Return to Transcripts main page

The Situation Room

Romney Releases 2011 Tax Returns; Was Libya Killing Revenge Attack?; Obama: My Opponent Got Really Excited; Nothing But Blame; Paying For Obamacare; Map App Sours Apple iPhone

Aired September 21, 2012 - 16:00   ET

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

WOLF BLITZER, CNN ANCHOR: Happening now: The Romney campaign fills in some big blanks, releasing details of years of the candidate's income taxes.

The White House race becomes the battle of the gaffes, with President Obama firing the latest shot.

Plus, the deadly attack on an American Consulate, there are now growing indications it was revenge.

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

After days of unfavorable headlines, the Romney campaign changes the subject in a dramatic way, releasing details of the candidate's income taxes. Critics have long been hounding Romney for them suggesting he had something to hide.

Let's go to our national political correspondent, Jim Acosta, and he's traveling with the Romney campaign there in Las Vegas right now.

Fill us in on the blanks, Jim. What do we know?

JIM ACOSTA, CNN CORRESPONDENT: Well, Wolf, as you know, Mitt Romney has said throughout this campaign that he only plans to release two years of tax returns to the voters. And today he finished up that assignment.

He put out his 2011 tax return just within the last hour to go along with his 2010 tax return that was already released by the campaign.

Let's show you some of the numbers from that 2011 return that we just got in the last hour. According to this 2011 return, he paid nearly $2 million in taxes on $14 million in income for an effective tax rate of 14 percent. But listen to this, Wolf. He donated $4 million to charity, but only claimed $2.25 million of those contributions as a deduction.

They reduced that deduction, the campaign says, to conform to past statements. You will recall earlier this year Mitt Romney released his 2011 estimate. That 2011 estimate showed he had paid an effective tax rate of 13 percent. Potentially, had Mitt Romney claimed that $4 million, that full $4 million number, he potentially would have had a lower tax rate than that 13 percent. The other number that comes out of this, Wolf, the Romney campaign put out a summary from its tax preparer, from Romney's tax preparer, PricewaterhouseCoopers, showing that he had paid a 20 percent tax rate according to the campaign over the last 20 years.

That apparently is going at that charge from Harry Reid. You will recall he made that last month that Mitt Romney paid no income taxes over a 10-year period. And, Wolf, this document dump comes after a weeklong war of words over gaffes.

(BEGIN VIDEOTAPE)

ACOSTA (voice-over): At President Obama's campaign stop of the day in Virginia, there was only one number on his mind, 47 percent.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I don't see a lot of victims in this crowd today.

ACOSTA: For Democrats, it's been the low-hanging fruit of the week, the hidden video of Mitt Romney talking about the 47 percent of Americans he said were dependent on government.

But as the week has made it painfully clear to voters, two can play the gaffe game. Take President Obama at a candidate's forum in Miami.

OBAMA: I have learned some lessons over the last four years. And the most important lesson I have learned is that you can't change Washington from the inside. You can only change it from the outside.

ACOSTA: Romney aides say they knew immediately they had a new line of attack.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: The president today threw in the white flag of surrender again. He said he can't change Washington from the inside. He can only change it from outside.

QUESTION: What about your gaffes?

ACOSTA: The debate over gaffes has replaced what both campaigns have claimed they have always wanted, an exchange of ideas over substance.

LARRY SABATO, DIRECTOR, UNIVERSITY OF VIRGINIA CENTER FOR POLITICS: I would have to say, either this year, we have set a new record for gaffes, or we're looking harder. It's one or the other. I hope this doesn't sound too cynical, but I really believe that they don't want to discuss many of the tough issues.

ACOSTA: When the Obama campaign complained the president's can't change Washington line was taken out of context, it retaliated with a Web video that took Romney out of context.

That didn't stop the RNC from firing off its own Web video. It was once thought Paul Ryan's addition to the ticket would elevate the discussion. Ryan's ideas on Medicare can ignite passions, as they did at his speech before the AARP. REP. PAUL RYAN (R-WI), VICE PRESIDENTIAL CANDIDATE: The first step to a stronger Medicare is to repeal Obamacare, because it represents the worst of both worlds.

(BOOING)

RYAN: I had a feeling there would be mixed reaction, so let me get into it.

ACOSTA: But with pundits complaining of all of the campaign gaffes, Ann Romney told an Iowa station she's had enough of the second- guessing.

