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THE SITUATION ROOM

Democratic Congressional Leaders Sent Letter To President Bush Opposing Troop Surge In Iraq; Shuffling Of National Security Players; House Democratic Leaders Trying To Rewrite Rules On Pet Projects; Joseph Biden Interview; Arnold Schwarzenegger Limps To Inaugural On Crutches

Aired January 5, 2007 - 16:00   ET

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


WOLF BLITZER, CNN ANCHOR: And to our viewers, you're in THE SITUATION ROOM, where new pictures and information are arriving all the time. Standing by, CNN reporters across the United States and around the world to bring you today's top stories.
Happening now, the new Democratic leaders in Congress are flexing their muscles on Iraq. They're warning Mr. Bush that a troop increase would be a huge mistake. We're following all the action after the power shift.

The president's team is in transition before he shifts gears in Iraq. We'll take you inside the job changes. And I'll ask the new chairman of the Senate Foreign Relations Committee, Joe Biden, why he suspects the Bush administration already has given up on Iraq.

And Arnold Schwarzenegger begins a new term as governor as a broken man, literally. The California Republican had to use crutches at his inaugural ceremony. But his political health appears to be very strong, in part because he sees green.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

Just one day after Democrats take control of Congress, they're taking the gloves off. House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid delivered a preemptive strike against a possible troop increase in Iraq. They sent a letter to President Bush saying any such surge option, as it's been called, has already been tried and it has failed.

Mr. Bush today formally announced an Iraq-related personnel shift. He's nominating retired Vice Admiral Mike McConnell as his national intelligence director. He'll replace John Negroponte, who's moving into the number two job over at the State Department.

Our White House correspondent, Ed Henry, and our senior political analyst, Bill Schneider, are standing by.

But let us begin our coverage this hour with our Congressional correspondent, Dana Bash -- Dana.

DANA BASH, CNN CORRESPONDENT: Well, Wolf, it is day two of the new Democratic Congress and already, as you said, the Democratic leaders are laying down their marker on the issue they say over and over again swept them into power, and that is the Iraq War.

They sent a letter today to the president. That is, the new House Speaker Nancy Pelosi, the Senate Majority Leader Harry Reid. And they make clear that they are opposed to any surge in U.S. troops in Iraq, as the president is considering, because they said that's a strategy that he's already tried and that has failed, trying it again would be a serious mistake.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MAJORITY LEADER: The surge is a bad idea. The president said he was going to listen to his commanders. If he's listening to his commanders, he can't do this. I know he's shuffling some in and out, obviously, because they're not telling him what he wants to hear.

But he -- what he needs to hear is the present situation in Iraq is deteriorating before our eyes and a surge will not help.

(END VIDEO CLIP)

BASH: Now, what Harry Reid and Nancy Pelosi are arguing for is something that we have heard also for quite a while, is that troops should not be going into Iraq, rather, they should be coming out. And that they should start a withdrawal at the White House, at the Pentagon, in about four to six months.

Now, again, we have heard that message before. But it is something that is -- has a new kind of importance, if you will, given the fact that this is -- it's clear now that Congress is going to add some heightened scrutiny to the White House when it comes to Iraq.

And, Wolf, it's not just coming from Democrats. Republicans are being a lot more vocal about what they want to see in Iraq, too.

Senator John McCain, the Republican from Arizona, and also likely presidential candidate, he came out today, as well, making clear what he wants. And what he said is that the idea of troops in Iraq should be -- is a good idea, more troops. He's been arguing for that for quite a long time. You would think that considering the fact that the president does -- is thinking about sending about 20,000 troops, we understand, that Senator McCain would be happy.

But instead, what Senator McCain said is that the president should have more troops in Iraq and do it in a sustained way.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: This troop surge be significant and sustained, otherwise don't do it. It has to be significant and sustained, otherwise, do not do it. Otherwise, there will be more needless loss of American lives.

The worst of all worlds would be a small, short surge of U.S. forces. We've tried small surges in the past, and they've been ineffective because our commanders lacked the forces necessary to hold territory after it was cleared.

(END VIDEO CLIP)

BASH: And, Wolf, Republicans are nowhere near united on this issue of troops in Iraq. You have other Republicans, like Senator Susan Collins of Maine, who recently went to Iraq with John McCain, who disagrees with him and says that she thinks that troops should not be added to Iraq and actually told the president that.

So you have a lot of different voices, a lot of different opinions and ideas coming from Congress.

But maybe the most interesting thing today was from Senator Joe Lieberman of Connecticut, who simply said that the president shouldn't listen to members of Congress, that he is the commander-in-chief and he should make his decision -- Wolf.

BLITZER: Joe Lieberman expressing his independent position, now that he is an Independent member of the Senate.

Thanks very much, Dana, for that.

Dana will be back in the next hour.

