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New Debt Plans; Imminent Threat of Default; Debt Gridlock; Terror in Norway

Aired July 25, 2011 - 19:00   ET


JESSICA YELLIN, GUEST HOST: Thanks Wolf and thank you for joining us. John King is off tonight. I'm Jessica Yellin.

Tonight there is a growing sense the United States is facing what Democratic officials say is an imminent threat of default. In just a couple of hours President Obama is expected to make that point when he speaks to the nation to talk about what happens if there is no compromise on raising the debt ceiling, and the stakes all of us face if the U.S. actually defaults a week from tomorrow.

He'll also say this problem is easily fixable, and talk about the different approaches Congress can take. But up on Capitol Hill tonight, lawmakers already are committed to trying two brand new and very different approaches, one from Democrats in the Senate, the other from House Republicans. But there's a big problem. Neither of those plans may be able to get through Congress and the clock is ticking.

CNN congressional correspondent Kate Bolduan joins us now from Capitol Hill. Kate, you know it. There are two different plans, so let's break it down. Let's start in the House where Speaker John Boehner has laid out his version of the Republican solution. Spell it out for us.

KATE BOLDUAN, CNN CONGRESSIONAL CORRESPONDENT: A lot of details to it, Jessica, but what it really comes down to is the length of the increase, if you will. House Speaker John Boehner, he is calling for two votes in order to raise the debt ceiling. First, a vote that would increase the -- that would come with -- 1.2 trillion in spending cuts. That would get the country through early next year and then another vote to raise the debt ceiling would be required that would get the country to 2013.

But only if, and this is the important part, if Congress would approve the spending cuts attached to that, or the deficit reduction measures attached to that that would come from a newly created committee, and that of course is the big hang-up with Democrats, as you well know. They are very much opposed to having to vote for a second time to raise the debt ceiling. They say that it risks us returning to exactly where we are today, at a deadlock.

YELLIN: And we do not as I mentioned have any clarity that that version can pass, even if it passes the House, it could pass the Senate, so over in the Senate there is another version. Harry Reid, a Democrat, has laid out the Democratic version. Republicans already say some of them are rejecting that. What's that version?

BOLDUAN: Yes, that version is only one vote and it's clearly the reason why they don't want to see two votes so Harry Reid's plan comes with but one vote, $2.7 trillion in deficit reduction. It would raise the debt ceiling and get us to 2013. It would not -- according to this plan, would not cut any benefits to entitlement programs, Medicare, Medicaid, Social Security, that wouldn't be touched -- also no new revenues. That's Harry Reid trying to say, Republicans you should be able to say yes to this but they are still very far apart this evening.

YELLIN: All right, Kate Bolduan keeping us abreast of developments from Capitol Hill. Thank you so much.

Now, at one point today Senate Majority Leader Harry Reid called Speaker John Boehner's Republican plan a non-starter. A little bit later Speaker Boehner dismissed Reid's plan as full of gimmicks. So who's looking for a third way, is anyone? Joining us now CNN senior political analyst David Gergen, who has advised four U.S. presidents, our chief political analyst Gloria Borger and from Capitol Hill Carl Hulse, the chief congressional correspondent from "The New York Times" -- a special treat to have you on with us, Carl, thank you.

Let me begin with you, Gloria, here. Two different plans, not enough time for either -- or not enough votes for either, I should say. Where does it go from here?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well, that's why the president is coming out tonight. The president comes out tonight and you know this -- he wants to apply pressure. He wants to say the clock is ticking. He wants to say this is doable. And I think where it goes from here is, believe it or not, some kind of compromise in which you take the debt ceiling and you separate it from the second round of budget cuts that John Boehner wants and -- because the White House is very insistent. I don't know that they can get this through, but the White House is very insistent. As one adviser said to me, we need to remove the debt ceiling from the political fire ants that keep coming up, which is the Bush tax cuts, et cetera, et cetera.

YELLIN: OK, you're shaking your head no, David. Can this be resolved in the next week?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: I think it's very doubtful that it can be resolved before the debt ceiling. To go back to your original point, we have two competing plans, now the Boehner plan and the Reid plan. And it appears that neither has the votes to get through both chambers and in fact both -- each could fail in its own chamber. The Reid plan could fail in the Senate. What that means is toward the end of the week we'll have two plans that can't pass and we don't have a backup. And what that leaves them is a weekend to figure out what the backup plan --

UNIDENTIFIED FEMALE: I thought that was last weekend --

GERGEN: And then get it voted -- well -- and then get it voted before Monday, Tuesday. I think there's a very good chance the president is going to permit an extension of the debt ceiling, short- term, which he really didn't want to do, but for as much two or three weeks --

YELLIN: Very brief, two or three weeks. Carl, let's bring you in to arbitrate because you actually know what's going on up there in a way. You live and breathe it. What do you see happening? Can either of these plans be merged into some compromised solution?