ANN ROMNEY, WIFE OF MITT ROMNEY: Stop it. This is hard. You want to try it? Get in the ring.

ACOSTA: And there weren't just tax records from that release from the Romney campaign earlier today, Wolf.

The campaign also put out letters from the physicians for both Mitt Romney and Paul Ryan on their health. And those letters both say that Mitt Romney and Paul Ryan are in excellent health and that they can face the rigors of the upcoming campaign, Wolf.

BLITZER: Not surprised to hear that.

Jim Acosta, thanks very much.

Let's dig a little bit deeper into Mitt Romney's newly released income tax information.

CNN business correspondent Christine Romans has been crunching the numbers for us.

Christine, it looks like his campaign as we just heard from Jim significantly overestimated Mitt Romney's 2011 income. What's going on here?

CHRISTINE ROMANS, CNN CORRESPONDENT: Yes.

Well, one of the reasons is in 2010 he made about $21 million. So, for his 2011 estimated return, we saw earlier this year, the campaign estimated it was at $21 million. Reason why it can be so off quite frankly is because Mitt Romney makes his money from investments, almost entirely from investments, $13.9 million in income last year because of investments.

So even the campaign in a statement to us saying that because investments can depreciate or gain, at the beginning of the year was difficult to properly assess exactly how much money he would make. So $21 million is what he made in 2010, that's what they estimated he would make this year. It was really $13.9 million.

This is how big it all is, some 400 pages, Wolf. We're going through it and I'm finding a lot of the things we'd suspected that we had also seen in 2010, including investments or accounts that go through the Cayman Islands. A lot of different kinds of investment accounts overall. His auditor saying they're all perfectly legal, that he has paid all of the taxes owed and his tax rate 14.1 percent.

Why isn't it, Wolf, the 35 percent, which is the marginal tax rate of someone who is as rich as Mitt Romney? That's because Mitt Romney as I said makes almost all of his money on investments. And investments are taxed at 15 percent. They are not taxed at 35 percent like work is in this country, like labor is or the work that a working person would do that you would -- you know, an hourly worker at a company for example, Wolf.

BLITZER: That explains the 15 percent or so tax rate as opposed to the 35 percent which is the highest rate right now. If President Obama got his way, it would go back up to 39.6 percent, which is where it was during the Clinton administration.

He also released as we heard a summary of 20 years of taxes from 1990 to 2009. Not all the tax returns, only two actual tax returns, 2010 and 2011. A summary of all the other years.

ROMANS: That's right.

BLITZER: You have been going through that summary. What's jumping out at you?

ROMANS: It jumps out at me that the average tax -- effective federal tax rate is 20 percent. That's what PricewaterhouseCoopers says, 20 percent, that he never paid less than a 13.6 percent effective federal tax rate, which is what the campaign had been telling us all along.

But he's not releasing, Wolf, those actual returns, 20 years of those returns, just a notarized letter from his auditor saying that he paid all the taxes he was owed. He did pay taxes. And the average rate was 20 percent.

I put another number on that screen, the 5.7 percent. You hear a lot about how Mitt Romney doesn't pay as much as the middle class. The effective tax rate for middle-income families right in the middle is 5.7 percent, because middle-income families have deductions too,like for mortgage interest, for their kids, for all kinds of different things as well.

But I don't mean to suggest that Mitt Romney's tax return looks middle income at all. Mitt Romney is among the top one-tenth of 1 percent of household earners in this country, no question. And he's taxed at a rate that is far below the 35 percent rate that is the advertised rate for someone of his wealth, Wolf.

BLITZER: Christine Romans, thanks very much.

Let's talk about the political implications of the news today.

Our chief political analyst, Gloria Borger, is joining us.

First of all, Gloria, what do you make of the timing of the release of all this information? GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Let's see, what time is it, Wolf? On a Friday afternoon, oh, sort of around 4:00, not a bad time to release something that you really want to minimize the conversation on.

So Friday afternoons are a tried and true time to do that. But I would also have to say if you look at the rest of the campaign, Wolf, there wasn't a lot of windows available to them. Mitt Romney had promised to release these 2011 returns.

And you have his Ohio bus tour coming up. Then, of course, we have the first presidential debate on October 3. Didn't want to release it too close to that. Didn't want it to become topic A. of the conversation at his very important first debate.

