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THE SITUATION ROOM

$700 Billion Switcheroo; Interview With Sarah Palin

Aired November 12, 2008 - 18:00   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.
Happening now: Sarah Palin is here. She's laying blame for her ticket's loss, expressing no regrets for slamming Barack Obama during the campaign. And you're going to find out why she says to him -- and I'm quoting now -- "My son's life is in your hands." Stand by for the interview.

Obama's team makes some big announcements about agencies handling foreign affairs and those protecting your money and national security.

And amid all the talk of an auto industry bailout, the government bails on an argument for the $700 billion rescue plan. And that's prompting serious questions if the treasury secretary misled Congress and you -- all that plus the best political team on television.

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

The administration that will soon be handling our money, our security, and the nation's foreign policy is now taking shape. There are important announcements from Barack Obama's transition team regarding the Treasury, the Defense Department, and the State Department. And we're hearing that among Barack Obama's considerations is a major idea designed to help one struggling industry and possibly many of you.

Let's go straight to our White House correspondent, Ed Henry.

Ed, you have details. What are they?

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: That's right, Wolf. It's all about the auto industry, literally millions of jobs at stake. And that's why Barack Obama is now considering a major new approach to this issue.

(BEGIN VIDEOTAPE)

HENRY (voice-over): President-elect Barack Obama spent the day huddled behind closed doors in Chicago mulling additions to his team. Sources close to the transition say one option getting a serious look is a new White House job dubbed car czar, a point person to deal with crisis in the auto industry.

Among the names starting to circulate for that post, David Bonior, a former Michigan congressman with close ties to the labor unions who helped elect Obama and are fretting about dwindling manufacturing jobs. Auto industry officials also taught Dan Tarillo, a trade expert serving as Obama's transition chief on auto issues.

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: I would like to see the administration do everything it can to accelerate the retooling assistance that Congress has already enacted.

HENRY: Beyond creating more bureaucracy, Obama wants drastic action, urging President Bush to support an emergency aid package for the auto industry. In a show of Democratic force, Speaker Nancy Pelosi is turning up pressure on the White House by vowing to consider a $25 billion rescue Bill next week in a lame duck session of Congress. But the Bush administration remains skeptical of yet another government bailout unless the big three agree to drastic changes.

HENRY PAULSON, U.S. TREASURY SECRETARY: We need a solution, but the solution has got to be one that leads to viability.

HENRY: Obama, too, wants Detroit to fix its business model and help clean up the environment by sharply increasing production of green vehicles. But he's also suggested some long-term solutions may have to wait to help prevent a short-term catastrophe.

OBAMA: The news coming out of the auto industry this week reminds us of the hardship it faces. Hardship that goes far beyond individual auto companies, to the countless suppliers, small businesses, and communities throughout our nation.

(END VIDEOTAPE)

HENRY: Now, the Obama transition effort has also just announced that they are going to be adding agency review -- now, the Obama transition team just announced that they have put together these agency review teams.

They're basically going to be handling the nuts and bolts of the government over at the State Department. The transition's going to be led by Ambassador Wendy Sherman and Tom Donilon, and two longtime Democratic insiders. At the Treasury Department, they have got Josh Gotbaum and Michael Warren. These are also two folks that are going to be advising Barack Obama on how to structure the personnel at these two critical departments, the State Department right now, with two wars going on, the diplomatic effort, but also Treasury, obviously, dealing with the financial crisis -- Wolf.

BLITZER: Ed Henry, in Chicago watching all of this, thank you.

Governor Sarah Palin is free from campaign constraints right now. She's very free from all of that. So, she's not biting her tongue anymore. I'm here in Miami, where I interviewed Governor Palin just a little while ago.

(BEGIN VIDEOTAPE)

BLITZER: Joining us now, the governor of Alaska, the -- I guess you could call her now the former vice presidential nominee, Sarah Palin. Governor, thanks very much for coming in.

GOV. SARAH PALIN (R), ALASKA: Thanks. Yes, you could call me the has been.

BLITZER: No. You're not a has been. A lot of people know that. Let's talk a little bit about what's going on in our country right now.

It's a pretty historic moment, when you think about it, the first African-American president, President-elect Barack Obama. This is historic. What does it mean to you?

PALIN: It's historic, and I think this time is full of optimism. And it's an opportunity for everybody to get it together and start working together. For us, as Republicans, to reach out to Barack Obama and the new administration that will be ushered in, and offer the solutions that we see for meeting some of America's great challenges right now.