Let's go over to the White House now, to the job shuffling and strategizing before the president's big Iraq announcement next week.

We'll turn to our White House correspondent, Ed Henry -- Ed.

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Wolf, we're told that big speech will be a prime time address, likely next Wednesday night, when the president will call for something in the neighborhood of a surge of about 20,000 more U.S. troops to Iraq, as you heard Dana reporting tonight.

Now, in advance of that speech, the president this afternoon just wrapped up a speech -- a private meeting with Democratic senators, part of what the White House feels is the consultation process.

But over the next few days, that will be put to the test, as to whether this is real consultation or whether the president is just making the decisions here and ultimately will inform lawmakers in the end about what he wants to do.

And I say that because coming out of this meeting Democrats like Senator Barack Obama said that they basically told the president a surge is a bad idea and various other lawmakers said it's really not a good option.

Take a listen.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D), ILLINOIS: I think that sending more troops in rather than initiating some sort of phased withdrawal makes them feel as if we will be there to prop them up in perpetuity.

(END VIDEO CLIP)

HENRY: Now, the president is dealing with another potential complication as he gets set to unveil the latest Iraq strategy, and that is what you mentioned, the shuffling of national security players. You heard Harry Reid, the Democratic leader, talking about generals being moved out.

He's referring, first of all, to what we know, General John Abizaid being moved out as the head of Central Command. He's going to be replaced by Lieutenant General Petraeus. General George Casey, as you know, who has been the lead commander on the ground in Iraq, he's going to be out, as well, replaced by Admiral William Fallon. Casey, though, will stay on at the Army and be Army chief of staff, we're told.

Meanwhile, the president today made official what we knew yesterday, which is that he's going to be shifting John Negroponte from the director of national intelligence office over to the State Department to be the number two official. And he will be replaced by retired Vice Admiral Mike McConnell.

Take a listen to the president.

(BEGIN VIDEO CLIP)

GEORGE BUSH, PRESIDENT OF THE UNITED STATES: John Negroponte's broad experience, sound judgment and expertise on Iraq and on the war on terror make him a superb choice as deputy secretary of state and I look forward to working with him in this new post. The vigilance of the DNI helps keep the American people safe from harm. And Mike McConnell has the experience, the intellect and the character to succeed in this position.

(END VIDEO CLIP)

HENRY: Now, Wolf, also, Democratic Senator Joe Biden today pointing out that he is going to be -- he released some of his witnesses, a list for some of those hearings that he will be kicking off next week, throughout the month, really pressing the administration, a sign of the fact that once the president unveils this new policy, it's going to be something that will come under heavy scrutiny from the Democratic Congress. He no longer has the Republican Congress to back him up -- Wolf.

BLITZER: I just wanted to make a quick correction.

John Abizaid, the Central Commander, he's going to be replaced by Vice Admiral Fallon.

HENRY: Yes.

BLITZER: And George Casey, the overall commander in Iraq, he's going to be replaced by Lieutenant General soon to be Four Star General David Petraeus. I just wanted to make sure we got that straight.

The president -- when is he going to make, formally, these announcements?

Do we know, Ed?

HENRY: Well, we're expecting, actually, right this hour Tony Snow is briefing the press. It's been delayed a couple of hours because we were told he was expecting to get some final word from the Pentagon exactly on these personnel changes being announced.

So we expect this afternoon that we should have sort of final confirmation on it and then next week all these pieces will be put into place -- Wolf.

BLITZER: All right, we'll watch it together with you.

Ed Henry at the White House. He'll be back in the next hour, as well.

Just ahead, we're going to talk about all these new developments in the war in Iraq with the new chairman of the Senate Foreign Relations Committee, Democrat Joe Biden of Delaware. That's coming up.

While the great surge debate, as it's being called, rages among political and military leaders, what do the American people think about adding additional troops instead of withdrawing them?

For some answers, we'll turn, as we always do, to our senior political analyst, Bill Schneider -- Bill.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Wolf, there is a lot of anxiety here in Washington in anticipation of the president's speech next week, all because of one word.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): The first official use of the sword came when the new defense secretary went to Iraq last month.

ROBERT GATES, SECRETARY OF DEFENSE: We've discussed the possibility of a surge and the possibility -- and the potential for what it might accomplish.

SCHNEIDER: The same day, President Bush was asked if he supports a surge in the number of U.S. troops in Iraq.

BUSH: I'm just interested in the Iraqis' point of view and then I'll report back to you, as to whether or not I support a surge or not.

Nice try.

SCHNEIDER: Why surge? Why not escalate?

Because surge sounds temporary. Waves surge and decline. Escalation sounds long-term.

President Lyndon Johnson escalated the deployment of U.S. troops to Vietnam in 1965. That war did not end for another 10 years. Whatever you call it, sending more troops would provoke a political firestorm.

