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Israel Avenging Murdered Teens; Pentagon: More U.S. Troops in Iraq Possible; Iraq War Booster May be Next Prime Minister; Urgent Warning for U.S. Bridges; Veterans Charity Under Fire for Fraud

Aired July 1, 2014 - 17:00   ET


BRIANNA KEILAR, CNN GUEST HOST: Crisis from Israel to Syria to Iraq, deadly violence is escalating at an alarming rate. Is the tinder box region on the verge of exploding?

Tropical storm threat. Arthur forms off Florida, begins churning north threatening the upcoming holiday. Who will see a Fourth of July washout?

And crumbling roads. Growing danger of another deadly bridge collapse like this one just as millions of Americans head out on summer trips. Why is Congress slashing funds for desperately needed repairs?

Wolf Blitzer is off today. I'm Brianna Keilar, and you're in THE SITUATION ROOM.

The first bombs have fallen with more to come as Israel unleashes vengeance on Hamas. Prime Minister Benjamin Netanyahu blames the militant Palestinian group for the kidnapping and killing of three Israeli teenagers whose funerals were held today. He says Hamas must continue to pay for the murders and Israel must forcibly attack. We have in-depth coverage of that as well as the escalating crisis in Iraq with our correspondents and guests, and we begin within CNN senior international correspondent Ben Wedeman in Jerusalem.

Ben, tell us how tense the situation in Israel is right now.

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Brianna, it's very tense. Even here in Jerusalem, I was witness to a march by several hundred Israelis in the center of the city, Jaffa Road, where they were chanting, "Death to the Arabs."

There were Israeli police -- some on motorcycles, some on horses -- trying to keep them under control, but it just gives you an idea of the level of anger and passion that you can see just in the streets down just far from -- not far from where I'm standing.

And in addition to that now, new details are emerging about the kidnapping of the three Israeli teenagers whose bodies were found yesterday.


UNIDENTIFIED MALE (through translator): We lower our heads in deep pain and sorrow.

WEDEMAN (voice-over): As Israelis bury three slain teenagers--


GRAPHIC: I've been abducted.

WEDEMAN: -- a chilling recording has surfaced. Israeli media outlets say it's an emergency call to police placed by one of the young men, 16-year-old Gilad Shaar when he realized he was being kidnapped. Israeli authorities say they did not leak the audio to the media and are refusing further comment.


GRAPHIC: I've been abducted.


GRAPHIC: Put your head down. Put your head down!




GRAPHIC: Put your head down. Hands down!










GRAPHIC: Hello? Hello, hello? Answer! Answer the phone, please. Where are you right now? Hello?

WEDEMAN: The three teens now are a symbol of Israel's struggle with its Palestinian foes. The nation is responding with an outpouring of grief.

Funerals were held a day after the bodies of the young men were found in a field near Hebron. Prime Minister Benjamin Netanyahu delivering a eulogy and promising punishment for those responsible.

BENJAMIN NETANYAHU, PRIME MINISTER OF ISRAEL (through translator): A broad moral gulf separates us from our enemies. They sanctify death. We sanctify life.

WEDEMAN: The Israeli military has begun to retaliate, stepping up air strikes in Gaza overnight and partially destroying the West Bank homes of two suspects, accused of kidnapping the teens 19 days ago while they were trying to hitchhike home from the West Bank. Israel calls the suspects Hamas terrorists.

MARK REGEV, ISRAEL GOVERNMENT SPOKESMAN: These groups want to kill. These groups want to murder. These groups believe that through this orgy of violence that they are somehow cleansing the world for -- for their warped and extreme religious views.

WEDEMAN: Hamas denies it was behind the killings, but warns that if Netanyahu brings a war on Gaza, the gates of hell will open to him. And now a Palestinian news agency says a little known group, whose name translates as "supporters of the Islamic state," is claiming responsibility.


WEDEMAN: And Brianna, this evening the Israeli cabinet is meeting once again to ponder the next moves. Before that meeting, Prime Minister Benjamin Netanyahu said Israel is going to take a three-prong approach. First of all, it's going to be pursuing the kidnappers, the murderers of these three teenagers. It's also going to be cracking down on the infrastructure of Hamas in the West Bank, and finally the prime minister said that Israel will operate against Hamas in the Gaza Strip -- Brianna.

KEILAR: Much more to come. Ben Wedeman, thank you so much.

And let's get more now. Let's bring in our chief national security correspondent, Jim Sciutto. How is the U.S. responding to all of this so far, Jim?

JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: One thing you'd expect and one thing you wouldn't expect. So on the one hand, you have Josh Earnest, for instance, the White House spokesman, encouraging restraint on all sides. He says, you know, prevent this one terrible act from leading to a much broader, much more destabilizing situation. In other words, encouraging Israel but also Palestinian Authority, Hamas from turning this into yet another conflict to rip that country -- that area apart. You'd expect that message.