This is an opportunity to all be working together. And of course President-elect Obama had promised also bipartisan efforts to meet the challenges. So let's seize this opportunity. Let's take him up on that offer. And let's all start working together.

BLITZER: Are you ready to help him?

PALIN: Absolutely, especially on energy independence, energy security that we need for this nation. Being the governor of an energy-producing state, knowing that we have the domestic solutions there in our state and in other energy-producing states, I'm more than willing and able to help president-elect Obama to start tapping into the domestic solutions that we have now so we can quite being so reliant on foreign sources of energy.

BLITZER: So if he reaches out to you and says, Governor Palin, I need your help on energy, or some other issues, kids with special needs, for example, and says, I want you to be part of a commission, you would be more than happy to say, Yes, Mr. President ?

PALIN: It would be my honor to assist and support our new president and the new administration, yes. And I speak for other Republicans, other Republican governors also. They being willing, also, to, again, seize this opportunity that we have to progress this nation together, a united front.

BLITZER: Because, you know, during a campaign, every presidential campaign, things are said that's tough. As you well know, it gets sometimes pretty fierce out there.

And during the campaign, you said this. You said, This is not a man who sees America as you see it and how I see America. And then you went on to say, Someone who sees America, it seems as being so imperfect that he's palling around with terrorists who would target their own country.

PALIN: Well, I still am concerned about that association with Bill Ayers. And if anybody still wants to talk about it, I will, because this is an unrepentant domestic terrorist who had campaigned to blow up, to destroy our Pentagon and our U.S. Capitol. That's an association that still bothers me, and I think it's still fair to talk about it.

However, the campaign is over, that chapter is closed. Now is the time to move on and to, again, make sure that all of us are doing all we can to progress this nation. Keep us secure, get the economy back on the right track. And many of us do have some ideas on how to do that, and hopefully we'll be able to put all that wisdom and experience to good use together.

BLITZER: So, looking back, you don't regret that tough language during the campaign?

PALIN: No, and I do not think that it is off base, nor mean- spirited, nor negative campaigning to call someone out on their associations and on their record. And that's why I did it.

BLITZER: And just one historic footnote. Was that your idea or did somebody write those lines for you?

PALIN: Oh, it was a collaborative effort there in deciding, how do we start bringing up some of the associations that perhaps would be impacting on an administration, on the future of America? But again though, Wolf, knowing that it really at this point, I don't want to point fingers backwards and play the blame game, certainly on anything that took place in terms of strategy or messaging in the campaign. Now is the time to move forward together, start progressing America.

BLITZER: Let's talk about some of the current issues on the agenda right now. And I speak to you as someone who's emerging as a potential leader not only of the Republican Party, but maybe if you want to run again for president or vice president down the road.

Right now a big issue, should the U.S. government, the federal government, bail out Detroit, the big three automakers?

PALIN: Well, that is the discussion of the day. And there's going to come a point here where absolutely, the federal government must play an appropriate roll in shoring up some of these industries that are hurting and will ultimately hurt our entire economy, and the world's economy if there aren't some better decisions being made.

But we also have to start shifting some debate here in our country and start talking about personal responsibility, and responsibility of management in some of these corporations and companies, so that from hence forth, it's not assumed that the federal government is going to be bailing out everybody who's going to soon line up, Wolf, for more taxpayer assistance. And I'm talking about personal responsibility, too, in terms of homeowners and in terms of folks who maybe have extended their own credit.

Sure, predatory lenders are to blame in all of this also, but we have got to make sure, for instance, we're not talked into buying a $300,000 house if really we know we can only afford a $100,000 house. And we've got to start living those lessons that we try to teach our children in terms of not living beyond our means and extending our own personal credit to the point of not being able to pay our monthly bills and then expecting government to grow and be the answer?

BLITZER: So I'm still waiting for the answer. Should the government bail out the big three automakers?

PALIN: Well, it's in debate right now, and I'm listening closely to the debate. And there's a lot of information that even you and I certainly aren't privy to understand all the ramifications if the federal government were going to step in and bail out.

But we do know that the auto industry is that important and certainly it needs to be considered. But I'm not going to ignore the debate again that I think needs to lead to the personal responsibility, the management decisions that have been made in some of these companies and corporations that have also led us to where we are.

