grilled and lambasteds by british law makers and now a whistleblower in the growing phone hackl scandal reportedly is dead. and a 77-year-old man defends his home and family from an intruder with a gun. stand by for the dramatic story. that's even more compelling because -- get this -- he's a member of the united states congress. i'm wolf blitzer. you're in "the situation room." the u.s. defaulting on its debt for the first time in history? we can't state it enough, this has enormous consequences for all of us, and time is quickly running out to prevent what the president calls armageddon. let's check in with kate baldwin. she's standing by with the latest. where do the negotiations stand right now? >> the two top republicans in the house. no official readout from the white house, but president obama says we are making progress when asked today by reporters how the debt talks were going when he was leaving an event in the rose garden. on the part of speaker boehner, a spokesman for him said that as they said really all weekend that the lines of communications remain open, but 2340 progress or agreement so report at this point. at the very same time, wolf, the house is scheduled to take up a measure tomorrow that would dramatically cut spending and also make raising the debt ceiling contingent on congress passing a balanced budget amendment to the constitution. this is something long supported by conservatives. not supported by democrats. it's known as the cut, cap and balance, although the president's spokesman called it something very different this afternoon. let's listen here. >> what we are witnessing here with this measure is classic washington prosturing. duck, do i have and dis-manhattan pl duck responsibility, dodge obligations and dismantle eventually if enshrined into law, which it would not be. but it would require the dismantlement of our social safety net. social security, medicare and medica medicaid. >> the reality is this measure very likely wouldn't make it to the point of getting to the president as it's unlikely to make it through the senate, largely becoming a symbolic vote for republicans, if you will. but as you mentioned, wolf, the deadline is approaching. now within two weeks. and because of that, the house majority -- senate majority leader harry reid announced today he's keeping the senate in session, working even saturdays and sundays until this debt crisis is solved. i will tell you that this probably, these extra days in session will likely come in handy as the clock ticks down, wolf. >> we're going to have a major debate the next hour here in "the situation room." two members of the house of the representatives, a liberal democrat and a conservative republican will square off. michele bachmann is reversing course signing on to the gop's cut, cap and balance plan to reduce spending. the tea party favorite had previously refused to support it, saying it was too timid. bachmann announced her change of heart just a little while ago in the key primary state of south carolina. >> i invite the president of the united states to travel with me to south carolina, to iowa, to texas, to new hampshire, to florida. the people and businesses i'm meeting with are demanding that the people in washington, d.c. listen to them and stop the debt-fuelled spending. >> bachmann's republican primary rival signed on to the cut, cap and balance plan. much more on this story coming up. u.s. government officials holding face to face talks with representatives of moammar gadhafi's regime. both sides confirming discussions, but the united states emphasizing this was not, repeat, not a negotiation. cnn's ivan watson was the first to report this development. he's joining us from the libyan capital of triboli. what happened here? tell our viewers what we know. >> well, this was a secret meeting that took place on saturday in tunisia, involving high-ranking u.s. government officials and representatives of mommar gadhafi's internationally isolated regime. and we were finally able to confirm that this meeting, this secret meeting took place when we spoke with gadhafi's government spokesman just a few hours ago. take a listen to this exclusive video. >> is this the first step? >> this is the first step. we welcome any further steps and we are prepared to go back to libya and go forward. we don't want to be stuck in the past. we are people that want to go forward all the time. if i may, it's not the time now to name people, but, you know, it's a first step dialogue. >> but it was direct face to face in tunisia on saturday? >> yes. okay? >> thank you. state department officials have told us that officials were libyan ambassador to libya, recalled last december amid anger over the wikileaks reports coming out. the assistant secretary of state and a national security council official. state department officials saying that this was a three-hour meeting in the tunisia capital involving representatives from the libyan said. they say that this was, quote, a one-time meeting sending a clear message to the libyans that gadhafi must go. this secret meeting took place in tunisia one day after u.s. secretary of state hillary clinton formally announced that the u.s. was recognizing that rebel council, the transitional national council in eastern opposition-controlled libya in the city of benghazi as the u.s.'s official partner here in libya. >> u.s. officials are being adamant, they're simply saying this was not a negotiation. this was an ultimatum. and they were basically saying, gadhafi must go. period. >> that's right. and the gadhafi spokesman tried to spin that a different direction, saying this was a chance for us to sit down, explain our position, deny any charges that we had attacked our own civilian population, deny any of the allegations that having made, which has led to four months of nato bombing. so we have both sides trying to spin in different directions in this secret meeting that took place. a face to face meeting between representatives of two governments and definitely not seeing eye to eye. certainly over the last five months. >> as you point out, a day after hillary