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Bradley Manning Verdict; Interview With Israeli Ambassador to the United States Michael Oren; WikiLeaker Not Guilty of Aiding Enemy; 'Real Housewives' Star Faces Fraud Charges; Issa Accuses IRS Chief of Obstruction of Justice; Who's So Vain?

Aired July 30, 2013 - 18:00   ET

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

WOLF BLITZER, CNN HOST: Happening now, the lesson for leakers of America's secrets. Now that an army judge has found Bradley Manning not guilty of aiding the enemy. We'll talk about the mixed verdict and what's next.

Also, after new Middle East peace talks resume, the Obama administration setting an ambitious deadline for the deal. I will ask the Israeli ambassador to the United States if that deal is doable.

And a real housewife and her husband are free on bond, their day in court on fraud charges.

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

Private 1st Class Bradley Manning is getting ready to learn his punishment for the largest leak of classified information in U.S. history. Today, an Army judge found him guilty of nearly all the counts against him, but -- but cleared him of the most serious charge. The judge rejected the prosecution's claim that Manning aided al Qaeda by sharing military secrets with the group WikiLeaks.

Our Pentagon correspondent Chris Lawrence is joining us now. He's been covering Manning's court-martial over at Fort Meade outside Washington, D.C., in Maryland.

So tell our viewers, you were inside the courtroom, how it all went down, Chris.

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Wolf, basically I was sitting about 10 feet away from Private Manning when this sentence came down. And basically he snapped to attention wearing his full dress blues, possibly one of his last acts truly as an American soldier.

He didn't say anything, didn't react as the judge announced her not guilty verdict. But his attorney did have a slight smile as he heard those two words not guilty for that most serious charge of aiding the enemy. But at the end, after the end of the five-minute hearing as the judge adjourned the hearing, Manning turned to his attorney, said something very low, and did seem to have a slight smile on his face, perhaps some relief that he wasn't convicted on the most serious charge, which obviously could have sent him to prison for life with no parole.

BLITZER: The whole notion of this not guilty verdict, was there an explanation -- did the judge offer any explanation? Or did she simply say not guilty?

LAWRENCE: She simply said not guilty, a very, very short hearing. About five minutes. But basically, Wolf, there's been some contention about whether prosecutors have actually proved that there was really damage done to national security.

The defense has contended that there was none, and they have said there was no real evidence, specific evidence presented that there was true damage done to national security because of these leaks beyond the simple embarrassment of State Department officials who saw their private cables become very public.

Of course, Manning was convicted, as you mentioned, on a range of other counts of espionage, and so in total he faces about 136 years in prison. What's going to happen now tomorrow on Wednesday, prosecutors will put out their argument of what they think he should serve. The defense will do the same. And the judge is going to come up with a number. She could go under some of the most serious years, something as 10 years. She could give him three to four of that. She could let some sentences run concurrently or she could string them out.

It's her discretion. But she's going to come down with a specific number. That's what Bradley Manning is going to serve.

BLITZER: Chris Lawrence over at Fort Meade, also the home of the National Security Agency, Chris, thanks very much.

Still ahead, Bradley Manning, hero or traitor? A WikiLeaks lawyer and a Republican congressman, they are standing here this hour for a major debate on Bradley Manning.

Let's go to Central Florida right now and huge explosions at a propane tank refilling plant. Residents say it felt like bombs going off at the plant that was packed with more than a million pounds of propane. Eight workers were hurt in the blast and the fire last night.

CNN's Adriana Hauser is in Florida.

(BEGIN VIDEOTAPE)

ADRIANA HAUSER, CNN CORRESPONDENT: Wolf, this community here in Tavares, Florida, is relieved to learn there were no fatalities given the circumstances of this explosion and the huge blaze that followed. Now they're just waiting for answers. They want to know what caused this incident.

UNIDENTIFIED MALE: Did you see that?

HAUSER (voice-over): While most residents were going to bed or already asleep, a series of explosions rocked the rural, quiet city of Tavares in Central Florida. The Blue Rhino propane plant went up in flames around midnight. Authorities feared the worst. There were some injuries among the workers. But miraculously, no one was killed.

LT. JOHN HERRELL, LAKE COUNTY SHERIFF'S OFFICE: Eight were transported to local hospitals in the area. At this point according to the Blue Rhino management, everyone whom they knew to be there last night that was scheduled to work has been accounted for.

HAUSER: A spokesman for Blue Rhino said 24 workers were inside the propane plant at the time of the explosion. Officials say they were actively manipulating some of the 53,020-pound propane cylinders that were inside the plant. The focus now shifts to the investigation. And there are already some theories.

