Transcripts For CNNW The Situation Room With Wolf Blitzer 20110713

investigation of rupert murdoch's media empire as the company pays a new price for its phone hacking scandal. could a massive probe now under way in britain happen here in the united states? and the obama money-maybing machine. who's behind the cash and can the republicans compete? president obama and the congressional leadership are under enormous pressure right now, about 40 minutes into their latest round of debt crisis talks. they haveless than three weeks until the deadline to raise the legal limit on the federal debt. and by all accounts, they're still very far apart. what if anything emerges from this meeting? consider the very dire warnings from the chairman of the federal reserve. ben bernanke using very strong words today, telling congress that the global financial system would be thrown into enormous disarray. that's a direct quote, if the u.s. treasury is deadbeat on its debt. >> ff we went so far as to default on the debt, it would be a major crisis. the treasury security is view as the most safest and liquid in the world. it's the foundation for much of our financial system. and the negotiation that it would become suddenly unreliable and ill liquid would throw show shockwaves through the entire global financial system. >> head into today's debt talks, republican leader mitch mcconnell was offering a controversial plan to prevent default if there's no deal by the august 2 deadline. it would have given the president the authority to raise the debt limit in three short-term increases while al w allowing three congressional votes for lawmakers to show their disapproval if that's what they wanted to do. let's bring in our congressional correspondent kate baldwin. the mcconnell plan is being criticized, not necessarily by democrat, not by the white house, but some republicans up on capitol hill. and some are suggesting it's now dead in the water. what's the latest? >> that's why it's no noteworthy. today, one day after mitch mcconnell pitched his backup plan, republicans, his own party, are pureeing cold water on it. eric cantor says none of the plans being discussed could garner the 218 votes needed for house passage. he goes on to say currently there's not a single debt limit proposal that can pass the house of representatives. and republican congressional sources tell cnn that includes the mcconnell plan. now, house conservatives they seem to be complaining the loudest really about this plan. just listen heto the conservati congresswoman michele bachmann when she was asked directly about the plan. >> well, i'm no raising the debt ceiling right now. i've been here long enough that i've seen a lot of smoke and mirrors but i haven't been here long enough to know who i serve and where i come from. people across america is saying the spending is what has to be addressed. it's too much, it's got to be limited. >> and you see right there that the criticism really seems to be centered on the fact that spending cuts are not required in the mcconnell plan in exchange for a raise to the debt limit. now, i'll tell you, i have spoken to some senate republicans, though, and they definitely said that it's an option to look at. especially as the clock ticks down and if, my chance this mcconnell plan, this backup plan could be left as the last option standing. but the big question is always, wolf, will it pass the house? can it pass the house? and this seems to be another example of just how divided the republican party is on this issue. >> yeah, it's a huge, huge division right now. going forward, this debate, we'll see what happens. kate, thanks very much. let's check in with jack right now. he's got the "cafferty file." >> despite that nasty game of chicken going on in washington over raising the debt ceiling. congressional leaders in both parties pretty much agree that doing it is going to be necessary. the argument is over what else goes into the bill that's tying them up and bringing the country dangerously close to defaulting on some of our loans. according to a new poll, 40% do not want the debt ceiling raised and they want their members of congress to vote against any measures that raise it. only 22% want their lawmakers to vote for raising the debt ceiling. and more than 1/3 of americans say they're just not sure. when asked which is a greater concern, 51% say raising the debt ceiling without plans for major spending cuts worries them more. only about a third is a csay they're more concerned at the risk of an economic crisis if congress doesn't take action. but there's two separate issues here. republican lawmakers have tied voting to raising the debt ceiling to long-term debt reduction. the fact is if with they don't raise the debt ceiling, the sky could fall. interest rates will go up, the dollar will go down a lot probably. stock markets around the world will go down a lot probably. if you things are ugly now, they could get a whole lot uglier and will. in a separate poll, the in number of americans who think this country is on the wrong track has risen now to 63% this month. that's up three more points from june. if the u.s. fails to pay its creditors, it's a good bet that number will go even higher. here's the question, what does it mean that 42% of americans do not want congress to raise the debt kreeling? go to cnn.com/caffertyfile and post a comment on my blog. the public has had enough, wolf. >> yeah, but i'm not sure everybody fully appreciates the consequences of failure by august 2. and you point out well, jack, what the consequences would be. i write about it on my blog at cnn.com/situationroom. it could cause not only a recession even worse than the last 2008-2009 recession, it could cause a whole lot worse than that. unemployment could go up. there would be a huge hidden tax on every american. the consequences -- i think the republican and the democrat you can leadership of the white house, they all fully appreciate it. that's why mitch mcconnell came up with his complicated desperate plan. we'll see if anything -- >> there are no spending cuts in that plan. >> no, no. >> the public wants the government to stop spending money. >> yeah, he would have -- >> they made it clear over and over again. stop spending money. and there are no spending cuts in mcconnell's plan. >> well, there would be three increases in the -- they would have to be tied to specific spending cuts for each of the increases. that's the idea. but it's easier said than done as you well know. >> yeah. it's just horrifying to watch the government stumble around. back in what was it february? bernanke said you better get this done. february. now it's the middle of july and nothing has been done and the clock is ticking and we got some real big storm clouds out there. >> huge. all right, jack, thanks very much. much more on this story coming up later. but there's other news we're watching including the scandal causing major damage to rupert murdoch's media empire in britain. it's now brettening to explode in this country as well. three democratic senators today are urging the justice department to investigate one of murdoch's american-based companies. and they're raising deep concerns about the possible violation of anti-bribery laws among other things. as the allegations of phone hacking play out in britain, the senate commerce committee chairman jay rockefeller says he may launch his own investigation. he suggested it's likely he would find some kind of criminal activity. >> it's really repugnant, you know, that one man can control so many. i watch the parliamentary debate on television. they were talking about, you know, how they control the labor party, but then when they go out, they control the conservative party. it's all about that. and that's bad for the world. it's certainly bad for america, and we have enough problems getting objective media. >> more of the report including the interview with jay rockefeller coming up later here in "the situation room." i'll also speak live shortly with the senate democrat robert mendez of new jersey about his concerns that journalists working for rupert murdoch may have tapped into the phones of 9/11 victims here in the united states. my interview with senator mendez coming up shortly. the british government meanwhile launched a wide ranging investigation of murdoch empire today as the company was forced to drop itsed by to take over another prime media outlet. our senior international correspondent dan rivers is in london. >> so wolf, the bskyb takeover is now no longer on the table. just as politicians in the building hnd me per about to debate it and just as they were about to vote against that takeover going ahead, rupert murdoch's company decided it was not going to go ahead. the phone hacking scandal is turn into a high stakes game. the conservative-led coalition is investing huge political capital into deciding with the opposition labor party. both now ranged against media king rupert murdoch until recently was a card both parties coveted, but the hacking scandal has left the king in trouble. >> the people involved, whether they were directly responsible for wrongdoing, whether they sanctioned it or whether they covered it up. however high or low they go, they must not only be brought to justice, they must also have no future role in running a media company in our country. >> murdoch's queen in all this is undoubtedly chief executive rebecca brooks. she remains at murdoch's side, apparently untouchable as his chief executive, but now she'll be forced to appear before a parliamentary committee next week to respond to allegations of illegal activities in some of her papers. and the joker in the pack is an andy coulson. >> he just doesn't get it. he just doesn't get it. i say this to the prime minister -- he was warned by the deputy prime minister about hiring andy coulson. he was warned by lord ashdown by hiring andy coulson. he's now admitted in the house of commons today that his chief of staff was given complete evidence which contradicted andy coulson's previous accounts. >> on wednesday, sensationally as the house of commons was about to debate rupert murdoch's controversial takeovered by for the british broadcaster bskyb, rupert murdoch abruptly walked away from the table acknowledging theed by was impossible in the current clima climate. suggesting that the a.c.led ho -- holds he could come back again. with talk in the u.s. that news corp may be viewed there for bribing police from the foreign services act. there's speculation he may come back to the table at a future date. he desperately does want to get his hands on that broadcaster bskyb. we'll have to see if he comes back to play another hand. wolf? >> dan rivers from london. thank you. and dan mentioned the possible u.s. investigation. did rupert murdoch's news corporation take advantage of 9/11 victims here in the united states? up next you're going to find out what one u.s. senator is now calling for. he wants an investigation. stand by for that. plus this -- a violent day in libya moments before this battle, a cnn crew comes under fire. bullets flying all around them. stay with us. 