "Businesses just don't want to hire. Workers are too costly and it's very easy to substitute technology for labor. So while corporate earnings were spectacular, the job market just stinks."

SOLIS: Well, I tell you, we do have high productivity right now with our American workers and I like the president have a lot of faith in the ingenuity and I think the rebirth of what's going to happen with the new jobs that are coming into play especially in renewable, clean energy, health care, IT. That's where I see those careers growing in the next couple of months and in the years to come.

BLITZER: You have a tough job ahead of you. Good luck.

SOLIS: I do.

BLITZER: Hilda Solis, the labor secretary of the United States, thanks for coming in.

SOLIS: Thank you, Wolf.

(END VIDEOTAPE)

BLITZER: Many expected a political smack down but now a wrestling tycoon finds herself in a surprisingly tight fight for the United States Senate.

And we'll tell you what prompted the Senate minority leader Mitch McConnell to remind Democratic Senator Al Franken that the Senate in his words isn't "Saturday Night Live."

(COMMERCIAL BREAK)

BLITZER: Wrestling tycoon Linda McMahon likes a good fight in the ring. Mary Snow is covering the race for us. There are indications now, though, Mary, that this race for the Republican nomination is tightened.

MARY SNOW, CNN CORRESPONDENT: It is, Wolf. What has happened here is there's ban late twist in the GOP primary. While Linda McMahon still has a healthy lead going into Tuesday's primary and is confident she'll win she is watching her back.

(BEGIN VIDEOTAPE)

SNOW: For Linda McMahon winning next week's primary in Connecticut's Senate race was supposed to be a cakewalk, a smack down for the former CEO of World Wrestling Entertainment. After all she spent more than $20 million of her personal fortune on the campaign. But then an odd turn. An 11th hour contender sort of. Former Congressman Rob Simmons who suspended his campaign two months ago resurrected it.

UNIDENTIFIED MALE: The wrestler lady.

UNIDENTIFIED MALE: McMahon.

SNOW: Simmons and his wife Heidi make the rounds of what they call the gung-ho mobile. She drives since Simmons laid off his staff in May when he lost the GOP nomination to McMahon but he kept his name on the ballot and is now running again. Was this the plan all along?

ROB SIMMONS (R), CONNECTICUT SENATE CANDIDATE: No, no. I wish I could say I was that smart. But by keeping my name on the ballot I felt I kept faith with those who supported me. And I didn't know what the future would bring. We never do. What we've discovered is that the -- Mrs. McMahon is not as compatible as I expected she would be after spending $20 million.

SNOW: McMahon is narrowing the lead with Richard Blumenthal but Simmons a Vietnam veteran sees vulnerability in Blumenthal who distorted his Vietnam record. Simmons has become more competitive after dropping out and several newspapers "The Connecticut Post" being the latest one have endorsed Simmons. Much of the criticism aimed at McMahon centers on the wrestling empire she and her husband created.

SIMMONS: There is a lot of violence and bullying involved and I think people are concerned about that as well.

SNOW: Are you concerned about it?

SIMMONS: I am. I don't recommend it for my family.

SNOW: How do you answer those critics?

LINDA MCMAHON (R), CONNECTICUT SENATE CANDIDATE: I can tell you in the evolution of that content most of the footage that's being put up and shown is old footage. It is at an earlier time. I would ask those critics, come to the WWE event. Come and see the parents and the children and the people who are at those events having a great time. SNOW: Great time or not McMahon is running ads like these to address concerns.

UNIDENTIFIED FEMALE: What about the wrestling stuff?

UNIDENTIFIED FEMALE: Not exactly my cup of tea.

UNIDENTIFIED FEMALE: It's a soap opera.

SNOW: Yet the business bringing McMahon the most criticism is also what she touts as her biggest asset.

MCMAHON: That's what I bring to the table. 30 years in business. Growing a company from the ground up. I have turning a mom-and-pop company into a public company that's traded on the New York stock exchange.

