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Christie Scandal; Chemical Spill in West Virginia; Jobs Numbers Disappoint; West Virginia Chemical Spill; Interview with West Virginia Governor

Aired January 10, 2014 - 18:00   ET


WOLF BLITZER, CNN ANCHOR: Happening now, unemployment shocker. A new jobs report catches everyone off guard. Why do numbers that look good on the surface possibly mean bad news for the economy?

Water disaster. A chemical spill prompts an emergency warning to hundreds of thousands of people: Don't turn on the tap. What sparked this toxic nightmare?

Scandal revelations. Hundreds of pages of just-released documents are shedding new light on the traffic controversy battering the New Jersey governor, Chris Christie. What do they reveal about lane closures on the world's busiest bridge?

We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

ANNOUNCER: This is CNN breaking news.

BLITZER: We're following two breaking stories this hour, contaminated water affecting hundreds of thousands of people in West Virginia. We just heard from the company believed to be responsible in a news conference.

Coming up, I will speak with the governor of West Virginia. He's standing by live, do a live interview in a few minutes, get the latest on that important story, hundreds of thousands of people without water right now in West Virginia.

The other major story we're following, a major document dump in the scandal involving New Jersey Governor Chris Christie.

Our Joe Johns is combing through those documents. He's joining us now with the very latest information.

Joe, what can you tell us?

JOE JOHNS, CNN CRIME AND JUSTICE CORRESPONDENT: Wolf, this is just a snapshot of what was going on in the bridge and around it. Fort Lee, New Jersey, Mayor Mark Sokolich charged that Port Authority of New York and New Jersey police were telling residents of his community that he, the mayor, was responsible for the lane closures on George Washington Bridge that snarled traffic for several days in December. He wrote: "Many members of the public have indicated to me that the Port Authority police officers are advising commuters in response to their complaints that this recent traffic debacle is the result of a decision that I as the mayor recently made."

That was in a scathing September 12 letter to Bill Baroni, the Port Authority deputy director appointed by New Jersey Governor Chris Christie. Quote: "This decision has wreaked havoc on our community during the morning rush hour," the mayor wrote. "Unquestionably, this has impacted negatively public safety in Fort Lee."

He ended his letter by saying, the basis reason or genesis of the decision is no consequence to him. However, he said its profound and adverse impact on the community is of paramount importance to him.

That's just one more idea of the dynamics that were going on, on the ground. As you know, Wolf, this has been a political story for a while and all of it, apparently, started with somebody's thought, at least we have been told, allegedly, that they would try to pay back the mayor for not endorsing Chris Christie in the election.

BLITZER: And, as you know, the governor did meet with and apologize to the mayor, Mark Sokolich, on Thursday after delivering, what, that two-hour news conference. Any more fallout we're getting now? Any reaction from the mayor specifically to this latest -- these latest documents that have come up specifically referring to him, sort of trying to blame him for all this?

JOHNS: Right.

No reaction so far. Reaching out to a number of people trying to get reactions. Again, when you look at these documents, I think the essential takeaway is that we're getting an overlay of information. It's creating a fuller picture of what went on. And we're learning the names, for example, of other individuals who may have been notified about the problem, but so far no smoking gun, nothing that points directly at Chris Christie as having any more involvement than he said he did. And he says he didn't know anything about it.

BLITZER: Joe Johns reporting for us. Thanks very much.

Let's dig a little deeper right now.

Joining us, Ryan Lizza, the CNN political commentator. He's the Washington correspondent for "The New Yorker" magazine. Also, Jeffrey Toobin, our senior legal analyst.

Jeffrey, first to you. What do you make of this latest information we're getting? No direct smoking gun implicating the governor, Governor Christie himself, but it looks like there were potentially other officials involved.

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Well, all the documents, certainly the ones I have seen, just suggest the nature of chaos and the degree of anger that was caused by the closure of these lanes. What remains mysterious and is not answered by the documents, at least the ones that I have seen, is who ordered this change and why. We saw the so-called smoking gun e-mails last -- yesterday, which talked about why -- where Ms. Kelly, the deputy chief of staff, basically said this was a political vendetta.

But, you know, one of the things you learn as a prosecutor is documents can only tell you so much, and you need witnesses. You need live human beings to explain what they meant, and so far we haven't had any of that. We have had one person, David Wildstein, take the Fifth and Ms. Kelly has not yet been called, but I think the odds are she will take the Fifth, too.

BLITZER: I would suspect that.

Go ahead, Ryan.


