we start with the president in his role as commander in chief as talk of a conflict with iran continues to escalate. that country's navy is testing u.s. resolve even as we speak shadowing a u.s. carrier convoy as it passes through the highly volatile strait of hormuz. an iranian vessel got so close u.s. forces had to fire flares to warn them off. the hostile action comes as the president is meeting with the man who may be the next leader of china. a country who supports the west needs if further sanctions against iran ought to be effective. >> it includes the work we ought to be together with hot spots like the korean peninsula.

>> the u.s. continues to rachet up sanctions. they seem to be having an effect. irans economy is crumbling as a wave of anti-government protests hit the streets. the iranian government have had to stop sites like facebook and google. some say war isn't inevitable, it's already begun. today, a fresh attack where police say an iranian accidental set off bombs and where police say they found a cash of arms in

his house. israel responded with an ominous threat today. a cabinet official told a radio station that israel would quote, settle the score. let's get the latest on this standoff with iran. jim is on the line now. i wonder if you can describe how close the situation was when the iranian patrol boats came toward the convoy. >> reporter: there were two strait incidents. it was an iranian patrol boat making a beeline toward the aircraft carrier and quite frankly the kennedy put some of its people, particularly those surrounding the deck and they were told to keep an eye on the

target. in that incident it never came close to the point where anybody would have fired on the lincoln. i set myself back several years. this was the abraham lincoln aircraft carrier. that boat turned off at the last possible second and backed up and down in the waves not far from the lincoln for some time. that's what usually happens here. it's a potentially dangerous, fast break not particularly deadly game of chicken that those folks play. nevertheless, that is routine ft. worth case where flares were fired, it turned out those were smuggler boats. it was a group of four or five. we saw some of these sneak across almost as if playing chicken with the u.s. because they come so close, they're going so fast right across their path.

one of the boats didn't make it pa past a destroyer. a helicopter nearby dropped some flares into the water nearby and it left. the reason they do that, it's nonlethal warning as opposed to firing warning shots, they drop flares in an escalation of force and the smuggler took the hint. there was no real face-to-face confrontation today with the iranians. it has happened with system of those fast boats before. >> indeed. as i understand it, jim, there were seven separate iranian vessels. as you look out now, have they completely cleared from the scene. is it very much peaceful? >> reporter: yes. once nightfall hit they really don't venture out this far.

quite frankly, we have left the strait of hormuz about four or five hours ago. i assume we're outside the strait of hormuz. >> thanks so much for joining us there from the uss abraham lincoln. >> reporter: thank you. >> for more, we go to kristen welker. two attacks in india and georgia. now a u.s. carrier convoy forced to fire flares at iranian vessels. i'm assuming this is rising up the white house agenda by the minute. >> reporter: absolutely. the white house monitoring this situation quite closely. jim talked about the game of chicken that occur in the strait of hormuz. that's what concerns them.

you could have a standoff or miscommunication that happens and ultimately wind up sparking some sort of military engagement. they want to make sure that everything that occurs there is handled quite carefully and they are watching those developments closely. senior administration officials tell you they feel as if they have the superior strength when it comes to military effort in the strait of hormuz and they think that sanctions are working. they do believe iran is more and more being boxed into a corner and being isolated. having said that they are paying close attention to what's happening. martin. >> thank you. for in-depth analysis we're joined by mark ginsburg and michael o' hanlin.

michael, flared fired today. what comes next? >> i'm not convinced we're close to a naval engagement. if they could damage one of your ships, we would shot at them and then sink their navy. i think the more likely thing is these vary kind of embassy attacks. just creating unease around the world that will make countries skiddish about tightening sanctions. i might note that's not necessarily a fantastic place for us to put iran because it does increase the likelihood of lashing out. i don't agree with the policy but to say the sanctions are working, is not the same thing as we're going to get to a happy outcome. >> thank you for returning to our broadcast because yesterday you warned that the temperature of this iran/israel conflict is

fast rising. do these attacks in georgia, indiana and now thailand increase the probability of some kind of military action against israel in your opinion? >> yes, because in the final analysis they realize as this escalates, there's a question of what really the strategy here is of iran. on the one hand these escalations may be an effort to basically provoke the united states to be the first power to engage in a military confrontation with iran and make it that much more with israel to piggyback on united states. the israelis have made it very clear that around the world terrorist attacks against israel has escalated by iran in many different ways and venues.