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>> well, we see from "the daily mirror" that a private investigator was approached by news international subsidiary of murdoch's press trying to get access to phone records of 9/11 victims and their families. and if, in fact, that is true, and we've already seen from the reports out of london as to how far this newspaper was willing to go in bribing individuals and law enforcement and others, if this is true, it would be horrifying to believe that families that suffered so much would have their privacy invaded, thinking about the phone calls that happened with mothers and fathers and spouses and children. it's just unimaginable. and i think the justice department should go forward and investigate and ascertain what's the truth of it. >> at this point it's a suspicion you have. you don't have any hard evidence that it actually occurred. is that right? >> we do not have hard evidence, but we do have this public press report which quotes an unidentified source saying that they were approach ed here in te united states to get access to that information. knowing what happened in london, knowing the prime minister and the royal family were ultimately pursued by this news corp and ultimately had private information that was discovered, i want to make sure this is not true for the families of the september 11 victims. >> and you go one step further being suspicious that some of the news organizations that rupert murdoch owned here in the united states, specifically the new york post, wall street journal, fox news, for example, do you suspect that any of these american news organizations may have done illegal activity like that? >> i don't know that for a fact. i have no idea whether there is the case. i'm focused singularly on this public report that there was an effort to get the phone records and actually the conversations, access to the conversations of 9/11 victims and their families after those fateful days. to me, that would be horrifying and horrendous enough. i would like to believe no news in the united states would do the same thing. >> and you want eric holder to be in charge of this investigation? is that what you want? >> i want the justice department to go after it, whether he uses the fbi. i mean, scotland yard is already pursuing an investigation of thousands of phones that were intercepted. it seems to me that we should have a very clear ability to be working with scotland yard and determine whether americans were pursued, and whether the families of 9/11 victims were pursued. >> to those who said bob mendez or barbara boxer or frank lautenberg or jay rockefeller, they're all democrats and this is political payback, if you will, against rupert murdoch, what say you? >> i don't have anything against rupert murdoch. if the report was that cnn did this, i would be going after you all. well. >> well, i hope you don't have to do that. dog versus machine. why that was the topic of a fiery debate on exhale clil. -- capitol hill. there's another way litter box dust:e purina tidy cats. tidy cats premium line of litters now works harder on dust. and our improved formulas neutralize odors better than ever in multiple-cat homes. so it's easier to keep your house smelling just the way you want it. purina tidy cats. keep your home smelling like home. >> body scanners versus dogs. some of the other top stories in "the situation room" right now. >> at issue during the fiery airport security hearing was which could be more effective in searching travelers for explosives. some may the argument that canines are cheaper andless invasive than body scanners while others allege they're too costly. listen to this exchange. >> how do you come up with hundreds of thousands of dollars. alpo only costs so much. >> we provide dog teams to agencies around the country and it is in excess of $100,000. >> you said hundreds of thousands of dollars per dog. i challenge you to verify that number. >> the tsa assistant administrator promised to look into the cost and to report back. a dramatic 27-day prison standoff in venezuela has come to an end. more than 1,000 inplaits abandoned the building and turned themselves over to authorities today amidst black smoke and gunfire. the standoff began when the government ordered raids on the complex last month. an official said renovations on the prison will begin immediately. the roof of minneapolis's famous metrodome is back up. seven months after collapsing in a major winter storm. the cave-in, which you can see here, put the dome out of business until repairs could be completed and forced the minnesota vikings to relocate some games. officials hope to have the $22 million project completed by august. and get ready to say goodbye to those long-time savings bonds. they'll be available only online on other financial institutions. although there will be some exceptions. the treasury department says the new electronic bonds will save taxpayers more than $70 million. over the first five years. >> when you were a little girl, you used to get those. >> i still have some in an envelope in our house. it's going to be -- >> i just cashed one in a few weeks ago. >> i got them as a gift and i just held on to it. >> i just looked in a drawer and there it was. $100. stand by for a cnn exclusive. our crew is there for a dpramatc fire fight. control of an entire village is at stake. and you're going to find out what pakistan's top spy is now doing here in the united states and whether it will help the relationship get any better. 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[ pigeons ] heyyy! hooo!!! it's schwab at your fingertips wherever, whenever you want. one log in lets you monitor all of your balances and transfer between accounts, so your money can move as fast as you do. check out your portfolio, track the market with live updates. and execute trades anywhere and anytime the inspiration hits you. even deposit checks right from your phone. just take a picture, hit deposit and you're done. open an account today and put schwab mobile to work for you. >> i'm wolf blitzer. more dramatic stories we're working on in the next hour. president obama bringing in $86 million in the next re-election. and the british prime minister blasted in a widening hacking scandal. why some members of parliament say he just doesn't get it. and he could be the moets powerful man high stakes debt talk and he's not even a member of congress. i'm wolf blitzer and you're in "the situation room." but first, this j uh coming in. a new source of pressure on president obama and the congressional leadership. democrats and republicans, as they hold their fourth straight day of debt crisis talks. those talks continuing right now. one of the big three credit agencies, moody's is now warning today that the united states may indeed lose its perfect aaa credit rating in the next few weeks if the lawmakers fail to raise the debt ceiling. more on this story coming up. a significant warning, though, from moody's. in libya's civil war, el rebels lost and regained control in a village of the western part of the country. there was a dramatic five-hour firefighter with moammar gadhafi's forces. ben wedeman with more. tell us what happened. i understand it got pretty, pretty hairy. >> hairy indeed, wolf. we had gone to this village which this morning was in the hands of the rebels. we just arrived on the outside of the village. we were going to investigate reports, a report by human rights watch that the rebels had engaged in widespread looting and vandalism. but we were just on the outskirts on that village when suddenly we were ambushed by gadhafi's forces. >> you guys! wait! [ bleep ] wait! wait, wait, wait! wait! >> wait, wait, wait. are you in? >> okay, just calm down. get down, get down. >> okay, we're leaving this area. there's gunfire all around us and we believe that gadhafi's forces are doing a round about movement. so we are rushing out of this area. >> now we had to go drive, very quickly, for about 20 minutes to get out of that area where the gadhafi forces seemed to be flanking the rebels along this main road that links this town qawalish to the area where we are now. after something of a barrage of the town, and you mention the five-hour fight in which eight of the rebels were killed. at least 27 wounded, they were able to retake it. but this is an indication that even though they have made progress there's still a long way to go before they're able to punch through gadhafi's forces and make it to