(END VIDEOTAPE)

SNOW: Should Linda McMahon win the primary next Tuesday I asked her how much is she willing to spend in the general election? She acknowledged it could be as high as $50 million. But she said she will spend what she thinks is necessary to get her message out. Wolf?

BLITZER: Mary thanks very much.

McMahon's not the only high profile candidate opening up her wallet. Republican Meg Whitman the former eBay CEO has spent $100 million of her own money campaigning to become California's governor. Also in California, Republican Senate candidate former Hewlett-Packard CEO Carly Fiorina has loaned her campaign more than $5 million of her own money to unseat Democrat Barbara Boxer. In Florida meanwhile there are reports that the real estate tycoon Jeff Greene has spent almost $6 million of his own money in a campaign for the Democratic Senate nomination against Kendrick Meek.

He grew up in America and now he is said to be a high ranking al Qaeda official responsible for planning attacks on America. We're going to give you the extraordinary and exclusive new details.

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BLITZER: Let's get to our strategy session right now. Joining us, Democratic strategist Jamal Simmons and Republican strategist Rich Galen. Guys, thanks for coming in. Rich, let's start with you. The tax cuts, a huge issue right now because they're going to expire, the Bush tax cuts from 2001, 2003, at the end of this year unless action is taken. The president says let them expire for the rich for those making more than 250,000 dollars a year but keep them for everyone else. Making less than 250,000. But now even some Bush era, Reagan era Republicans are saying you know what? Because of the deficit it's a good idea to let them expire the tax cuts for anyone. For everyone. Alan Greenspan among others saying these deficits are exploding.

RICH GALEN, REPUBLICAN STRATEGIST: That's true. There is an old saying if you took all the economists in the world and laid them end to end you still wouldn't reach a conclusion. I think that's what happens with these things. The other side of the argument is, so David Stockman, Alan Greenspan, whom ever, so you think raising taxes which is essentially what's going to happen, raising taxes in the teeth of a recession, we saw today's job numbers, this is going to take until 2027 to get back if just we do 71,000 a month, that the people most likely to be in charge of hiring, bringing people on, hiring people, the middle class should have a tax cut. I'm not opposed.

BLITZER: The middle tax should continue to have the same tax rates but he is saying those making more than 250,000 a year don't need it.

GALEN: The middle classes don't do the hiring. It's the people at the top end of the scale whether they're individual business owners or people in corporations. They make the hiring decisions and in my case I have a little two-person company and it's either going to come out of my pocket and I'll hire Jamal to come and help me figure out what I'm doing or it goes to taxes and I'm not.

BLITZER: How do the Democrats respond to that?

JAMAL SIMMONS, DEMOCRATIC STRATEGIST: If he hires me I think his Republican clients would be a little upset.

GALEN: I think they'd be thrilled I finally got smart.

SIMMONS: But the reality is Wolf we can't afford the Bush takes anymore. The reason they put the Bush tax cuts in with a sunset is because they knew no one would vote for it because of how much money it would cost if we kept them in place over the long term.

The reality also is we can't afford a lot of things we're doing anymore, we can't afford a lot of the defense spending. At some point defense, domestic spending, entitlement, Democrats have to pony up to the table when it comes to entitlement just like Republicans are when it comes to taxes and defense spending and we have to figure out how to fix the problem. You have the discussion about how to lock in a real deficit plan today now. Maybe it doesn't kick in today but a couple years from now but the market can digest it, people can digest it and Americans can get back on the path to fiscal health. The reality is we can't afford the government we have and we all have to give up something.

BLITZER: The argument is, this is the argument the white house makes, if you let the Bush tax cuts lapse, the ones implemented when President Bush was in office they would go back to what existed during the Bill Clinton administration. In other words the top rate would go from what is now about 35 percent to 39.6 percent and the argument is well the rich people did well during the 90s during the Bush, the Clinton administration, why can't they afford a higher tax?