CARL HULSE, CHIEF CONGRESSIONAL CORRESPONDENT, NYT: I think they're going to have to -- they're going to have to find some way. I mean everyone is on pins and needles. There's no sure outcome. We're hearing from a lot of conservatives tonight in the House who might not support Speaker Boehner's plan. I think what you'll see is these -- both of these plans hit the floor for some votes, see where the votes are.

In some ways the first one to pass and get enough votes, which would be 60 votes in the Senate, you know might have the advantage. But I think at the same time that these votes are going on and all this arguing is going on, there's still going to be a lot of back channel talk about how can we merge them in some way to get this through. No one wants a default -- certainly in the leadership.

YELLIN: So first of all, let me just ask you some basic questions. Do you believe that John Boehner's Republican bill will necessarily even pass the House?

HULSE: No, that's what I was saying and --

YELLIN: And Reid's bill --

HULSE: We're hearing from people tonight who are Republicans, because I don't think many Democrats are going to vote for that, he's going to need to get 218 votes out of Republicans. Yesterday he was calling you know on the conference call for sacrifice. He wants some people who don't want to vote for any debt increase to support this. Some of them are already saying they won't.

YELLIN: And are you --

HULSE: Whether Harry Reid's plan can get 60, I don't know.

YELLIN: You don't know, OK. And so the question then remains, you know the person who's been sort of silent in all of this is Senate Minority Leader Mitch McConnell.

BORGER: Yes. And he knows the rules. He knows --

HULSE: He's always the person to watch actually --


HULSE: -- because he can make things happen.

BORGER: Absolutely because he knows the rules better than anybody. He came up with the first plan. And you know, I think they're all kind of waiting for him. I don't know, Carl, what you think, but I think they're waiting for him to come up with a plan B or C.


GERGEN: Go ahead, please, Carl.

HULSE: I just think that they're -- I think that at this point they probably have to go through some of these initial votes. And that's what I was referring to earlier, that the back channel communication that continues and, you know, where Senator McConnell comes down I think will be important because whether he helps Harry Reid or whether he helps John Boehner to ultimately get a plan through. He has been very determined to avoid a default.

YELLIN: We all want -- go ahead -- because everybody in this city is talking about avoiding a default because the stakes could not be higher, not just politically but for the American people and there's a lot of talk that America will face a downgrade next week.

GERGEN: Yes, I think, Jessica, that there's a sense -- look, I think they're going to deal with the default one way or the other. It may take an extension of time. We may have a brief default, but it will be done. But there's a growing sense in the city now among people who really understand this that we do face and we will go through a downgrade in our credit rating. The first time it's ever happened. We've been a AAA country since 1917. So this is already, I think, what's baked in is already not only embarrassing to the country internationally but is actually going to damage the economy.

BORGER: And I think it's interesting because I think what you're seeing on Capitol Hill, particularly on the House side, is essentially a leadership that is auditioning to lead its troops, because the movement that we saw on Capitol Hill among House Republicans was really formed outside the establishment. They came to Washington. And I'm not quite sure that John Boehner leads them or Eric Cantor leads them, I'm not quite sure who leads them. It's some of those people, I believe, who aren't convinced that a default would be the worst thing --


GERGEN: It's interesting about Eric Cantor. We all thought he could bring the Tea Party with him. He's for the Boehner plan (INAUDIBLE) today and yet Carl is saying Boehner may not have the votes in his own caucus.


YELLIN: Carl -- go ahead --

HULSE: I don't know -- I don't know if the votes are there or not, but there are some people who are definitely not going to vote for it. And you're correct; there are some people who don't think a default is necessarily a bad idea. The entire House Republican leadership endorsed that plan today and immediately people began falling away.

YELLIN: Bottom line, Carl, one way or another do you see this ending up as two votes, we will face another -- we will be having another conversation like this sometime in 2012?

HULSE: Let's hope not actually. I don't want it -- I don't want that to happen. The -- I -- the Democrats say they will not do that. Now, depending on how it's ultimately presented to the president, you know, he may be stuck with that kind of approach. They are really trying to find a way out of that. Harry Reid, Chuck Schumer, they seem very determined. They say Republicans are now just trying to embarrass the president in the election year next year. It may be a two-stage process at the end. How they work the vote, I don't know. It may be that motion of disapproval in some way.

YELLIN: Or it's more passive or automatic.


GERGEN: They can't get there I don't think, Carl, unless they sweeten the pot on the front end.


GERGEN: In other words, unless they -- with more cuts up front.


GERGEN: That's the only way I think the Republicans --

YELLIN: What can the president do tonight? Can he do anything to advance the process?

BORGER: No, he can apply pressure. He can tell the American public where we are. He can try and convince the American public that he's still the grownup in the room. But it looks increasingly like there aren't any grownups anywhere in Washington. But I think part of it is to convince the public that there is going to be a way out of it and -- but to apply the tourniquet there.