RYAN LIZZA, CNN CONTRIBUTOR: One thing that Joe Johns reported -- I haven't seen this document he just reported on, but I find it fascinating.

This is first time that there's been any explanation of how this vendetta was actually retaliation against the local mayor, right? Up until this point, I think a lot of people were just scratching their head, saying, big deal, you shut down the lanes in this town. How is that actually going to damage the mayor?

But what Joe Johns is reporting is that in these documents the local officials were blaming it on the mayor, rather than the Port Authority of New York and New Jersey, which was actually responsible for it. If that was the scheme from the beginning, it seems to be more Machiavellian than we realized before, to shut down the traffic, and then erroneously blame it on the mayor.


BLITZER: That was so disturbing. And it would explain -- because the notion of -- and, Jeffrey, I want you to weigh in on this. The notion of a Democratic mayor of Fort Lee, New Jersey, endorsing the Republican candidate for reelection, why should anyone really expect a Democrat to do that?

But it looks now that if, in fact, they were seeking a way to punish him and pin the blame, get all these tens of thousands of people, residents in his community angry at him for shutting down these lanes, that is pretty awful.

TOOBIN: Well, it is awful, but, again, it's so puzzling, because I thought the most persuasive part of Chris Christie's news conference was when he said, look, I didn't even know who this guy was. I didn't solicit his endorsement. I don't think I met him. It turns the out that they had probably shaken hands at some point.

But why this relatively insignificant political figure in New Jersey, why would they, you know, do this crazy vendetta damaging him and ultimately it turns the out damaging themselves when he wasn't even that important?


LIZZA: It sure does seem like overkill for someone that's not that significant, doesn't it?

TOOBIN: It does. And that's why you need individuals to explain what was done and why. The paper can only tell you so much.

BLITZER: Yes, I totally agree.


BLITZER: Go ahead, make the final point, Ryan.

LIZZA: That's also the big weakness with Christie's press conference this week is at the end of the day, he didn't promise any public accounting of all this. He promised he would personally interview his staff and sort of report back if he found anything worth reporting.

He don't actually -- look, we all know that if the president of the United States said that or some other political figure who is involved in a scandal, that doesn't really cut it. You have to have an independent investigation for it to be credible. I think there's going to be a lot of pressure on him to do that down the road or at least cooperate with the legislature that has been looking into this.

BLITZER: Ryan Lizza, Jeffrey Toobin, guys, thank you.

Chris Christie is not only facing a huge political crisis, now he's actually facing a lawsuit. The class action suit targets the governor and three fired appointees arguing that the politically orchestrated traffic jams caused lost wages.

Joining us now is the attorney Rosemarie Arnold, who filed the suit.

What's your main argument, Rosemarie? What damages, what claims do you have?

ROSEMARIE ARNOLD, ATTORNEY: Well, you're acting like it's insignificant.

I would like to say that what happened here caused severe and significant damages to a lot of people, tens of thousands of people. This isn't a case where we're talking about one person's hour-and-a- half lost wages of $60. This is a case where tens of thousands of people were caused to sit in a traffic jam. That wasn't like, OK, there's an accident on the Cross Bronx and we're going to move very slowly across the bridge.

This was a situation they closed all the access lanes from Fort Lee to the George Washington Bridge except for one. And everybody in that entire town and anything leading up to it were trying to get to that one lane. Cars were fighting with each other, getting within a millimeter of each other. People were missing airline flights. People were late for work. Their bosses were getting angry at them. People were yelling at each other.

People were having panic attacks. We're not talking about just my six plaintiffs. We're talking about a potential class of tens of thousands of people. The damage that was sustained by them is significant. And what's worse is that it was exactly the damage that the Christie administration and the Port Authority were looking to have them sustain when they implemented this politically motivated plan.

BLITZER: I'm not suggesting, Rosemarie, that this was insignificant by any means. We have been spending a lot of time covering this story because it is so significant and it was such a severe setback to tens of thousands for, as you correctly point out, people in Fort Lee, New Jersey, and elsewhere, not only there, but in other communities as well.

The only question I wanted to know is damages. What kind of damage, financial damages, what kind of financial compensation are you looking for, for these people?

ARNOLD: Very well.

You know, time is money. There were people who lost hours from work, they lost wages, there were people who missed planes, missed vacations. There were people who missed school, were late for school. The entire area was disrupted, along with a lot of businesses in New York City because employees couldn't get there. Businesses in Fort Lee were impacted because customers couldn't get there.

So the damages that we're looking for are the actual damages sustained by these people.

BLITZER: And would you expect the state of New Jersey to compensate these people? Where is the money, in other words, going to come from in this lawsuit if you succeed?