But the other message you hear, as well, is questioning who's behind it. Josh Earnest saying, you know, we're still seeking some details about who precisely is responsible. The Israeli government is saying it is Hamas. We're going to punish Hamas. I mean, there's been evidence that the two suspects had ties to Hamas, questions about whether senior leadership of Hamas approved this. Was this a -- you know, an approved operation or was it a freelancing operation? KEILAR: They're saying they didn't know about this. Right? That's

what they're saying?

SCIUTTO: Hamas has not claimed responsibility. They're saying early on they praised the abductions, but they didn't claim responsibility for it. You know, do you trust Hamas? That's one thing. But you do have from the White House questioning whether you have hard evidence whether Hamas approved this at the senior levels. I think that's part of the broader message from the administration, saying, "Let's not go to war over this." That no one's going to win, if that's what the situation devolves into.

KEILAR: The other thing that is sort of striking, as all of this happens, is that this follows a push by John Kerry for Mideast peace.

SCIUTTO: Months and months. It was his life work for the early part of his term. And there weren't many people who thought that it was going to go anywhere. But to his credit, to some degree, Secretary of State John Kerry stuck with it. And it didn't go anywhere. We knew that already in the spring. And now you have it taking a step to what could be an even more violent situation there.

And I think more broadly, it shows that this is a difficult part of the world. You know, any policy response has a low chance of success. And you've seen the administration try a number of things. They tried really not getting involved in Syria, Syria expanded into Iraq. Now you have, you know, forces going into Iraq. We'll see if that makes a difference.

You had a peace effort that failed in the Middle East, and of course, now you have a situation like this. So it shows that it is hard to find outcomes that are solutions, as opposed to just outcomes in this part of the world.

KEILAR: Jim, thank you so much.

And now to Iraq and the possibility of even more American forces being sent there. This, as you can imagine, is sparking growing concern about mission creep. CNN Pentagon correspondent Barbara Starr are working that story for us.

What are you hearing, Barbara?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, you know, Brianna, officially, the Pentagon says it's absolutely not mission creep, but I have to tell you, I've talked privately to several military officers who are worried it is just that.


STARR (voice-over): The Pentagon now admitting the number of U.S. troops in Iraq could rise again, depending on what President Obama decides.

READ ADMIRAL JOHN KIRBY, PENTAGON PRESS SECRETARY: Is there a grand total? No, but. But I mean, a -- in terms of a grand total limit, I mean, he's the commander in chief. He makes these decisions.

STARR: The Sunni backed militants are now at the northwestern edges of Baghdad.

KIRBY: That hasn't let up. It's difficult to tell what their intent is.

STARR: Leading the U.S. to escalate its involvement for one crucial reason: Baghdad International Airport. U.S. military officials believe the airport must be protected from attack. It's the only way to evacuate thousands of Americans out of Baghdad if the embassy or the city itself comes under fire.

So the additional U.S. military personnel are going to the airport with armed helicopters and drones. If needed, they will fly overhead between the embassy and the airport, looking for signs of ISIS on the move.

Northwest Baghdad, where the airport is located, very much in the militants' crosshairs.

It's the third escalation of U.S. force in two weeks. At the U.S. embassy in Baghdad, there have been up to 200 troops working there for the last several years. But then on June 16, 275 additional troops were ordered to beef up security.

Three days later, President Obama announced up to 300 military advisors would be sent in after several Iraqi divisions collapsed in the face of an ISIS advance.

Then on Monday, 200 more troops were sent to Baghdad to reinforce the embassy, the airport, and key roads. The Pentagon insists there is no mission creep. Not everyone buys that.

LT. COL. RICK FRANCONA (RET.), FORMER U.S. AIR FORCE INTELLIGENCE OFFICER: We haven't defined what our mission is. How do we know when we've accomplished it? Is the mission to prop up the Iraqi government? Is the mission to evacuate Americans and get out of there? Is the mission to resupply and support the Iraqi army on the ground? I don't think we've heard a clear explanation from the president or the secretary of defense exactly what we're doing there. I know we're there to advise.


STARR: And now perhaps, Brianna, one of the real questions is the status of the Iraqi forces if the fighting were to come to Baghdad. Will the Iraqis stand and fight?

KEILAR: A big outstanding question. Barbara Starr at the Pentagon, thank you so much.

And let's talk about all of this with Rear Admiral John Kirby, the Pentagon press secretary. He's -- we still have, of course, our chief national security correspondent, Jim Sciutto, here, as well. This was interesting to me. We heard in Barbara's report the concern

about mission creep, that there are several military officers who are worried that that is the case. How is that not a major concern here?