venezuela hosts an encampment for the revolutionary guards to train. these are the type of terrorist incidents and provocations that they are concerned for all around the world. >> there's an argument that the international community has less than a year before iran moves into the so-called immunity zone, that would make it impossible to stop their production of a nuclear weapon. sanctions are punitive and they are having an effect, and yet, i ran remains defiant, doesn't it? >> yes. when you talk about that yearlong schedule, no one really knows what iran will do when they get to the point where they could have a bomb. there are some countries that appear to think iran has decided to go for a bomb as fast as it can. other intelligence agencies are not sure and think iran may

still be weighing the pros and cons. they might be able to go up to the nuclear brink. in other words, get 20% you rur and stop enriching. we will stop one lifrl short of that so sanctions will not be further intensified. or they might say if you lighten up on the sanctions, we will stop the enriching. that's the question. we just don't know. >> ambassador, it's impossible to ignore the politics of this potential conflict as we approach the presidential election. do you see the president as having to support an attack by israel should israel choose to go forwarded with an attack given his electoral needs in the united states?

>> that's a question that's kept everyone up at night. just imagine if he gets the call and the prime minister says our planes are on the way. are you with us? are you going to support us? if not, why not? if you don't, i'm going to have to disclose the fact that the united states is not prepared to support its ally. it makes it out as if the white house has been forced into a situation that it didn't want which is why the united states dispatched the chairman of joints chief to israel to try to coordinate an israeli approach. the last thing this white house wants is for israel to act and force the united states to go into circumstances that are not consistent with its own objectives. >> indeed. thank you both. >> thank you. next, 40 reasons why the president may win the payroll tax cut argument.

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with house republican leaders showing rare signs of cooperation, president obama seized the moment pushing to secure a tax cut for 160 million americans through this year along with an extension of jobless benefits. >> last thing we need is for washington to stand in the way

of america's comeback. congress needs to extend that tax cut along with vital insurance lifelines for folks who lost their jobs during this recession. they need to do it now without drama and without delay. >> speaker boehner and house republican leaders could be bracing for a fight trying to get their conference to pass a clean extension of the payroll tax cut even as they clash over unemployment insurance for another day. speaker john boehner and house majority leader eric cantor seem to realize if they don't agree to an extension of the payroll tax cut then they will breech their pledges of promising to never raise taxes. do you think what their trying to do is not raise taxes but not extend unemployment benefits? >> what a disaster that would be

if that's their plan. if we don't extend the unemployment insurance benefits, three million people will have no visible means of support. the other important provision that they haven't agreed to yet is to increase what doctors get reimbursed for medicare. the result of not doing that is many, many seniors may hear from their doctors, no we're not going to take medicare beneficiaries. so the games go on. >> why do you think they have isolated the payroll tax cut extension in this way? there must be a reason. they don't do things by accident, as you know. >> i want to think they want to keep their pledge. we are for lower taxes and create a crisis once again before we leave in saying we're not going to do this kind of spending anymore. i think it's a serious mistake for them politically as well. extended unemployment benefits has happened every single time

we've been in a recession. >> i want to turn to the president's budget and the republicans who are ataking it on the campaign trail. listen to this. >> he looks at where we are and is comfortable borrowing a trillion dollars more every year than we spend. this cannot go on. i will cut spending. i will cap spending and get us a balanced budget. >> another trillion dollar budget deficit. . >> this budget is impossible. it's the wrong direction. the time to have a fight over the next debt ceiling is not this fall. we've played this game before. >> it seems to me this is a chemical weapon question of priorities. the president will cut the program if they can be protected. republicans will cut them. is that a winning position for the economy and its recovery?

>> not only is it not a winning position, i think they are in severe danger if they are looking at anything other than balanced approach to budgeting. that is asking the wealthiest americans to pay a bit more and pay their fair share which is supported by over 80% of the american people and not cutting benefits for the elderly through medicare and medicaid. it's also a case of amnesia. i didn't hear a word like i heard now when president bush was increasing the debt and deficit and not counting in his budget the costs of the wars. >> newt gingrich might ask who was george bush. i guess it's a wonderful relief that republicans are now talking about the payroll tax cut extension and not talking about contraception. >> well, i think as long as the economy is going well, i think we may get back to the culture

wars. it is a relief to get off the birth control issue, and just let women get what they need. >> thanks so much for joining us. >> thank you. coming up, the horse race tightens, and mitt may just have to open his wallet. stay with us. >> my conservatism did not come so much from reading the writings of conservative scholars as it came from my living my life, may family, my faith, my business. >> it's not a lie if you believe it. ♪