ARNOLD: You're the first person to ask me that question today. It's a great question, because we're alleging that the actions of these people in the administration were deliberate. I can't imagine that the state of New Jersey is going to pay for any intentional acts.

The government is, of course, immune from any negligence. So you have Title 59 immunities there, but they're not immune from intentional acts.

BLITZER: So you would expect money from the state of New Jersey, if you succeed in this class action lawsuit, to compensate these people who lost out, whether on jobs, lost on vacations, had their lives disrupted in pretty severe ways.

Do you think the governor -- tell me what you think about this governor. Do you believe the governor, Chris Christie, when he says he knew nothing about any of this?

ARNOLD: You know, I would love to believe the governor. You want to believe the governor. It's hard to believe that something that was on the front page of the newspaper for days wasn't in his radar.

It's also the way you were talking earlier in the show. Fort Lee is a big city in New Jersey. It's not a tiny little town. It's hard to believe that he didn't know who Mayor Sokolich is. Regardless of the fact that he's the Democratic mayor, regardless of any of that, it's a big city. It's one of the connections to New York City. It's one of the bigger ones. I don't know if I believe him.

BLITZER: All right, Rosemarie Arnold, you have got a class action lawsuit. We will stay in close touch with you and see what happens down the road. Appreciate your joining us here in THE SITUATION ROOM.

ARNOLD: Thank you for having me.

BLITZER: Still ahead, hundreds of thousands of people now affected by contaminated water in West Virginia. I will speak live with the governor of West Virginia. There's lots of questions that we have. How could this happen in the United States of America? Three hundred thousand people can't drink the water, they can't take a bath, they can't even use the water to prepare food. What is going on?


CHRIS CUOMO, CNN ANCHOR: Wind gusts 235 miles an hour.

MICHAELA PEREIRA, CNN CORRESPONDENT: In 2013, one of the biggest typhoons in recorded history struck the Philippines killing thousands and displacing millions. That tragedy captured much of the world's attention including NBA superstar, Pau Gasol.

PAU GASOL, NBA PLAYER: The damage that the typhoon caused was huge. And it's going to take a lot of time to rebuild. Do I thought I had to do something and utilize my position to attract others and also create awareness.

PEREIRA: Shortly after the typhoon hit, Gasol took to the court pledging $1,000 for every point he made. Turns out it was a great scoring night. He racked up 24 points making it a $24,000 donation to Unicef's efforts in the Philippines.

It's not the first time he has teamed up with Unicef. In act he has been an ambassador for the organization for over a decade, a job Gasol takes seriously.

GASOL: One thing that I told Unicef, I wanted to be a good ambassador. I needed to lead it.

PEREIRA: Gasol has taken several trips with the humanitarian organization to communities in need. His focus is always on the most vulnerable, the children. GASOL: Most of these kids have traumatic experiences. I always get reminded that children are children. They love having attention and having fun and playing and feeling cared for.



BLITZER: The government's newest unemployment report had economists doing a double-take. Their projections for job growth in December were way off the mark. It turned out to be the weakest month in almost three years.

Take a look at this. Experts predicted 193,000 new jobs would be created last month, thanks in part to extra retail hiring for the holidays. But the Labor Department counts only 74,000 new jobs in December. And while the unemployment rate fell from 7 percent to 6.7 percent, that's largely due to frustrated job seekers actually dropping out of the work force altogether, hundreds of thousands of them.

Let's go to our senior White House correspondent, Brianna Keilar. She is taking a closer look.

What's the reaction over at the White House to this rather dismal report?

BRIANNA KEILAR, CNN SENIOR WHITE HOUSE CORRESPONDENT: Wolf, White House officials aren't just looking at this one month. They're instead urging people to look at the overall trajectory of job growth.

But they're also using these latest numbers to make their case for why Congress should extend long-term unemployment benefits.


KEILAR (voice-over): It's the number the White House wanted, but not the way they wanted it, the nation's unemployment rate dropping below 7 percent for first time since President Obama was elected more than five years ago.

But economists say the dip is due in part to more Americans giving up looking for work. Today's jobs report was the worst in nearly three years, just 74,000 jobs created.

DAVID WESSEL, ECONOMIST: Now we're back to this really frustrating situation where the economy does seem to be picking up some momentum, but it's not leading to a lot of job creation.

KEILAR: That, some say, doesn't help the White House argument that the economy is recovering slowly but steadily, though it does help the administration's push to extend long-term unemployment benefits.