the capital. >> you look like you were scared oit of your mind. i was scared just looking at that video. thank god you're okay. bigger picture, is it a stalemate? is that what you're seeing? >> it's difficult to say. certainly if you're looking at eastern libya, it's a stalemate. but in the west, the rebels seem to be getting better organized. they're getting better armed. and they are gradually retaking territory. of course today, they lost temporari temporarily, but they were able to retake it. and they plan on trying to get to this man highway that links the city libya with tripoli in the forth. if they can cut that highway, that could mean serious problems for the libyan army. much of their ammunition and heavy weapon, many of their men and food supplies, they get to the libyan capital come from the south of the country along that highway. i wouldn't say it's a stalemate but it's going to be a real slog for the rebels to make really steady progress and get much closer to the capital of tripoli. wolf? >> be careful over there. we'll stay in close touch. thank you. and right now it took a sharp turn for the worse after the killing of osama bin laden. let's bring in our pentagon correspondent chris lawrence who's work on the story for us. has he already landed here in washington? or is he still on the way? >> you know, wolf, his visit is going to be very brief. he's only going to be here tonight and part of tomorrow. u.s. officials tell us, you know, there's no one issue that's driving the visit, but there are plenty of things on the table. lieutenant general is due to meet with several officials, including the acting director of the cia. he's not going to meet with any speng folks during this visit. mostly intelligence op ray forps but again, there are so many issues on the table between these two countries. the u.s. threatening to cut off nearly $1 billion in aid to pakistan. at first, the pakistani military sort of brushed it off. but today, the prime minister of pakistan expressed some real concern about that aid being cut. this visit could be one of the first steps to trying to find a way forward in which the two countries can still cooperate. >> the accusation is that elements of the isi, the pakistani intelligence service are helping insurgents, enemies of the united states in afghanistan and effectively helping to kill americans and other nato forces there. what are they saying about that? >> well, wolf, it doesn't make sense when you look ate from an american perspective. when i was in pakistan earlier this year, pakistani officials are very concerned about two things. they feel a threat from india. they're worried about the indians having influence in afghanistan. there are some elements within pakistan that use these insurgents in afghanistan as sort of a check on india's power there. they don't like this idea of this rival india having influence on the other side of the border. the other thing they worry about is going into the tribal regions, by doing so they kick up a hornet's nest and then those people start to make attacks in places where people really care. you can liken to a very rural part in alaska, there would be a difference between something happening there and something happening in the heart of times square manhattan. that's sort of the pakistani perspective on that, wolf. >> a juror in the casey anthony breaking her silence about the verdict and the threat shs he's getting from it. and president obama's re-election campaigns in a record breaking pile of cash. we're following the money. there's bugs, leaves, lint, crud. you'll be breathing that. i do believe it's part of a locust. make sure your alignments good. your brakes are good. you've got all sorts different things that you check off. your fluid levels. pretty much everything you could need. it gets done. it gets done quickly. and it gets done correctly. the works fuel saver package, just $29.95 or less after rebate. only at your ford dealer. you're a doctor. you're a car doctor. maybe a car doctor. ♪ [ cat meows ] ♪ [ whistles ] ♪ [ cat meows ] ♪ [ ting! ] [ male announcer ] travelers can help you protect the things you care about and save money with multi-policy discounts. are you getting the coverage you need and the discounts you deserve? for an agent or quote, call 800-my-coverage or visit travelers.com. >> some of the jurors in the casey anthony murder trial are speaking out despite threats after their acquittal. last week we spoke with juror number three. >> you said the charge of manslaughter was 6-6. which side were you on? >> for amongst manslaughter. >> so what caused you to change your vote? >> lack of hard evidence. like i said, the duct tape and the chloroform and things like that, you could -- if you took a good lard look at it, you could kind of -- there was a lot of doubt surrounding all of the certain things. so there's not enough to make anything stick. >> so you don't necessarily think she's innocent but you don't feel there's enough proof to find her guilty beyond a reasonable doubt. >> right. i don't know either way. but it's obviously it has not been proven that she's innocent. but it certainly hasn't been proven she's guilty. >> the defense in the opening statements said that casey anthony's father molested her repeatedly when she was young and that's why she kept the drowning of her child secret. do you think she could have been molested by her father? >> there was no evidence, none at all. and that had no bearing on any verdict that was made. i mean, that was irrelevant. it was thrown out there but never substantiated. >> didn't it bother you that it wasn't substantiated? the judge said you cannot bring this up in the closing arguments because you didn't present any evidence about it. >> i wish he hadn't brought it up. if you're going to do that, at least back it up. if you can't back it up, don't put that picture in people's minds in nobody wants to see that. >> and regarding the drowning, the only evidence that was presented was pictures of caylee climbing in the pool with her grandmother, standing near a screen door, which -- a door which her grandmother testified she couldn't open. flimsy evidence at best. i'm wondering if you think there was a pocket that she could have drown. was there any evidence that convinced you of that? >> no evidence convince m.d. eof that, no. >> so a casual viewer might say why didn't you find her guilty of murder. >> because it's on the prosecution to prove -- they brought charges. they have to prove that those charges are -- you know, they can validate and bring those charges and the crime was committed. >> so you didn't believe the central pint points that the defense told you, you just believed the prosecution didn't have enough evidence to convict? >> they had good, strong circumstantial evidence and there was not just one strong piece of evidence that said something definitively. every piece of evidence could kind of say this or that. there were many different ways you could have gone with each piece of evidence. >> by the way, a search and rescue group has now filed a civil suit for more than $100,000 it says it spent searching for her daughter when she allegedly knew the child was dead. anthony is scheduled to b released from prison this coming sunday. the power of prayer. wait until you hear what the texas governor and possible presidential contender rick perry is saying this week. is he going too far? strategy session coming up next. plus, has britain's phone hacking scandal stretched into the united states? you're going to find out what several u.s. senators are now doing about that. hey can i play with the toys ? sure, but let me get a little information first. for broccoli, say one. for toys, say two. toys ! the system can't process your response at this time. what ? please call back between 8 and 5 central standard time. he's in control. goodbye. even kids know it's wrong to give someone the run around. at ally bank you never have to deal with an endless automated system. you can talk to a real person 24/7. it's just the right thing to do. >> let's go to roland martin and former bush speech writer david frum, the editor of frumforum.com. how big a deal is it that some of these republican candidates are signing this traditional values pledge, if you will, opposing same-sex marriage in iowa as opposed to others refusing to sign? >> it says some other things than that. this just drives hope what a great point it would be to move this first republican primary to florida, the way the florida state wants and have it in a big urban state. the people who are signing this are the people pinning their hopes on iowa. social conservatives are very strong. you have to spend a lot of time in those caucuses. people who are not signing are not making the big commitment to iowa. the republican party almost -- you must not win iowa. >> i hear 24 about dumping iowa caucus every four years. hasn't happened. probably won't happen. it looks like iowa has a lock. >> i'm an evangelical. my wife is an ordained minister, i'm a christian author. i think this pledge is stupid and idiotic. so for those republicans who are refusing to sign it, i agree with them. if you're married when you stood at that altar and pledged before god, that's the commitment you made. also if you are elected, you have to recite a pledge in the constitution. that's the only one that matters. so this is ridiculous. it's simply detracts. now they have to explain the slavery language wrz the rest of the people saying i'm not dealing with that nonsense. this has nothing to do with the real issues that people are thinking about. >> black people had it better under slavery as opposed to now. >> the pledge point is very powerful. why allow your commitment to be segmented by these different groups. and why is it only the family people? where are