RICHARD KEITH, TAVARES FIRE DEPARTMENT CHIEF: We don't think that there was any act of sabotage or anything like that. We honestly think it was probably an equipment failure with a combination of maybe human error from one of the staff.

HAUSER: Fire Chief Richard Keith says that more than 60 firefighters and 24 emergency workers responded. The fire was under control just hours after it started.

We were allowed to tour the facility.

(on camera): We're inside Blue Rhino's propane plant. As you can see behind me, there's 53,000 cylinders. According to the fire department, many of them exploded last night.

(voice-over): It is not known how many of the cylinders exploded in the facility. But Tavares Mayor Robert Wolfe said he found comfort in knowing that this could have been much worse.

ROBERT WOLFE, MAYOR OF TAVARES, FLORIDA: I'm relieved that as of right now and last night that nobody had gotten killed at this site.

HAUSER: A feeling everyone in this community shares.

(on camera): Wolf, we know OSHA is assisting in this investigation and so is the state fire marshal's representatives. Both agencies were here earlier today looking into what went on late last night -- back to you.

(END VIDEOTAPE)

BLITZER: All right. Adriana Hauser, thanks very much.

Another series of fiery explosions, this time at a biofuels plant in Kansas. Flames and thick black smoke were seen shooting up into the air this morning. Fire crews say corn oil was burning inside. A dozen people were at the plant when the fire started. But officials say they all got out safely.

We're getting new details of a very frightening scene in Kansas City, Missouri. An SUV slammed into a Cadillac sending it crashing through the front wall of a day care center with about 40 children inside. Police say three children were injured, including two who were trapped under the car. An adult was also hurt. But police say none of the injuries are life-threatening. They say the driver of the SUV is elderly. The driver of the Cadillac ran away from the scene.

A Spanish court says the driver of the high-speed train that derailed last week was on the phone with railway staff at the time of the crash. We're told that information comes from the train's data recorder. The court also announced that the train was going 95 miles an hour when it careened around a curve and crashed; 79 people were killed. The driver has been charged with homicide and causing injury due to professional recklessness.

Up next, new talks and new hope for a Middle East peace deal after so many years of frustration. I will ask Israel's ambassador to the United States what if anything is different this time.

And did the judge get it right? Should Bradley Manning have been acquitted of aiding the enemy? We're going to hear two very different views.

(COMMERCIAL BREAK)

BLITZER: Long-stalled Middle East peace talks have now resumed here in Washington, with the U.S. prodding both sides to follow an ambitious timeline.

The secretary of state, John Kerry, was flanked by the Israeli and Palestinian negotiators as he laid out the goal.

(BEGIN VIDEO CLIP)

JOHN KERRY, U.S. SECRETARY OF STATE: Our objective will be to achieve a final status agreement over the course of the next nine months.

(END VIDEO CLIP)

BLITZER: John Kerry saying "a final status agreement over the course of the next nine months."

Michael Oren, the Israeli ambassador to the United States, is here.

Is that a firm deadline, that a deal has to be worked out over the next nine months?

MICHAEL OREN, ISRAELI AMBASSADOR TO THE UNITED STATES: Good to be with you, Wolf, again.

That is our desire. Prime Minister Netanyahu is committed to that timeframe. And he strongly believes that if the Palestinians negotiate with good faith, with seriousness and remain at the table, that's the most important situation.

Yes, we can reach that historic agreement within nine months.

BLITZER: You think that's doable?

OREN: We do.

BLITZER: You're optimistic that it's going to happen? OREN: We believe, again, that if the Palestinians stay at the table, if the Palestinians stay at the table, that that is the -- proving the crucial condition in which that will enable us to reach the peace agreement based on two states for two people, if they stay and they negotiate with goodwill, yes, within nine months we can work out all of the core issues.

And the secretary of state talked all the core issues, whether it be territory, security, mutual recognition, even Jerusalem, we can work out within nine months.

BLITZER: Is this -- I know you released some Palestinian prisoners to set the stage for these negotiations.

Are you ready to, over these nine months, take other measures to reassure the Palestinians of your good faith, for example, freezing settlement activity?

OREN: Well, the Palestinian prisoners will be released over a staged period as the Palestinians remain at the table and keep on negotiating and as they remain at the table, we will, as in the past, we will consider other measures to build confidence with the Palestinians.

Senator of State Kerry has talked about a $4 billion program to spur or jump-start the Palestinian economy, which we also think will create the right conditions for moving forward in the peace process.

BLITZER: Well, listen to this other clip from what the secretary, John Kerry, said today at the State Department. Listen to this.