clinton the u.s. is recognizing the rebels as the governing party in libya. on my blog at cnn.com/situationroom, i write about that $33 billion that the united states government has frozen in libyan assets here in the united states. now that the u.s. has recognized the rebels, n rebels, a lot of is going to go to them. but should the u.s. deduct whatever it's caused the u.s. taxpayers to help the libyans, protect the libyans, about $1 billion so far, check out my blog. cnn.com/situationroom. from pakistan, a very graphic video released by taliban showing 16 men being executed. >> this is a graphic look at how brutal and ugly the war against the taliban can get. some of you may find this very disturbing. if you would like to turn away, this is a good time to do so. let's walk you through this video. it was released by the taliban, posted online. men wearing traditional pakistani garb, all of them with their hands tied behind their back. in front of them, you see three armed men, you assume these are taliban fighters. one of them is scolding the men who are lined up, accusing them of being enemies of islam, saying these executions are about to take place for six children. the military here vehemently denies those excuses took place. after the scolding is over, that's when you see and hear the gunfire. you see the men topple to the ground, some of them moaning and writhing in pain. we're not going so show you what happened next. some of the gunmen walk up to the men and shoot them again, sometimes in an effort too make sure they're dead. the military believes the men who were killed were police officers kidnapped during a cross-border attack on june 1. militants crossed over from afghanistan and attacked a village on back stanny soil. the military believes the gunmen were members of the pakistani pakistan in the swat valley. again, in 2009, a military operation chased them away. they say it's a tactic that will not work. wolf? >> an amazing, very, very amazing story. thanks very much for that. it's a startling claim by a man who wants to be president of the united states. we're going to focus on new remarks by republican presidential candidate herman cain who's taking his very vocal concerns about muslims to a whole new level. and when rupert murdoch faces british law makers in a matter of hours, he may feel like he and his entire media empire are on trial. stay with us. you're in "the situation room." discover customersl are getting five percent cashback bonus at the pump... and at many of the places their summer plans take them. it pays to switch, it pays to discover. >> announcer: this past year alone there's been a 67% spike in companies embracing the cloud-- big clouds, small ones, public, private, even hybrid. your data and apps must move easily and securely to reach many clouds, not just one. that's why the network that connects, protects, and lets your data move fearlessly through the clouds means more than ever. jack cafferty is here with the cafferty file now. people can watch you stream on a mobile device, an ipad, jack. this is great. >> i have no idea what that means. but i'll trust you. >> it's really good. >> republican congresswoman michele bachmann is a rising star of sorts in a lacklustre to say the least field of gop candidates who hope to challenge president obama next year. bachmann came out on top in three separate polls of likely iowa republican voters last week. go figure. my shael bhaukman's husband marc marcus runs a christian counseling business. former clients say he encourages homosexual patients to try to change their sexual orientation, or at least oppress it. it's called pray away the gay. in an interview, marcus bachmann did not deny that he and other counselors doo do use that technique, but they only do so at the request of the patient. michele bachmann has been sort of skirting around her own views on homosexuality, but that party is about to come to a screeching halt. she recently signed something called the marriage vow, written by a very conservative group in iowa. among other things it's a vow to be faithful to your spouse. fair enough, but the vows also condemn adultery, pornography and gay marriage and describe homosexuality as a choice. in a speech in 2004, michele bachmann said being involved in the gay and lesbian lifestyle amounts to personal bondage, personal despair and personal enslavement. sort of like traditional marriage. unquote. that was my add, not heres. comedians and bloggers having a field day with all of this. but on a more serious note, there is a group called the human rights campaign, a gay rights group that's vowing now to go after michele bachmann and her beliefs in the upcoming campaign. they call michele bachmann, quote, the very definition of a target-rich environment, unquote. if they're serious, she could have a serious problem. here's the question, when it comes to the gay community, is michele bachmann living in the twilight zone? go to cnn.com/cafferty file. if she comes out winning the caucuses, she's got some momentum and heads into new hampshire with, you know, some kind of a lead. we'll see where it goes from there. it could happen. >> and then south carolina that follows new hampshire. jack, thank you. let's go to britain right now where the scandal surrounding rupert murdoch's media empire is growing. a former "news of the world" reporter who blew the whistle on allegations of phone hacking has reportedly been found dead. police are treating it as an unexplained but not, at least for now, suspicious death. other new developments. in the scandal, the british prime minister david cameron says he'll request a special session of parliament on wednesday. a separate investigation of police corruption is widening after a second top london police official resigned. all this just hours before murdoch faces british law marngs cnn senior international correspondent dan rivers is in london. >> well, wolf, the phone hacking scandal is about to reach its incredibly dramatic climax as rupert and james murdoch arrive at the palace of westminster behind me to face probing questions from politicians about how much