SEN. RICHARD DURBIN (D-IL), MAJORITY WHIP: I'm afraid that, in many instances, we are only sending targets, and not troops.

SCHNEIDER: Only 11 percent of Americans favor sending more troops. A majority wants to withdraw U.S. troops, either immediately or within a year.

President Bush said...

BUSH: There's got to be a specific mission that can be accomplished with the addition of more troops before, you know, I agree on that strategy.

SCHNEIDER: Two military strategists defined that mission this way: "bringing security to Baghdad, the essential pre-condition for political compromise, national reconciliation and economic development is possibly only with a surge of at least 30,000 combat troops, lasting 18 months or so. The surge must come from the Iraqis, too, a point the president says he made to the Iraqi prime minister.

BUSH: I said that you show the will, we will help you.

(END VIDEOTAPE)

SCHNEIDER: A State Department official has been quoted as saying: "Instead of a surge, it is a bump."

Well, to quote the president, nice try -- Wolf.

BLITZER: All right, Bill, thank you very much.

Bill Schneider, Dana Bash, Ed Henry -- as all of you know, they are part of the best political team on television. And remember, for all the latest political news at any time, check out our Political Ticker. Go to CNN.com/ticker.

There's a developing story happening out in Oakland, California.

I want to turn to CNN's Fredricka Whitfield.

She's got some details -- what do we know, Fred?

FREDRICKA WHITFIELD, CNN ANCHOR: Well, Wolf, we understand that both terminals at Oakland International Airport have been closed, in fact, evacuated, because of a security breach and now all the passengers in those terminals are being rescreened while they continue to look now -- authorities say they're looking for a man who simply bolted through the security check area. And now they are looking for that person. All incoming flights are allowed to land at Oakland International Airport, but all outbound flights are being grounded temporarily. It's causing a real mess just outside of the airport, on Airport Drive, as well, because that road has been closed, which means for a pretty serious backup there taking place -- Wolf.

BLITZER: Fred, we'll stay on top of this story with you.

Thanks very much.

And remember, stay tuned to CNN day and night for the most reliable news about your security.

Time for Jack Cafferty and "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Ah, the government. It boggles the mind. Mexican illegal aliens who gain legal status in the United States could collect Social Security for the time they worked here illegally. That's thanks to a deal the Bush administration made with Mexico. This could mean billions of dollars from Social Security going to illegal Mexican workers.

The deal was actually reached back in 2004, but never made public until now. I guess they didn't want us to know about it.

A seniors' advocacy group finally got the government to release the information by using the Freedom of Information Act. In order for this agreement to take effect, President Bush has to sign it and send it to Congress. They then have 60 days to vote on it or the deal becomes law. You might want to let your congressman or senator know how you feel about it.

Social Security has unfunded liabilities in the trillions of dollars. We don't have enough money to pay our own citizens their retirement benefits.

But President Bush saw fit to make a deal with his buddy, Vicente Fox, that he apparently didn't want anyone to know about, that would allow illegal Mexican aliens to collect U.S. Social Security benefits.

Here's the question -- should Mexican immigrants who worked in the United States illegally be allowed to collect U.S. Social Security benefits?

E-mail your thoughts to CaffertyFile@CNN.com or go to CNN.com/CaffertyFile -- Wolf.

BLITZER: Jack, thank you.

Jack will be back later this hour.

Coming up, day two for the new Democratic Congress brings more action. We're going to go live to Capitol Hill to find out just what lawmakers did today.

Plus, we're also going out to California, where the governor, Arnold Schwarzenegger, is inaugurated for a second term. But is his bipartisanship a model for national Republicans?

Plus, the new chairman of the Senate Foreign Relations Committee, Joe Biden, says the White House effectively has given up on Iraq. I'll ask him about that statement when he joins us right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: On Capitol Hill, House Democratic leaders are spending much of their second day in power rewriting the rules.

Today's prime target?

Lawmakers' costly pet projects that help swell the federal deficit.

Let's check in with our Congressional correspondent, Andrea Koppel -- Andrea.

ANDREA KOPPEL, CNN CORRESPONDENT: Wolf, Democrats say during Republican control of Congress, the number of earmarks exploded from about 1,400 to today, what's close to 14,000. Ending that abuse was just one of several immediate changes to House rules that Democrats have already made.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA), HOUSE SPEAKER ELECT: We can do it.

KOPPEL (voice-over): The speaker of the House flexed her new political muscle, leading her party to change rules that would force Congress to live within its budget, also known as pay-as-you-go.

Newly minted Congressman Brad Ellsworth, an Indiana Democrat, said Congress had to cut the federal deficit.

REP. BRAD ELLSWORTH (D), INDIANA: Hoosier families in my district make tough decisions every day about how to balance their budget and it should be no different for the Congress of the United States.