GERGEN: My hope is he not only applies pressure, which I think both he and Boehner will do that, but that both the president and Boehner don't box themselves in too much. There is a -- more negotiating to do and I hope they don't box themselves in and rule things out when in fact they may have to buy something like a short- term extension.

UNIDENTIFIED FEMALE: Short, short term, two weeks --


UNIDENTIFIED MALE: That's not long --

BORGER: But the problem is, according to someone at the White House, you know you don't know who you're negotiating with anymore, because John Boehner might say one thing but then he goes back to his caucus --

YELLIN: Well, you talk to people and everybody feels that way these days, it seems.

BORGER: Right.


YELLIN: And we all keep reporting --

HULSE: If the president came out strongly against the Boehner plan, it might help Mr. Boehner, because part of the problem up here is that the Republicans just are really -- the House Republicans do not want to do business with the White House and they're very resistant to that.

GERGEN: Interesting --

BORGER: Well that's what hurt the "gang of six" plan, right?

YELLIN: We will -- we will keep everybody posted. We'll have continuing coverage all night and of course carry the president's plan at 9:00. And Carl, thank you so much. We'll continue logging on and updating your reports as well -- pleasure to have you with us.

And coming up, it is Washington's fight, but it's your money. Next, we'll take a good, hard look at how you could be affected by the threat of a default. Stay with us.


YELLIN: Outside of Washington's Beltway, many Americans are rolling their eyes at the spectacle of Washington's debt ceiling gridlock even though our leaders keep assuring us everything will be all right in the end. Remember what President Obama said Friday?


BARACK OBAMA (D-IL), PRESIDENT OF THE UNITED STATES: I am confident simply because I cannot believe that Congress would end up being that irresponsible that they would not send a package that avoids a self-inflicted wound to the economy at a time when things are so difficult.


YELLIN: Self-inflicted wound he called it. The August 2nd deadline for raising the debt ceiling is now a week from tomorrow. And yes, depending on what happens, your finances could take a hit. For a look at how there is no better person at cutting through the jargon than Kai Ryssdal, the host of American Public Media's, "Marketplace". Thank you for being with us, Kai. OK, cut through it for us, please. If this vote does not happen in time, will you spell out again what are the stakes for you and me and regular people.

KAI RYSSDAL, HOST, "MARKETPLACE", AMERICAN PUBLIC MEDIA: So let me ask you just because you're in Washington and you guys love policy, let me ask you a policy question. When was the last time you heard anybody in Washington talking about the jobless rate, education policy -- let's see, what else, sustainability and the environment. I mean take your pick. This discussion is crowding out so many other things that we need to deal with in our environment and our political system that there's no air left. But here's the bottom line.

Let's think about what could happen come Tuesday and for some reason the treasury stops paying the balance due on its debt -- couple of things. One is we the United States has to pay more money to borrow money. That means eventually Americans will as well. Interest rates will rise. This will not be something like the Federal Reserve saying OK we're going to increase the federal funds rate. It's going to be like over time. The bond rates are going to rise and, thus, we will all have to pay more money. It's a discussion of timing as much as it is instantaneous impact, if that makes any sense.

YELLIN: OK, so that goes to my next question. We don't go into -- if this deal does not happen, we don't go into default at midnight on August 3rd, do we? It doesn't happen instantly?

RYSSDAL: Right, correct.

YELLIN: Explain.

RYSSDAL: No -- right. So default is a technical term in the markets. And we've all been bandying about with some degree of freedom but it means a very specific thing. Not paying the service you owe on your debt. Believe me when I tell you that Treasury Secretary Geithner will stop payment on Social Security checks. He will stop payment to veterans and vendors and all of those things before he sacrifices the entire full faith and credit of the United States. So it means a very, very technical thing. And while that August 2nd date as you and I talked about the last time I was on, a month or so ago, that August 2nd date is firmly fixed in people's minds, it's not like at midnight we all turn into pumpkins. That's not what happens.

YELLIN: OK, so now I've talked to some senior people on Wall Street and other places.


YELLIN: There's an increasing sense that we will be downgraded. Come next week, we will be downgraded.


YELLIN: I'm curious, if they come up with a deal, can it just be reversed in a few weeks? So we get downgraded for a month and then everything is back to normal and our interest rates are better in a few months from now?

RYSSDAL: So here's the thing, I've got news for you. We've already been downgraded. I had Bill Gross on "Marketplace" this afternoon. Bill Gross runs the biggest bond fund in the world and the bond market is what we're talking about I hear. And I said to him, listen, it sort of seems like what you're telling me is that you don't believe the United States has a AAA credit rating right now. And he said, oh, no, absolutely not. It's gone. It's not a real AAA rating.

We will begin to may more money for our debt over time. It's just going to happen because of -- wait for it -- the politics of this whole thing. Bill said to me he thinks it's eventually going to be solved and all this posturing is exactly that, posturing. The markets believe there will be a deal because there has to be a deal, but it's too late. We've already done the damage and from now on it's just how well in fact we can manage that damage.