KIRBY: Well, obviously, we're always concerned about mission. But I'll tell you: the mission is very clear, and there's -- and there's sort of two tracks to it. One is security assistance at the embassy, at our facilities there in and around Baghdad and, of course, at the airport right now.

No. 2 is what we consider an assess and advise mission. So right now we're in the assessment phase. Eventually, we'll get to the advise phase of that mission. But it's a two-track process, a two-track resourcing demand. And that's the mission that we're on right now.

KEILAR: But is there any timetable for how long these troops will be there?

KIRBY: They're going to be there for as long as they're needed, but the president's been very clear that this is a limited, short-term duration mission for all these troops. There's no expectation that they're going to be there for an inordinate amount of time, but they're going to be there as long as they're needed.

KEILAR: Could there be more troops going?

KIRBY: Well, I mean, I can't -- it's not for me to rule that in or out. The commander in chief makes these decisions. I think what we've tried to do is be as flexible to the requirements as possible. So I certainly can't rule out that there could be additional troops. But if there are, they won't be in great number and again, they won't be there for a long period of time.

KEILAR: What's the mission?

KIRBY: The mission is twofold. One to help provide static security assistance for our facilities in and around Baghdad and to allow the embassy to keep doing their job which is, you know, diplomatic relations with the government of Iraq. The embassy is still open. And we have an obligation to protect them and our property there.

No. 2, we want to assess the state of the situation on the ground, assess the Iraqi security forces and their readiness.

KEILAR: But then what? Beyond the assessment?

KIRBY: After the assessment--

KEILAR: What if they're not ready?

KIRBY: After the assessment, we're going to--

KEILAR: They're not doing so well at this point.

KIRBY: After the assessment phase, which won't take more than a couple weeks, we expect to flow in perhaps additional advisors so the numbers could go up in terms of that mission to help advise the Iraqi security forces, do what they need to do in the field against the ISIL.

SCIUTTO: What happens if U.S. troops come under fire in that mission, particularly when they're out beyond the wire of the U.S. embassy with Iraqi troops in forward positions?

KIRBY: It's a fair question. First of all, they're going to embed only at higher headquarters levels, maybe down in the brigades. So they're not going to be, quote unquote, "out in the field."

That said, they are armed, and they always have the right of self- defense. They know that. And I would remind that you these advisors, these are largely Special Forces troops. They know how to take care of themselves.

KEILAR: And lastly, if -- if there is no end date here, there's no -- there's no real cap to the number, I mean, can't you see how people look at this and say, "There could be mission creep. This is sort of open-ended"?

KIRBY: No, again, the missions are very clearly defined. And within each one of those, the president has given a cap, right, up to 200 -- up to 475 in terms of security assistance. He made that clear in both letters to Congress on that. And then for the advisors up to 300. And we're not at that level right now. We're at about 180 on the ground fulfilling that mission for assess and advise. So we're not -- we're just over halfway what he actually authorized, which was 300.

SCIUTTO: If Baghdad was under threat, if there was an assessment that Baghdad could fall, would these troops go in there to defend Baghdad?

KIRBY: That's not the mission. The mission is security assistance for our personnel, our property and also to assist and advise the Iraqi security force. That's the job.

KEILAR: All right. We want to talk to both of you more about this, so stand by. When we come back, we'll be talking about the front runner to replace Iraq's prime minister. One of them, I should say. He is the same man who fanned the flames that actually ignited the Iraq war.


KEILAR: Critics call him dishonest, self-promoting and vengeful. He also played a key role in convincing the Bush administration to invade Iraq in the first places in 2003. And now he is a frontrunner in the race to replace Prime Minister Nuri al-Maliki.

CNN's Brian Todd is here with more on the very controversial return of Ahmad Chalabi. Brian, tell us more about this.

BRIAN TODD, CNN CORRESPONDENT: Well, Brianna, many analysts say what Iraq really needs is a Nelson Mandela who can bring embittered, violent political enemies together. Is Ahmad Chalabi, the man who sold the U.S. a bill of goods on weapons of mass destruction, Iraq's Nelson Mandela? Many have grave doubts.

But right now Chalabi is considered one of the top contenders to come in and unite Iraq in one of its worst crises.


TODD (voice-over): He had President Bush's ear, was a guest at the State of the Union address. He relentlessly campaigned for America to throw Saddam Hussein out under the premise that Iraq had the deadliest weapons.

AHMAD CHALABI, IRAQ NATIONAL CONGRESS: I believe the U.S. will find Iraqi weapons of mass destruction. They certainly found the software. We've been talking to many of the scientists who were involved in these programs, and they confirm the manufacture of those weapons.