(BEGIN VIDEO CLIP)

KERRY: We have worked very closely with our Palestinian friends to help develop Palestinian security capacity. And we cannot forget that the security of Israel will also benefit Palestinians next door. The Israeli government has recognized this, which is why it will be taking, in the next days and weeks, a number of steps in order to improve conditions in the West Bank and in Gaza.

(END VIDEO CLIP)

BLITZER: All right. So what does he mean, that you're going to be taking a number of steps in the next few days and weeks to improve conditions, not only in the West Bank, but in Gaza as well?

OREN: Well, Senator of State Kerry had set down a fundamental ground rule for negotiations. And that is everything that goes on in the negotiations stays in the negotiations and that he'll be the only source reporting on what goes on in those negotiations. And we are very much going to respect that ground rule. So I'm not going to go into great detail.

But what I can say is that in the past, we have discussed with the United States -- and with the Palestinians -- ways in which we can build confidence, where that we can enhance living conditions in the West Bank -- (CROSSTALK)

BLITZER: And Gaza as well?

OREN: Well, in the past we have -- we have eased restrictions on Gaza in accordance with the willingness of the Hamas de facto government there to abide by a cease-fire. We had no interest in hurting the people of Gaza, but Hamas was shooting rockets at us. It was very much -- very difficult for us to ease restrictions when we're under massive rocket fire.

(CROSSTALK)

OREN: Right now, it's quiet.

BLITZER: So will you ease the encirclement, shall we say, of Gaza?

OREN: Again, we -- not going to go into detail as to what we're going to do in these negotiations. But the general thrust is to increase and enhance, augment conditions in the territories in order to create the right atmosphere for going forward. We want peace and we want to create the right environment for getting there.

BLITZER: Do you envisage a day where Hamas would join the other Palestinians, Mahmoud Abbas, in this negotiation with Israel?

OREN: Well, the United States and the international community have been very clear about what the conditions would be for Hamas to join those negotiations. They have to disavow terror; they have to recognize Israel and they have to accept all previous agreements between Israel and the Palestinian Authority. Up to now, they have categorically rejected all --

(CROSSTALK)

BLITZER: Do you think they might change, though?

OREN: I haven't seen any sign of it. They keep on rejecting them. What we do hope is that someday, if we strike a historic peace agreement with the Palestinians in the West Bank and we see that peace actually yields great dividends for both Israelis and for Palestinians, the people in the West Bank and in Gaza will say we want what they want in the West Bank, and they'll join the peace process.

BLITZER: The region is in turmoil right now, in Syria. Jordan's got major problems; Lebanon, Iraq, Egypt obviously, a major problem.

From Israel's standpoint, should the U.S. continue to provide $1.5 billion a year in economic and military assistance to the new government in Egypt?

OREN: Well, our paramount interest vis-a-vis Egypt is to maintain the peace treaty, which has been the cornerstone --

(CROSSTALK)

OREN: -- and they are, for more than three decades.

BLITZER: President Morsy did as well.

OREN: It's been vital for Israel's security; it's vital for Egypt's security. It is vital for the stability of the entire region. And you'll remember, Wolf, that that American aid was extended to the Egyptians under the context or in the context of the peace treaty.

So we want to maintain the peace.

BLITZER: So you basically -- as far as the aid, U.S. military aid to Egypt, you want it to continue?

OREN: We want to maintain the peace and we'd like to -- America's influence in Egypt to continue as well, because it's a positive influence.

BLITZER: Are you encouraged by this new government in Cairo?

OREN: Well, we're not going to get involved in passing judgment on internal events within Egypt. Again, our interests are maintaining the peace. We do want security, peace, stability, prosperity and democracy for Egypt.

BLITZER: You know, we can go through our CNN archives. We're restarting "CROSSFIRE" later this year in the fall. And there's an older review, in the 31 years ago, former President Richard Nixon, at the time, speaking about a conversation that he had with David Ben- Gurion years earlier.

And you're a historian. You'll appreciate this. Let me play this clip, Richard Nixon on "CROSSFIRE" 31 years ago.

(BEGIN VIDEO CLIP)

RICHARD NIXON, FORMER PRESIDENT OF THE UNITED STATES: I think it's a significant thing to note -- I quote Ben-Gurion in my book.

I had a conversation with that marvelous man back in 1959, one that Eisenhower called "an Old Testament prophet," "his huge, flowing locks," and all this, in which he said, "The only reason that Israel is unique, that it has a right to exist, it because it is Jewish and democratic." He said, "If we get more territory, we will no longer be Jewish, and we can no longer be democratic."

(END VIDEO CLIP)

BLITZER: That was pretty -- because you hear the same thing right now, 31 years later, David Ben-Gurion, the founding prime minister of Israel. He made a decent point, didn't he?