YELLIN: So if a deal isn't announced soon, what do people need to do to prepare? Can we do anything?

RYSSDAL: You know, here's the thing and people asked me the same thing during the financial crisis when literally we did not know what the next day would bring. I think the smartest thing to do right now is sit tight. Obviously there will be some repercussions for, let's say, senior citizens who are in fixed income investments, who have a lot of treasury bonds and bills in their portfolios and there will be repercussions in the stock market.

There will be -- there will be a day, if this thing really comes to pass, there will be a day where we have a drop like we had the day the House voted down the TARP, when it went down 777 points. There will be negative market reactions, but sit tight and take your time. There is no moment like a crisis to do nothing. Just sit around and see what happens because if you make silly moves, you're not going to know what's going on.

YELLIN: OK, tell us when we need to start buying duct tape and stocking up on water, OK.

RYSSDAL: Yes, no, we're not there yet.


RYSSDAL: We're not there yet.

YELLIN: Thank you. Kai Ryssdal reporting for us, so grateful as always and ahead tomorrow's headlines tonight including new details about the death of singer Amy Winehouse. Stay with us.


YELLIN: Welcome back. Here's the latest news you need to know right now. The funeral for singer Amy Winehouse will be tomorrow. Her press agents tell CNN it will be small and private for a few family and friends. It may be weeks before lab tests determine what killed her. According to the British newspaper, "The Sun" police sources report they found no drugs at her house. The paper also says Winehouse last spoke to her security team at 10:00 a.m. Saturday and was dead about six hours later.

Conservative groups today asked New York's Supreme Court to overturn the state's new same-sex marriage law. Their lawsuit claims state Senate rules were broken and open meetings laws ignored in the rush to legalization.

And it's game on for the National Football League. The players and owners signed a new 10-year agreement today, ending a lockout that began last March. One of the owners hopes our politicians are paying attention.


ROBERT KRAFT, OWNER, NEW ENGLAND PATRIOTS: I hope we gave a little lesson to the people in Washington, because the debt crisis is a lot easier to fix than this deal was.


YELLIN: The suspect in the Norway terror attacks appeared in court today and some long-time friends are providing new details about the person they thought they knew. That's next.


YELLIN: The main suspect in Norway's terror attacks says he did it. Anders Breivik was in court today but the hearing was held in secret. Later the judge told reporters Breivik not only acknowledges carrying out Friday's bombing in Oslo and the mass shootings at a youth camp at a nearby island, Breivik also claims he worked with two other terror cells. The judge says Breivik felt the attacks were necessary to prevent the colonization of Norway by Muslims. And since Breivik blames the country's Labour Party for promoting multi- culturalism he targeted a party-run youth camp. The 68 people who died at the camp are very much on the mind of Norway's prime minister, who spoke with CNN's Nic Robertson today.


UNIDENTIFIED MALE: I think that I never will be able to explain it fully to myself how this could happen, the horror that so many people experienced at that island on Friday because many people were killed. But many more people, young people, teenagers and children saw other children, young people being killed. I think no one -- no one who wasn't there will never be able to fully understand what happened.


YELLIN: Nic Robertson joins us now from Oslo. Nic, we're hearing more details about the suspect's background and his possible motivations. What's the latest?

NIC ROBERTSON, CNN SR. INTERNATIONAL CORRESPONDENT: Well, the latest is that it seems certain now, at least by his own claims, that he wasn't acting alone, that he sees himself as some part of crusade to stop what he calls Molotov governments in Europe from turning Europe or handing Europe essentially over to Muslims. There is wide concern that there could be a potential pick-up (ph) by right wing copycats. Not necessarily here in Norway because (INAUDIBLE) information how to do this, if you will. He spread it on the Internet. But there is concern that perhaps right wing extremists in other parts of the world could try to copy what he is doing.

YELLIN: What can you tell us about the suspect's demeanor in court today?

ROBERTSON: It's very difficult for us to say, because we just weren't allowed in there. And there was a huge expectation, a lot of pressure from the media and the public as well to go in. But at the same time, there was a Facebook page signed by 60,000 people in Norway who said they didn't want him to get another sort of public platform. He had already put his manifesto out online, 1,500 pages.

So, really, they were afraid it would just be a repeat of this vitriolic manifesto.


ROBERTSON (voice-over): Anders Behring Breivik is believed to have posted these images to YouTube in a 12-minute video, embedded in a 1,500-page manifesto, just hours before he began his deadly killing spree with a massive car bombing outside government offices.

CNN cannot independently verify their authenticity.

Together, the video and manifesto appear to answer how and why the 32-year-old became a mass murderer. The video reveals an intense fear that Muslims will dominate Europe and anger at what the author calls Marxist European governments he blames for doing nothing, and a belief that a Christian crusade is the solution -- a belief he hid when he met this mainstream right-wing politician eight years ago.

JORAN KALLMYR, PROGRESS PARTY: I am actually sorry because if he had said something like that, maybe we could have discovered it.