JASON FURMAN, SENIOR FELLOW, BROOKINGS INSTITUTION: There's no question that the biggest short-term economic challenge we face in our country is the long-term unemployed. And we're making progress. That long-term unemployment rate is coming down, but it's still higher than any point it was ever recorded prior to the great recession, and that's exactly why the president's fighting so hard to extend those unemployment insurance benefits.

KEILAR: Those benefits expired at the beginning of the month. A deal in Congress to keep checks coming appeared imminent this week until negotiations devolved into partisan bickering, leaving people who had been unemployed six months or more without benefits.

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: We have more work to do, and, you know, we need to get that unemployment insurance to those families who need it.


KEILAR: And Wolf, there does appear to be some progress on the front when you're talking about Congress.

Senate Majority Leader Harry Reid now saying that he will entertain changes from Republicans to this plan to extend unemployment benefits, and six Republicans who joined Democrats in voting to begin debate, as my colleague Dana Bash is reporting, they're now involved in negotiations hoping to maybe strike a deal by Monday to move forward on this.

But as you know, Wolf, even if the Senate votes on this and passes it, the future of extending long-term unemployment benefits is still uncertain in the Republican-controlled House.

BLITZER: It certainly is. All right, Brianna, don't go away. I want you to be part of this next conversation.

We have an excellent panel of experts. In Chicago, Austan Goolsbee is joining us, the former chief economist on the Economic Recovery Board, top adviser to President Obama, currently professor at the University of Chicago Booth School of business. Also joining us in Washington, Douglas Holtz-Eakin, the former economic adviser to President George W. Bush, the current president of the American Action Forum. And in New York, Rana Foroohar, she's the CNN global economic analyst and "TIME" magazine assistant managing editor.

By the way, you have a great new interview with Janet Yellen. She's on the cover of the new issue, the upcoming chair of the Federal Reserve. There she is, "The $16 Trillion Woman."

Austan, let me start with you. The good news is, the unemployment rate fell from 7 percent to 6.7 percent, first time in seven years it's below that 7 percent level. That's pretty low. The bad news is it fell largely because, what, about 300,000 people who had been looking for jobs just gave up and they left the job market, if you will, because they have no hope of finding a job.

AUSTAN GOOLSBEE, FORMER CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS: Look, I think that's correct. It followed on the data last month, which was shockingly good, way above expectations, so everyone thought it was going to be a big number. They're looking, were the surveys lost in the polar vortex, stuck in traffic on the bridge? I mean, what happened? Nobody can quite figure that out.

This may be somewhat revised away, but I think the continued problems of labor force participation, that's the weakest part of the job market, the long-term unemployed and people getting discouraged, I think we got to address that issue. You know, even as we start to turn a corner, we have got to address that issue.

BLITZER: We certainly do.

And, Doug, just to give it some perspective, they revised the job creation number from November. Originally, they said 203,000 jobs had been created in November, now 241,000, they say. That's good. One month, as a lot of economists say, don't just jump to conclusions based on one month. December, a bad month. So you got to look at the big picture. Give us your analysis of the big picture.

DOUGLAS HOLTZ-EAKIN, FORMER CONGRESSIONAL BUDGET OFFICE DIRECTOR: Well, in the big picture, I had expected 210,000 jobs this month and obviously I was on the list of people who was quite surprised by the low number.

I want to agree with Austan. I think there's a good chance this number will be revised and will probably be revised up. There's a lot of speculation that weather influenced the outcome. But of the two numbers that were bad in this report, the jobs number might get revised.

That labor number is unlikely to change. We have seen this before. We're now at the point, Wolf, where the fraction of Americans who are working is lower than at the start of the recession and this long-term departure from labor force is the single most pressing issue we face and it's one that really hasn't been addressed in any way.

BLITZER: It's an excellent point, Rana, and I want your perspective on this.

RANA FOROOHAR, CNN ANALYST: I would agree that it's really work force participation more than one month of good or bad unemployment numbers that we should care about.

And, you know, it's not just something that's been going on for a few years. This work force participation rate is as low as it has been since 1978, which is before women started coming into the work force in large numbers. This is something that's been going on for some time now. It's a real trend.

It makes the U.S. look more like Europe in terms of its work force participation and that's a structural problem that we need to throw a lot of firepower at.

(CROSSTALK) BLITZER: Let me bring Brianna back into this conversation.

Brianna, hold on for a moment. Austan will make one additional point.

GOOLSBEE: The only point I want to make is the U.S. population is aging. So part of this is from retirements, and we're likely to continue setting the record for low participation every year going forward for the next 15 years because the people are retiring.