TODD: Ahmad Chalabi's pronouncements and the intelligence he fed to U.S. officials influenced the Bush administration's decision to invade.

And the information was spectacularly bogus.

Now, Chalabi is being talked about as a serious contender to replace Nuri al-Maliki as Iraq's prime minister. The very idea brings back bad memories for some American observers.

MICHAEL O'HANLON, BROOKINGS INSTITUTION: This is a crazy world. I can't really believe this is a good leader for Iraq. On every single issue, he was either dishonest, self-promoting or, you know, vengeful towards his previous enemies, and I just saw nothing good in the man.

TODD: Chalabi had American military and political leaders thinking the Iraq war would be a cakewalk. Later he was accused of tipping Iranians off to American intelligence secrets and effectively banned from the U.S. embassy in Baghdad. He denied the claims.

Before the war, Chalabi was convicted and sentenced in a massive bank fraud case in Jordan and escaped to London.

In addition to credibility questions, there are also concerns over how effective he would be as prime minister. During the war, Chalabi, who's Shia, headed up the effort to push top Sunni leaders out of their jobs. But despite that, a spokesman for popular Shiite cleric Muqtada al-Sadr told us Sadr's followers, a key bloc in Iraq's parliament, believe Chalabi is a viable candidate who can work with Sunnis and unite the government.

James Jeffrey, former U.S. ambassador likes Chalabi, calls him courageous, and says in the current spiral of violence, there aren't great alternatives.

JAMES JEFFREY, FORMER U.S. AMBASSADOR TO IRAQ: Iraq is disintegrating before our eyes. This is a total emergency situation. The only way out of this thing -- and there's only limited chances of that -- is for Iraq to find a replacement to Prime Minister Maliki. If he's the lowest common denominator, let it be. Let's give this guy a chance. (END VIDEOTAPE)

TODD: How does the Obama administration feel about Ahmad Chalabi possibly becoming Iraq's next leader? The White House and the State Department says it's not the role of the U.S. to support any candidate. Our efforts to get Ahmad Chalabi himself to comment for this story were not successful -- Brianna.

KEILAR: So what are the chances, really, here, Brian, that Chalabi might win?

TODD: Well, some argue he's really got kind of a long shot here. He doesn't have much of a mass following and maybe not much of a chance to win, but he's a very savvy political operator. He's a moderate, and his alliance with Muqtada al-Sadr's followers is very important here. That could give him some momentum if they hold an election any time soon.

KEILAR: All right, Brian Todd. Thanks so much.

And let's bring back in now Rear Admiral John Kirby, the Pentagon press secretary, along with Jim Sciutto, our chief national security correspondent.

Can we really trust Chalabi when you listen to everything laid out there in Brian Todd's piece?

KIRBY: Well, look, again it's not for the U.S. military to get involved in Iraqi politics. This is -- these are decisions that the Iraqi people have to make. Our focus is on trying to make sure that the Iraqi security forces are ready to meet the threat that ISIL.

KEILAR: But he's connected. He's known. He's moderate. He's savvy. Is he someone that the U.S. could work with?

KIRBY: Again, we're not going to pick sides. But what we do want is political leadership in Iraq that's inconclusive and that is non- sectarian and that can be and that can unite all the people of Iraq together to meet this common threat.

KEILAR: I want to follow up on something that Jim asked you a short time ago, which was what would happen if Baghdad were under threat of ISIS? Would the U.S. really stand by and let the airport fall?

KIRBY: Well, we already think -- we think that Baghdad's already under a legitimate threat by ISIL and the forces surrounding Baghdad. But we're also seeing Iraqi security forces and Shia militia start to reinforce their positions there. And we have every indication, everything we're seeing, to suggest that they will fight to defend their capital.

Again, our mission -- we talk about mission creep. It's not mission creep. It's mission discipline. We know exactly what the two tracks of our mission are. They're security assistance for our personnel and property and trying to get to an advisory role for the Iraqi security. SCIUTTO: I know that the assessment part of the mission from the U.S.

military advisors is far from over. You say there's one positive side that you have the Iraqi military and Shiite militias defending Baghdad at this point. Are you seeing any other positive signs that they're doing better this week than when were those first couple weeks when ISIS forces marched, you know, through Mosul and other cities in the north?

KIRBY: Absolutely, Jim. As you know, over the weekend, Iraqi security forces started to move north from the capital up near Tikrit to try to take back ground that ISIL had captured, and they did so.

They're also -- they've retaken the Baiji oil refinery. Now, it's still contested, but we think it's largely in the control of the ISF. And they still hold the Haditha Dam. So I mean, they are -- they are making some gains.