KOPPEL: But Republicans complained the move would lead to higher taxes.

REP. JOHN SHADEGG (R), ARIZONA: Pay-go is a provision that is designed to prevent us from being able to ever enact tax relief. I believe that tax relief helps the average American worker. It helps create jobs. It lets us have more money to keep in our pockets.

KOPPEL: Speaking of money in their pockets, under new rules passed Friday, lawmakers will have a much tougher time sneaking requests for millions in taxpayer money, known as earmarks, into spending bills. In 2005, for example, the senior senator from Alaska, Ted Stevens, finagled over $220 million for a bridge connecting an island with fewer than 50 people on it to the Alaskan mainland, which critics dubbed "the bridge to nowhere." Now, when a lawmaker asks for money for projects back home, he must make it public and justify the expense.

REP. RAHM EMANUEL, DEMOCRATIC CAUCUS CHAIRMAN: And we are going to use the disinfectant of sunlight. And everybody is going to know everything they need to know about these earmarks.

(END VIDEOTAPE)

KOPPEL: Now, Republican leaders, meanwhile, sought to put Democrats on the defense and said if they really wanted to foster a spirit of bipartisanship next week, rather than just putting forward their own legislation, Wolf, they should agree to discuss and debate a Republican plan to make health care more affordable for businesses, for small businesses, especially something that Democrats have routinely rejected over the last 10 years or so.

BLITZER: And I take it she's now in Baltimore, where she was born, even though she represents a district in San Francisco, has lived in California all these years.

What's going on?

KOPPEL: Wolf, Nancy Pelosi has returned to her Baltimore roots. They're going to be renaming a street that is quite literally outside her old front door at the intersection of Albemarle and Fawn Street. They're going to rename it Nancy D'Alesandro Pelosi Way. D'Alesandro, of course, her maiden name. Her father was the mayor of Baltimore.

This is part of, some analysts say, an attempt to sort of rebrand Nancy Pelosi not just as that liberal from San Francisco, but of someone who came from the gritty working class community of Baltimore, an Italian Catholic community.

She lives in Little Italy.

BLITZER: All right, good. I love that area in Baltimore myself. I've been there several times.

Thanks very much for that, Andrea.

Still ahead, with friends like these, a Democrat who was a leading ally of John Kerry's 2004 presidential campaign unleashes. We'll tell you what's going on.

Plus, I'll press Democratic Senator Joe Biden about his presidential prospects and whether an announcement is imminent.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Here's a check of our Political Radar this Friday.

President Bush beginning the new year still in a slump in the polls. A new CBS News survey shows President Bush's job approval rating slipping to 30 percent, down a point from last month. And the poll shows just 23 percent approve of his handling of Iraq.

Former Democratic Party Chairman Terry McAuliffe is venting some old frustrations with John Kerry's 2004 presidential campaign. In his new memoir, McAuliffe reportedly lashes out about the Kerry camp's decision to back off from some tough criticism of President Bush. A.P. says McAuliffe calls that move, and I'm quoting now, "one of the biggest acts of political malpractice in the history of American politics."

Kerry now is mulling a second run for the White House in 2008.

A new boost today for John Edwards' bid for the Democratic presidential nomination in 2008. Prominent abortion rights activist Kate Michelman tells CNN she's backing the former senator's campaign.

And remember, for the latest political news at any time, check out our Political Ticker at CNN.com/ticker.

Up next, is the White House waving the white flag on Iraq?

The new chairman of the Senate Foreign Relations Committee seems to think so. My interview with Democrat Joe Biden just ahead.

And is there a secret to Arnold Schwarzenegger's success?

As the California governor begins a new term, we'll look at his efforts to find middle ground.

We'll be right back.

(COMMERCIAL BREAK)

BLITZER: To our viewers, you're in THE SITUATION ROOM, where new pictures and information are arriving all the time. Happening now, the new Democratic leaders in Congress launch a preemptive strike at President Bush. They sent him a stern letter, saying if he decides to order a U.S. troops increase in Iraq, it will be a big mistake.

The president is paving the way for some changes in Iraq by making more changes in his team. There's new confirmation he's tapped two candidates to fill some top military positions overseeing the war. Earlier, he announced he's nominating retired U.S. Vice Admiral Mike McConnell to replace John Negroponte as the national intelligence director.

And new bloodshed in Baghdad. The driver for Iraq's agricultural minister was shot to death today. And the U.S. military death toll since the start of the war in Iraq stands at 3,006.

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

House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid aren't the only Democratic leaders in Congress giving the Bush administration some grief today, as the president prepares to announce his next moves in Iraq.

And joining us now, the new chairman of the Senate Foreign Relations Committee, Joe Biden, Democrat of Delaware.

Mr. Chairman, congratulations. Thanks very much for joining us here in THE SITUATION ROOM.