BLITZER: So I hear you saying you need more information then?

PALIN: Yes, I do.

BLITZER: What about the $700 bailout of the financial industry? Was that the right thing to do with hindsight, based on what you know right now, or the wrong thing to do?

PALIN: I still believe it was the right thing to do to be able to propose this rescue package, certainly in the home mortgage industry, because with foreclosures up 71 percent compared to where we were last year on foreclosures, this is bad ultimately for our entire economy. And it doesn't do any neighborhood, or any community, any state, any good to see the rate of foreclosures that we have.

So with home mortgages and overall with the general bailout plan, yes, I think it was the right thing to do. The federal government had to take some action. But it cannot be assumed again that taxpayers can be looked to for all of the bailouts as more and more corporations, companies, entities come forward with their hand out for government to continue to bail.

BLITZER: Should Congress go forward right now with another economic stimulus package to help the struggling middle class?

PALIN: I do want to see the struggling middle class be the ones at the end of the day who are not stuck with the bills and stuck with the burdens. But I am not one, again, to believe that it should be just assumed that it's a taxpayer bailout that will be the solution to all the problems, all the financial challenges that our nation is facing.

Supportive of $700 billion initial, now hearing more rumor, more speculation of even greater amounts being poured into that. There again, need more information, but not being so enthused about a second, a third, a fourth stimulus package. BLITZER: President Bush only has, what, two and a half months or so left. What would you like to see him do in these remaining days and weeks? What's the most important thing he should be doing right now?

PALIN: He's already doing that, and that's reaching out to Barack Obama and to those potential new cabinet members also, and those whom we know will be in the cabinet. Reaching out to them and not being one to stay away, to shy away from addressing the challenges that we have today, working with the new administration, and start ushering in some new solutions. So I appreciate that he's already done that.

And that bodes well for our president also. And other things also that bode well for President Bush and keeping our country safe for the last seven years with no new attack on the homeland, those things I think we cannot lose sight of that President Bush has allowed for progress in those areas in our nation. You know, I'm going to do a shout-out to our president and thank him for that.

BLITZER: Even though he may have hurt you and John McCain in terms of becoming president and vice president?

PALIN: You know, I think that there is so much blame to go around, if you will, in terms of why it was that the Republican ticket did not win. And you know, that's being attributed to, we didn't get the Hispanic vote, that really hurt; we were outspent tremendously because, of course, Obama took the private financing, John McCain had stuck to his promise of just keeping the public financing in the campaign, so greatly outspent.

Barack Obama was a great campaigner. He had a very strong organization. So many reasons. I'm not going to look backwards there, again, and point to just President Bush and the administration as to why our ticket didn't prevail.

BLITZER: You look back and say to yourself, I wish I would have done something differently? Is there anything you look back and say, you know, I think I could have done something differently that might have helped?

PALIN: I just wish there had been more hours in the day, been able to speak to more Americans through the media. I would have loved to --

BLITZER: We tried. We tried. God knows we tried.

PALIN: I'm sorry. All right. That's why we're here today, Wolf. Yes.

But just more hours in the day so that we could have reached more Americans with that message of who it is that John McCain is. He is a true American hero. He does have solutions in mind for this country to get the economy back on the right track and to win the wars. But he now, as a leader in the Senate, we're going to be looking to him, again, being able to unite the party, but also helping unite the nation, working with the new administration. John McCain will continue to be that strong leader in America. And we need to listen to him.

(END VIDEOTAPE)

BLITZER: Much more of the interview coming up.

Now that there's an African-American president-elect, I asked Sarah Palin if affirmative action is still necessary.

And before the election, Governor Palin suggested God would do the right thing on Election Day. What does she think right now?

Plus, we will go inside the transition with Barack Obama's first friend and senior adviser, Valerie Jarrett. She's standing by live.

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

(COMMERCIAL BREAK)

BLITZER: You just heard Governor Sarah Palin talk about helping the soon-to-be President Barack Obama. She says she will do whatever she can to help him. But she's also expressing no regrets for slamming him as a candidate. We continue now with the interview with a controversial issue.

(BEGIN VIDEOTAPE)

BLITZER: Let's talk about affirmative action right now. It's a sensitive subject.

Now that there's a president-elect who's African-American, do you believe it's time to get rid of affirmative action in our country?