KEILAR: I want to play, actually, some sound from retired Army General David Petraeus, someone very intensely familiar, obviously, with Iraq. He was also the CIA director. And he said that he saw this coming. This is what he said at the Aspen Ideas Festival.


GEN. DAVID PETRAEUS (RET.), U.S. ARMY: I think people who have watched this closely -- and I've been one of them -- have seen this coming. It came out -- had quite a good campaign. They've been conducting reconnaissance.

And I think what really took place, as well, is that the population was not reluctant to see some of these security force leaders and their members get pushed out. Again, keep in mind, this is a part of the country that had come to feel disenfranchised again, cast off and not having a seat at the table.


KEILAR: Is this something that top brass saw coming?

KIRBY: Well, I think we've been watching ISIL and their progress not just in Iraq but in this area. And they go back and forth across that border. We've been watching that for quite some time. Absolutely.

And it's not something that just started yesterday. And I would remind you, too, that you know, some of the performance of the Iraqi security forces up in the north wasn't so much a statement about training and readiness so much as will.

And we believe that the government in Iraq did not take full advantage of the opportunity that the ISF was given in 2011 when we left. When they were trained and ready and competent with the threat. The threat has changed, but there wasn't enough of a political process around the military, proper organization, manning, resources and inclusiveness to keep that will to fight going.

SCIUTTO: Intelligence officials told us for months they've been warning about ISIS's growing strength and even with the specificity of saying that ISIS had their targets set on Baghdad. This is something that has been churning through. The question is the how would Iraqi forces respond? Obviously, up north they did not respond well.

KIRBY: Did not respond well, but again, we think they're stiffening their spine in and around Baghdad. We really do.

KEILAR: And something else is very significant, that we have heard reports of ISIS members marching through Iraq with what appeared to be a SCUD missile. Likely looted from Iraqi military bases. This is the expectation; we have pictures of this here. Is this what happened? Are those SCUD missiles that ISIS has? How concerned should we be? Where did they come from?

KIRBY: Well, I have to take a little bit more -- longer look at the video to say definitively. But we do know that they have captured quite a bit of Iraqi equipment from the north when they started grabbing ground up there. No question about that. They seem to be taking the kinds of things that they can use, things that won't slow them down. So again, I don't know much more about the SCUD missile. But it is a concern. The amount of gear that they've been able to capture.

KEILAR: This is a big deal, Jim, to see something like this.

SCIUTTO: We've spoken to James today and other military experts who looked at this video, and they said that their best assessment -- again, you're doing this from afar, you're looking at videos that it looked old and didn't look operable. Hard judgment to make in the field. And there's also the question. There was a question early on whether, you know, helicopters might be captured, whether they could fly them. So can they launch the missile? I think that's still an open question.

But listen, they're getting a lot of military gear, which they're using, and everything they pick up, I think it's safe to say, you know, it's a dangerous thing for them to have.

KIRBY: And let's not forget, I mean, some of what they're doing is for propaganda value in general, just to -- just to instill fear.

KEILAR: We certainly see that in the pictures. Jim Sciutto, thank you so much. Pentagon spokesman and Rear Admiral John Kirby, really appreciate you being with us.

KIRBY: Thanks for having me.

KEILAR: And coming up, Tropical Storm Arthur threatening to wash out Fourth of July celebrations along the East Coast. We're tracking that storm.

And also lawmakers quietly -- very quietly -- change a rule to keep you in the dark about one of their biggest perks.

(COMMERCIAL BREAK) KEILAR: Members of Congress do not have to disclose who funds their travel. Did you know that? That is the new guidance from the House Ethics Committee for members in a rule change that was approved, mm- hmm, behind closed doors.

And our justice correspondent, Pamela Brown, has been looking into this.

This is pretty controversial stuff.


And, in fact, CNN is just learning at least one Congress member is filing an official request asking the Ethics Committee to reverse course on this. Now, members of Congress are allowed to accept trips overseas from private sponsors like nonprofits as long as they disclose who is paying for the travel, but the Ethics Committee quietly changed that requirement, a change that has transparency and government advocates up in arms.


BROWN (voice-over): Members of Congress have had the travel bug for years, visiting places like the Old City in Jerusalem to get a sense of the age-old problems there. In fact, Israel, France, Turkey and Ireland rank among the most popular destinations for lawmakers who are traveling there for free, because private sponsors pick up the tab totaling millions of dollars.

It used to be each member of Congress must reveal who paid their tab on their personal financial disclosure forms, one of the most high- profile forms lawmakers must file. Now that requirement has changed.

MELANIE SLOAN, EXECUTIVE DIRECTOR, CITIZENS FOR RESPONSIBILITY AND ETHICS IN WASHINGTON: It's clearly been done to allow members to escape accountability for lavish trips.