SEN. JOSEPH BIDEN (D), DELAWARE: Thank you very much, Wolf.

BLITZER: I woke up this morning, read this interview you granted to "The Washington Post." Let me read one line from it.

BIDEN: Sure.

BLITZER: "I have reached the tentative conclusion that a significant portion of this administration, maybe even including the vice president, believes Iraq is lost."

That's a pretty shocking statement. Give us the context. Tell us what -- what you know.

BIDEN: Well, let me tell you what I think.

I -- as I said, I have a tentative conclusion. I start with the premise that Vice President Cheney and Secretary Rumsfeld are very smart guys. I have known them and worked around them and with them for the last 30 years. They're very bright.

I could not believe -- and we have been on your show and talked about this -- that, the last three years, they actually thought we were making progress. I could not believe the assertions about them saying, we have trained up Iraqis and we're doing so well, that they actually believed.

And, so, I have reached the conclusion that they had to know how bad things were, but they had to have reached the conclusion of one of two -- one of two conclusions. Either the radical change necessary in order to get this back on the right path was something they weren't willing to recommend, or, two, they concluded that the best thing to do is keep this stitched together, and hand it off to the next president.

And that's the tentative conclusion I have reached, because these are very smart guys. The idea...

BLITZER: So, are you just -- are you just surmising this, based on your...

BIDEN: I'm surmising this.

BLITZER: You have no inside information that...

BIDEN: I have no inside information to that effect, none whatsoever.

Here they are, at a time now where they're basically rejecting the recommendation of everybody in the world, everybody in the United States that has made that they have respect for, the Baker-Hamilton commission, the recommendations made by their own military, et cetera. And I think it's very difficult for them to change policy. The idea -- I don't think they're willing to take a risk on talking to Iran. I don't think they're willing to take the risk on engaging Syria. I don't think they're willing to take the risk on putting more pressure on the government to -- in Iraq to take over more responsibility.

And, therefore, because they're not willing to take the risk, and they have no real alternative, 30,000, 20,000, 15,000 troops are not -- emphasize, are not -- alone, going to change the situation on the ground. And, so, I think they have to know that. So...

BLITZER: So, here's the question, Senator: What can you do about it?

If it's not going to make any difference, and more Americans are simply going to die in the process over the next year or two, even if there is this so-called surge, what can you, as the chairman of the Senate Foreign Relations Committee, do to stop that, if, in fact, you feel strongly that it is over and it's a waste of time and energy and lives?

BIDEN: Well, I -- by the way, see, I don't think it's over, in the sense that I think we should take those radical steps, those chances recommended by the -- the Baker-Hamilton commission, the chances recommended by me and Les Gelb and others.

They're taking a chance. They are a significant alteration of course. They're not willing to do that, obviously.

So, what can I do to stop them continuing to sort of incrementally go at this thing by adding another 15,000 to 30,000 troops? The honest-to-God answer, Wolf, is nothing.

The reason I spoke out between Christmas and New Year's, in my opposition, was in the hope that my voice might be added to those of Secretary Powell and others to dissuade them from taking this step. So, one was to try to have joined the chorus of those opposing this and, hopefully, maybe they would reconsider. That seems not to have worked.

The second thing...

BLITZER: You do have -- you do have one option, as you know. That's the power of the purse, to stop funding the war, if you will.

BIDEN: The truth is, that's not a real option, Wolf.

The idea that -- I was there when we tried that during the Vietnam War. It is a very -- it is a very blunt instrument that does not work very well.

You have to cut off all funding, not just for the war. The president can still steam folks into the region, the fuel that goes into the aircraft carriers from which the aircraft fly off of, the -- the -- the tanks and the rest. You cannot say, as a practical matter, we're going to cut off the money for the bullets in the rifles of the young men they -- and women -- that they say are going to stay there. It's a false threat.

What will change things, in my view, Wolf -- and the reason why I'm holding these extensive hearings with Senator Lugar in the Foreign Relations Committee -- is to lay out the reasonable options that are laid out there by others, who may have a different path for us to get a more positive result, and to bring along and show that there's not just Democrats, but a significant number of Republicans, who do not support essentially staying the course, and adding 15,000 or 20,000 more troops.

I believe the only thing that will ultimately change the president's mind -- and that is to make a radical change in course -- is if, in fact, he looks out there and sees that the bulk of the Republican senators no longer support his position.

BLITZER: And there are increasing...

BIDEN: That's the political reality.

BLITZER: There are increasing numbers of Republicans who are distancing themselves from his strategy in Iraq right now, Gordon Smith of Oregon, for example. Chuck Hagel, he's been out there for some time.

Here's another quote from the interview in the Washington Post. You said that, "They are simply trying to postpone disaster" -- referring to the administration -- "so that the next president will be the guy leading helicopters inside the Green Zone, taking people off the roof."