BLITZER: People are retiring earlier than they normally would have retired or there's just a lot of people who are retired and they live longer?


GOOLSBEE: Well, there are a lot more people getting to age 65 now as a share of the population than there were in 1985.

And so it is part of this is a normal thing. It was projected to be falling. It's just it has fallen more than it was projected to, but about half of what we have seen is just demographics.

BLITZER: Yes, I think that's a fair point.

And, Doug, you agree with him on that, right?

HOLTZ-EAKIN: It's the baby boom. The baby boom is a big chunk of the population now. They're reaching retirement age. And that piece, we do understand, but the rest is a big problem.

And it's chronic underemployment. It's chronic departure from the labor force. It won't be dealt with, with little patches like this emergency U.I. bill that they're talking about in Congress. It has to be dealt with in a structural way some real training and real education. And, quite frankly, the economy has to grow more rapidly.


BLITZER: Hold on, Doug. Hold on. Why do you say this little bill? And 1.3 million Americans have lost their government support, if you will. That's not a little thing, for 1.3 million Americans and the millions of family members who may be dependent on that.

GOOLSBEE: Well said, Wolf.

HOLTZ-EAKIN: With a population of 300 million, Wolf, it's not going to solve the bigger problem for the whole population.

Certainly, those families will be affected. But, again, let's go back to the basic problem. The problem is unemployment insurance benefits are help after the problem has occurred. The real issue is to make the economy grow more rapidly so that there are job opportunities and then give people the skills to take advantage of them. We're not doing either of the latter two.


BLITZER: Hold on for a moment.

Rana -- go ahead, Rana.

FOROOHAR: Yes. I think the truth is that we need to do both.

Yes, of course we need to grow the economy. In my "TIME" cover, I actually spoke to Janet Yellen about this and she believes, as many do, that a rising tide still lifts all boats. So, sure, if you have got 3 percent growth, rather than 2, which is what everybody is hoping for this year, things will look better.

But the long-term unemployed problem is something that goes beyond even being an economic problem. It's a real social problem. There's research to show that when people have been out of work for over a year, for 18 months, families start to disintegrate. Children have trouble in school. People's marriages can fall apart.

This is a real cultural issue. And I think we have to look at the broader implications on society.

BLITZER: Brianna, do White House officials believe that this new jobs report is going to push it over the top, get at least a three- month extension of the unemployment benefits, and do they believe it will help their efforts to raise the nation's minimum wage?

KEILAR: Well, I think the thing here, Wolf, is actually that this bad report is more helpful to doing that than if they were to get a good report.

And I have even spoken with Republicans who told me before the report came out, if it's bad, this may be something that puts a little pressure to do something. It does sort of make the case when you look at the numbers. You're looking at about four in 10 of those who are unemployed are long-term unemployed. So, that's folks who have been without a job for more than six weeks, and this is really their last lifeline.

And when you look at the average of people who have been unemployed, it is beyond that six months. So this is an experience for the unemployed that is really kind of consistent. So, obviously, the White House, congressional Democrats, they see an opportunity here in what's a really tough political year.

You have the midterm political elections ahead in November. And so they're trying to certainly push this as well, the long-term unemployment benefits. And this is also going to be a push a little later for the minimum wage as well, Wolf.

BLITZER: Doug, go ahead and react to that.

DOUG HOLTZ-EAKIN, ECONOMIST: Well, you know, the extension of emergency unemployment benefits is desirable but I don't think solves the fundamental problem and that's all there is to it. The minimum wage doesn't solve any problems either. It doesn't really address poverty and it really doesn't help job creation.

The difference between people who are poor and not poor is work. The poverty rate among those not working is three times higher. We need to get people into jobs and there's nothing about the minimum wage that helps do that.

RANA FOROOHAR, TIME: You know, I have to jump in on this that because we're living in a time when the corporate share of the overall economic pie is as high as it has been in decades. Meanwhile, the median male worker in this country has not seen a raise, inflation adjusted, since -- for 30 years, basically.

So I think this is -- it's not just about working or not working. There's some real, large, entrenched structural problems that we need to address.

BLITZER: They certainly do. We'll continue this conversation.

Doug, I mean, Austan, go ahead, make a final point because we've got to run.

AUSTAN GOOLSBEE, ECONOMIST: My only final point is I think the impact on what's happening in the minds of the Fed who just last month after the good report said, hey, let's go ahead and start the tightening, I think that's more important than the impact on the legislation.

BLITZER: You mean if they continue the stimulus to keep pumping money into the economy?