OREN: Well, I think the Prime Minister Netanyahu has said pretty much the same thing, in order to preserve Israel as a democracy and as a Jewish state and as a Jewish state, it's predicated on having a Jewish majority, we have to try to seek an historic peace with the Palestinians based on a Palestinian nation state and a Jewish nation state, called the State of Israel.

I think that's the same vision that Ben-Gurion had and that's what Netanyahu now subscribes to.

BLITZER: So this -- nothing really has changed over the past 30-40 years; the same -- the same issues are basically still at play?

OREN: You know, I've been a Middle East historian for more than three decades, Wolf. And I'll say that very little changes, you know, in my past research I've showed that Thomas Jefferson went to war in the Middle East in 1801 against Libya and wanted to create a democracy there.

So history doesn't always repeat itself, but it certainly does rhyme. And many of these themes play out. And yes, I think that Ben-Gurion was right; I think Netanyahu is right. And in order to preserve Israel as a democracy, and a Jewish state, yes, we have to try to seek that peace based on two states and two peoples.

BLITZER: Michael Oren is the Israeli ambassador to the United States.

Mr. Ambassador, thanks very much.

OREN: Wolf, always a pleasure.

BLITZER: We have invited, by the way, the Palestinians to join us here in THE SITUATION ROOM tomorrow or later this week. We hope Saeb Erekat, the chief Palestinian negotiator, or some other member of the Palestinian delegation will join us.

Coming up, is he an American hero or a traitor to his country? We will have much more on the Bradley Manning verdict.

Plus, an inmate's wild escape from jail all caught on tape.

(COMMERCIAL BREAK)

(NEWS BREAK)

BLITZER: Up next: the soldier behind the bombshell verdict, Bradley Manning's past as a quirky computer genius and his future. He could spend much of the rest of his life behind bars.

(COMMERCIAL BREAK)

BLITZER: Happening now: The verdict is in, but how will Bradley Manning be judged by the world for leaking America's secrets? Hero or traitor? Stand by for a major debate.

Plus, D.C. police trying to connect the dots between several cases of vandalism at local landmarks. We have new information about the suspect.

And stars of "The Real Housewives" in the fight of their lives. We're in New Jersey for their dramatic day in criminal court.

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

But this just coming into THE SITUATION ROOM right now, WikiLeaks founder Julian Assange responding to the Bradley Manning verdict. As we have reported, the U.S. Army soldier was found not guilty of aiding the enemy after turning over a treasure trove of classified data to WikiLeaks.

But a military judge convicted Manning of most of the other charges, lesser charges he faced, including theft and espionage.

(BEGIN VIDEO CLIP)

JULIAN ASSANGE, FOUNDER, WIKILEAKS: This is the first-ever espionage conviction against a whistle-blower in the United States. It is a dangerous precedent and an example of national security extremism.

It is a short-sighted judgment that cannot be tolerated. And it must be reversed. It can never be that conveying true information to the public is espionage.

(END VIDEO CLIP)

BLITZER: Brian Todd is joining us now with more on Manning and the verdict.

I know you have been looking into his background.

BRIAN TODD, CNN CORRESPONDENT: Right.

BLITZER: What are you fighting out?

TODD: Well, Wolf, Bradley Manning's story has in some ways arced with the winding down of America's two major wars.

He and WikiLeaks were put on the map in 2010 when the video of an airstrikes that killed journalists in Iraq was released. Manning was arrested later that year and we have since gotten information on his background that might help us understand how he got to this point.

(BEGIN VIDEOTAPE)

TODD (voice-over): He was once on suicide watch in a military brig. Now Private Bradley Manning has avoided a verdict of aiding the enemy. But it's still possible he could still spend the rest of his life in prison.

Before all this broke, before he was accused of the largest intelligence leak in U.S. history, Manning, according to friends and acquaintances, struggled to fit in wherever he went. Born in Oklahoma, his parents divorced in 2001, and Manning moved with his mother to her native Wales.

He's described by friends there as a headstrong, quirky computer genius.

TOM DYER, FRIEND OF BRADLEY MANNING: He was the small kind of dweeby, pasty-looking American, with a very deep Oklahoma accent.

JAMES KIRKPATRICK, FRIEND OF BRADLEY MANNING: Oh, no doubt very principled. If he didn't agree with something, he would without a doubt make his opinion heard.

TODD: Manning dropped out of that school and moved back to the states in 2005. He told others he drifted before being taken in by an aunt who's a lawyer near Washington, D.C. The aunt, who sources say helped Manning find his lawyer, wouldn't speak to me just before the verdict was read. Wouldn't talk to me when I went to her home in 2010 or when I tried to flag her as she drove away.