GALEN: Because during most of the Clinton administration the Republicans were in charge after '94. So if you want to bring back Newt Gingrich to be the speaker of the house I absolutely agree. SIMMONS: If we look back at history and the truth is, I'll give him credit, I didn't at the time, but the first President Bush did a big job of getting us on the path of fiscal us austerity and the right plan and then President Clinton did it in his first budget which no Republicans voted for and when Newt Gingrich came in they did it again and got us back on the path to fiscal health. Both parties have to figure out how to make this work but the Republicans can't say no tax cuts ever or no tax hikes ever to get us back on this path.

GALEN: To Jamal's point, I think it's important to remember, remember the big budget shutdown fight in '95, '96? That was about the growth cutting the growth in Medicare and Medicaid that Gingrich and the Republicans of the House were trying to slow down the curve.

BLITZER: They lost that fight.

GALEN: They lost that fight but he was right.

BLITZER: Let's talk about what seems to be, at least to me, a new strategy the president has in trying to energize the Democratic base namely mentioning his predecessor by name. Listen to this.

PRES. BARACK OBAMA (D), UNITED STATES: Haven't come out with a single, solitary idea that is different from the policies that held sway for eight years before Democrats took over. Not a single policy difference discernible from George W. Bush. Not one.

BLITZER: That going to work do you think?

GALEN: I think enough time has gone by. Early on, I forget if it was Gloria or Gene Cummings was on your show in the recent polls, I mean at this point the people say it is the Democrats, not the Democrats' fault but they have their hands on the reins and you can't keep blaming George Bush.

BLITZER: What are you going to do and I speak to you as a Democratic strategist, what are you going to do to energize that Democratic base going into a mid-term election where turnout is critical? The Republicans seem enthusiastic. The Democrats not so much.

SIMMONS: That is exactly what the president is doing here. George Bush is to Democrats as Nancy Pelosi is to Republicans. Republicans go around talking about Nancy Pelosi because it fires up the Republican base but independent voters don't care. They're not going to go out and vote against Nancy Pelosi. The independent voters might want to hear about George Bush but Democrats reminding Democrats that if we allow the Republicans to take back the white house, to take back the Congress that we'll go back to George Bush policies, definitely fires up Democrats. They're not going to sit by and let them do that.

GALEN: Somebody needs to show me polling data that says 90 days in, this is all we care about. Does it move votes? Someone has to show me polling data that blaming George W. Bush by the president is going to -- BLITZER: Very quickly, you believe the polling data that comes in around Labor Day will be the polling data that exists actually in November?

GALEN: No. You about trends start to establish themselves and my point is if the president starts trying to pretend that the President Bush is back in the white house I'd like to see some data that says, yes, that's moving votes.

SIMMONS: But the Democrats want to get the Obama voters not showing up a lot, need to get those voters to show up this year to have a chance.

BLITZER: Thanks very much. Have a great weekend.

The former comedian turned U.S. Senator Al Franken gets a tough message from the Senate minority leader the message being this isn't "Saturday Night Live."

And a decorated U.S. army doctor says President Obama isn't his commander-in-chief. Why he's now refusing to deploy to Afghanistan.

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BLITZER: A lot of us remember the former comedian Al Franken from his funny days on "Saturday Night Live." A lot of us, though, have been surprised over the past year or so that he's kept his head down, keeping a low profile since becoming the Democratic senator from Minnesota. At least until yesterday. Let's bring in our Congressional correspondent Brianna Keilar who covers Congress. What happened?

BRIANNA KEILAR, CNN CORRESPONDENT: You can say god darn it Wolf that the top Republican in the Senate did not like Al Franken very much yesterday. Senator Mitch McConnell, he was giving a speech, you can see him here giving a speech on the Senate floor. This was in opposition to Elena Kagan's nomination to the Supreme Court and this is just before this historic vote. Here's what you can't see in this camera shot. Here's what the camera didn't capture. Senator Franken is presiding over the chamber right in front of Senator McConnell.

UNIDENTIFIED MALE: The senator from Kentucky.