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payroll tax cut curve ball house republicans are throwing has many raising a suspicious eyebrow. to clear it up let's get to luke

russert. luke, house republicans have had a change of heart. i smell a conspiracy here. what's going on? >> a change of heart on valentine's day. >> i'm not sure i believe it. can you give us some substance? >> a lot of republicans acknowledge that back in december they got creamed on this issue by president obama. they started trying to say this tax cut had to be paid for because it was going to add $100 million in the deficit. president obama was able to say you're for tax cuts that aren't paid for but there's a middle class tax cut and that has to be paid for. americans took that message. it resonated with them. obama was able to win that argument back in december. no one on the republican side wants to relive that. they called it a sugar high last year. they are backed by the

conservative score card that is usually worthy. you can find the pulse of the rebellious freshmen that say it's fine to add $100 million to the deficit. let's go forward because we don't want to lose the argument. >> i think 160 million americans would have some argument with that. >> this is interesting because this is a real reversal. speaker boehner went out saying this had to be paid for. it's quite the reversal. democrats are nervous because this will no longer be attached to unemployment benefits being renewed. nancy pelosi came out in favor of this and it will probably go to the floor tomorrow. the fact that unemployment benefits and the medicare is up to these conferees that have been able toll go nowhere so

far, that has a lot of democrats worried. there ha been lapsed in unemployment benefits before for six, seven, eight weeks. many americans depend on that. the future of those two important things are unclear. >> indeed. thank you very much. >> happy valentines day. stay with us. the day's top lines are coming up. >> instead of standing here unemployed yelling at somebody, go out and get a job. >> go get a job right after you take a bath. ♪ wanna know the difference between a trader and an elite trader? it's this... the etrade pro platform. finds top performing stocks -- in three clicks. quickly scans the market for new trading ideas. got it? get it. good. introducing new etrade pro elite.

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the dogs out and newt is feeling saucy. here is today's top lines. love is in the here. >> 3,000 dogs competing for best in show. coats so silky they look like they were spun by a giant spider. >> who let the dogs out. >> i think our strategy has to change. >> that's not class warfare, that's common sense. >> the president came out with a new budget today. yeah, you have reason for that response. >> i want to say particularly to small town of blue collar america. >> between 150 and 200 some odd million dollars. >> did you see mitt romney at the grammy's last night. can he belt out a tune. >> this is a charade. >> they get infected by this washington disease. >> clearly much bolder than santorum or romney. >> perhaps the greatest

distinction is what we will done during our lives. >> this is airtight kennel. >> have a woman run away from you and run back. i'm used to seeing them run away from me. >> for all the gentlemen out there, today is valentine's day. do not forget. i speak from experience here. >> she'll be quite happy. i think the first time in a while we have a private dinner. hopefully exchange gifts and re-connect a little bit. >> don't go into anymore details. i just had lunch. let's get right to it this afternoon with our panel. joe williams is from politico and joining me is krystal ball. joe, you heard newt's

valentine's day plans, undo undoubtedly some tiffanys. based off the past few weeks, shouldn't he be re-connecting with his campaign rather than his wife? >> one would think. his money has kind of dried up. sheldon adelson has closed the checkbook. mitt is seeking to get small donors on board. those are the ones he need to show some love to. he's run this unconventional, some might call it -- >> disasterous. >> i was thinking political malpractice. he is focusing his energies on super tuesday and florida where

he holds a lead in one primary. that's probably where he's trying to make his land stand. >> while newt is enjoying entertaining callista, santorum is really surging. is santorum the one that can really challenge romney. >> i think he's the last man standing. as soon as one starts to surge, mitt romney pulls out the checkbook. his super pac pulls out the checkbook and they hammer that person on the air waves. we have seen reports of something like $500,000 worth of ads to be aired in michigan. i think that will tough for rick santorum to overcome. he does have advantages in the state. in most of the states the amount of middle class voters who is the people about 50 to $100,000,

have been about 37% of the vote. in michigan it's going to be more like 44%. that's group that rick santorum has done well with and mitt romney has done poorly with. that is a strength that rick santorum brings to the stage. >> joe, rick santorum says he's a conservative twice in a 30 second ad than been leased today and every 15 seconds when you speak to his personally. we know it's mitt romney, isn't it, that needs to build that conservative case for voters. >> to use the valentine's day analogy, that's why they have yet to put a ring on it. it's interesting that santorum is trying to bolster against the coming death star lasers from mitt romney's well-funded machine. it's interesting that he's trying to set himself up and prebutt those attacks. what's interesting is the fact