(on camera): Ma'am? Ma'am? Hello?

(voice-over): Manning, according to friends, was gay and felt he was ridiculed in the military for it. In an instant message shortly before he was taken into custody, Manning wrote, "I've been isolated so long. I just wanted to be nice and live a normal life. But events kept forcing me to figure out ways to survive. Smart enough to know what's going on but helpless to do anything. No one took any notice of me."

Now he's a world-renowned whistleblower, or traitor depending on your point of view, responsible for leaking video of an air strike that mistakenly killed journalists in Iraq in 2007; leaking hundreds of thousands of sensitive documents on the wars in Iraq and Afghanistan and hundreds of thousands of diplomatic cables that embarrassed the U.S. government.

MICHAEL O'HANLON, BROOKINGS INSTITUTION: Because Manning and WikiLeaks have become so famous, there's no doubt that, yes, perceptions have been changed. There's no doubt that a lot more people have heard of various specific things than had before. On the other hand -- and this is part of why I would reject Manning's excuses for what he's done -- a lot of this kind of information was in the public debate.

(END VIDEOTAPE)

TODD: For example, Michael O'Hanlon says, the disclosure of when employees of the security firm known as Blackwater at the time killed some innocent Iraqis in a Baghdad square. O'Hanlon's point is that, before Manning, Americans already knew their leaders made critical mistakes in these wars and knew that steps had to be taken to correct them -- Wolf.

BLITZER; Julian Assange of WikiLeaks and other supporters of Manning insist that the information that is out there really did no serious harm to U.S. national security.

TODD: That's right. Assange said there's been no accusation that anyone has been harmed as a result of this information. In fact, he says it's been the opposite. He said there's been a wide range of prosecutions, investigations of people for things like torture as a result of this information. Of course, Assange also said this is the end of national security journalism in the U.S., which I think many of us would dispute. But, you know, he's out there speaking strongly about this verdict.

BLITZER: He certainly is. All right, Brian Todd, thanks very much.

Let's talk a little bit more about the Manning verdict. Whether or not he's a hero, a whistleblower, or a traitor. We're joined by Michael Ratner. He's a lawyer for WikiLeaks. He's the president of the Center for Constitutional Rights. Also joining us, Congressman Michael Grimm, Republican, of New York, a former Marine and a former undercover FBI agent.

Thanks to both of you for joining us. What do you think about this not guilty verdict, Congressman? Not guilty for the most serious charge, aiding the enemy.

REP. MICHAEL GRIMM (R), NEW YORK: I support the court's decision. They looked at the law, and they applied the law correctly.

But the other counts where he was found guilty will put this gentleman in jail, and rightfully so, most likely for the rest of his life. Although he might not have directly aided the enemy under the espionage law as it is written, he certainly committed treason by divulging classified information. There's just no way around it. The private committed treason, period.

BLITZER: That's a pretty strong word, Mr. Ratner, treason. What do you say?

MICHAEL RATNER, LAWYER FOR WIKILEAKS: Well, you know, treason; has nothing to do with treason, not a constitutional violation. You'd have to adhere to the enemy. It has nothing to do with treason.

In fact, he was tried when he shouldn't have been tried. He revealed important information that this administration and past administrations should have given out so that we can debate these kind of issues; we can find out about torture centers in Iraq; we can find out about corrupt governments in the Middle East that help actually -- that actually his information helped bring on Arab Spring. He is a whistleblower in the classic sense. Public information that was important to debate.

What's sad here to me is everybody's focusing on is Bradley Manning this or that? And back or forth. I think he's a hero for doing what he did. But where are the investigations of the people who committed the crimes? Where -- where are the investigations that we've been trying to get forever of the people who ran the torture conspiracy under the Bush years? Where's the investigation of the illegal Iraq war? Where's the investigation of the torture center run in Iraq? That's what I want to know.

We shouldn't be focusing on this issue. We should be -- Bradley Manning should be not in jail at all. He's a whistleblower.

BLITZER: Congressman.

GRIMM: Wolf, you know, by the standard of Mr. Ratner, basically, what you're saying is anyone that takes classified information. He's saying important information. It was classified. It's a fact. He took classified information and he put it on the Internet where all of our enemies can easily access it.

Well, under his standard, basically, there'd be no more reason to have an Espionage Act at all, because you could just claim whistleblower status. That's absurd. That standard would basically eviscerate the entire Espionage Act. It would put us in harm's way.