Whenever a member of Congress takes an expensive trip, watchdog groups or their constituents ask questions, why did they need to take this trip? And if they don't have to reveal this trip on their financial disclosure forms, people won't know about it.

BROWN: Buried on page 35 in the House Ethics Committee's guidelines provided to Congress members states the change, meaning the gift to travel regardless of its dollar value and paid for by a private source does not need to be reported. The unpublicized change went unnoticed until a reporter with "The National Journal" spotted it.

The chairman of the House Transparency Caucus says that's part of the problem.

REP. MIKE QUIGLEY (D), ILLINOIS: I only know what I read in the newspapers. I did not know this had taken place.

BROWN: Now Congress members must disclose all travel records to the clerk's office instead. The House Ethics Committee says the information is still accessible and the change streamlines the process.

Congressman Quigley disagrees.

QUIGLEY: A wise Supreme Court justice said that sunshine is the best disinfectant. It doesn't hurt us to be duplicative. I think it helps us at a time when trust in Congress is at an all-time low to be as open and accountable as we can.

BROWN: The trips in question are financed by a private nonprofit groups, usually billed as fact-finding missions. House Democratic Leader Nancy Pelosi is speaking out about the change in a statement, asking the House Ethics Committee to reverse course.

"While the committee's aim was to simplify the disclosure process, Congress must always move in a direction of more disclosure, not less," she says.


BROWN: And in a statement, the Ethics Committee tells CNN it is committed to effective and efficient public disclosure and that it continues to enforce the requirement that all House members and staff who wish to accept privately sponsored travel must continue to receive prior approval and file detailed paperwork about any such trip within 15 days.

Those requirements have not been changed. So, Brianna, the argument could be made that actually you can get access to their travels, Congress members' travels, even sooner now with this change.

KEILAR: That you would get it 15 days later. I see that point.

Pamela Brown, thank you so much.

And joining us now to discuss more, CNN chief political analyst Gloria Borger and senior legal analyst Jeffrey Toobin.

Is this a big deal, do you think, Gloria?



BORGER: Look, this is one of those this is one of those issues that sounds really important because, of course, we're all for disclosure in the wake of the Jack Abramoff problems in 2006-2007, the super lobbyist who took people on--


KEILAR: You're not saying it's not a big deal because get it the short-term, but not--

(CROSSTALK) BORGER: What you have to do is you -- you take a trip. You have to disclose 15 days after the trip. What this did was try and make the paperwork easier and say, OK, you disclose 15 days. You don't have to duplicate it on your annual form.

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: You know what I think happened is, members of Congress sat around and they said let's figure out a way for the American people to hate us even more.


BORGER: That's the problem.


KEILAR: What if I want it the 15 days later and I want to see it on their annual form? What if I say that?

BORGER: That's just fine. And you can do that if you click a button. You can click a button.

And if you want to look up Nancy Pelosi's travel, it's all there for you.

KEILAR: OK. But you're kind of rolling your eyes.


TOOBIN: Why change it to any less, any slower? Yes, eventually--


BORGER: It's not slower. It's faster.

TOOBIN: Well, it just -- it seems to me that if you are a member of Congress and you're in an issue about disclosure, any change where it's less transparent, it just seems like a dumb idea.


BORGER: Here's the thing.

My bottom line is they were trying to streamline it. In trying to streamline it, they should have just left it alone, because you don't even want a eensy-teensy-weensy the appearance of not disclosing as much as you can.

KEILAR: That's a good point.

OK, I want to turn now to immigration. And Congress, when you talk about them falling out of favor with Americans, it's dead. This issue is pretty much dead for this Congress. President Obama has said, I'm going to go it alone in this regard.

I'm wondering, does this -- does he have a potential here of overreaching? Does President Obama potentially overreach and actually embolden the Republican base, where you have Speaker Boehner already suing him for going alone?

TOOBIN: No, already saying he's going to sue him.


TOOBIN: It's a big difference.


KEILAR: It's a big difference, threatening to sue, which is sort of a lot of drumming ahead of a midterm election.

TOOBIN: This is a hypothetical lawsuit about a hypothetical change.


TOOBIN: So it's like saying who's going to win a soccer game in the 73rd minute when there's no score. You just don't know at this point who's going to win.

But I think the president -- he's not -- is -- anything he does Congress, the Republicans are going to hate. So, why shouldn't he try to change the law in a way that he thinks is better? I just -- the idea that he will somehow offend Congress' delicate sensibilities is just crazy.


KEILAR: But does he stir up Democrats enough for how much he's stirring up Republicans?