BLITZER: All right, guys. All good points. Thanks very much. Obviously, lots at stake in this story as well.

Coming up, hundreds of thousands of people of West Virginia now plagued by contaminated water. The governor of West Virginia standing by live. I'll speak with him. That's coming up.

And should West Virginians be concerned about their actual health? An environmental lawyer whose story was the inspiration for a major film starring John Travolta standing by to weigh in.


BLITZER: Don't drink the water, don't bathe with it, don't cook with it, don't even brush your teeth with it. That's the message to 300,000 West Virginians today after a chemical leak contaminated a local river.

And authorities have no idea when things will actually get better. The governor of West Virginia standing by to join us live in just a minute.

But let's get some background first from our senior medical correspondent Elizabeth Cohen. She is in Charleston, West Virginia, right now, at that chemical plant.

Elizabeth, we heard from a spokesman from the chemical factory over there, that plant, that's believed to be responsible for this problem that's going on right now. But update our viewers on what is going on.

ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: What's going on is that facility has been told to cease and desist all of their activities. The state of West Virginia said just stop. They are -- they want to make sure that nothing else gets leaked.


COHEN (voice-over): The Elk River, a water source for hundreds of thousands of people in West Virginia, and now contaminated with a chemical used to clean coal.

JEFF MCINTYRE, WEST VIRGINIA AMERICAN WATER: The only appropriate use is toilet flushing. Don't wash with it, don't shower with it. Don't drink it. You can't just boil it. So it's not a boil water advisory. It's a do not use advisory.

COHEN: The chemical leaked out of taps belonging to Freedom Industries. Customers noticed because it smelled strongly of black licorice. The chemical safety data sheet says, "warning, harmful if swallowed, causes skin and eye irritation."

But West Virginians were exposed to the chemical at very diluted levels, levels that have been going down.

MCINTYRE: We don't know that the water's not safe, but I can't say it is safe.

COHEN: Health officials say some 4 to 6 people were admitted to the hospital with problems related to the contamination, minor problems such as nausea and vomiting.

And Friday, the West Virginia Department of Environmental Protection issued a cease order to Freedom Industries telling them to stop all operations.

The company issued a statement saying, "Our team has been working around the clock since the discovery to contain the leak to prevent further contamination."

In the meantime, supplies of bottled water are running low and hundreds of thousands of West Virginians just want to be able to use their taps again.

MCINTYRE: It could be days. We're working to keep it very short. I don't think we're talking weeks. COHEN: The economic impact has been real. Restaurants and many hotels have closed and patients have suffered, too. Several hospitals have canceled elective surgeries until the water crisis is over.


COHEN: Now, this facility did have a system in place to handle the leak. There was a concrete wall that was supposed to contain any chemicals that might leak out, but that concrete wall, we are told, was breached -- Wolf.

BLITZER: Elizabeth Cohen, thanks very much.

Clearly, this is a major crisis right now. It's affecting, as we say, 300,000 Americans. They can't use water. They can't use water for anything virtually than flush their toilets. But that's basically about that.

But this is an enormous crisis in West Virginia right now. A lot of people have to leave these areas because there's no water. There's no bottled water that's left either.

Let's talk about what's going on with the West Virginia Governor Earl Tomblin.

Governor, thanks very much for joining us.

I know that you're over at the water treatment plant behind you right now. How bad is this situation?

GOV. EARL RAY TOMBLIN (D), WEST VIRGINIA: Well, it's pretty bad. As you mentioned we do have way over 100,000 -- we don't have the exact number yet -- of people who are without water. But, obviously, all the restaurants are closed down. The hotels are having to close down. Schools were out yesterday.

You know, it's just a real inconvenience for the people not being able to use their water with the exception of flushing toilets. So, we're working to put all the state resources we have together. We're doing water tests on an hourly basis and the chemical level is declining, but we're just not sure exactly how long it's going to take until it's acceptable to lift the "do not drink" ban that the West Virginia American Water Company has placed on us.

BLITZER: What happened in this chemical plant, this company Freedom Industries was operating. What happened to cause this nightmare?

TOMBLIN: Well, I'm not sure whether it was just lack of maintenance of the storage tank. There was several thousand gallons of this chemical in the plant. It's estimated that probably at the maximum about 5,000 gallons had leaked out in the tank, as I understand, is very near the Elk River and then obviously after it breached the wall it got into the river and then obviously was sucked into the water plant here. Our Department of Environmental Protection was on the scene yesterday morning when they started getting complaints of the smell of -- or black licorice in the air. They traced it down to this particular chemical company. And that's when they -- told them they had to cease and desist right there and then they had to put a new retaining wall around with pumps, in case rain will come, or the chemical cannot get back into the river.