That's a reference, of course, to Saigon, the last days of the war in Vietnam.

Is that what you assess is about to happen?

BIDEN: Well, I assess that, if we continue on the path we're on, that's going to be the only option left to the next president of the United States, whomever he or she is, because the ability to stitch back together a strategy, whether it's the one I propose or the one proposed by Baker or others, will have been lost.

We will be so far down the road in a full-blown civil war, that there will be no possibility of retrieving it at that point.

So, I think that that will be the inevitability, if we continue, absent a political solution in Iraq. Unless the Sunnis and Shia make a judgment that we use every bit of influence we have to force them to come to that they are going to have a political accommodation, unless that happens, Wolf, there will be no success in Iraq...

BLITZER: One final question.

BIDEN: ... in my view. BLITZER: Where do you stand, as far as being the next president of the United States? Have you formed your committee? Have you formally gone through the process of declaring your intention to run?

BIDEN: I haven't formally done that. But we will formally set up that committee, I expect, by the end of this month. It is my intention to run. I have been straightforward about that for the last six or eight months.

But the legal requirement of setting up a committee and transferring funds and all that, which is a little above my pay grade, that will occur at the -- around the end of this month. We haven't picked the exact date.

But it is my intention, Wolf, to seek the Democratic nomination.

BLITZER: I will end the interview where I started. Congratulations, Mr. Chairman. Thanks very much for joining us on this new year.

BIDEN: Thank you.

BLITZER: And we're just getting this word in from the Senate Foreign Relations Committee, with Senator -- which Senator Biden chairs.

Next Thursday, January 11, 2:00 p.m., the witness before his panel will be the secretary of state, Condoleezza Rice; 2:00 p.m. next Thursday. He is going to be having an extensive series of hearings, together with Richard Lugar, now the ranking minority member of that panel.

Interesting. Thursday -- if the president of the United States delivers his major address to the nation Wednesday night on his new Iraq strategy, Condoleezza would go up the Hill the next day to articulate, to further explain exactly what the president has in mind. We will watch all of that, together with you.

Coming up: Arnold Schwarzenegger begins a new term as California governor with a plan to reach out to moderates that might make some other Republicans green with envy.

And would a troop increase in Iraq be a huge mistake? Has the Bush administration actually given up on the war? Provocative questions for Paul Begala and J.C. Watts -- that's coming up in our "Strategy Session."

We will be right back.

(COMMERCIAL BREAK)

BLITZER: Arnold Schwarzenegger limped to his inaugural on crutches today. But the California governor may be politically stronger than ever, after mining the middle ground. The Republican told supporters at his swearing-in ceremony that centrist does not mean weak. CNN's Peter Viles is joining us from Sacramento with more -- Peter.

PETER VILES, CNN CORRESPONDENT: Wolf, the governor recovering from a broken leg and major surgery on that broken leg, but he managed to stand up today long enough, about 15 minutes, to give a very provocative speech.

In that speech, he said Americans are frustrated and fed up and disgusted with partisan politics, and they deserve something better, and so does our democracy. He said, what they deserve is not bipartisanship. It's something different. He called it post- partisanship.

Here is how he explained what he meant by that.

(BEGIN VIDEO CLIP)

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: We don't need the Republican roads or Democratic roads. We need roads. We don't need Republican health care or Democratic health care. We need health care.

We don't need Republican clean air...

(APPLAUSE)

SCHWARZENEGGER: ... or Democratic clean air. We all breathe the same air.

(END VIDEO CLIP)

VILES: Now, specifically, on that issue of global warming, the governor took issue with those even within his own party who say they're not certain, they're not sure, they're not convinced that global warming is a real problem. He said he is convinced. He believes it's not just a real problem, but it's such a big problem that government needs to act immediately to solve it.

(BEGIN VIDEOTAPE)

CHIEF JUSTICE RONALD M. GEORGE, CALIFORNIA SUPREME COURT: I, Arnold Schwarzenegger...

SCHWARZENEGGER: I, Arnold Schwarzenegger...

GEORGE: ... do solemnly swear...

SCHWARZENEGGER: ... do solemnly swear...

VILES (voice-over): California's Republican governor is rapidly becoming one of his party's leading environmentalists, promoting solar energy, fuel cell research, and signing a Democratic bill to combat global warming, a trend some in the Republican Party believe is a myth.

SCHWARZENEGGER: We simply must do everything that we can in our power to slow down global warming, before it is too late.

VILES: Before he was sworn in, Schwarzenegger threw this green dream party, celebrating everything from freshwater fish and organic granola to pedal-powered taxis. The governor's wife, in a green leather jacket, stood in for her husband.

MARIA SHRIVER, CALIFORNIA FIRST LADY: Think green, eat green, live green, and live with zero waste in your home.

Thank you so much. Thank you.