ROBERTSON: Kallmyr suspects Breivik was attracted to his party's anti-immigration reputation, but found them too moderate.

KALLMYR: I probably thought that he would find people inside our Progress Party that would be -- agree with him or something like that and he wrote in his manifest he was disappointed.

ROBERTSON: The manifesto, titled "2083: A European Declaration of Independence," rails against such political inaction.


ROBERTSON: And it's not just his manifesto that seems completely askew, but his defense lawyer today after Breivik appeared in court came out and said Breivik himself expected to be tortured when he was picked up, even shot by police rather than arrested. That was his skewed view of how everything would go once he was cord (ph) or one he came into police custody and that was certainly something he knew was going to happen, Jessica.

YELLIN: So disturbing. Thanks, Nic, for your great reporting.

Joining us now to discuss this further, CNN national security contributor, Fran Townsend, who's a member of the external advisory boards for both the CIA and the Department of Homeland Security. Also with us, former CIA and FBI analyst Philip Mudd, who's currently a senior global adviser for Oxford Analytica.

All right. Phil, let me start with you. When you hear Nic Robertson's reporting on this 1,500-page manifesto, his plans for attack, what does that tell you about the suspect?

PHIL MUDD, SENIOR GLOBAL ADVISER, OXFORD ANALYTICA: I think it tells me a couple of things. First, personally, we have a lot of people in this country and you see the same kinds of people in Europe who have extremist political ideology but who themselves suffer from some sort of mental problem that leads them to murder nearly 100 people.

The second and final thing it leads me to think is what I saw at the FBI, is that a number of people in this country, white supremacists, people from sovereign nation movements, a number of people in this country who think like this, have access to weapons, including automatic weapons, numbers at least in the thousands if not in the tens of thousands.

YELLIN: That is a really disturbing thought. I'll come back to that.

Fran, first thing in Oslo -- Breivik claims that he worked with two other cells. I wonder to you -- does that seem likely or do you think that someone like him tends to work alone?

FRANCES TOWNSEND, CNN HOMELAND SECURITY CONTRIBUTOR: Well, you know, it's interesting. What makes these defendants like this difficult to catch is that they often, while they affiliate with a group, just before they have an attack, they'll break away, like the Holocaust shooter in Washington, D.C. So, that usually is a shooter.

This was a large-scale attack. He had to amass a good deal of material for the bomb in Oslo. He acquired -- there was -- he claimed early on there was more than one shooter at the island. One at least is alleged to have had a police uniform.

And this was all timed to happen all -- you know, all near simultaneously.

And so, all of that suggests to me, and Phil and my experience and our experience has been in order to have those things happen, it's a complicated organizational matter, you need more than one person to do it.

YELLIN: So, let me ask you, Phil, how difficult is it to track a domestic terrorist like this? I mean, if somebody wants to do something --

MUDD: This is difficult to near impossible. Think of a couple of ways you might track someone like this. You might look at them on the Internet.

First, you have a free speech issue. Everybody talks about violence. It's not somebody committing a federal crime.

And the second is the numbers of people sorting through that volume is incredibly difficult.

The second issue that I'd point out is what Fran said. You can look at groups, extremist groups, but one of the indicators of someone who's going to do something is the people who separate themselves off, not the people who participate in groups. And they're tough to follow.

YELLIN: So, going back to what Phil mentioned earlier, Fran, that we have people like this in the U.S., is this incident a reminder to the U.S. essentially we've had this problem before, we cannot be complacent about domestic terrorism?

TOWNSEND: Absolutely. Look, the FBI and local law enforcement actually do devote substantial resources to this. There are many challenges, as Phil has outlined to you. You know, probably the best known domestic terror incident of this kind was Oklahoma City. And in talking to a Norwegian journalist, as this was unfolding Friday, it was said to me, you know, this is like our Oklahoma City.

Look, you know, they have all sorts of causes. There's white supremacists. There are environmentalists who burn down developments. And all of them have free speech rights that Phil points out. And so, this is a real challenge.

And it's very hard. Look at this -- look at the guy in Norway. He didn't post this manifesto until shortly he began to execute on his attack. And so the notion of trying to intervene is very difficult, if not impossible, for law enforcement.

YELLIN: Well, Phil, Fran points out Oklahoma City, there's also Ted Kaczynski. Since those incidents, has the U.S. stepped up our watch on domestic terrorism? Are we safer from it?

MUDD: I'm not sure we're safer from it, but in terms of looking at people like this, my experience at the bureau is these people take a lot of resources. They don't get the media print because they're not Islamic extremists like the ones who committed the attacks on 9/11. But if you look across this country, geographically the spread of these people and extent of them is very high and there's a lot of resources expended on them.

YELLIN: You're making me nervous. Fran, people like Breivik, are they more a threat to security than people affiliated with al Qaeda?