So, the old tank has been emptied and taken away and as of right now, the company has closed down.

BLITZER: We understand the federal government is coming to aid, some FEMA trucks from the Federal Emergency Management Agency. I take it they're going to be coming later tonight, around 8:00 or 9:00 p.m. your time. What do you want the federal government, Governor, to do?

TOMBLIN: Well, let me say that I am pleased that the president did sign the emergency declaration yesterday evening after I requested it, and we are receiving FEMA assistance. Most of it right now is in the form of several truck loads of water.

I understand that the water should have been here before, but in traveling here got caught in some bad weather and so slowed it down. However, for several private businesses, both instate and out of state has shipped just truckload after truckload of water. That's the big need right now.

Obviously, as we go on, we're going to start maybe needing wipes and hand sanitizer, baby formula and that sort of thing. But as of right now, I think everyone has enough food, but if anyone wants to make those donations, we're accepting those now. But water has been the big thing. We learned from the Derecho we had a year ago and hurricane Sandy last October, we needed to be prepared.

So, you know, we've been able to handle the emergency much better than we could have before. So, we just appreciate all the help of the donations that so many kind people from around the country are sending us with the trucks of water.

BLITZER: Tell us about Freedom Industries, Governor, this plant, this company that operates this plant that had this disaster that caused this -- does it have a good track record? Is it a subsidiary of another company? What do we know about it?

TOMBLIN: You know, I know very little about it, and I personally have not had any contact with the management of that company. I know that when DEP rolled in yesterday morning, they had to convince them that they needed to get in to take care of this problem.

So, you know, we're still investigating to see what's going on with the company. I do not know of any previous spill or anything like that, but that doesn't mean that that hasn't happened.

BLITZER: Well, good luck to all the folks in West Virginia. We're hoping this is resolved quickly, governor, I'm sure no one hopes it's resolved more quickly than you do. Appreciate you joining us. Good luck.

TOMBLIN: Well, thank you very much, Wolf. We appreciate your concern for us. Thank you.

BLITZER: Yes, a lot of people are watching right now and I'm sure they're going to want to try to help as best as they can as well, Governor Tomblin of West Virginia.

The contamination in that state is not the first time a corporation has been accused of poisoning a local water supply. Back in the 1980s, the environmental lawyer Jan Schlichtmann took an industrial chemical company that was polluting a Massachusetts town to task and won. The basis of that 1998 film "A Civil Action" starring John Travolta who played Schlichtmann.

Jan Schlichtmann is joining us right now.

What do you make of this current situation, Jan?

JAN SCHLICHTMANN, ENVIRONMENTAL LAWYER: Well, I think it's -- the community in Kanawha Valley are learning the lessons that the Woburn families did. That we can't -- we have to know where our water is coming from and we need -- we can't leave it to the authorities. We have to work in partnership with them to protect the threats to our water supply. Here's a water supply that was just one mile down river from a chemical storage plant that obviously has a long history here of some neglect that could have caused this thing.

So, it's a wake-up call to them and to all of us how precious our water supply is and we must know our source and we must work with government officials to make sure that it's protected.

BLITZER: So, there's -- what I hear you saying is there's got to be more regulation of all of these plants, these sensitive areas, so that water plants are not disrupted and poisoned, if you will.

SCHLICHTMANN: Well, yes, and I think the public has to understand that every time we talk about, you know, cutting government, these are the kinds of programs are the first ones that get cut. They're not on the radar screen of the budget and the bean counters. And the problem is that the citizens of these communities have to understand, they have to work in partnership to ensure that there is enough infrastructure, there is the monitoring and they themselves, the communities, can form associations and ensure the fact that their water -- identify the threats and make sure that these threats are watched and monitored so that they don't wake up one morning like this community did to find that the water that they thought was safe isn't and they can't use.

BLITZER: What would you ask the leaders of freedom industries, the owners of this plant where this poisonous spill occurred, what would you ask them if you had an opportunity?

SCHLICHTMANN: Well, I mean, I think the most obvious thing is that clearly this leak had to be long duration because it had to fill the whole containment area. There obviously were no alarms or anything or if there were, nobody was listening to them. Then it overflowed the contaminate area and contaminated ground before it got to the river and it was a chemical storage facility.

So, it was a good thing that state officials closed it down. There should be a complete audit of that entire facility because obviously, if there's a problem in one tank, there could be a problem in others. And we don't know all the other kind of chemicals that are stored there one mile up river from such a sensitive water supply.