the people concerned about better roads? the farmers, shouldn't they have a pledge? and eventually you're beholden to so many people. >> rick perry is thinking of running. i think he's going to run. in early august, he's going to have this prayer meeting that he's organizing in texas.texas. he's on his website already talking about it. let me play a little excerpt of what he's saying. >> as an elected leader, i'm all too aware of government's limitations when it comes to fixing things that are spiritual in nature. that's where prayer comes in. we need it more than ever. with the economy in trouble, communities in crisis and people adrift in a sea of moral relativism, we need god's help. that's why i'm calling on americans to pray and fast like jesus did, and as god called the isralites to do in the book of joel. >> is that appropriate for a sitting governor to be getting involved in the organizing of prayer and fasting like this at a stadium in texas? >> i have no issue with that at all. what i take issue with, i hope governor perry will read others parts of the bible. you can sit here and pray, you can fast. if you make your correction in your life, all that stuff is meaningless. i have no issue with any politician doing that. you do not sit your christian faith or whatever your faith is aside when you go into office. you better have works along with your faith. >> some people are feeling uncomfortable, queasy about that. >> a lot of presidents called for prayer and fasting before including abraham lincoln. more people on the agnostic side of the spectrum to put it mildly. when governor perry talks about the things that government can't help, we're in the middle of a crisis of underemployment, of economic failure. dealing with things that government can do something about. when we're back in prosperity, when we have full employment, we'll still have a lot of problems that are beyond the reach of government. right now are problems are within the reach of government. let's hear some solutions. >> i have to say this, wolf. if you saw the report on governor rick perry making more than $1 million over a four-year period, only tiling $1 million, maybe that's why faith can't do more. >> that's all he gave to charity? >> 90 bucks. >> over four years? >> a couple years. to his church. $90. maybe that's part of the problem. he's not tiling like he should. >> i'm going to double check that and make sure you're right. that's a sensitive issue, guys. thanks very much. rupert murdoch's companies in the united states may have targeted with a formal investigation like the one unfolding in britain right now. stand by for more on this new push by leading members of congress. china's secret military lets the top u.s. officer enter what's called the no go zone. to those always searching for what's pure and what's real from we who believe we know just how you feel. haagen-dazs. another good thing about geico so like say you need to report a people wclaim, alright./7.. a real person will be there to help you. then you can use geico.com to view photos of the damage, track your claim, print an estimate. you want an english muffin? they literally hand you a toasted muffin with butter and jam. (sigh) whaa. tasty. that's, that's a complete dramatization of course, but you get my point. vo: geico 15 minutes could save you 15% or more on car insurance. >> announcer: this past year alone there's been a 67% spike in companies embracing the cloud-- big clouds, small ones, public, private, even hybrid. your data and apps must move easily and securely to reach many clouds, not just one. that's why the network that connects, protects, and lets your data move fearlessly through the clouds means more than ever. what's this option? that's new. personal pricing now on brakes. tell us what you want to pay. we do our best to make that work. deal! my money. my choice. my meineke. america's top uniformed officer gets a rare window into china's powerful military machine. the chairman of the joint chiefs admiral mike mullen wrapped up a four day visit to the communist nation. it's another important and difficult u.s. relationship that's on the line. cnn's stan grant is in china. >> reporter: this is a rare opportunity to get up close at a chinese military base. you can see over here that is the chinese jet fighter. that's admiral mullen who's just emerging from the bottom of the stairs there. this is a very, very tightly controlled trip. every move is being scripted. we're being kept a good distance away from him. of course, while they're getting to see these jet fighters, they're not getting to see the one they would like to see. that is the ja-20 still fighter. that's already being trialed and that takes the chinese military, the chinese air force to a whole other level. china has been spending more on its military. it increased its spending by 12% this year not just developing the stealth fighter but developing aircraft carriers as well. admiral mullen has said china has, indeed, arrived as a world power. he says, though, that brings great responsibilities. says china needs to show more openness. trips like this, visits like this are an attempt to try to really get this relationship on a more even footing. there are tensions. china is not happy with u.s. war games off its coast and american arms sailes to taiwan. china spends about $100 billion a year on its military. that's seven times less than the united states. today was keen to show admiral mullen the range of its fire power. at the same time, there are so many with concerns about what just china military rise, china's rise to a world superpower, will mean. not just for this region, but for the rest of the world. stan grant, cnn, shandong province, china. >> jack cafferty is here with the cafferty file. >> that's pretty fascinating stuff, isn't it? >> yep. >> question this hour, what does it mean that 42% of americans don't want congress to raise the debt ceiling? jeff in virginia, "means that most of the taxpayers in this country have to live on a budget and our government needs to start doing that as well. we cannot continue doing everything we do with borrowed money. doesn't matter if it's wars, defense spending or some of the entitlements. i agree taxes should go up a little bit it has to be fair for everyone." jim in illinois writes "americans see the present danger of outrageous debt and foresee the dire consequences of more debt being piled on. president obama's request for more debt would be like asking the captain of the titanic to hit another iceberg." alex writes from washington, "it means that americans realize we can't keep borrowing 40 cents of every dollar we spend. a similar majority don't want any cuts in the programs that benefit them, things like social security and medicare. like ap reported charles babington wrote, voters oppose large deficits, higher taxes and cuts in programs that benefit them. a painless but impossible combination, unquote. rick writes "it means citizens think obama has squandered far too much of our money at a time where we can ill afford it and we're all fed up with that." michael in virginia says "americans see this as the definition of our debt problems. if the debt limit is raised it seems counterproductive in the crusade to lower the deficit. now is viewed as the best time to start a process by which this debt can be made manageable. america needs this to happen before the limit is raised." and pete writes "it means once and for all average americans are sick and tired of lunatic federal government, runaway spending, the deseat covering up where all of the billions really go and the mindless casual attitude of how horribly this will affect our children and so on. thank god for a few leaders with a backbone. enough." if you want to read more of this, the story of the day, go to my blog, cnn.com/caffertyfile. how is it all going to end, mr. blitzer? >> i don't know. the stakes as you know and viewers now, they are enormous right now. i'm nervous about it, i must say. >> yeah, i am, too. to our viewerses you're in with the the situation room" happening now. rupert murdoch's media empire under threat. a multibillion dollar deal is strapped as the british tabloid hacking scandal spreads possibly soon to the united states. also, he's a washington power player who can instill fear in republican lawmakers who violate his anti-tax orthodoxy. we're going to talk about that, the debt ceiling, much more with grover norquist. secret and fear as the chinese government crackdown intensifies. we'll take you inside an illegal underground church. we want to welcome our viewers in the united states and around the world. breaking news. political headlines. and jeanne moos all straight ahead. i'm wolf blitzer. you're in "the situation room." there's fresh fallout today from the hacking scandal that brought down one of britain's biggest newspapers, the prime minister david cameron has announced the public inquiry into eavesdropping and bribery by journalists working for media mogul rupert murdoch. amid the public fury, murdoch's corporation has dropped the $12 billion bid to take control of british sky broadcasting. the scandal could spread beyond britain. three, repeat, three u.s. senators now urging the justice department to investigate murdoch's u.s. holdings. cnn's brian todd is working this part of the story for us. it's a dramatic development, brian. what do we know? >> senator jay rockefeller is leading the charge. he thinks journalists from ruppert mert murdoch's papers me targeted americans and they may have involved victims of september 11th. as of now, mr. murdoch is under intense pressure on both sides of the atlantic. as he faces the investigative music in britain, critical mass builds to look into the actions of rupert murdoch's companies in the u.s. several lawmakers are calling for