TOWNSEND: It's hard to make a comparison, Jessica, of more or less. They're certainly more difficult to identify. There are a number of steps, though, that law enforcement in the wake of Oklahoma City put in place like tracking the sale of large amounts of fertilizer, large amounts of precursor chemicals. And so, there are more trip wires in the United States now. It's an imperfect system, as Phil points out. But we are -- we sort of have a system by which now we try to identify these people as they're assembling the materials that they need to act.

YELLIN: Phil, a court official told CNN that Breivik was very calm and very concise in explaining why he was trying to do this. If you listen to this survivor, and we can talk about it after. Listen.


ADRIAN PRACON, SURVIVED NORWAY MASSACRE (via translator): There was a panic, and he was walking very calm. He was calm all the time. He was walking behind us and was shooting. He had an automatic weapon, but he switched into the single bullets because each bullet was supposed to kill someone.


YELLIN: So, what is the suspect's calm, sort of methodical demeanor tell you about him?

MUDD: What it tells me is what we learned from looking at his web access and what he wrote about his motivations for the act. Same kinds of things in some way I saw at the center of al Qaeda. When people participate in closed circles where they're talking to each other and persuading each other that the murder of innocents is acceptable. If you're inundated with that over the course of years, you're going to start to say what I'm doing is justified, it's appropriate, and you start to persuade yourself that there's nothing wrong with the murder of 90-plus people.

So, what I saw is sort of like what I saw at the high levels of al Qaeda when they're contemplating something like the Madrid attacks where 100-plus people are going to die. It's OK, they tell themselves.

YELLIN: That's chilling.

One last quick question to you, Fran. If you think there could be other cells attached to him, is this the precursor for something else potentially?

TOWNSEND: Well, the first thing that law enforcement in Norway undoubtedly has done is begun to look at every piece of evidence that they can find. It goes to searching his home, looking at cell phone records and other phone records, Internet access. They will throw a wide net. And I'm sure that identifying his co-conspirators, was the first priority of his interrogation.

And so, I imagine that there is a very intensive manhunt inside Norway to identify those people so you can prevent them from acting.

YELLIN: All right. Fran Townsend, Phil Mudd, thanks to both of you.

MUDD: Thank you.

YELLIN: And ahead, the woman of accusing former IMF chief Dominique Strauss-Kahn of sexual assault is speaking out. She insists she is telling the truth. Did she jeopardize her own case by going public? That's next.


YELLIN: This is turning into a big week in the sexual assault case against former International Monetary Fund head, Dominique Strauss-Kahn.

A source close to the investigation tells CNN there's a Wednesday meeting between prosecutors and the housekeeper who accuses Strauss- Kahn of sexually assaulting her.

She has also taken her case to the court of public opinion.

Let's get the latest from CNN national correspondent, Susan Candiotti, in New York.

Susan, we are hearing the accuser's name for the first time now and she is not backing down. What can you tell us?

SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT: That's right. She came out without appearing in silhouette. She wanted to tell her story. There's no way she's backing down.

In her interview, she says she suffered a violent sexual attack. She wants the world to know about it. Look into her eyes, hear it directly from her and, yes, there is little doubt she and her attorney are worried the Manhattan district attorney might not take her case to trial, so she wanted a chance to tell a jury what happened.

She's not sure if that's going to occur.

YELLIN: So, what happens next?

CANDIOTTI: Well, Ms. Diallo's civil lawyer plans on filing a civil lawsuit this week against Dominique Strauss-Kahn. And she's expected to meet with the D.A., as you indicated, again this week and that would be the first time in about a month. Relations strained after her lawyer held a press conference to accuse the district attorney of abandoning her.

YELLIN: Unbelievable developments. Thank you so much, Susan Candiotti, reporting from New York.

Well, last Thursday, the housekeeper spent three hours telling her story to "Newsweek" magazine and "The Daily Beast" news director, John Solomon. He joins us now, along with CNN senior analyst Jeffrey Toobin.

Thanks to both of you for being with us.

John, I want to talk with you because you spoke with Nafissatou Diallo with more than three hours, I understand.


YELLIN: What's your impression of her?

SOLOMON: You know, I walked away with three impressions. At the beginning she was very reluctant, looking down, very shy. When I asked her a lot about her background, how she get here from Africa, was sort of evasive and reluctant to answer questions.

We get to the point of the attack and it becomes almost a dramatic change. She falls to her knees and reenacts what happens in the hotel room, as she recounts it, grabs her head, shows what happens during the whole incident and is clearly animated and says something really profound. The reason I didn't do more to fight back is I was afraid of losing my job with this powerful man.

And then, at the end o the interview, we were talking about what's it like to be a housekeeper and you get this absolute sense of how proud she is as an immigrant to have a $40,000 a year job cleaning hotel rooms.

YELLIN: So, this is Diallo's account when she walked into the room, room 2806, and saw Strauss-Kahn. She said, "Oh, my God, I'm so sorry." Then she turned to leave and said, "You don't have to be sorry," Dominique Strauss-Kahn said, but he said -- he was, quote, "a crazy man. He clutched at her breasts. He slammed the door of the suite. This is her account.