And then you continue along with the other presidential and vice presidential debates. If you're looking at a calendar -- and I know the Romney campaign is saying we released it just because we just got it, but if you are looking at the calendar, you would have to say this is probably what I would call the least worst time to release it.

BLITZER: You know, back in July, the Obama campaign had a commercial, a political attack ad on Romney. I'm going to play a little clip of it. Watch this.

(BEGIN VIDEO CLIP)

NARRATOR: Tax havens, offshore accounts, carried interest. Mitt Romney has used every trick in the book. Romney admits that over the last two years, he's paid less than 15 percent in taxes on $43 million in income. Makes you wonder if some years he paid any taxes at all.

(END VIDEO CLIP)

BLITZER: Well, the summary that was released today show he did pay taxes in every one of those years. Remember, Senate Majority Leader Harry Reid flatly said that he had inside information from Bain Capital that Mitt Romney for 10 years didn't pay any taxes at all.

If you believe the summary that came out today, notarized by this accounting firm, he did pay taxes every single year.

BORGER: Right.

And we're waiting to hear from Harry Reid. We know he will have something to say on this. Presumably, what they're trying to do is blunt the argument. But, of course, Wolf, the argument is going to continue largely because of what you say, that it is a summary of those tax returns over those 20 years, that it is not a detailed accounting of those tax returns.

And they're still going to talk about Mitt Romney's relationship to Bain Capital, Mitt Romney's offshore investments, how he sheltered his income. So I think you're going to see this debate continue, although PricewaterhouseCoopers did notarize the statement as Christine pointed out that said that in fact Romney had paid taxes every year over the last 20 years with an effective rate of 20 percent.

What's interesting to me, Wolf, is that they went back 20 years, because you have to presume that when Mitt Romney was earning income 20 years ago, he was probably paying a higher rate of tax than he's paying now, when it's on investment, unearned income. So they went back 20 years and said, OK, on the average over the 20 years, it's about a 20 percent rate.

BLITZER: Yes.

As Christine points out, 15 percent for the investment income, as opposed to 35 percent or 39 percent. In those days, it was about 30 -- I don't remember what it was, but it was much higher than it was right now in 1989, 1990 and all of that.

(CROSSTALK)

BLITZER: So we will continue to watch this story.

But I think you're right. The Democrats will find plenty to criticize here. This argument is not going to go away.

BORGER: You bet.

BLITZER: Thank you. Much more on this story, by the way, coming up later, also other news we're following, including the attack that stunned the United States, shocked the diplomatic world. Was the killing of the United States ambassador in Libya, was it revenge for the death of a Libyan terrorist? We're going to live to Benghazi.

(COMMERCIAL BREAK)

BLITZER: A massive protest against militias, thousands of people march in the streets of Benghazi, Libya, voicing their anger at the armed factions operating so freely and violently in the city. One militia is linked to the attack on the United States consulate that killed the U.S. ambassador, Chris Stevens, last week and three other Americans.

Let's dig a little deeper right now with our senior international correspondent Arwa Damon. She is in Benghazi. Also joining us, David Ignatius, the columnist for "The Washington Post."

And, David, let me start with you. You have some information, fascinating and intriguing information, that the attack on the consulate may have been linked to al Qaeda operatives in Libya as a revenge plot. What exactly are you hearing?

DAVID IGNATIUS, WASHINGTON POST: Wolf, I heard from a source who has good sources on the ground in the Libyan underground that the talk there was that the attack on the U.S. consulate that killed our Ambassador Stevens on September 11th last week was conceived as by the people who did it, an act of revenge to retaliate for the drone attack that killed Abu Yahya al-Libi, who was a key al Qaeda operative and planner who was killed in a drone attack last June 4. I ran that yesterday by a U.S. intelligence official who said that although some of the elements that I'd heard did not check out, that they had heard the same thing. They'd heard this talk of revenge for the al-Libi killing as a motive for the attack on the consulate in Benghazi.

So the U.S. government has been hearing the same thing that I picked up from my source.

BLITZER: That would seem to suggest, David -- and I'm going to bring Arwa into this conversation in a second -- that it was all pre- planned, a pretty carefully orchestrated hit on the ambassador and the three others.