PALIN: I am one to believe in equal opportunity for everyone. And there probably are some specific policies that it is time that America can kind of turn that page, understanding that, with the intent of treating everybody equally and providing equal opportunity in the workplace, and in education, there are some specific policies that I'm sure, and we can move beyond.

And here again, you know, as Barack Obama prepares to take this office of Washington and of Lincoln, what progress our nation has made in not allowing race to be prohibited at all -- a prohibitive factor in an election. I'm so proud of America and very happy to see what Barack Obama, he has accomplished this for himself, but also for our nation, for our children, to know that race is not a factor, cannot be a factor, cannot be a ceiling or a prohibition towards progress.

BLITZER: Let's talk about some of the other issues. And we have a question. One of our I-Reporters sent this in.

PALIN: Oh, good.

BLITZER: Eric Olson (ph) of Savage, Minnesota. He says he is a Democrat, he voted for Barack Obama, but he has this question.

PALIN: OK. (BEGIN VIDEO CLIP)

ERIC OLSON-SAVAGE, MINNESOTA: Governor Palin, before the election, you were speaking with James Dobson, and you said you were confident that God would do the right thing for America on November 4. Did God do the right thing for America?

(END VIDEO CLIP)

PALIN: I don't know if that was my specific quote, but I do believe that there's purpose in everything.

And, for me personally, I put my life in God's hands and ask him to -- don't let me miss some open door that he has for me, and I will travel through that. And I think the same thing for our nation, as we seek God's guidance, his wisdom, his favor and protection over our nation, that at the end of the day that, the right thing is done.

And, you know, I do believe that prayers were answered, others who prayed across this nation in the election, that -- you know, that this nation would be protected, that we would be safe, that we would be prosperous and favored. I believe that that prayer is answered.

BLITZER: All right. Well, fair enough. What does Barack Obama have to do right now, in your opinion, to show that he's going to reach out to Republicans and independents and work in a bipartisan way?

PALIN: He needs to do what I did when I was elected governor of Alaska. And that is, you don't use as your litmus test partisanship. You do not look to someone's party affiliation, but you look to fill your Cabinet positions, especially, with the best of the best. That's what I did as a governor of Alaska, appointing Democrats, independents, Republicans all to work in a team effort, really walking the walk, not just talking the talk, not just that rhetoric of, you know, an ability that's preached to reach across the aisle.

But he's really going to have to walk that. And he can do that by appointing others who are not just a member of his own Democrat Party. And I think we're going to see that.

BLITZER: Here's another question from Dan Waun (ph) of Lansing, Michigan. He was undecided. He said he leaned for McCain at one point, was for Bush in '04. He ended up voting for Barack Obama. This is his question.

(BEGIN VIDEO CLIP)

DAN WAUN-LANSING, MICHIGAN: What would you propose the GOP do to reconcile this ideological shift, in order to regain moderates and independents, who so convincingly voted for president-elect Obama?

(END VIDEO CLIP)

BLITZER: He's referring to the ideological shift, the conservative, social religious base vs. the more moderates, the pragmatic independents in the middle.

PALIN: Well, if there is some kind of perception that conservatives and those who maybe represent a conservative base are not pragmatic and are not thinking along those lines that you put a sense of partisanship aside, then I beg to differ with the whole premise of his question.

Certainly, this is opportunity, though, to bring people together, to unite and start finding the solutions to America's great challenges. But, as you're reading these viewers' questions, you got any questions from anybody who voted for McCain?

BLITZER: I think we do.

PALIN: Oh, good. OK.

(LAUGHTER)

BLITZER: But stand by. We're going to get to that.

Another question: What are your new ideas on how to take the Republican Party out of this rut that it's in right now? Give me one or two new ideas that you're going to propose to these governors who have gathered here in this hotel?

PALIN: Well, a lot of Republican governors have really good ideas for our nation, because we are the ones there on the front lines being held accountable every single day in service to the people whom have hired us in our own states. And the planks in our platform are strong. And they are good for America. It's all about free enterprise and respecting equality and...

BLITZER: Is there anything new you want to come up with, a new Sarah Palin initiative that you want to release right now?

PALIN: Nothing specific right now, sitting here in these chairs, that I'm going to be proposing. But in working with these governors, who, again, on the front lines, are forced to -- and it's our privileged obligation to find solutions to the challenges facing our own states every day, being held accountable, not being just one of many just casting votes or voting present every once in a while.