And the other thing is some of this information did deal specifically with troops' locations and so on. We have troops on the ground in harm's way. This private endangered their lives, endangered the national security of our country. So to say that he gets some special protection because he's a whistleblower is simply absurd, and that standard would completely eviscerate the Espionage Act, by any standard.

All you have to do is give it to a third person that puts it on the Internet. Now you're no longer responsible for your actions, so to speak? Because there -- Mr. Ratner's claiming there were things in there that the government should or should not have done? That cannot be the standard by which we decide what espionage is. That's ridiculous.

BLITZER: Let's let Mr. Ratner respond.

RATNER: Well, you know, the Espionage Act, to the extent it's used to go after whistleblowers and truth tellers, it should be eviscerated.

But if you're a young soldier as he was in the military and you see, as he said, awful, terrible things and you see atrocities. I think he acted as a man of principle and of conscious, and he came forward with that.

It's the same thing we would expect and hope happens in other mass atrocities and other killings. It happened in the My Lai massacre in Vietnam. There's no way in the world we would have prosecuted, or we probably tried for a while, the whistleblower on the My Lai massacre. It turned out to be journalists in the end. But that's the kind of thing you want happening. And you want to protect that.

When you see massive human rights violations in front of you, you want those people coming out. And you want the people who perpetrated those investigated and prosecuted.

GRIMM: Wolf, as someone that has actually served in the military, as someone that's manned a post and had a gun in my hand in harm's way, I can tell -- on multiple levels, I can tell you in the military, but as an FBI undercover agent, I can tell you, there are statutes in place; there are protocols in place. If I am given an unlawful order, I don't follow that order, and I run it up my chain of command. I don't turn around and take classified information on the sly and I'll sneak it out and put it on the Internet. That's what this is.

And I -- maybe we need to have a discussion on better rules and protocols for whistleblowing, make it easier for whistleblowers to go up the chain of command. That's a discussion I'm willing to have. But to say that this person, this private in the military was a whistleblower by giving out classified information on the Internet, it is simply absurd, and it's a dangerous argument that puts our troops and our entire nation in harm's way. It cannot be tolerated.

BLITZER: Go ahead, Mr. Ratner.

RATNER: What's interesting about that argument, of course, is the video that began this and you showed on your piece, in not which not just two Reuters journalists were killed, and of course, you said, after that, I think that could be disputed, but 12 people were killed, and some of the most blood-lusting scenes you could ever see, that video wasn't even classified. That video was kept out of the public domain, even when there was an FOIA request, because they didn't want to embarrass the military. That's the kind of information that absolutely has to be public.

In addition, when classified information is used as a mask, a mask of -- to keep atrocities -- to keep what is -- what are important human rights violations out of the public debate, then it shouldn't be classified at all. I have that personal experience. We have lawyers at my office. They hear about their clients being tortured, like Guantanamo and other places, and they can't even talk about it. That stuff should not be classified.

BLITZER: Go ahead, Congressman.

GRIMM: Well, that's a different debate on what should and shouldn't be classified. But I'll tell you this.

As someone that has protected this country and now is in a position to continue to protect this country here no Washington, I don't want some private that's disgruntled for a myriad of reasons to be deciding what should and shouldn't be public. That's why we have a classification system in this country. That's why he's trained in the military to understand the protocols and understand the chain of command and understand very clearly what classified means.

It's not up to some private or some fancy talking lawyer to decide what the public should and shouldn't see when you're talking about human lives and Americans' lives. And after, I'll tell you something else: as someone that has lived through 9/11 as a 9/11 first responder, I don't want that private making decisions that could end up in putting information in the hands of the next terrorist that's going to attack New York City or anywhere else in this country.

BLITZER: Very quickly, Mr. Ratner, I'll give you the last word. I gave the congressman, of course.

RATNER: Now, at trial there was no evidence of damage to the troops or anything like that. In addition, I want to have people in the military who are willing to stand up and say when they see an atrocity, "We will honor our conscience and what should be revealed to the American people about the criminality of our own government.

BLITZER: Michael Ratner, with the Center for Constitutional Rights, a lawyer for Julian Assange and WikiLeaks, and Congressman Michael Grimm of New York. A good serious, solid debate, guys. Thanks very much for coming in.

GRIMM: Thank you, Wolf.

RATNER: Thanks for having me.

BLITZER: Up next, a "Real Housewife" and her husband face criminal charges in court. And in familiar fashion, there's a bit of a brawl outside.

And new information about the suspect charged with defacing a Washington landmark. Was she behind other similar acts of vandalism?

(COMMERCIAL BREAK)

BLITZER: We're just getting this into THE SITUATION ROOM. Republican senators John McCain and Lindsey Graham, they're now planning to go to Egypt at the request of President Obama as early as next week.