IGNATIUS: Let me just caution on that, wolf. I asked specifically because the information I'd been given was that a brother of al-Libi, who is now in Libya, who's been associated with the same Islamic fighting group, which is an al Qaeda affiliate, had been responsible for planning it. The U.S. intelligence official said, no, we don't have information that confirms that. We are hearing this idea that it was revenge.

But I have to be clear with your viewers, in terms of the specific individual and the preplanned aspect, I don't have confirmation.

BLITZER: Arwa, you've been digging. You've spoken to a lot of people on the scene in Benghazi. You were in Tripoli, met with the prime minister of Libya. Is that consistent, David's information, with what you're hearing?

ARWA DAMON, SENIOR INTERNATIONAL CORRESPONDENT: Well, Libyan officials are not going so far as to say that this was a revenge attack. In fact, the prime minister was saying that the individuals who they do believe carried out this assault were not in fact linked to al Qaeda. They were however extremist Islamist militants. More of a loose coalition of individuals with different affiliations with various and many extremist groups that do operate here but not necessarily that it was an attack carried out by one entity in and of itself.

That being said the prime minister does believe that this was a preplanned attack. If you look at the coordination that went into the initial assault on the consulate from eyewitnesses on the ground, we're hearing that the attack initially came from three different directions. And then of course a few hours later, when those embassy staffers -- consulate staffers had evacuated to what was supposed to be a safe location, there was then, according to Libyan military officials, an even more sophisticated shorter attack, but one that was using even heavier artillery that was used the first time around.

All of these, Libyan government is saying, are indications it was a preplanned attack. Whether or not it was specifically timed to be carried out on September 11th, that at this point is unclear. This very much could have been a plan that was put together and then put on the shelf and then the target of opportunity of course presenting itself as those demonstrations broke out in Egypt initially providing potentially cover for those to then carry out the attack against the American consulate in Benghazi, Wolf.

BLITZER: David, what does it say to you that apparently no organization has put out a statement claiming credit or responsibility for killing the American ambassador and the three other Americans? Under normal circumstances if al Qaeda did it, wouldn't we be seeing a videotape, wouldn't we be hearing someone boast about this?

IGNATIUS: That would have been the M.O. of the al Qaeda of Osama bin Laden.

Another important thing that my source told me -- again, there was some confirmation of this from the U.S. intelligence official I checked it with, is that the new leader of al Qaeda, Ayman Zawahiri, has called since 2007 for what he speaks of as a global intifada -- with which al Qaeda would interact. In other words, al Qaeda would try to use the rage that's on the streets in the Muslim world, which we see so visibly, as a way to assist its attacks. The terrorist spectaculars, carefully planned, devastating effect, public claim of credit afterwards that were bin Laden's specialty, that's not the direction that Zawahiri said they should move.

And I hear from these sources in Libya that in Libya and your brave correspondent's the one who'd know best, they're speaking about this as the al Qaeda intifada idea. This again, the phrase of Zawahiri, a global intifada with which al Qaeda would be linked, but wouldn't be directing in the normal sense.

BLITZER: David, I know you got to go. Thanks very much.

Arwa, don't go yet.

Tell us what happened today. The demonstrations, I guess there was some violence. Update our viewers on what happened today in Benghazi, also in Tripoli.

DAMON: There were two demonstrations in Benghazi today, Wolf. Both of whom and the confrontation we saw between the two very much going to one of the core issues that the government here has to deal with. The significantly larger demonstration was called Save Benghazi carried out by individuals who do believe in democracy, who were demanding an end to the armed militias, wanting to see a formation of a truly nationalistic army and police force. Also demanding an end to the impunity with which these militias can operate, wanting the government to pass legislation that would in fact criminalize them. And going even further to say they were demonstrating for freedom of speech.

I met one woman at this demonstration who had had two of her sons killed during the revolution. And she said they paid such a high price in blood that Libya absolutely had to change.

Now, these demonstrators, these pro-democracy demonstrators moved towards the square in Benghazi that had already been occupied by Ansar al-Sharia and its supporters. They said that they were demonstrating against the depiction, the film that came out with the horribly degrading images of Prophet Muhammad and then, of course, the French cartoons, and also saying that they were proclaiming their innocence when it came to the attack against the U.S. consulate.

The Libyan government, if you'll remember, has in fact detained individuals that say (INAUDIBLE). But it does believe we're responsible for that attack, that the group as itself is not. These two groups did end up converging coming head-to-head. There was some scuffle. There was a lot of shouting.