that santorum won the last three primaries running with a very strong socially conservative message, anti-abortion, antibirth control. he's is your honoring in michigan on the strength of that and not economic message. you would figure romney having all these ties to the state basing his campaign on his business experience would take the lead there. >> it's tough for him. >> mitt romney said he was conservatively conservative at cpac, isn't that enough. >> some would say his campaign is constipated. we heard rick santorum talking about women not being appropriately placed in battle situations. she says in the spike in sexual assaults in the military, she

asked what did they expect? what did women expect? isn't that the same argument when they see a woman in a skirt that's not at her ankles, she was asking for it? >> absolutely. it's the same blame the victim mentality that we shouldn't be surprised from the far right because just look at how they responded to the herman cain controversy. the immediate instinct was not to look and say what's the truth. it was to blame the women, to slam them, go through their personal history to try to degrade them and diminish them. that's the instinct that's there. it speaks to a larger problem coming from the far right and certainly rick santorum has this issue. >> isn't that, joe, a problem for rick santorum? >> it's going to be a problem coming out of the primary. conservative women are kind of used to this sort of thing and they accept that notion. i want to talk more about what

krystal is saying. a lot of attacks and this is what happens when you put women in front line positions it's almost absurd. most happen in rear guard. they happen in operating bases while not completely safe but right aren't the front lines. they happen among support personnel. they happen among personnel coming back from r and r. the discipline breakdown and the other problem is the army brass has not seriously addressed the issue and addressed the breakdown of discipline among the men and taken their concern seriously. it's something he would have to answer from moderate women and the party will have to talk about once the general election campaign starts. >> republicans have an issue with women voters. right now if you look at the polling, mitt romney is beating the president with five points with men. losing by 21 points with women. it's major problem. >> thanks so much for joining us this afternoon.

>> my pleasure. stay with us. much more ahead on this valentine's day. >> it's valentine's day. love is in the air. can't you feel it? especially on capitol hill. the republican national committee providing some political love notes on behalf of washington's to politicians. >> they really wrote these? >> yes. ♪ [ male announcer ] juice drink too watery? ♪

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how does this impact the global economy and the fragile economic recovery here at home? bill, good afternoon to you. these sound very much like the same measures, i'm thinking of spain, britain, italy and portugal that paul ryan's budget recommend. >> of course. in greece where they were forced on them. they had a gun to their head where you take these measures or don't get a bailout or in the uk they come to more or less voluntarily but market discipline demanded it. you see there's been riots and protests in both countries as well as in spain. >> the bottom line is these nations that have imposed a form of the paul ryan budget are doing how well?

>> they're not doing very well at all. frankly, that's part of the reason they are getting downgraded or potentially getting downgraded. i don't see the paul ryan budget having any legs at all. i'm not sure president obama's new budget will have many legs either. he's clearly taking a different approach. we sort of got almost our head in the sand about fiscal austerity in this country. i think we're seeing we can finance our budget deficits because we can borrow at 2%, 3% long term rates. as long as the market is allowing us to do that, why not take that money and invest it in seriously important projects. i think that's the philosophy behind the president's budget. whether or not that will be allowed to continue is the question. >> testimony president is making the case that his policies are working. listen to this.

>> when a plane has lifted off the ground, you don't ease up on the throttle. you keep going. our plane is up there, but we're not at cruising altitude yet. >> the statistics are right. the economy is improving. >> slightly. the economy is down slightly. it's a question whether it's seasonally adjusted and whether or not they pull up when they go to readjusted again. i think we're beginning to see some of the green sheets they talked about from several cycles ago. it's very much dependent on what happens. thank you. coming up, where's the love for

mitt. we have the cnbc market wrap. >> let's have a look at how the markets are doing starting with the dow down. 27 points. nasdaq down about eight points to 2,923. the s&p down about five to 1346. that's it from cnbc. [ male announcer ] what if you had thermal night-vision goggles, like in a special ops mission? you'd spot movement, gather intelligence with minimal collateral damage. but rather than neutralizing enemies in their sleep, you'd be targeting stocks to trade. well, that's what trade architect's heat maps do. they make you a trading assassin. trade architect. td ameritrade's empowering, web-based trading platform. trade commission-free for 60 days, and we'll throw in up to $600 when you open an account.