investigations into whether murdoch's tabloids hacked the phones of americans. powerful senator jay rockefeller is leading that charge. he's especially concerned over reports that 9/11 victims' phones were hacked and told cnn his bet is they'll find, quote, criminal stuff. i caught up with rockefeller. >> you know the department of justice and all kinds of other federal agencies are going to be going after this very hard, and we will, too. i mean, this is a -- it's really repugnant, you know, that one man can control so many. >> reporter: do you have specific information that americans that 9/11 victims had their phones hacked? >> we will find out. >> reporter: at least two relatives of 9/11 victims are joining in this call. contacted by cnn, the justice department wouldn't comment on whether an investigation has been launched. rockefeller called for the probe after victims of 9/11 were reported to have been among the targets of british papers. "the daily mirror" a rival of murdoch's papers, asserted a new york private investigator said he'd been asked by "news of the world" journalists to hack victims' phones but he turned down the job. it's unclear if the tabloid journalists were after the victims of america or british 9/11 victims or both. owner of some of the london papers that has been the focus of the outrage is based in the united states. its outlets include "the wall street journal," "new york post." it's too early to tell if those allegations will suffer legally from an investigation. what kind of public backlash could there be against rupert murdoch and entities in the u.s. even if this doesn't come to full true wifruition? >> we know him through all the tv channels he owns in the country. he has plenty of enemieses in this country. this could be, i stress the could be, the moment when they get a lot more ammunition to use against him. >> we contacted news corporation to ask if they would respond to calls for investigations. if they could shed light on the alleged attempt to hack americans and if they've launched their own investigation. a spokesman there would not comment. wolf? >> is it for sure u.s. law enforcement agencies will, in fact, investigate murdoch's operations here in the united states and if they do, i mean, what would the penalties be? >> legal experts tell us it's not a slam dunk u.s. agencies will investigate if the justice t department, for example, finds british agencies are doing a job going after them thoroughly then the americans may step aside. as for the penalties, there could be serious jail time if privacy laws were violated. one wants to investigate if they paid for information. if it's found they did, there could be very serious fines into the millions of dollars. >> we spoke to senator bob menendez of new jersey. he wants a full investigation. the attorney general of the united states, eric holder, the fbi, he wants them all to get involved. we'll see what happens. brian, thank you. murdoch's vast american media empire encompasses dozens of companies worth billions of dollars. cnn's becky anderson has a closer look. >> news corp has plenty at stake in the united states including the majority of its profits. its television sector earns the company $15 billion a year. that is largely thanks to the success of fox network. you'll know that. and hit shows like "american idol," "24," and "simpsons." also news corp owns fox sports and 37 television stations from new york to los angeles. in fact, when you look at the map, across the country, each of these antennas actually represents a station that is under murdoch's control. and this, also, of course, fox news, fox business and other cable networks including fx and the national geographic channel. moving on from tv for you, murdoch's film division is also highly lucrative, bringing in more than $7 billion a year. largely thanks to the success of popular 20th century fox films such as "avatar" and "star wars" franchises. its newspaper oldings also important. also profitable in the u.s. with such titles as "the wall street journal" and "new york post" and owns u.s. publisher harper coll collins with c.s. lewis under their belt. as the british prime minister david cameron was announcing a public inquiry into the scandal, he was being blasted, himself, in parliament for hiring a former murdoch editor as his spokesman. listen to this blistering criticism then cameron's response. >> he just doesn't get it. he just doesn't get it. i say this to the prime minister. he was warned by the deputy prime minister about hiring andy coulson. he was warned by lord ashtown about hiring andy coulson. he has now admitted in the house of commons today that his chief of staff was given complete evidence which contradicted andy coulson's previous accounts. the prime minister must now publish the fullest account of all the information that was provided and what he did and why those warnings went unheeded. the decision to employ a tabloid editor meant there were a number of people who said this was not a good idea, particularly when that tabloid editor had been at "the news of the world" when bad things happened. the decision i made was to accept the assurances he gave me. as i've said, those were assurances given to the police, to a select committee and to a court of law. if i was lied to, if others were lied to, that would be a matter of deep regret. i couldn't be clearer about it than that. we must make sure we judge people as innocent until proven guilty. >> can the prime minister assure the house all illegal press activity under the last government will be investigated now? and that this will include the criminal conspiracy between the highest levels in that last government, with parts of the murdoch empire, including -- bank accounts of lord ashcroft in a bid to undermine him and his conditions as laid out in dirty politics, dirty times? >> in public life we're subject to scrutiny. that's fair. it's not fair when laws are broken. we've all suffered from this. and the fact is we've all been too silent about it. that is part of the problem. gone through by some media organization but you hold back from dealing with it because you want good relations with the media. we need honestly about this issue on a cross party basis so we can take on this problem. >> wow. pretty dramatic stuff in parliament today. shockwaves from the scandal may be rattling number 10 downing street. the prime minister's residence. they're not reaching the white house. at least not yet. >> it's not on our radar in the sense that we're having discussions about it. everyone reads newspapers and catches the news reports. so we're aware of it, but it's not, you know, we have some other issues we're dealing with. >> to put it mildly. president obama shattering a fund-raising record by tens of millions of dollars. how does his campaign war chest compare to those of his republican rivals? plus, we have an exclusive. a cnn crew caught up in a raging fire fight in libya, continuing to report even as they fear for their lives. purina cat chow helps you well-being. we're all striving for it. nurture it in your cat with a full family of excellent nutrition and helpful resources. purina cat chow. share a better life. jack cafferty is here. he has the cafferty file. jack? >> wonderful little item here. restaurant in monroeville, pennsylvania, which is just outside pittsburgh, is banning children under the age of 6 from its dining room. the owner of mcdain's said he decided to change the restaurant's policy after other customers complained about noise and unruly behavior by children dining with parents who did little or nothing to control their offspring. the policy goes into effect saturday. if the place was closer, i would call and make a reservation now. mcdain's is a small restaurant. it only seats about 40 people. it sits quietly on a golf course. we're not talking chuck e. cheese here, you know what i mean? nonetheless, the decision to ban these little noise makers has caused an uproar in this town. this isn't the first time a restaurant has gotten fed up with tiny diners who can't behave themselves while eating a meal. last year, a restaurant called the old salty in carolina beach, north carolina, ruffled feathers. they put a sign in the window saying screaming children will not be tolerated. it was magic. the sign was. while some locals were up in arms about it, that restaurant owner has reported a boom in business as a result. she says diners who are looking for a peaceful meal seek out her restaurant. of course, badly behaved children are not just a problem in restaurants. malaysia airlines recently announced it's banning infants from first class because of complaints that it received from passengers about crying babies on long flights. other airlines catering mainly to business travelers have also been pressured to consider child-free sections of their flights. or even child-free planes. we'll see if that happens, though. see, airlines need paying customers to fill the seats, and kids, whether they're poorly behaved or not, are part of that equation. anyway, here's the question. restaurant in pennsylvania banned children under the age of 6. is that fair? go to cnn.com/caffertyfile and post a comment on my blog. i think everybody can relate, wolf. >> certainly can, jack. i'm fascinated by this story. see what our viewers think as well. thank you. cnn crew including our senior international correspondent ben wedeman came under fire while covering a story in libya. they ran into some unexpected gunfire as moammar gadhafi's forces with s were trooiing to h a checkpoint. our camerawoman continued to shoot under gunfire. take a listen to this and watch. >> our driver -- >> get in the car, mary. >> you guys. wait. >> okay. >> wait. wait. wait! >> wait, wait, wait. you in, mary? >> yeah, i'm in. >> okay. just calm