But it really went to underscore this issue that the government here has to deal with. The vast majority of the population is demanding change. It is demanding an end to these armed entities. And it has to figure out a way to deal with this extremist albeit minority, but it does need to somehow reconcile these two sides -- Wolf.

BLITZER: Arwa Damon reporting for us from Benghazi. Arwa, thanks very much.

Much more by the way on what's going on in Libya. Senator John McCain, the ranking member of the senate armed services committee is standing by to join us live in the next hour.

We've also received Mitt Romney and Paul Ryan's medical records. Today, our own Dr. Sanjay Gupta has been going over there. Sanjay is standing by to join us live.

(COMMERCIAL BREAK)

BLITZER: A dramatic hostage standoff unfolding in Pittsburgh today. Lisa Sylvester's monitoring that and some of the other top stories in THE SITUATION ROOM right now.

Lisa, what happened?

LISA SYLVESTER, CNN CORRESPONDENT: Hi there, Wolf.

Well, Pittsburgh police tell CNN that a suspected gunman who was holding one person hostage at a downtown high-rise has now surrendered and is in custody. Police say no one was harmed in what they are calling a happy resolution. The suspect entered the building this morning and allegedly claimed to have a bomb. Police have identified him as 22-year-old Klein Michael Thaxton. He says he is a former Army private and has a criminal record.

Vice President Joe Biden is urging Iraq to stop weapons from going to Syria through Iraqi air space. This as Syria's president insists the door to dialogue is open with rebels battling his military. Bashar al-Assad blames Syria's 18-month-long civil war on armed terrorists but says he would offer amnesty to anyone who puts down their weapons. Opposition activists say at least 100 people have been killed in fighting today.

And fishermen in Hawaii, they have spotted a large dock drifting toward Oahu, and it could be debris from last year's devastating Japan's tsunami. It's about 30 feet by 50 feet. And that could be dangerous for boats in the area, especially those at night. The Coast Guard is now putting out a warning. And take a look at what happened during a champion's league soccer match in Iran this week. A player, he picked up an object lying on the ground and tossed it aside. You see it right there. It then exploded. It turns out it was a mini-grenade or live explosive.

The players and game officials ran for cover. Luckily no one was hurt.

It is believed, Wolf, that a fan actually threw the grenade on to the playing area. And that is pretty spectacular video.

That player obviously who picked that up very lucky that he did not lose a hand there, Wolf.

BLITZER: Yes. Very lucky indeed. Wow. That's amazing.

Thanks, Lisa.

Mitt Romney says President Obama's waving the white flag of surrender. It's but the latest flashpoint in the presidential campaign. Donna Brazile and David Frum, they are standing by live to talk about this. Our strategy session is next.

(COMMERCIAL BREAK)

BLITZER: Mitt Romney's been under a lot of pressure to release his tax returns. Today, he released his tax return for 2011. Earlier, he released his tax return for 2010. But those two years alone, is that enough? Let's discuss it.

Our "Strategy Session," joining CNN contributor, Democratic strategist Donna Brazile and CNN contributor, David Frum, he is a contributing editor at "The Daily Beast" and "Newsweek."

Is it enough, David? He released a summary of those 20 years.

DAVID FRUM, CNN CONTRIBUTOR: Enough for what? I think there's certainly enough for people to make an assessment based on what they know. They have a pretty good idea of Romney's tax situation. They can decide for themselves how they feel about it.

It's not enough if you're looking to do a maximum troll hoping to find some discrediting information. It's impressive he gives as much to charity as he does. And it's also negatively impressive how much of a story that the Romney campaign has allowed this to become. It could have been headed off earlier.

BLITZER: There aren't a lot of politicians, Donna, who give 15 percent if not more to charity alone. He makes a lot of money through his investments, but that's still a lot -- rich people don't even do that. David's got a point about the charitable contributions.

DONNA BRAZILE, CNN POLITICAL CONTRIBUTOR: Yes, Wolf. Perhaps this year he gave more than ever before because, of course, he's releasing his complete set of returns, is it enough? Who knows, Wolf? Because what we've seen thus far is that Mitt Romney has been reluctant to really disclose all of the information. Is he still hiding or sheltering his money overseas? How much foreign taxes? I'm not a tax accountant. I don't know.