We -- we don't get away with that. We have to balance budgets, and we're dealing with multibillion-dollar budgets and tens of thousands of employees in our organizations, that executive experience that every governor has and must have being put to good use now as we work together as governors to help reach out to Barack Obama's administration, being able to help him make good decisions, based on the solutions that we already see, for me specifically, of course, energy independence that is doable here in this country. We have the domestic solutions because we have the domestic supply.

BLITZER: I know that is a huge issue for you.

(END VIDEOTAPE)

BLITZER: All right. We're going to have more of the interview coming up.

The Alaska Senator Ted Stevens, as you know, is a convicted felon right now. But Sarah Palin says, if the opportunity arises, she's not -- quote -- "egotistical enough" to name herself to succeed him. More of the interview with Governor Palin, that's coming up here in THE SITUATION ROOM.

And what about Governor Palin's offer to help Barack Obama? I will ask Obama's senior adviser, Valerie Jarrett, about that and a lot more. That's coming up -- Valerie Jarrett standing by live.

Plus, the treasury secretary changes course on the Wall Street bailout. Does that hurt your chance for help with your mortgage?

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

(COMMERCIAL BREAK)

BLITZER: As you heard, Sarah Palin says she's going to do whatever she can to try to help the president-elect, Barack Obama.

Let's get some immediate reaction to that and more from Barack Obama's longtime friend and now senior adviser Valerie Jarrett. She's playing a key role in the transition to power. Valerie is joining us from Chicago. Thanks very much for coming in, Valerie.

What do you think? Is there any advice, any help you would like to get from the governor of Alaska?

VALERIE JARRETT, SENIOR OBAMA ADVISER: Well, of course there is. That's terrific news, that Governor Palin's interested in working with the Obama administration, just like it was great news on Monday that President Bush invited president-elect Obama to the White House so soon after the election, a meeting that usually happens days or weeks later. So, these are all very good signs, and they're consistent with president-elect Obama's philosophy of working in a bipartisan way.

One of, I think, his remarkable qualities, Wolf, is his sincere interest in learning from all different perspectives. And, if Governor Palin has some innovative new ideas coming out of Alaska, of course we're interested.

BLITZER: So, you're saying -- correct me if I'm wrong, Valerie -- that it's not out of the question that, for example, on something like energy, where she knows a lot, given Alaska's role in energy production, you could see a meeting between the president-elect and the governor of Alaska, in which they might discuss what's going on involving ANWR, the Alaska National Wildlife Refuge, or other issues, and maybe he could be picking her brain; is that right?

JARRETT: He's interested in picking brains from all different perspectives. Part of why I think he's where he is today is his openness and his willingness to listen. He likes to have people with different perspectives. He has an insatiable appetite for new and innovative ideas. And, Wolf, that's what the American people deserve. That's why they voted for him. That's part of what the message of change is all about. It's people working together in a bipartisan nature. The fact that we could have a heatedly contested election just weeks ago, one week and one day ago, and still have Governor Palin make that generous office -- offer, that's what the American people deserve, and that's what makes our country great.

BLITZER: Is he one -- and you know him quite well -- the president-elect, to hold grudges? Because when I asked Sarah Palin if she has any regrets about some of the tough talk she had during the campaign, you know, the charge that he was -- quote -- "palling around with terrorists," referring to Bill Ayers, she didn't back away from that.

She said, look, she believed some of those associations were wrong, even though she wants to look ahead now and not look back. How does he feel about grudges and payback and stuff like that?

JARRETT: He doesn't believe in it. He doesn't hold grudges. He doesn't believe in payback, because all of that is a distraction from the issues that are important to the American people.

Wolf, we have huge problems ahead, but we also have great opportunities. And the only way we're going to really reach those opportunities is if the American people work together, if president- elect Obama reaches across the aisle, works with everybody, regardless of party, regardless of geography, regardless of perspective, to try to do what we all believe in, which is to make our country as great as it can possibly be.

So, there's really no time for all of that. That's not in his spirit. He has a core decency as a human being. And he understands that you have to be pragmatic and you have to work with people with whom you may not agree on everything, but you can find that common ground. And, again, that's what the American people deserve. And that's the kind of president that they elected.

BLITZER: I know the president-elect, the vice president-elect, they were meeting with their top advisers, I think, most of the day. You were probably inside the room for some of those meetings.