Senator Graham tells CNN he and McCain will deliver a message to Egypt's military leaders that they're expected to move to a democratically-elected government sooner rather than later and that putting opposition leaders in jail is not sustainable.

We'll watch their visit to Egypt next week.

The stars of "The Real Housewives of New Jersey" are used to having cameras on them 24/7 but not necessarily like this. Teresa and Joe Giudice, they went to federal government today facing fraud and tax charges and a day after their were hit with a 39-count indictment.

CNN entertainment correspondent Nischelle Turner is in New York. She's got the very latest for us. You can't make this kind of stuff up, Nischelle.

NISCHELLE TURNER, CNN ENTERTAINMENT CORRESPONDENT: No, you certainly can't, Wolf. This is reality TV at its finest, I tell you.

You know, this was their initial court appearance. So they will be back in court on August 14 for their formal arraignment. That's when they will enter their pleas.

But today the judge rescinded their passports. She also restricted their travel to New York and New Jersey. And she also released them on a $500,000 unrestricted appearance bond.

Now yes, this reality TV drama is really giving this real-life couple something to think about.

(BEGIN VIDEOTAPE)

TURNER (voice-over): It's a real-life legal saga for two stars of Bravo's "The Real Housewives of New Jersey," a reality series that's famous for bringing the drama.

UNIDENTIFIED FEMALE: (EXPLETIVE DELETED). TURNER: A U.S. district court has indicted table-flipping "Housewife" Teresa Giudice and her husband, Joe, on 39 counts of fraud and tax charges.

The Giudices are accused of exaggerating their income while applying for loans before "Housewives" debuted in 2009, then hiding their fortunes in a bankruptcy filing after the first season aired.

The federal indictment alleges the Giudices lied to the bankruptcy court, to the IRS, and to a number of banks. The pair faces pretty stiff penalties on the most serious charges, up to 30 years in prison and a million-dollar fine if convicted.

Joe Giudice was also charged with failure to file tax returns between 2004 and 2008, a time when he earned nearly $1 million, adding to an already checkered legal past.

MAGGIE FURLONG, WEST COAST EDITOR, HUFFINGTON POST TV: We had been hearing rumblings of a knew for years now, and it's all kind of come to a head with these latest charges.

TURNER: Joe's lawyer did not immediately respond to requests for comment. However, Teresa's attorney told CNN she will plead not guilty, releasing a statement saying she supports her husband and adding quote, "I am committed to my family and intend to maintain our lives in the best way possible, which includes continuing my career. As a result, I am hopeful we will resolve this matter with the government as quickly as possible."

With "The Real Housewives of New Jersey" in its fifth season on Bravo, Teresa's future with the show is potentially in jeopardy.

FURLONG: You can't really shoot the level of glamour and weave- pulling behind bars.

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TURNER: And Wolf, I should say that coming out of court today, the Giudices had absolutely nothing to say, although they were being peppered with a lot of questions from a throng of media about 50 deep, people out there waiting on them today.

Another interesting point, though, that came out of court: it was revealed that Joe, whose name is Giuseppe in the indictment, is not a U.S. but an Italian citizen. And the prosecutor said today that he could possibly face deportation if all of these allegations are proven to be true and he is convicted. So Joe Giudice could actually be sent back to Italy if all of this goes according to what the prosecutors want.

BLITZER: I didn't know that. All right. Nischelle Turner, thanks for that report. Good report from Nischelle.

Here in Washington a 58-year-old woman accused of splattering green paint on at least one D.C. landmark now is being held without bond. She's charged with defacing property, and she could face a maximum ten years in prison and a $5,000 fine.

We now know she has a Chinese passport, and her visa to stay here in the United States expired on Saturday. The woman was specifically charged in connection with vandalism at the National Cathedral, where officials say an estimated $15,000 in repairs have now begun.

The D.C. police chief said there's probably a connection between acts of vandalism at several local landmarks, including the Lincoln Memorial.

A decades'-old mystery is now back in the spotlight. Who is Carly Simon singing about? Can Taylor Swift crack the case?

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BLITZER: Some more political fireworks today over the Internal Revenue Service and its alleged targeting of conservative political groups. A top Republican congressman accusing the head of the IRS of instructing his panel's investigation.

Let's bring in our chief congressional correspondent, Dana Bash. She's got the latest -- Dana.

DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT: Well, Wolf, Daryl Issa is taking his probe of the IRS to a whole new level. He wrote a really threatening letter to the head of the IRS, saying that the -- what they've done has obstructed the investigation to the point where he -- meaning the IRS commissioner -- may have committed a crime. That could result even in jail time.