I think this story will perhaps live on for another couple days. You know the old saying, it's Friday, so someone is dumping bad news somewhere and Mitt Romney today dumped his taxes so we can get off the 47 percent comment he made earlier in the week with that video.

BLITZER: I want to get back to that comment. I want to play some sound bites for David in a second. But, Donna, it looks basically if you believe this notarized statement of the 20 years of tax returns, he did pay taxes in all those years.

So it would seem if you believe this Harry Reid, the Senate majority leader, was flat wrong when he said for 10 years that Mitt Romney had inside information supposedly from someone at Bain Capital. He didn't pay any federal income taxes. It looks like he was wrong on that, right?

BRAZILE: Well, I haven't seen the documentation. Was that an average of the last 20 years or was that the actual returns and income and so forth? Again, I'm not a tax accountant.

In fact, I don't even want to call my tax accountant. You know that's an expensive proposition as well. Truth of the matter is he has put forward the 2011 returns and I still believe it will raise a significant number of questions.

BLITZER: I'll be anxious to hear the reaction from Harry Reid. I want to move on. Do you want to say anything else, David?

FRUM: Well, I thank you for making the point about Harry Reid. I think that was really a reckless thing. Harry Reid is not just some back venture. He's the Senate majority leader.

It looks like he went for probably had good reason to believe something not true simply in order to score a point go prove me wrong. That's not a good way to do business especially for one of the leading constitutional officers in the U.S. government.

BLITZER: Well, question may be why would he go out with it if he thought it was wrong simply for political reasons? Do you think Harry Reid, David, would do something that reckless?

BRAZILE: No, he wouldn't.

FRUM: Yes, I do. Harry Reid is he is not one of the more dignified Senate majority leaders. He's very much a hard puncher. He's very much a partisan. I think he was willing to trade the hit to his reputation that eventuated in order to run the new cycle against the Mitt Romney.

BLITZER: Well, I'm willing to give Harry Reid the benefit of the doubt. Somebody I suspect told him that maybe for 10 years he didn't pay taxes and he went with it. But I don't think he went with it knowing it was false. That would be incredibly stupid.

BRAZILE: He's not one that shoots from the hip. We have a lot of politicians who do that.

BLITZER: All right --

BRAZILE: I still believe that Harry Reid had a point in raising that Mitt Romney should release the full -- all of his --

BLITZER: That's different. That's different than saying I have inside information he didn't pay taxes. T hat is a stark, stark charge, which is completely repudiated by the summary that was released today.

Let's move on. I'm going to play some clips. Actually, you know what -- I don't know if we have time for another round of this conversation. Do we have time for another round of this conversation?

All right, let me play these clips right now. Back and forth between Mitt Romney, the president starting with this clip, this is Obama yesterday at Univision. Listen to this.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: I think that I've learned some lessons over the last four years? And the most important lesson I've learned is that you can't change Washington from the inside. You can only change it from the outside. That's how I got elected.

MITT ROMNEY (R), PRESIDENTIAL NOMINEE: The president today threw in the white flag of surrender again. He said he can't change Washington from inside. He can only change it from outside. Well, we're going to give him that chance in November. He's going outside. I can change Washington. I will change Washington. We'll get the job done from the inside. Republicans and Democrats will come together.

PRESIDENT OBAMA: For some reason my opponent got really excited. He re-wrote his speech real quick. He stood up at a rally, proudly declared I'll get the job done from the inside. What kind of inside job is he talking about?

(END VIDEO CLIP)

BLITZER: All right, let me start with David. What do you think about this exchange? It's sort of frustrating. You want them to be arguing over real substance rather than this silly stuff.

FRUM: That struck me as a speech writer, friendly fire -- unfriendly fire exchange campaign rhetoric turning words in a clever way. You know, one of the things that I was struck by today that is serious.

My "Daily Beast" colleague reported this morning the continuing unravelling of the administration's story about what happened in Benghazi. And more and more evidence based on report from people who were there, people inside the National Security Services. The story was a spontaneous event that could not have been known in advance with.

Nothing could have been done to protect the ambassador. That story's continuing to unravel. I thought that was the top news story of the day. And I suppose that this kind of argument is more convenient for the president.

BLITZER: Donna.