Then she gives very graphic and vivid details.

Just a bottom line, yes or no basically, did you find her account credible?

SOLOMON: You know, I let credibility in the eye of the other beholders. What we do know is that her account does match the hospital records that we're going to report on tomorrow in "The Daily Beast" and what the physical evidence that the prosecutors found at the scene. But takes a long way from convincing a jury -- and I know Jeffrey will talk about that, but that's the big challenge here.

YELLIN: OK. Jeff, let's talk to you. Strauss-Kahn insists the encounter with Diallo was consensual. His attorneys issued a statement yesterday calling Diallo, quote, "the first accuser in history to conduct a media campaign to persuade a prosecutor to pursue charges against a person from whom from whom she wants money."

Do they have a point?

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Well, it's a very unusual strategy on the part of Diallo's lawyers. But I think it's a desperation move that they may have had to do because this case is hanging by a thread. Vance has to decide whether to go forward on not. And this was an attempt to present her in a sympathetic light.

And I think as John points out, she is a sympathetic person. But she has very serious credibility problems, and I think the fact that she's now told the story another couple of times is more fodder for cross examination down the line and also the fact that she's bringing this lawsuit now really drives home the message that she has a financial motive in this whole situation. None of that means she's not telling the truth, but all of it makes a trial, if there is going to be a trial, harder for the prosecution.

YELLIN: But, Jeff, is her position changed by the fact that she has also been dragged through the court of public opinion? I mean the articles on her allege some unbelievably egregious things against her and she didn't speak out for the longest time.

TOOBIN: Well, it wasn't just the press that gave her a hard time. This all started with a letter by the district attorney, by the prosecutor, saying that she had made a series of false statements, that she has all these credibility problems.

So, yes, there appears to have been some irresponsible press reporting about Diallo, but the core here is not bad journalism, it's problems that the prosecutors themselves discovered with her testimony, and those problems haven't gone away, even though she's presented what I think is clearly a very sympathetic face to the public.

YELLIN: We have an exchange between Diallo and ABC's Robin Roberts from "Good Morning America" today. Let's listen to this for a moment.


ROBIN ROBERTS, ABC NEWS: When did you realize that he was one of the most powerful men in the world?

NAFISSATOU DIALLO, DOMINIQUE STRAUSS-KAHN ACCUSER: I was watching in the news and then they say he's going to be the next president of France. Then I say, oh, my God. And I was crying. I said they're going to kill me. I said they're going to kill me, I'm going to die.

ROBERTS: Why did you think that, Nafi?

DIALLO: Because I know if that was in my country, he's a powerful man like that, they're going to kill me before someone knows what happened to me.


YELLIN: Who's "they"?

SOLOMON: Whatever forces she thought were behind Dominique Strauss-Kahn. I mean, you have to understand from Diallo's point of view, she group up in Ghana where rape is very common, where soldiers and oppression are very common. Two things influence her story, that experience in Ghana and coming to the United States and not wanting to lose that job.

And I think her behavior in that room, as she describes it, were influenced by those two things.

YELLIN: You write in your piece that she still is very angry at Dominique Strauss-Kahn. I want to read a piece of it. Quote, "Because of him, they call me a prostitute. I want him to go to jail. I want him to know there are some places you cannot use your power, you cannot use your money." She said she hopes God punishes him. Quote, "We are poor, but we are good." She said, quote, "I don't think about money."

If that's true, what does she gain by going public?

SOLOMON: I think going public was really two things. One, I think Jeff had it right on the head. She is shooting over the prosecutors to the court of public opinion and trying to sell people this. And the person you might have heard about that in that court filing in these anonymous stories in newspaper, that's not me. I'm a real person and here I am.

I think the second part is, do you set up a case for civil court. I think Jeff had it right. You go to civil court, you raise the question of money. Imagine if Monica Lewinsky had gone to civil court against Bill Clinton in the middle of the scandal. No one would have taken her seriously.

YELLIN: OK. I could keep going on. But the president is speaking in a little while. We got to move on. Thanks, gentlemen. I appreciate it.

In just over one hour, as I mentioned, the president will deliver a speech on -- to the nation on the debt negotiations. Then the speaker of the U.S. House of Representatives will give a separate address.

Why are not they talking to each other? We'll talk about that after the break.


YELLIN: We are awaiting President Obama's speech to the nation at 9:00 Eastern Time. CNN special coverage begins in just a few minutes at the top of the hour and the fight over raising the debt ceiling has revved up both the Democratic and the Republican P.R. machines. They are cranking out commercials using similar imagery to make exactly opposite points.

Fasten your seatbelts.


NARRATOR: You're willing to risk it all to protect tax breaks for millionaires, oil companies and CEOs who fly around in corporate jets, even if the rest of us crash and burn.