There's stuff you can tell us. There's other stuff you can't tell us. What can you tell us? Give us a little flavor. Take us inside on what's going on.

JARRETT: Well, sure. It's really, as you said, President-Elect Obama and Vice President-Elect Biden, together with their transition teams, did spend several hours together today meeting. The economic advisers came in for a portion of the day. We spent time going over the agencies and the status of where they are, as well as looking at key personnel and how to fill those important cabinet slots.

So it was a very productive day. But it's been a very productive week. I think we hit the ground running last Wednesday and have been going at warp speed ever since. BLITZER: And he's pleased with the transition -- the cooperation from the Bush administration, not only from the White House, but from the respective cabinet agencies and elsewhere?

JARRETT: Very pleased. President Bush made it clear that he wanted full cooperation. He's interested in a seamless transition. He wants President-Elect Obama to be ready to govern on day one, January 20th. And so far, he's done everything that we could have asked to do to cooperate, both from the White House, as well as throughout all of the agencies. We have teams working throughout the federal government right now. And so far, there has been full cooperation. And of course, we're heartened by that.

BLITZER: Which cabinet secretary goes first -- will be named first, State, Treasury, Defense? What do you think?

JARRETT: Well, you know what, we'll see. I think that what President-Elect Obama is committed to doing is moving forward with deliberate haste -- equal emphasis on deliberate and haste. He wants to make sure that he has exactly the right team. He's being efficient. He's looking for the most competent people he can find who will work together as a team.

He's looking for a broad range of perspectives. He would like to have -- both Republicans and Democrats and Independents in his administration. He's looking for geographic diversity, racial diversity, differences in perspective. And I think what he'll do is pull it together. And as people are ready to be announced, he'll make those announcements. As you know, obviously front and center are the economy and national security. And so we spent a lot of time and attention on the people who will fill those key roles. But we're moving along on multiple fronts and his team will come together promptly.

BLITZER: Well, good luck to you.

JARRETT: Thank you.

BLITZER: And good luck to everyone involved. Thanks very much, Valerie, for coming in.

JARRETT: My pleasure. Invite me back.

BLITZER: We certainly will.

JARRETT: OK.

BLITZER: Valerie Jarrett is one of the top advisers to the president-elect of the United States.

Coming up, we're going to have more of my interview with Governor Sarah Palin. We're going to show you what she has to say about running for president in 2012. Also, an emotional moment when she says her son's life is in Barack Obama's hands right now.

And President Bush hosts an international economic summit this weekend. Barack Obama won't be there, but should he be there? We'll discuss his decision not to attend that session with the best political team on television.

Lots more coming up right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: All right. Viewers like you want to ask Sarah Palin questions. So guess what? We put some of them to the Alaska governor in my interview.

(BEGIN VIDEOTAPE)

BLITZER: Here's another question from Chris Plumstead (ph) of Cumberland, Maine.

(BEGIN VIDEO CLIP)

CHRIS PLUMSTEAD, CUMBERLAND, MAINE: Yes. Hi, Governor Palin. I was wondering how you plan on dealing with a convicted felon and senator of your state.

(END VIDEO CLIP)

BLITZER: He's referring to Ted Stevens.

PALIN: Right.

BLITZER: He may or may not be re-elected. We don't know. But what are your thoughts?

PALIN: Well, and after the four counts -- the felony counts and the judgment came down --

BLITZER: Seven. Seven.

PALIN: Seven. Yes.

BLITZER: Yes.

PALIN: After that came down -- and I called for him to step down and he chose not to. Now it is in the hands of the U.S. Senate. It takes two-thirds vote to expel. It's up to the U.S. Senate to decide what to do.

But the voters of Alaska, the will of the people was that he would be representing Alaska. And whether some of that vote's intent was that he would win the election and then we would have a special election and still have a chance to hold onto that seat in the Republican Party, maybe that was some intention there of some of the voters. But it's in the U.S. Senate's hands now. It's not in my hands.

BLITZER: So if he's still re-elected -- and they're still counting ballots, I take it, up there -- and the Senate goes ahead and kicks him out of the Senate, is that something you might be interested in? Could you name yourself, for example, to succeed Ted Stevens? PALIN: I suppose if you were that egotistical and arrogant --

BLITZER: Do you have any desire to serve in his --

PALIN: -- you'd name yourself.