BRAZILE: I agree. That's a very important story. We should get the information from the administration, but we're in this phase where we're doing a gaffe a day. I guess this is gaffe week 2.0.

BLITZER: As it is. Well-said, Donna. Thanks very, very much, guys. Appreciate it.

Congress adjourns, but will its unfinished business spin the U.S. right back into recession? We'll be right back.

(COMMERCIAL BREAK)

BLITZER: If placing blame were an achievement, you could say Congress accomplished quite a bit for adjourning. But the fact is gridlock still rules on Capitol Hill even when it comes to the looming deadline.

That will force drastic spending cuts across the board, possibly sending the U.S. back into recession. CNN's senior congressional correspondent Dana Bash is joining us from Capitol Hill. Dana, what happened?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, if you look around me it looks pretty empty, I think. That's because it is. Check this out. This is the House. They're gone. They left several hours ago to go home and campaign.

And over here the Senate, they're not far behind. In fact, this is the earliest, Wolf, in more than half a century that Congress is leaving town to go home and campaign.

And it's probably pretty fitting for one of the most unproductive sessions in recent history.

(BEGIN VIDEOTAPE)

BASH (voice-over): The capitol parking lot full of cars ready to whisk House members out of town. But not before both sides took final turns in the blame game that has voters fed up.

REPRESENTATIVE STENY HOYER (D), MINORITY LEADER: This is simply irresponsible and Republicans ought to come back and finish their work not cut and run and walk away from the American people. Shame on them.

REPRESENTATIVE JOHN BOEHNER (R), HOUSE SPEAKER: President Obama won't work with us to find common ground or urge Senate Democrats to take action. Why? It's because Democrats have failed to lead. BASH: The list of unfinished business is seemingly endless. The farm bill, a five-year measure governing everything from farming to food stamps and runs out at the end of this month, it includes disaster relief for drought-stricken farmers.

Many issues both parties want to address are trapped in partisan gridlock, cyber security, postal reform, even extending the violence against women act, which expires at the end of the year.

Never mind the really tough stuff, namely the so-called fiscal cliff. When the Bush era tax cuts expire and some $100 billion in spending cuts kick in on December 31st.

Anyone who may wonder why Congress has a remarkably low approval rating should watch and listen. Watch the bipartisan exodus to go campaign and listen as each party scours the other.

SENATOR MITCH MCCONNELL (R), MINORITY LEADER: Never before, never, have a president and a majority party in the Senate done so little to address challenges as great as the ones our nation faces right now.

SENATOR HARRY REID (D), MAJORITY LEADER: It's a wonder we've gotten anything done at all considering the lack of cooperation Democrats have gotten from Republican colleagues.

BOEHNER: There are nearly 40 of our jobs bills sitting over in the United States Senate, all part of our plan for American job creators.

UNIDENTIFIED MALE: Congressional Republicans want to run away, but, you know what? You can run, but you cannot hide from your record.

BOEHNER: They haven't passed a budget in more than three years.

REID: Time and time again Republican colleagues have stalled or blocked perfectly good piece of legislation to score points with the Tea Party.

MCCONNELL: They haven't passed a single appropriation bill. They haven't passed a defense authorization bill for the first time in a half a century. These things are usually about as standard as turning the lights on. They haven't done any of them. It's a disgrace.

(END VIDEOTAPE)

BASH: Now, Congress is doing one very important thing before leaving. That is funding the government for the next six months to make sure it doesn't shut down while they're gone.

But, Wolf, that's not exactly worthy of accolades because the only reason they have to pass that stopgap measure is because they have sent none, none of the 12 spending bills they're supposed to the president's desk -- Wolf.

BLITZER: So the real action will be after November 6th, after the election, the lame duck session between then and January. They got a lot of work to do then. BASH: A whole lot.

BLITZER: A lot will depend on the makeup of the new House, the new Senate and who's going to be the next president.

BASH: It's all going to be about political leverage. Whomever has it is going to do much better. And everybody agrees on that, Republicans and Democrats.

BLITZER: Less traffic in Washington, D.C. with all those members out of town. All right, thanks very much for that.

The real world impact for proposed changes to Medicaid, one family tells us it was their only option and now they are fearing the future.

(COMMERCIAL BREAK)

BLITZER: Millions more Americans could end up paying a big tax penalty under the new Obama health care law when they can least afford it. CNN's Lisa Sylvester's back. She's got more information. What's going on?