(MUSIC)

VILES: It's more than slogans. Environmental groups generally give the governor high marks.

BILL ALLAYAUD, DIRECTOR, SIERRA CLUB CALIFORNIA: Right from the get-go, he said something that was pleasing to our ears. He said, there is no conflict between the environment and the economy. He has stayed that course pretty well.

DAN SCHNUR, REPUBLICAN POLITICAL CONSULTANT: What Schwarzenegger is doing is showing national Republicans how to reach beyond the conservative base using environmental protection as an issue with which to do so.

VILES: Schwarzenegger admits his agenda on this goes far beyond California. He says other states and other nations will follow California's lead.

SCHWARZENEGGER: And so will, finally, also, our federal government follow us. Trust me.

(APPLAUSE)

(END VIDEOTAPE)

VILES: Now, Schwarzenegger will make a major speech on Monday on health care insurance.

It is already being reported here locally, Wolf, that he will propose universe health care cover for all California children, including the children of illegal aliens. Now, the governor's office says they haven't made a final decision on that, but he will speak on it on Monday.

So, it appears that this governor is heading straight into controversy on the immigration issue, Wolf, very early in his second term -- Wolf.

BLITZER: Fascinating material. Thanks, Peter, for that -- Peter Viles reporting from Sacramento.

Up next, the Schwarzenegger strategy, we're going to have more on that. Is it something Republicans across the nation should be copying? J.C. Watts and Paul Begala will weigh in. And they will join the great troop surge debate as well. Are Democratic leaders in Congress going to fight Mr. Bush on Iraq at every turn? All that coming up in our "Strategy Session."

We will be right back.

(COMMERCIAL BREAK)

BLITZER: In our "Strategy Session": Democrats in Congress blast the president over a troop surge. He says he hasn't decided on it yet.

Could embattled Republicans take some tips from Arnold Schwarzenegger? Two provocative subjects.

Joining us now, our CNN political analysts, Democratic strategist Paul Begala, former Republican Congressman J.C. Watts.

Here is what Harry Reid, the Democratic leader, the majority leader, in the Senate, and Nancy Pelosi, the speaker, wrote to the president today, among other things: "Surging forces is a strategy that you have already tried and that has already failed. Like many current and former military leaders, we believe that trying again would be a serious mistake."

Is there -- do you have a problem with the strategy of sort of preempting what the president is going to say? They don't know yet what he will say in his address to the nation next week.

PAUL BEGALA, CNN POLITICAL ANALYST: That's right.

No, I think it's brilliant. And I hope, I pray, that, just like Joe Biden in your interview with him a few minutes ago, that maybe they will preempt the policy, that is to say, they will derail this. A surge would be a tragic mistake. They're right, as a matter of record, the administration, our government, surged 15,000 troops into Baghdad recently. It did nothing to quell the violence.

And there's already a news report out that a Bush administration official is admitting that this is a political move, not a military move. So, this is a political ploy in search of a military rationale. It's why General Abizaid, as Pelosi and Reid point out in their letter, recently testified that he doesn't want more troops, nor do any of the other commanders in the field. So, it looks like a political stunt. And let's hope that Reid and Pelosi can derail that.

BLITZER: Their argument, basically, is, it's not going to work, and why endanger more Americans?

J.C. WATTS, CNN POLITICAL ANALYST: Well, Wolf, I could make an argument that it's -- it's a political move to send the letter, when you don't know if, in fact, it's going to happen, or why it's going to happen, what the rationale behind it is.

I think, first, you should want to know why you're proposing to do this, what sense does it make, what -- what is the rationale. And I -- again, I think it sounds as though, as Arnold Schwarzenegger said, this isn't a Republican or a Democrat thing. This should be an American thing.

And I think the president is trying to make a case that: The things that I'm going to be proposing are the things that will get us in a good situation in Iraq, win this thing, and then get out of there.

And to just dismiss it, you know, without hearing the rationale behind it, I think, is a little short-sighted.

BLITZER: You heard Joe Biden say that he believes, he surmises, that top administration officials, including the vice president, they believe this is over already, and they are just trying to do what they have to do to resolve it, one way or another, but they really have no great hopes that, when all the dust settles, the -- the new Iraq, as envisaged years ago, is going to materialize.

BEGALA: If, in fact, that is true -- and he said he was just speculating, Senator Biden did -- if, in fact, the administration has already decided this is a lost cause, and they're sending more troops into that, that is a sin. That is a mortal sin.

I think -- you know, I think that the president has got to face reality. Maybe Senator Biden's comments will help. Hopefully, this letter will help. General Abizaid himself said he doesn't want more troops there. So, I think that the president is in a terrible bind. And it looks like he is making a political move.

BLITZER: It's a tough statement that Biden made, because he said he suspects the administration is simply trying to roll out the -- run out the clock, if you will, the two years that remain in this administration, and let the next president, whoever that may be, have to get the troops out of there.