they knew about the illegal activities going on in some of their newspapers. when big ben strikes 2:30 in london, the bell will be tolling for rupert murdoch, his son james and former chief executive rebekah brooks. their appearance before a british parliamentary committee may be the most important hour of their entire careers. and the big political beasts in this building are smelling blood. even if rebekah brooks' arrest may mean she's unable to shed light on what really happened. hacking victims like john prescott think rupert murdoch's got a lot to answer for. >> everybody is scared to death of doing anything he doesn't like. he's the spider in the middle of this web and it's about time we took him on. >> the chairman who will be in charge of the grilling is keen to hear why the company previously told him phone hacking was just the work of a rogue reporter. then later admitted that wasn't true. >> we took evidence from senior executives of news international and james murdoch has now publicly stated that parliament was misled. parliament takes that very seriously. they want to ask him why he's discovered we have been misled, who misled us and how long he's known about that. >> for rupert murdoch, this isn't a court appearance, but it may feel like he's on trial. rupert murdoch has been behind numerous cruel tabloid headlines. now suddenly he's on the front page himself. and that's a pretty awkward place for a press baron to be, suddenly the target of the gutter press. >> members of congress are used to political fights, but how a 77-year-old democrat from iowa may have actually fought for his life against a gunman. and why didn't president obama choose the woman who came up with the idea for a consumer financial protection bureau? 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visit sprintrelay.com. >> it was a very odd scene over at the white house. president obama announcing the man he's chosen to head the new consumer financial protection bureau. also there, the woman who didn't get the job. just ahead, i'll speak with elizabeth warren about the bureau she envisioned and the controversy around her running it. she made it clear she was going to get the job and we all thought she was going to get the job. >> liberals thought she was the best woman for the job but republicans did not like her. and after that, as elizabeth warren pointed out in an opinion piece today, the new agency has some enemies in washington. >> last september, when president obama unveiled the consumer financial protection bureau in the rose garden, he praised elizabeth warren as the architect. >> she will help oversee all aspects of t s of the bureau's creation. >> but she didn't get the nop nak as dire -- nomination. but that confirmation hearing that the president joked about is one reason he got the nod. yes, the white house said he's the right fit for the job, moving up from director of enforcement, but they didn't discount threats fra conservatives to block warren if she had been nominate pd . >> had there not been that stiff opposition, would she have been the person nominated? >> hypotheticals are hard to answer. as an observation of fact, the kind of opposition she engendered is clear. as another observation in fact, some republican senators have a blanket opposition to the agency as it is. >> more on that in a moment. but why didn't conservatives like warren? some feared a heavy-handed approach to the financial industry, wall street in particular. that opposition could have led to a nasty confirmation battle during a time when big money and every vote counts. but it's unclear about the nomination process. >> we've added another huge powerful regulator on top of a system that everyone agrees is broken and hasn't decided how it's going to work together. wolf? >> thank very much. >> joining us from the white house is elizabeth warren. thanks very much for coming in. >> it's a pleasure to be here. >> why do you think you're so controversial? >> you know, i'm going to say, i really don't get it. the stuff i work on are things like how bad fine print is. and how it is that credit agreements should not be written in language that ordinary folks can't read. and understand. and why it shouldn't take an army of folks, of lawyers to be able to interpret a mortgage agreement for you. that's stuff all kinds of folks think are good things for hard works middle class americans. i really don't get the part. what is the one thing i've done that makes me controversial. i think this is politics. >> the consumer financial protection bureau, really your brain child, as the president of the united states himself said. how dis appoiappointed are you e didn't nominate you to head it in the. >> oh, golly, not at all. what you really have to understand here is my job was to set this up. one of the people i recruited right from the beginning was rich cordray, a guy with an incredibly impressive resume for standing tough and being smart. and this is a new time for the consumer agency. this is the one-year anniversary of first come into existence. this is the week that we pick up a bunch of our new powers. and this the week that the president makes a nomination for someone to lead this agency going forward. that's a good thing. >> senator shelby, the republican senator from alabama, he issued a statement saying this, and i'll read it to you. until president obama addresses our concerns by supporting a few reasonable structural changes, we will not confirm anyone to lead it. no accountability, no confirmation. do you think the president will be ready to make those kinds of changes that senator shelby and others are asking that will allow mr. cordray to be confirmed? >> let me be really clear. we started this fight two years ago. and senator shelby and others who were their allies did not want any consumer agency at all. and if it absolutely was the case politically there had to be one, they wanted a weak agency that couldn't get anything done. we had that fight and then we had a straight up vote on it. and in a straight up vote in the united states senate just over a year ago, that side lost. the side that