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>> mitt romney declaring, even singing his love for america this valentine's day. unfortunately, for mitt, it seems voters are not just that into him and a brand new poll might be a handful of thorns without a rose petal in sight. romney facing 14 points of pure pounding republican love that's flooded to santorum. i dare say it won't be cupid's arrow that the romney campaign aims at santorum in the days ahead. this is the third national poll this week showing santorum with major momentum. two of them he leads outright. we've seen a surge by so-called hard candidates before or what bonnie frank called the bum of the month. is it your sense that the

santorum surge is going to last? >> i think it will last longer, perhaps, than some of the other surges than by newt gingrich. remember the polls can change quickly over the course of a couple of days. over the course of a couple days. that's because we're seeing a lot of ad money in michigan. romney's super pac is up. once these ads start getting pumped into the tv air waives in michigan and detroit, the numbers shift a lot. there's no doubt these polls showing santorum in the lead is definitely good news for him. especially as the field continues whittle. >> doubling down on his let detroit go bankrupt line. "the president tells us without his intervention things in detroit would be worse. i believe that without his intervention, things there would be better." he says he will be a detroiter in the white house. i am slightly confused. i would have thought there's

some evidence now that the president's action on the motor industry was the right action. >> there's a lot of it from the bailouts of the auto companies did work. that said, mitt romney, his problem is he can't get conservatives. he can't get tea partiers. those groups are not behind him. he's trying to show i'm a conservative. i'm a conservative. here's how. i don't like bailouts. he's trying to emphasize. >> but does that basically mean that mitt romney has to revise the truth about the motor industry in order to appeal to these political groups? >> i think in some ways, it does. if you look at what he says today versus 2008, he was saying let detroit go bankrupt. it doesn't quite jive of what he's saying today. he has to figure out a way to reconcile the views. he's also aware of the general election problem. he's thinking you can't be against the auto industry if you

want to win that state. he's having to deal with the primary and the general election all at once and balance those things out. >> you're beginning to draw a sense of sympathy for poor mitt. now the spin machine gets spinier with romney's first michigan ad. take a look. >> president obama did all these things the liberals had wanted to do for years. the fact you have millions of americans out of work. home values collapsing. people here are stressed. i want to make michigan stronger and better. michigan has been my home, and this is personal. >> he's against the bailout, which saved jobs, yet he's going to be the savior of those who lost jobs. explain the logic of that to me. >> first of all, can we just confront the issue of how many places can mitt romney say is his home? >> he's very wealthy, my friend. he can claim to have homes all around the country. that's not fair. he's extremely wealthy. >> also his line about i'm a detroiter. he was born in detroit, but he moved to bloomfield hills.

that's in oakland county. detroit is in wayne county. bloomfield hills, none of the house in that ad, i doubt there are houses that look like that in bloomfield hills. it's a wealthy suburb. >> he's got lots of money and he can buy his houses where he likes. that's got to be the beginning. you have to look at the money compared to santorum. mitt romney cannot let michigan get away from him. that could be catastrophic, wouldn't it? >> i think this nice, sunny ad we saw will not be the ads we're seeing in the next few weeks. they will be sharper. you saw what happened to newt gingrich in florida. that's what rick santorum has to figure out. can he whether that aggressive attack. >> thank you. a very happy valentine's day to the pair of you. >> thank you. >> we'll be right back. ♪we w nature valley gra bar,

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it's time now to clear the air. when we last saw rick santorum speaking before a crowd yesterday, all we could think of is george orwell's novel about totalitarianism. see if you can spot the similarities. >> there are a lot of voices that support the republican party. >> the similarities with george orwell's novel and that movie are not just superficial. rick santorum holds views on issues and he regularly sounds like a thee democrat. for example, he's asserted that the right to privacy does not exist and has equated same sex

relationships with bestiality. >> atrocities will ensue from this appalling act, must, can, and will be terminated. >> mr. santorum has pledged to repeal funding for contraception and says individual states should be allowed to outlaw any kind of birth control. >> forces of darkness and will collaborate with them must, can, and will be wiped from the face of the earth. >> in reviewing his book, one writer said mr. santorum has one of the finest minds of the 13th century. but i'm not so sure. if you listen carefully to rick santorum, he sounds more like stal lin. thanks for watching. dylan ratigan is here and is ready to take us forward.

happy valentine's day. >> and to you, martin. a fine day of love and affection for everyone in america. >> i hope it is for you. >> we have all this time. can you see my pen? >> that's beautiful. >> can you get a shot of the pen. >> i'm slightly jealous of you today. >> put it on the paper. watch. as i write, see that. [ laughter ] >> do you see that the mind of a man or woman is three years old? very simple stipulations are very powerful for adults. it feels good doesn't it? >> you've always been a man of simple pleasures. there's nothing wrong with that. the show starts right now.