I want to read part of the letter that Issa and his Republican colleague, Jim Jordan, wrote to Danny Werfel: "The systematic manner in which the IRS has attempted to delay, frustrate, impede and obstruct the committee's investigation raises serious concerns about your commitment to full and unfettered congressional oversight."

Now, he claims that the IRS has handed over only about 12,000 of what he says is 64 million documents identified as potentially relevant to the IRS probe. The IRS spokesman responded in an unusually harsh retort.

And here's what they said at the IRS: "We're doing everything we can to fully cooperate with the committee -- with the committees, and we strongly disagree with any suggestions to the contrary."

Now, the IRS says nowhere near 64 million documents that's relevant. They also emphasized that 70 out of 1,600 lawyers, so that's a fair number amount -- fair number of lawyers, they have been full-time working on answering Congress's request.

And this really takes this to another level, because in part, Danny Werfel, the IRS commissioner who got this letter, he wasn't even there when any of this happened. He's new. And so far, he's pretty much gotten bipartisan praise on the way he's trying to turn the IRS around.

BLITZER: The battle clearly continues between these two sides. All right, thanks very much, Dana Bash, up on Capitol Hill.

Up next, a very different story. We're asking the question, who's so vain? Taylor Swift knows now who is so vain, but will she spill Carly Simon's beans?

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BLITZER: It's one of music's great mysteries, inspiring four decades of guessing. CNN's Jeanne Moos reports there's now a new round of the "You're So Vain" game.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): Prepare to dip your hat strategically below one eye and wear a scarf that's apricot.

TAYLOR SWIFT, SINGER: We're going to sing "You're So Vain" tonight, and I'm so excited.

MOOS: So excited, they were holding hands in this behind-the-scenes video. Taylor Swift brought Carly Simon out on stage at her Boston- area concert, so together they could belt out Carly's signature song about some conceited mystery man.

TAYLOR SWIFT & CARLY SIMON, SINGING: You're so vain, I bet you think this song is about you, don't you

MOOS: Don't you know, 41 years later, we still don't know.

(on camera): You're so lame, you probably think this song is about...

UNIDENTIFIED FEMALE: Warren Beatty.

UNIDENTIFIED FEMALE: Cat Stevens.

UNIDENTIFIED FEMALE: James Taylor?

MOOS (voice-over): Sixty-eight-year-old Carly Simon has never spilled the beans, though she's doled out a few clues over the years.

SIMON: The name of the person it's about had an "E" in it.

MOOS: She gave us two vowels.

SIMON: An "A."

MOOS: And a consonant.

SIMON: I'm going to add an "R."

REGIS PHILBIN, FORMER HOST, ABC'S "LIVE WITH REGIS AND KELLY": An "R"?

MOOS: When she released a new version of the song in 2009, a British tabloid was sure it had the guy based on barely a whisper. Played backwards sounded like some to David. Ah-ha. David Geffen, the record producer. But Carly shot that one down.

At an auction for charity, Carly promised to reveal the secret to the highest bidder. Former NBC sports executive Dick Ebersol donated $50,000 for Carly to whisper the name to him, though he had to sign a confidentiality agreement not to reveal it.

Will Taylor Swift have loose lips?

SWIFT: Who is "You're So Vain" written about?

SIMON: Well, I've already told you, and I told you never to tell. So you know.

SWIFT: I was just thinking that she might tell you. But I do know now.

MOOS: Cat, James, Warren, Mick, Carly sometimes says who it's not about.

SIMON: It is not Mick Jagger.

MOOS: Or who it's not not about.

SIMON: Well, you know what? It's certainly not not about Warren.

MOOS (on camera): But if you have dreams of ever solving this riddle, they're just clouds in your coffee.

SWIFT & SIMON (singing): Clouds in my coffee.

SIMON: I could never solve it, because if I solved it, then no one would have anything to talk to me about.

MOOS: Nothing vain about Carly.

SWIFT & SIMON (singing): You're so vain...

MOOS: It's just asking that's in vain.

Jeanne Moos, CNN...

UNIDENTIFIED FEMALE: It was Warren Beatty, wasn't it?

SIMON: What are you talking about?

MOOS: ... New York.

(END VIDEOTAPE)

BLITZER: Carly Simon says Warren Beatty, by the way, certainly thought it was about him. He even called her up once and thanked her for the song.

Remember, you can always follow what's going on here in THE SITUATION ROOM on Twitter. Tweet me, @WolfBlitzer. Tweet the show, @CNNSitRoom. Thanks very much for watching. I'm Wolf Blitzer in Washington.

"ERIN BURNETT OUTFRONT" starts right now.