down. >> get down. >> we're leaving this area because there's gunfire all around us, and we believe that gadhafi's forces are doing a roundabout movement. so we are rushing out of this rare. >> i spoke with ben wedeman in the last hour. he told me the rebels took back the town. he and the crew, thank god, they are fine. republicans are taking a hard line stance when it comes to tax hikes saying they don't belong in any deficit reduction deal. had the decision tied lawmakers' hands? team usa and france battle it out at the world cup. we're going to tell you which team is advancing to the next finals. i suspect you probably know. at deadly terror attack in mumbai, india. lisa sylvester is monitoring that and other top stories in "the situation room." what's going on, lisa? >> 21 people are dead and more than 100 wounded after three bombs exploded within minutes of each other. officials say they were coordinated by terrorists but no suspects have been identified. today's attack is the first in mumbai since the city's 2008 terror siege that left 164 people dead. here in the u.s., figures obtained from this tsa reveal more than 25,000 security breaches at the nation's airports over the last ten years. the tsa say the cases represent the tiny fractions of the billions of travelers screened and says all incidents were investigated and resolved. and a huge development in the world of sports. the united states' women's soccer team is headed to the world cup finals. team usa advanced after defeating france 3-1. they'll take on japan sunday to see who takes home the trophy. looking good there, wolf. >> we'll be watching. certainly we'll be watching that. thanks very much. more than $86 million, that's how much president obama raised in just three months for his re-election campaign. that's the most money ever raised in a single quarter by an incumbent president and shatters the old record set by george w. bush by $36 million. our chief white house correspondent jessica yellin is here to take us through the numbers right now. jessica, how does all this compare with what the republican presidential candidates raised over the past three months? >> wolf, simply it dwarfs the numbers the republicans have raised so far. let's compare apples to apples. so just the amount of money raised for the obama campaign, alone, let's take out the money raised for the democratic party. the president raised more than $47 million in just 3 months. now, add all the money the major republican candidates who reported, michele bachmann has not reported, so six candidates taken together have raised about $37.5 million. okay. now let's break down the president's numbers even further. his hall comes from more than 550,000 individual donors we're told by the campaign. according to the campaign, 98% of those donations were in the amount of $250 or less. that's small donors. that's according to the campaign. we have to look at those numbers ourselves and analyze it. if that's true, that shows grassroots enthusiasm. that's the kind of enthusiasm that matters in a campaign. that's what they said they were looking for. that could translate to a lot more donations down the line. here's campaign manager jim messina warning the grassroots, though, that despite all these big numbers so far, don't get complacent. >> we have reason to be proud of what we built so far, but it's going to get tougher from here. gop outside spending for 2012 could be as much as $500 million. but these groups don't report anything. we're not allowed to see any of those numbers. this is a whole new ball game like we've never faced before. thank you so much for all you've done. >> now, that's one side of the story. american cross roads, you've heard of them, the top conservative outside spending group. they say, quote, the billion dollar obama team will far outspend the republican outside groups and they call that, from jim messina, a quote, fund raising hook. >> let's not forget president obama supporters have outside spending groups that they've created as well just like the republicans. >> absolutely. >> have done. what's the downside of the obama campaign making such a big deal about these numbers? >> there are a few things. first of all, republicans are already dinging the president for campaigning. he's been doing it already. prior to the debt talks, he did no fewer than 30 fund-raisers in 3 months. many on the same trip that he also did official events so that the campaign did not pick up the whole travel tab. also, a number of democratic donors have complained to me that they think it's unseemly for the president's campaign to be boasting now of such a fat fund-raising hall during what are grim economic times when people are out of jobs and when washington, frankly, can't get its act together to avoid a default. and then finally, there is what you point out, wolf, that there is plenty of democratic money going to outside spending groups on the democratic side. here's just one. >> the republicans have opposed economic reforms at every turn and now they have a plan that would essentially end medicare for future retirees, slash education while giving huge tax breaks to big oil and the wealthy. we can't rebuild america if they tear down the middle class. >> clearly that's a democratic message, so when we talk about undisclosed donors, they're coming on both sides of the aisle. >> the president doesn't have a democratic challenger for the party's nomination. unlike jimmy carter who did have a democratic challenger, ted kennedy. as a lot of us will remember. he's raising a ton of money right now. thanks very much, jessica, for that. he may be the most powerful man you've never heard of here in washington. many republican lawmakers live in fear of breaking his one major rule. no new taxes. my interview with grover norquist. so you can get back to playing "angry birds." it lets you access business forms on the go, fire off e-mails with the qwerty keypad, and work securely around the world so you can get back to playing "angry birds." it's the android-powered phone that mixes business with pleasure. so let's get our work done, america, so we can all get back to playing "angry birds." the motorola expert from sprint. trouble hearing on the phone? visit sprintrelay.com. vietnam, 1967. i got mine in iraq, 2003. u.s.a.a. auto insurance is often handed down from generation to generation, because it offers a superior level of protection and because u.s.a.a.'s commitment to serve the military, veterans, and their families is without equal. begin your legacy. get an auto insurance quote. u.s.a.a. we know what it means to serve. this just coming in. the fourth day of white house talks, the fourth day in a row have just wrapped up over the white house trying to find some sort of deal on raising the nation's debt limit. the stakes are certainly enormous. there's new pressure on both sides to reach a deal. the credit rating agency moody's now saying it will review the aaa rating the united states currently holds in light of a possible government default if the debt ceiling isn't raised. republican presidential candidate michele bachmann is dismissing the risk while the chairman of the federal reserve is underscoring it. >> this is a misnomer that i believe that the president and the treasury secretary have been trying to pass off on the american people and it's this. that if congress fails to raise the debt ceiling by $2.5 trillion, that somehow the united states will go into default and we will lose the full faith and credit of the united states. that is simply not true. it's important to recognize that revenues continue to come in to the united states treasury. it's merely the president's obligation and the congress' to make sure that the interest is paid on the debt. >> fairly soon after that date, they would have to be significant cuts in social security, medicare, military pay, or some combination of those in order to avoid borrowing more money. if, in fact, we ended up defaulting on the debt, or even if we didn't, i think, you know, it's possible that simply defaulting on our obligations to our citizens might be enough to create a downgrade in credit ratings and higher interest rates for us which would be counterproductive, of course, since that makes the deficit worse. >> moody's is reviewing the u.s. aaa rating. republicans certainly under sense pressure to refuse new taxes as part of a deal to raise the nation's debt ceiling. lawmakers who give in risk the wrath of one of the most powerful men here in washington, a man most americans probably never heard of. we're talking about grover norquist. we asked lisa sylvester to join us right now. i'm going to be speaking to grover norquist in a few moments. give us a little background, lisa, on who he is. >> he's a fascinating guy. grover norquist, actually, he got his start in politics early. at 12, he hopped on a train and he headed to boston to volunteer for richard nixon and he has held on to his conservative values ever since. he believed in small government, lower taxes and limited government services. >> that's mitt romney's. michele bachmann. >> reporter: in this black binder are signed pledger from gop presidential candidates. grover norquist, president and founder of americans for tax reform, secured their signatures as well as those of most of the congressional republicans, all committing to not raise taxes. hundreds of names with the originals safely stored away. where are the pledges? everybody wants to know. where are the pledges? >> we keep the original pledges inside a vault that can't be burned. a safe vault. we keep multiple copies just so that they can't be lost. we want to promise to voters and to elected officials that their pledge will be there forever. >> reporter: in some ways, this father of two young toddlers is a study in contrast. although politically