BORGER: Yes. That's what he's trying to do. He's trying to bring out his base. The Republicans are going to already have their committed, motivated voters out in 2014 because it's the sixth year of a presidency. He's got to figure out a way to get Democrats in the Senate to the polls.


KEILAR: My last question, I have to get in. It's really great.

And that is, Ruth Bader Ginsburg's dissent on the Hobby Lobby case. It's gained so much popularity. Check it out. It's inspired a T- shirt design. We have that. It's pretty hilarious.

"Notorious RBG." And check it out. It even has its own song. Listen.


UNIDENTIFIED MALE (singing): Any decision to use contraceptives not propelled by the government. It's the woman's autonomous choice, informed by her doctor.


KEILAR: All right, I mean, look, you have got acoustic music going along with this.

Is this something that is going to rally Democrats?

TOOBIN: Not the song.


KEILAR: Good point.

TOOBIN: But I think the issue is a big one.

I mean, you know, the Republican Party ought to be a little careful talking about contraception, considering how much trouble they have gotten into in the past elections on these issues about abortion in Indiana, in Missouri.

This is a case where, you know, women's employers are deciding what sort of contraception that they can get. And, you know, I don't think that's a winner for them politically.

BORGER: And this is why the Democrats are going to bring it up on the Senate floor, knowing full well that they will take a vote that they will lose, but they will bring it up because they want women to come out and vote for them again in the midterm elections.

So they can turn this loss, which it was, into some kind of a political momentum.

KEILAR: All right, Gloria and Jeffrey.

TOOBIN: The substance matters too, though.


BORGER: Oh, no. Of course.

KEILAR: Thank you so much, Jeffrey and Gloria.


KEILAR: Really appreciate it.

And coming up, look at this. We're watching this guy, the first storm of the 2014 season barreling towards the East Coast. We have got your forecast, and an urgent new warning from the Obama administration that roads and bridges like this one are in danger of collapse. We have got details ahead.


KEILAR: The first named storm of the 2014 hurricane season is threatening July Fourth weekend as it picks up strength off the coast of Florida and it barrels towards the East Coast.

(WEATHER UPDATE) KEILAR: Well, there's an urgent warning from the Obama administration about America's roads and bridges in serious need of repair. The nation may be actually on the brink of a highway crisis.

And now lawmakers are scrambling to find the funds to maintain a safe system.

Our Rene Marsh is on the road checking out that infrastructure, and she's joining us now.

Hi, Rene.


There is a deadline that comes along with that scramble to find cash. Right now, we're live on the roadways here in Washington, D.C., not far from the Capitol, where a battle is brewing. You want to know what's at stake? Take a look here.

You think traffic is bad now? Well, it's projected it will only get worse if they don't fix the problem. And if you don't drive, guess what? There are consequences for you, too.


MARSH (voice-over): This summer, millions of Americans hitting the road will cross bridges and roadways in dire need of improvement and repairs. Getting to your destination likely won't be easy. Expect traffic jams because decades-old bridges and roads weren't built to handle today's traffic.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: If this Congress does not act by the end of the summer, the Highway Trust Fund will run out.

MARSH: Dubbed the Transportation Fiscal Cliff. A federal fund used to repair America's crumbling infrastructures just weeks away from going bankrupt. A potential crisis for commuters, considering the American Society of Civil Engineers gives U.S. infrastructure a D- plus. And one in nine of the nation's bridges are structurally deficient.

Look no further than Delaware for what the impact could look like. An emergency shutdown of the critical I-495 Bridge. The problem? Cracks and leaning support columns. Old underground pipes breaking in cities across the country causing major flooding.

The president and Transportation Secretary Anthony Foxx say failure to fund, repairs and improvements will cost Americans in more ways than one.

(On camera): How many jobs potentially at stake here?

ANTHONY FOXX, TRANSPORTATION SECRETARY: So we're estimating 700,000 jobs at risk.

JONES (voice-over): In 2011, commuters wasted $2.9 billion gallons of gas just sitting in traffic costing the average consumer more than $800 per year according to one study. The Highway Trust Fund gets revenue from an 18.4 cent per gallon gas tax. But the tax has not increased to keep up with inflation since 1993. Now the clock is ticking as Congress debates how to prevent the fund from going broke next month.

FOXX: We need to be able to get those investments moved in to fill in gaps, reducing congestion, lowering travel times, improving the ability of the American public to move around and for goods to move around. But that can only happen if Congress acts.


MARSH: All right. Well, today, states all across the country received letters essentially saying prepare for the worst. Those checks are about to slow down. Now what lawmakers cannot decide on is how to pay for these roadways that we're looking at here essentially. They just don't agree on the best way to go about it.

Back to you, Brianna.