WATTS: Well, Wolf, I think that's irresponsible, if you can't in fact, prove that. And that's speculation, and -- and that is a political statement.

And Senator Biden is -- has been a lot more responsible than that. The fact is, we are in a war. We are in a tough situation in Iraq. The fact is, we must win this thing. And the president is responsible for coming up with solutions, or with a strategy that he and his team can implement in order to win this thing.

And -- I -- and, again, I was disappointed and saddened to hear Senator Biden say some of the things that he said, because he has no -- there is no basis in fact for him to say those things.

BLITZER: Well, he suspects that. And he made it clear he has no inside information, but that is his suspicion.

Let's go on to Arnold Schwarzenegger. You know, he has done amazingly well. It wasn't that long ago people were writing him off, after he lost all those referendums in California. And now he has easily -- relatively easily -- got himself reelected, in part, by positioning himself in the middle.

BEGALA: In fact, a friend of mine, one of my Hollywood liberal friends...

(LAUGHTER)

BEGALA: ... who I talked to this afternoon, said, it was one of the best Democratic speeches he had heard in years.

And, in fact, Governor Schwarzenegger himself compared himself to Saul on the Road to Damascus, this miraculous revelation that he has had that the power of -- in America is in the center.

I would, though, hasten, particularly when he talks about all the green support that he has got, and the new environmental positions that he has, As Peter Viles reported on our air a moment ago, that I did notice that one of the major funders of the Schwarzenegger inaugural is Chevron, the oil company. It's one of the biggest polluters and biggest causes of global warming in the country. So, let's be a little careful before we anoint him king of green.

BLITZER: But, given the fact that he is now in the middle, Rudy Giuliani, according to all the polls, registered Republicans say he is their top choice, even above McCain, for the Republican nomination for president, is this a new strategy that Republicans should consider, in other words, moving toward the center?

WATTS: Well, Wolf, political pundits would consider J.C. Watts a conservative Republican, as defined by this city.

Well, I think, as a conservative Republican, as a Republican, I should be talking about the environment. And I'm a social conservative. I think that the environment is God's. Why shouldn't we be good stewards of the environment? We should be talking about poverty. We should be talking about underserved communities, AIDS in Africa.

These are things that Arnold Schwarzenegger has talked about. We may have differences on how we deal with these things, how we solve these problems. But I think it's a huge mistake for Republicans not to be talking about those things.

BLITZER: All right. Well said.

BEGALA: Amen.

BLITZER: Thanks very much, J.C. Watts...

BEGALA: You know, he is a preacher, as well as a quarterback and a politician...

(CROSSTALK)

BLITZER: I saw a little of that preaching coming in.

BEGALA: Yes. BLITZER: Paul Begala, J.C. Watts...

WATTS: Now...

(CROSSTALK)

WATTS: ... pass the hat.

BLITZER: They are part...

(LAUGHTER)

BLITZER: ... of the best political team on television.

And, remember, for the latest political news at any time, check out the Political Ticker. Go to CNN.com/ticker.

Still to come here in THE SITUATION ROOM: the border wars. Should Mexican immigrants who work illegally in the United States get a reward of sorts from the Social Security Administration?

Jack Cafferty with your e-mail.

We will be right back.

(COMMERCIAL BREAK)

BLITZER: Let's check back with Jack Cafferty for "The Cafferty File" -- Jack.

CAFFERTY: The question, Wolf, this hour is: Should Mexican immigrants who worked in the United States illegally be allowed to collect U.S. Social Security benefits?

Apparently, they can, under the terms of some weasel deal that the Bush administration worked out with Vicente Fox back in 2004. We're just finding out about it now because of some demands under the Freedom of Information Act.

Needless to say, not a lot of you think this is a great idea.

Andy in Nevada writes: "I'm not sure why you asked this question. Once again, illegal is illegal. I think we have justification for impeaching the entire government for not enforcing the federal immigration laws."

Donald in Bucyrus, Ohio: "No, they should not. I wrote my congressman and senator about this today."

Jerry in Napa, California: "Jack, yes, they should. And the entire tab ought to be picked up by the employers who hired them illegally."

Larry writes: "Unbelievable it would even be an option. Does anyone in our government ever stand up for legal middle-class Americans?" Jeff in Bethesda, Maryland: "If formerly illegal immigrant -- if a formerly illegal immigrant and his or her employer both paid Social Security taxes for the period of time that the employee was an illegal immigrant, then, yes, they should be able to collect benefits. But how many illegal immigrants pay their Social Security taxes?"

And Dawn writes from Rocky Hill, Connecticut: "Jack, there is something desperately wrong with our system, that such a situation would occur for a question like this to even arise. Talk about broken government" -- Wolf.

BLITZER: Jack, thank you very much.

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