BLITZER: Jan Schlichtmann, thanks so much for joining us.

SCHLICHTMANN: My pleasure.

BLITZER: Up next, now that Chris Christie is on the ropes to speak at least politically, Democrats are closing in. They're accusing the governor of what they are describing as his, quote, "reign of terror."

I lost my job about, probably about six or seven months ago.


BLITZER: Democrats now seizing on the traffic scandal swirling around the New Jersey Governor Chris Christie, to try to spotlight his reputation for some strong arm politics, and a style some called bullying.

The Democratic National Committee has released the web video accusing them of creating what they describe as a malicious culture among his staff.

Chris Frates of the CNN Investigation Unit is on the ground for us in Trenton, New Jersey, right now.

Chris, what are you hearing from your sources in Governor Christie's own backyard?

CHRIS FRATES, CNN INVESTIGATION UNIT: Well, most Democrats here say that the George Washington Bridge scandal has given the nation the ability to see a Chris Christie they say they've known for years, a bully who uses hardball politics to punish his critics.

We spoke to former Governor Richard Cody who told us that he believes Christie's governorship is becoming, quote, "a reign of terror." And he told us what happened when he crossed Chris Christie.


RICHARD CODY (D), FORMER NEW JERSEY GOVERNOR: It was a Monday and he -- I guess he was upset about something I said about his policies so anybody leftover in state government who didn't have civil service protection that he felt was aligned with me were let go. Anybody on a commission or a board who were holdovers were replaced and a cousin of mine who worked at the Port Authority who was appointed by a former governor who didn't have civil service protection was let go all in one day, and he told somebody he was sending a message. I got the message.


FRATES: And, Wolf, Governor Cody said he lost the police protection that's provided as a courtesy to former governors when they go to public events.

BLITZER: He's a Democrat, as you know, Cody. But you've also been hearing from people on both sides of the aisle, right?

FRATES: Well, that's right, Wolf. What I'm hearing from Democrats are they're the only ones talking publicly and complaining publicly about this. Republicans, however, will tell you privately that they've gotten similar treatment from Governor Christie.

And what you have to remember here in New Jersey is that it's a strong governor state. That means that Governor Christie has more power than governors across the nation. Neither Republicans nor Democrats for that matter want to cross a guy who just got elected to four more years in office.

BLITZER: Chris Frates on the scene for us in Trenton, New Jersey -- thank you.

Just ahead, a tale of two Americas. Congress, wealthier than ever as lawmakers reach a millionaire milestone.


BLITZER: Congress may have a hard time figuring out the country's budget right now, but apparently they have no problem with their own. A new study finds that for the first time in history, more than half the members of the United States Congress are millionaires.

CNN's Tom Foreman is breaking down the numbers.


UNIDENTIFIED MALE: And no American need be left out.

UNIDENTIFIED MALE: Affordable housing to the American people.

REP. NANCY PELOSI (D-CA), MINORITY LEADER: Democrats are standing for the middle class families.


TOM FOREMAN, CNN CORRESPONDENT (voice-over): Despite all the talk about economic hard times from lawmakers, the Center for Responsive Politics has found the median net worth for a Congress member is now at $1,008,767, meaning for the first time, just over 50 percent are millionaires.

(on camera): That's a lot because when you think about the rest of the population only 3 percent of us can call ourselves millionaires. And look who has all the money in Congress.

Leading the list is Darrell Issa from California, a Republican with a net worth of $464 million. You can go to Virginia to find the top Democrat, Mark Warner, $257 million. And another Democrat, Jared Polis from Colorado, with $197 million. This is based upon their income for 2012 on their tax returns.

(voice-over): Congressional Democrats overall are slightly richer than their Republican colleagues and senators are much richer than members of the House.

Senate majority leader, Democrat Harry Reid, is worth over $4 million. Speaker of the House, Republican John Boehner, has about half a million less than that.

(on camera): Still, they all get salaries a regular member of Congress gets $174,000 a year from the taxpayers or about four times as much as an average American earns in the same period of time, and how do they invest all their wealth?

The Center for Responsive Politics found that some of the top stock picks include General Electric, Wells Fargo and Microsoft just to name a few. But as a general principle, they like investing in real estate, in big oil, in securities, in big banks.

In fact, investing in many of the businesses that they're so often called on to investigate and regulate for the rest of us -- Wolf.


BLITZER: Tom Foreman, thanks. That's it for me. Thanks for watching.

"ERIN BURNETT OUTFRONT" starts right now.