conservative through and through, he loves janice joplin, has figures from the adult animation series "south park" on his book shelves and dabbles in improv comedy. >> when midgets play miniature golf, do they know? >> reporter: norquist also has the ear of powerful gop leaders who often won't act on sensitive budget issues unless he has signed off. every wednesday, norquist convenes a meeting here of prominent republicans, political activists and gop operatives to plan strategies. if someone thinks about breaking the pledge, he likes to remind them of president george h.w. bush. >> read my lips. no new taxes. >> the american people are very angry that he'd broken his commitment. he had a very successful presidency except for the tax increase. >> reporter: in the ongoing debt ceiling negotiations, one point of debate is whether to raise taxes in tandem with government cuts. norquist is quick to remind republican lawmakers of their promise. here is a wall of republicans who went astray. >> these are people who voted for tax increases and down below in blue it points out which ones were defeated in the next election. >> reporter: his position, power and ego sparked outrage by some of the other side of the political aisle. michael etlinger with the center for american progress says it makes it harder for congressional leaders to legislate. >> gloefer norquist is a big problem, but the people whose feet he's holding to the fire are getting tired of it. you know, we're getting to the point where we need serious people to sit down and make serious decisions and drawing really hard lines in the sand the way grover does is hurting the country. and i think people who signed that pledge are starting to recognize that and realize that that kind of hard line just is not in the best interest of the country. >> reporter: norquist is unfazed. it call comes town to the one-line pledge that hangs in the americans for tax reform office. the group's strength is in the grassroots operations. you know, being able to run ads and make phone calls to either elect or defeat a candidate and that makes norquist a very powerful master behind the scenes, even though, you know, wolf, he has never been elected to office. >> yeah, he's been doing this for 25 years. he says he started doing it at the request of then-president ronald reagan. i had a chance, lisa, a little while ago here in the "the situation room" to question grover norquist. in principle, do you agree if they don't raise the debt ceiling august 2nd it would be a dissaster for america? >> if obama chooses not to cut spending and we end up with a default that would be very bad. >> that would be the value of the dollar presumably would go down, interest rates would go up. inflation could occur. that would be a huge hidden tax on almost every american. >> every problem we have is because obama has ramped up spending so dramatically in the last two years that it's busting the bank. we need to fix that overspending problem. >> they doubled the national debt during the eight years of the bush administration. you know that. >> right. we went from spending $2.9 trillion before obama came into power to $3.8 trillion. >> the national debt went from $5 trillion when bush took office to $10 trillion when he left office. >> $15 trillion after two years. the ramping up the last two years of massive spending increases is unbelievable. >> are there any tax reforms you could support as part of this deal? for example, i'll throw out a few examples of what a lot of people consider to be crazy situations. john paulson, hedge fund manager, he made last year $4.9 billion. billion with a "b." not million. but $4.9 billion. a big chunk of that income was taxed at 15%, not the maximum 35% because it was seen as some sort of capital gains or whatever. is that fair? >> certainly the democrats have been arguing to raise the capital gains tax on all americans. obama says he wants to do that. that would slow down economic growth. it's not necessarily helpful to the economy. every time we've cut the capital gains tax, the economy has grown. whenever we raise the capital gains tax, it's been damaged. it's one of those taxes that most clearly damages economic growth and jobs. >> shouldn't it be taxed as regular income, 35%, like you, me, and everybody else in the highest income bracket? >> if it's capital gain it should be taxed as capital gain. >> would you change the law so that that would be regular income instead of allowing this tax loophole right now that defines it as a capital gain? >> if you have to change the law to get more money, that's a tax increase, and americans for tax reform supports all efforts of tax reform, getting rid of deductions or credits, for something that's misclassified, as long as you at the same time reduce rates so that it's not a hidden tax. >> you'd be open to changing that law so he'd pay a higher income tax? >> if overall tax burden was not increased, as long as rates come down. i'm for tax reform, not tax increase. >> what about general electric which made last year $14 billion worldwide, $5 billion in the united states and paid zero in federal income tax. is that fair? >> okay. several things. one, if there's a credit or deduction that they're getting, and i understand they get a lot of obama's special tax credits that he put in for -- >> should that be eliminated? >> -- then let's get rid of those and reduce rates for those people who are paying taxes other places. but, again, when businesses pay taxes, you and i pay them. businesses don't pay taxes. people pay taxes. when they buy things from the grocery store, grocery stores do not pay taxes. >> you'd like to see tax reform so that would be eliminated? so ge would pay some income tax in the united states as opposed to paying no income tax? >> and let's bring rates down other places. >> the same with exxonmobil. they pay a lot of income tax in nigeria and other countries around the world wbut don't pay income tax in the united states because they can deduct the income tax overseas and not pay it here. >> we ought to go to a territorial system which is what the rest of the world operates on. we tax things that happen in the united states and don't tax things that happen overseas. similarly when people make money in the united states we tax it and france doesn't. that's a territorial tax system. it's clearly where we're going to. we ought to move there as quickly as possible. >> you're the president of americans for tax reform. it's a very influential group here in washington. i want to read to you what former president bill clinton said in aspen, colorado, on july 2nd. have you heard this in. >> i think so. >> he said this. he said "you're laughing but he was quoted in the paper the other day saying he gave republican senators permission on getting rid of ethanol subsidies. i thought, my god, what has this country come to when one person has to give you permission to do what's best for the country? it was chilling." >> okay. typical bill clinton, got everything completely wrong. i wondered where one of those quotes came from. what that was was there was a bill to get rid of the tax credit for ethanol and -- >> which you supported. >> which we support getting rid of that tax credit. >> it would be an increase in taxes, though. >> it would. there was another bill wrapped around it by demint which would have, one, eliminated the mandate for ethanol which is the real problem, and two, have a tax cut larger than the other. we sent a letter to the hill saying, if you want to make sure you haven't raised taxes, those two bills together do exactly that. >> so basically he's right when he says you gave them permission to vote to eliminate subsidies for ethanol. >> we made it clear the two bills together didn't violate the pledge. they chose when they ran for office to commit in writing to their constituents, not to me, to their constituents, is where bill clinton gets it wrong. nobody promises me anything. they promise when they get elected to the people in their state and their congressional district, i'm not going to raise your taxes. and -- >> that's the question they -- >> no, to the american people. it's the americans for tax reform pledge so it's the same wording in all 50 states so people know what it is. they commit to their voters. they won't raise taxes. there was a confusion, because coburn was trying to confuse people, as to whether this was a tax increase. we wrote letters saying, no, tvbs not, it's not a tax increase so they could be comfortable they weren't getting tricked by senator coburn into a tax hike. >> you like it when people say you're one of the most powerful men in america? >> it's a little bit silly. the american taxpayers are a powerful force. they don't want their taxes raidsed. obama and the democrats have a fight with the american people, not with me. >> reverend norquist, thanks for coming in. >> thank you. republicans may not be budging when it comes to tax hikes in the ongoing deficit talks. have they now painted themselves into a corner on the issue? more in the story. we go in-depth. david gergen standing by. i'll tell you what -- when we stop to fill it up. ♪ ♪ [ son ] you realize, it's gotta run out sometime. [ male announcer ] jetta tdi clean diesel. the turbo that gets 42 miles per gallon. ♪ let's dig deeper on this battle over racing the nation's debt ceiling. joining us, senior political analyst david gergen. david, you saw my interview with grover norquist. explain to our viewers here in the united states and around the world why this man is so powerful. >> well, as he, himself, said, it's not just because he's grover norquist. it is because there is a strong populist anti-tax sentiment in this country that's been there for a long time. it's intense today. and grover norquist has been smart enough, tough enough