KEILAR: All right. Rene, we know you'll be following that.

And just ahead it's her first TV interview in a decade. We have the blunt new conversation with Monica Lewinsky, but first, more than $100 million of your donations to disabled veterans pocketed by fraudsters.

A CNN investigation reveals rampant deception about a -- at a charity for vets. We have that next.


KEILAR: It's a charity that says it serves those who serve, the men and women of the U.S. Armed Forces. But a CNN investigation reveals it's full of deceptive activity so bad it's described as despicable and it's facing a precedent setting fine.

CNN's senior investigative correspondent Drew Griffin reports.


DREW GRIFFIN, CNN SENIOR INVESTIGATIVE CORRESPONDENT (voice-over): It is one of the largest settlements ever recorded by the New York Attorney General's Office for deceptive charitable fundraising. The Disabled Veterans National Foundation's chief private fundraiser Quadriga Art has agreed to pay huge fines, change the way it does business and possibly set a new and much more transparent course for charities across the nation.

Attorney General Eric Schneiderman calls the private fundraising firm Quadriga, quote, "despicable," in how it has deceived the mostly old and gullible out of hundreds of millions of dollars.

ERIC SCHNEIDERMAN, NEW YORK ATTORNEY GENERAL: Some of these pleas that were put up by Quadriga were heart-wrenching. That they're helping some poor particular veteran get a car and get a better life, and we've now learned through our investigation in some cases those stories were totally fabricated. That the foundation at issue had never helped the veterans that they used in their ads.

GRIFFIN: Quadriga will pay a $9.7 million fine and it will forgive nearly $13 million in debt still owed it by the Disabled Veterans National Foundation.

(On camera): All right. So now you're getting back to me, is there going to be an interview?

(Voice-over): CNN has been chasing Quadriga and the Disabled Veterans National Foundation for years, ever since we found out these two groups -- one a company, one a charity -- have been taking your generous donations to our nation's disabled veterans and pocketing almost all of the money.

(On camera): We're doing a story on Quadriga Arts. We're with CNN.

(Voice-over): Quadriga, the investigation discovered, had almost total control over the charity. In effect the charity was a front for Quadriga's profit-driven scheme.

SCHNEIDERMAN: They've got the folks who set up the charity going, they used their council to advise the charity, and they entered into a contract which enabled Quadriga to control the flow of funds. They -- Quadriga put up the money for the direct mail campaigning but then it had total control and discretion over the funds going in.

GRIFFIN: Out of a total of $116 million raised by the veterans charity over the years, $104 million of it went to the direct mail fundraiser according to New York state. And most of the donations that it made called gifts in kind like those coconut M&Ms were useless to veterans.

SCHNEIDERMAN: The abuses here really span the whole gamut of abuses that you could see in a charitable organization, that's why this is such an interesting case because they were falsifying the value of the gifts in kind. They were sending things that no disabled veteran needed like M&Ms, chefs hats.

GRIFFIN: As a result of the settlement, the DVNF founding board members including its founder Priscilla Wilkewitz are being removed from the charity.

Its executive director has already left and the charity is banned from doing any business with Quadriga Art for three years. In addition to its huge fine and the forgiven debt, Quadriga Art itself and its president Mark Schulof must now fully disclose its fundraising costs up front so would-be charities understand just how much of the donated money, your donated money, Quadriga will keep for itself.

SCHNEIDERMAN: The donor's intent in this case was to help disabled veterans and take money that some people are trying to spend to help disabled veterans just to feed your own overhead and to pay your executives off as Quadriga did here is pretty despicable. GRIFFIN (on camera): Quadriga Art, which is a family company,

announced that an uncle who helped run the company, Tommy Schulof, has resigned. His nephew is running the company, Mark Schulof. And he released this statement saying, "We have taken responsibility for the mistakes that were made. We deeply apologize for our actions and have taken steps to ensure that this situation will never occur again."

As for the Disabled Veterans National Foundation, their four founding members have been separated from that organization and now they have released a statement as well saying, "This is very significant and a positive step for the Disabled Veterans National Foundation." That, they say, "will enable us to improve the services we deliver and increase transparency with our loyal donors."

Drew Griffin, CNN, Atlanta.


KEILAR: And coming up, as the crisis in Iraq deepens, the U.S. is sending more troops into Baghdad. Are we seeing mission creep unfold?

Plus her first TV interview in a decade, Monica Lewinsky is speaking out and she's not pulling any punches.

Also the tropical storm that's threatening your July 4th weekend. Stand by for the latest forecast.


KEILAR: Israel's revenge, punishing strikes aimed at terrorists as violence and turmoil spread across the Middle East.

I'll ask President Obama's top spokesman about fears of another destabilizing war.