Tell Congressman Duffy, don't drive America's economy off a cliff.

NARRATOR: Don't let Obama drive us to disaster. Change direction.

Republican National Committee is responsible for the content of this advertising.


YELLIN: For more, I am joined now by CNN political contributors, Roland Martin and Alex Castellanos.

Thanks, gentlemen.

Quite a night we face ahead of us. I know the politics are not the first thing over one's mind but it does play tonight and it plays during this fight.

Let's listen to some of the rhetoric on both sides today. First, the Democrat and then the Republican.


SEN. CHARLES SCHUMER (D), NEW YORK: Make no mistake about it. The two step plan outlined by Speaker Boehner is a dodge. It kicks the can down the road.

REP. KEVIN MCCARTHY (R-CA), MAJORITY WHIP: The president continues to pick politics over people. His only concern when you listen to him is he brings up the election.


YELLIN: So he is to blame.

Is there any hope of a deal with that kind of talk to Capitol Hill?

ROLAND MARTIN, CNN CONTRIBUTOR: Well, first of all, if an adult shows up and tells the children to calm down, recess is over. I mean, the reality is you have liberals on the left who really don't want any kind of cuts to entitlement programs because they know how effective it is going to be come the 2012 election, as we saw in the New York race. And Republicans understand --

YELLIN: We know the politics.

MARTIN: An adult has to show up.

YELLIN: Alex, be the adult.

ALEX CASTELLANOS, CNN CONTRIBUTOR: Is there going to be a deal? Yes, there is, because there has to be. I think both sides understand that. However, I think the president has made it harder by lecturing that he is the only adult in the room, that no one else possibly understands how dangerous this is but him.

That's not the way you bring people together. And this week, something happened I've never seen before. Yes, Republicans refused to negotiate with the president, but the Democrats agreed to that. Harry Reid walked out, left his president and went to speak with Republicans alone. It's like leaving the president.



YELLIN: I'm going to tell you that I've talked to Democrats and Republicans all day. What you just said, I hear from Democrats all day. What you just said, I hear from Republicans all day.

There was a lot of talking points in the city, but somebody needs to get beyond the talking points. So, one person who is trying to rise above it is the mayor of New York City. He likes to be the adult.

Listen to what he said today.


MAYOR MICHAEL BLOOMBERG (I), NEW YORK: There will be no political gains from a prolonged crisis. No one will win. Voters, I think, are going to blame all of the incumbents and they all deserve that blame. Nobody is going to benefit by the brinkmanship that is being played out right now.

And around the globe, our friends are watching this spectacle with amazement and our foes are watching it with glee.

America is a great nation. It's time our leaders in Washington start acting that way.


YELLIN: So, he doesn't have to vote. That's the beauty of it.

Does this -- do both parties lose, Alex?

CASTELLANOS: Yes. But I think Republicans haven't been treated by the media on this at all. Somehow, it's only the Republican who are intransigent and ideological.

When Democrats say, hey, we don't get a tax increase, while we'll take our ball and go home, too. That hasn't been out there.

Look, both sides want to raise revenue. They should be able to agree a way to do it. Republicans want to do it -- Democrats want to do it by creating new taxes. Republicans want to do it by creating new and more successful taxpayers.

That's a legitimate point of view.

MARTIN: Here's nonsense. If you got a plan on the table where it's 3-1, three cuts to one raise in revenue -- hold on one second -- if you have that, look, you can sit here and try to debate it all day, but the reality is there. It's not like someone is saying, hey, three time more revenue than tax cuts.

And this is the problem. But you have people who do not like the art of compromise. When I hear Mayor Mike Bloomberg, I hear the president say similar things.

CASTELLANOS: One of those people is probably Roland Martin.

Now, it's my turn. When you go to the doctor, you don't want to compromise on your medicine. I'll take three good medicines and another third of poison. You don't want to do that. You think it's bad for the economy.

The Republicans, if a Republican believes your plan is going to shrink the economy --

YELLIN: Gentlemen, let me interrupt for a moment --

MARTIN: But also, read Roland on That's not what I said.

YELLIN: We've talked to people. The markets have already taken to account the expectation that we will be downgraded one way or another, officially or just because they expect us to continue to have gridlock.

So, will we have a deal in a week? Yes or no?

MARTIN: Well, we have no choice but to have a deal. If they want to drive us to default, that's nuts.

YELLIN: You would think so?


YELLIN: I've talked to some senior policymakers in this town, they think it might take another two weeks.

MARTIN: Well, if they want to play with that, go right ahead. You will see terror that you have seen before.


CASTELLANOS: One thing to understand about Republicans, if this is as serious as the president says it is, and he's right, then shouldn't our leaders step up now and take the bullet and not pass it on to our kids?

YELLIN: OK. Gentlemen, thanks for being with us. And stay tuned for more tonight.

This programming reminder: President Obama will address the nation tonight on the debt limit stalemate. CNN's special coverage continues right now with Wolf Blitzer.