to put himself at the head of that parade. so when he speaks, when he calls attention to these pledges, they matter. in this -- there are now in the house of representatives among republicans only six members of the current house did not take that pledge, wolf, during campaign. that means everybody else pledged against raising taxes and tied their hands. grover norquist is also a tough customer. he has complained for years that any time republicans make deals with democrats, their democrats will shun the deal. he said publicly, quote, bipartisanship is a form of -- very, very tough language. he does not mind using the whip on people who get out of line. >> i've been in washington a long time. the frustration level right now, enormous, and the stakes clearly enormous as well. listen to what john mccain said today. i'll play the clip. >> my kids and my grandkids, i am very worried about because we have spent ourselves into a hole that we can only make very tough decisions and clearly we are not making those decisions here in washington, d.c. it's hard trying to do the large work in the city of satan. >> he used that line before, but it's still a very powerful line, david. >> it sure is. i think what we're seeing, wolf, is the disfunctionality of washington which is usually below the service, is now in stark review for all americans to see. we've gone through this a couple times before in recent years. and when you really look at this closely, you know, it's like that old saying about you never want to see sausages made, you just want to see them at the end of the day. we're watching a sausage get made now. it's not pretty. i do think right now is we're facing two crises. one is the debt ceiling. mitch mcconnell, you know, has come up with this plan which is very controversial among conservatives, but at least recognizes we have to lift the debt ceiling. and john mccain recognized it. but even if we use the mcconnell plan, that doesn't solve the second crisis. that is we have debts that are so large that if we don't solve it soon, the credit rating agencies, as you said, talking about moody's, s&p, fitch, they're all out there going to say, there's a very real danger, growing danger they will downgrade america's credit ratings. >> the stakes would be enormous. david, thanks very much. we'll continue this tomorrow. i want our viewers to check out my blog at cnn.com/situationroom. i write about what the stakes are of failure. failure cannot be an option right now. all of us would be enormously affected. simply for going to church, frightening reality for so many christians in china. we have a rare inside look at an underground service in beijing. that's coming up next. china's crackdown on christians isn't letting up. we got access to an underground church service in beijing. >> reporter: these christians in beijing asked us not to show their faces. they're worshipping on a sunday just like so many others around the world, but what they're doing is against the law here. >> it's really difficult to get access to these informal churches because they're not approved by the government. these people have been kind enough to let us film here, but they're taking a really big risk n china, the government strictly controls religious activity, requiring christians to worship only at churches sanctioned by the state. the rest, like this one run bypass toby pastor ezra gjin are not generally allowed. they've been cracked down more in the wake of arab spring. the government has concerns, he says, because we are well organized and outside the establishment. for months congregants of one of beijing's largest underground churches have been detained, its leaders under house arrest. the chinese government says the worshippers have been illegally gathering in the streets. still parishioners here continue to worship the way they want. i'm not scared, she says. i believe god will be with me. the chinese government maintains it allows freedom of religion. american televangelist franklin graham says china has allowed christianity to grow here despite beijing's concerns the church could undermine the state's authority. >> i've seen the changes they've made in 20 years, and i believe there will be more changes to come. >> reporter: pastor jin wants to stand up for those changes n a rare public move, he and a dozen other christian leaders have signed a petition calling on leadership to allow greater religious freedoms. shao wong's case could deteriorate into a major crackdown. we are at a critical moment, and we are ready to pay the price -- for a power even higher, in their eyes, than the chinese government. eunice yoon, cnn. >> jack has the cafferty file. there's a restaurant called mcdane's right outside pittsburgh, pennsylvania, that has banned children under the age of 6. is that fair? >> julianne writes absolutely. asking parents to keep their kids under control isn't being unreasonable. it's called being considerate of others. there is nothing wrong with parents teaching their children good manners. if children don't learn to respect others when they're young, when exactly are they going to learn? sandra writes, "yes. in fact, i would ask those parents with older kids who behave like obnoxious spoiled brats to laeven. unfortunately, many that are yelling and screaming in restaurants are older and should already have some manners. somewhere along the line someone decided that ill mannered children should be tolerated by all of us. if people wish to raise their kids without respect for others, then they shouldn't bother to subject them to the public." ed writes, "yes, in fact, let him do that. of course, everyone who disagrees with his position has the right to not use the establishment and to stand outside and protest his actions. i hope he is out of business in three to six months." jennifer in arizona, "the problem is really the parents, not the kids. my husband and i are very aware of our children's behavior. "i don't want to read that. diana writes, "this is discrimination against people with small children. what's next? adult only subway cars? adult only buses? adult only movie theaters." i think those are all good ideas, actually. jeff writes, "given our druthers, my wife and i would only go to establishments that did not tolerate noisy, disruptive behavior from children. we shake our hadsed in dismay at those who are supposed to be acting like parents who allow their children to run amok. i wish it was closer to washington, d.c., or i would go there." jane says, "it's probably a moot question, but what family with little kids can afford to eat out?" >> a female marine is hoping justin timberlake will take his own advice. stay with us. jeanne moos coming up next. eve. one little smile, one little laugh. honey bunny. [ babbles ] [ laughs ] we would do anything for her. my name is kim bryant and my husband and i made a will on legalzoom. it was really easy to do. [ spits ] [ both laugh ] [ shapiro ] we created legal zoom to help you take care of the ones you love. go to legalzoom.com today and complete your will in minutes. at legalzoom.com we put the law on your side. fiber one. uh, forgot jack's cereal. [ jack ] what's for breakfast? um... try the number one! [ jack ] yeah, this is pretty good. [ male announcer ] half a day's worth of fiber. fiber one. discover aveeno positively radiant tinted moisturizers with scientifically proven soy complex and natural minerals. give you sheer coverage instantly, then go on to even skin tone in four weeks. aveeno tinted moisturizers. then go on to even skin tone in four weeks. host: could switching to geico reon car insurance? or more host: do people use smartphones to do dumb things? man 1: send, that is the weekend. app grapgic: yeah dawg! man 2: allow me to crack...the bubbly! man 1: don't mind if i doozy. man 3: is a gentleman with a brostache invited over to this party? man 1: only if he's ready to rock! ♪ sfx: guitar and trumpet jam vo: geico. 15 minutes could save you 15% or more on car insurance. personal pricing now on brakes. tell us what you want to pay. we do our best to make that work. deal! my money. my choice. my meineke. justin timberlake gets plenty of invitations but none quite like this. here's cnn's jeanne moos. >> reporter: this female marine is asking justin timberlake out on a date. >> i'm going to call you out. >> reporter: hoping he'll take his own advice. >> do it for your country. >> reporter: that's what timberlake told his co-star mila kunis after a marine stations in afghanistan tilted his shades and asked mila out via youtube. >> hey, mila, sergeant moore, but you can call me scott. i just want to take a moment out of my day to invite you to the marine corps ball on november 18th in greenville, north carolina, so take a second. think about it. get back to me. >> reporter: chances are last time when mila kunis was asked out on a semi blind date was when wolf blitzer invited her to the white house correspondents dinner. but the sergeant had had justin timberlake on his side during a fox news interview. >> this needs to go down. this needs to happen. do it for your country. >> reporter: i'll do it for you. you do it for your country, justin timberlake, because now this marine wants you. >> on the phone. justin, you want to call out my girl mila. i'm going to call you out and ask you to go to the marine corps ball with me on november 12th in washington, d.c. >> reporter: corporal kelsey desantis is the only marine at the martial arts center for excellent at quantico. she's an instructor with a black belt who sometimts does cage fights. kelsey is a fan of timberlake's. she got the idea to invite him to the marine corps ball after seeing him so enthusiastically tell mila kunis to go. her friends set up a facebook page called let's get justin

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