LISA SYLVESTER, CNN CORRESPONDENT: Wolf, you know, it was originally estimated in 2010 that four million people could be penalized for not having health insurance. But now the tax penalty could actually hit six million people.

And one reason is that some states may choose not to expand Medicaid. Another reason is the economy, unemployment remains high. And some individuals particularly those with pre-existing conditions might have a hard time getting health insurance.

(BEGIN VIDEOTAPE)

SYLVESTER (voice-over): The 60-year-old Sue Anglin has seen the ups and downs of life. She was laid off last year. Now she's out of a job and out of health insurance.

SUE ANGLIN, HEALING HANDS PATIENT: Since I have been this age that I am now and faced with the prospects of buying my own insurance through the private sector that it's become so difficult because it is extremely expensive. And I'm just saying if this law goes into effect the way I understand it now, it's going to be a hardship for me.

SYLVESTER: Anglin is referring to the new federal health care law. She and virtually all other U.S. residents will have to have health insurance by 2014.

If not, they'll face a financial penalty, collected by the IRS. New numbers from the nonpartisan Congressional Budget Office finds that 6 million Americans will likely have to pay that penalty.

PETER KONGSTVEDT, GEORGE MASON UNIVERSITY: People who are affected by it are the so-called working poor. They're working, they're making some income. They're making enough so they wouldn't be eligible for Medicaid, but it's real hand-to-mouth. It's day-to-day living on their part.

SYLVESTER: Starting off in 2014 the penalty will be capped at $285 for a family, or 1 percent of income. But by 2016 it reaches $2,085 per family or 2.5 percent of income.

At the Healing Hands Community Health Center in Oklahoma City, Susan is the program coordinator. She insured, but to insure her family, it would cost $700 a month. Money she doesn't have.

UNIDENTIFIED FEMALE: If you don't have any income, how are you going to pay the federal tax? I mean, to me it's a no-brainer. If there's no money, there's no money.

SYLVESTER: The Department of Health and Human Services is quick to point out that 98 percent of Americans will not be impacted by the penalty. And through state exchanges, health insurance will become more affordable.

The Obama administration in a statement saying, quote, "The health care law creates a new marketplace where consumers can purchase private health insurance and get tax credits to make insurance more affordable.

Thanks to the health care law, more than 20 million middle class people and families will get a significant tax cut averaging about $4,000."

(END VIDEOTAPE)

SYLVESTER: Now, it is hard to know how this will all play out. The working poor could be eligible for a waiver or those who can't afford health insurance might just get care the way many do now, at the emergency room -- Wolf.

BLITZER: All right, thanks very much, Lisa, for that report. Complaints about the map app on the new iPhone 5. We have details next.

(COMMERCIAL BREAK)

BLITZER: The new iPhone 5 is out today, but there are already some grumblings about changes to the map app. Here's CNN's Brian Todd.

TODD: Wolf, here's the product that everyone is talking about, the new Apple iPhone 5. It's a huge hit its first day on the market. Millions of them sold. Users are saying that it is lighter, faster, has a bigger screen than the old version.

Those are the positive reviews. It does have one big negative review though many users are complaining that the map application is faulty. That it can't find some locations properly. Doesn't take you to some locations at all that you know exist, can't find them at all on the map.

So we're going to test it out. The one reason for this is this is a new application that Apple is launching on a new operating system. For years Apple used Google products, it's now moving away from Google and competing with Google in the map application realm.

The new Apple application for maps can also be applied to iPads. So we're going to demonstrate using an iPad because the screen is bigger and you can see it a bit better. We're demonstrating it trying to find CNN in Washington on the map as well as a local hotel.

We typed in Howard Johnson's on the new Apple map app knowing this hotel in Northeast Washington has been here for several years. When it came up, it did not show this location, but others in this area that are many miles away.

Compare that to Google's map application and this address comes up on the first try. Let's try CNN Washington, D.C. and see where it takes us. OK, heading there now. Here we are now as close as we can get to the spot it told us to go, but hold on a second.

That is the South Lawn of the White House. The Apple map failed to put us in the right spot the first few times we tried it. In response to the complaints, an Apple spokeswoman told us they launched the new map service knowing it was an ambitious project. She said they are commited to continuously improving it, and she said, the more people use that application, the better it will get.

Wolf?