KEILAR: And that is him just moments before McConnell spoke, allowing him to proceed. So he's sitting there in that chair right in front of McConnell. And two Republican aides who were on the floor watching, they told me Franken while McConnell he was speaking was shaking his head, he was making exaggerated facial expressions. One said that he was actually rolling his eyes as McConnell spoke. And afterwards McConnell was ticked off enough about this that once he finished his speech, he went up to Franken and he said, this isn't Saturday Night Live, Al. That's what an aide to McConnell told us. So he was chastising of course the junior senator from Minnesota here because it's sort of the moment where decorum is expected and Mitch McConnell was obviously fed up. BLITZER: We didn't see him doing any of this, at least not on camera, at least not you or I or anyone else except for these Republican aides, but you did catch up with Senator Franken later, right?

KEILAR: That's right. The press gallery is right above whoever is presiding so we couldn't see his face. But once he was done presiding over the Senate, what he did was he left the chamber. He rushed into this corridor right off the Senate floor and this is where I happened to be standing with my producer Deidre Walsh and all of the sudden Wolf he suddenly. He's kind of in a hurry but he doesn't really know where he's going so he asks where is the minority leader's office and Deidre my producer tells him and then off he goes really quickly and we kind of had to chuckle. We thought it was funny that he didn't know where the minority leader's office was but what we didn't realize until later was that he was heading there to apologize to McConnell. McConnell wasn't there so he ended up sending a handwritten note to apologize, Wolf, and he put out a statement basically saying that McConnell is entitled to give his speech with the presiding officer just listening respectfully.

BLITZER: All right. Well good for him. Thanks very much for that.

Al Qaeda and nuclear weapons, we're going to show you a new documentary film focusing in on the untold threat and an unconventional solution.

And he grew up in America and reportedly joined al Qaeda as a dishwasher. Now he's said to be running the terrorist organization's overseas missions. We have exclusive new details coming into THE SITUATION ROOM.

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BLITZER: What if the world had no nuclear weapons? Is that the way to keep them out of the hands of terrorists? A new documentary film that's sparking an interesting debate. Here's CNN's Brooke Anderson.

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UNIDENTIFIED MALE: The objective of al Qaeda is to "kill four million Americans." You are not going to get to kill four million Americans by hijacking airplanes and running them into buildings.

BROOKE ANDERSON, CNN CORRESPONDENT: The movie is "Countdown to Zero." To say this is a cautionary tale about the dangers of nuclear weapons would be an understatement.

LUCY WALKER, FILMMAKER: Al Qaeda's involvement with nuclear weapons that we show in the movie is really scary.

ANDERSON: Filmmaker Lucy Walker has interviewed more than 100 nuclear arms experts and world leaders. Her documentary asserts that nuclear weapons are the greatest threat in the world because of proliferation to rogue nations, accidents and terrorist groups.

WALKER: Deterrence doesn't work when you don't have a return address. Who do you nuke back? Terrorists don't have, you know, any way of being deterred.

ANDERSON: Harvard and UCLA professor Dr. Albert Carnesale has a PhD. in nuclear engineering and consults regularly with the U.S. government on national security. He has seen walker's film.

ALBERT CARNESALE, NUCLEAR WEAPONS EXPERT: It's certainly true that terrorist organizations have been trying to get nuclear weapons.

ANDERSON: Carnesale agrees that terrorists are harder to deter but says they still have to get the weapons from somewhere and having some nuclear weapons to deter those nations from dealing with terrorists does serve a purpose.

CARNESALE: It's not that countries that have them are stupid. It's just that it is wiser not to use them than it is to use them, which is not the same as saying it's wiser not to have them than to have them. Especially if others have them.

ANDERSON: Though Carnesale does not agree with complete global disarmament, he does support Walker's overriding message.

CARNESALE: You don't have to agree that we should aim for zero in order to agree that 25 to 35,000 is far too many and the risk is far too high.

ANDERSON: Brooke Anderson, CNN, Hollywood.

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