BLITZER: Do you want --

PALIN: -- but I'm not one to name myself --

BLITZER: Do you want to be in the United States Senate?

PALIN: You know, I believe that I have -- I feel I have a contract with Alaskans to serve. I've got two more years in my term. I'm going to serve Alaskans to the best of my ability. At this point, it is as governor. Now, if something shifted dramatically and if it were -- if it were acknowledged up there that I could be better put to use for my state in the U.S. Senate, I would certainly consider that. But that would take a special election and everything else. I'm not one to appoint myself or a member of my family to take the place of any -- any vacancy (INAUDIBLE).

BLITZER: All right. So you're not going to name yourself, but you're not ruling out the possibility of some other way of becoming a United States senator?

PALIN: I just don't want to close any doors at this point. I'm very, very happy, privileged, blessed to serve as governor. I want to continue to do that. But I'm not going to close a door in the future here, if Alaskans decide that, perhaps, I could be put to better use for them in another capacity.

BLITZER: You're not ruling out a run in 2012 for president of the United States, are you?

PALIN: I'm not ruling that out. But there again, that is based on my philosophy of it's crazy to close a door before you even know what's open in front of you. You travel in this road in life. And as you turn a corner and there may be something there that -- circumstances change. You've got to call an audible (ph) and you decide to shift gears and take another direction. I'm always open for that.

But you've just got to be prepared. And when you see opportunity and preparation meet, that's how you know that a door is open and you're ready to go through it.

BLITZER: You have five children.

PALIN: Yes.

BLITZER: Michelle Obama and Barack Obama, they have two sweet little adorable girls --

PALIN: Sweet.

BLITZER: As you know. Do you have any advice for Michelle Obama right now, who's about to become our first -- first lady?

PALIN: Oh. Oh, we --

BLITZER: Our first lady, I should say.

PALIN: Right. Right. Well, she is -- as I do in the governor's mansion in Juneau, also, man, let the kids be kids. Let them have their friends come over. Let them hold onto that childhood, despite the fact that they are going to be in the public eye and in more formal settings and everything else.

Bring spunk and life into the White House. You do you that via children being allowed to have fun and just be who they are. And they're just going to have a blast there. And it's going to be good for the country, also, to see that young wife in the White House. I think it's going to just brighten up our entire country. I look forward to that.

BLITZER: I see a smile coming on your face just thinking about it.

PALIN: Absolutely. Yes. Yes.

BLITZER: How did this campaign affect your family, because your kids -- you know, obviously they came into the spotlight, as well?

PALIN: My kids are cool, too. They are -- they are very adaptable. They've been used to, all these years, me having a very busy schedule as an oil and gas regulator, and a city manager and mayor and then governor; and then Todd being very busy with a commercial fishing schedule and the North Slope oil production schedule that he has. The kids have always been very adaptable, kind of going with the flow, but at the same time being quite Independent themselves.

And it's a great, fun family that we have, also -- a very full life. And they, too, I believe have felt that this has been the privilege of a lifetime, to be able to get to know John McCain, be able to run with him, with his family, with the team that we had together. They got to travel the country and see things that, of course, they -- never would they have had an opportunity before. So it's been nothing but awesome.

BLITZER: Your son is serving in Iraq right now.

PALIN: Yes.

BLITZER: Are you worried about the incoming commander-in-chief, who's going to be his commander, in effect?

PALIN: Well, you know, we've got to make sure there, too, that Barack Obama surrounds himself with strong commanders who understand that our boys, our girls with their boots on the ground, you know, they're looking to -- their lives -- my son's life is in his hands. And I do have faith in this new administration, that they're going to look out for America's finest -- those in uniform who are protecting us and our freedoms. I have faith that all is going to be well.

And my son, he's got -- he's serving for the right reasons. He's a teenage kid who recognized that he had an opportunity to do all that he could, at his stage in life, to help protect America and to serve something greater than self. And I think about my son. I think about Track in those terms. And I think is every elected official, too, serving in government doing the same thing? To the best of their ability, are they protecting this country? Are they doing all that they can to make sure that our troops over there, especially, are well-equipped, have the budgets that they need, have all the tools that they need for them to do their job?

BLITZER: I'll leave it on that note, because I know you're worried about your son every single day. And let's hope he's OK. Let's hope all the men and women who serve in the U.S. military in Iraq and elsewhere are OK. Governor, I know it's been very busy, but thanks very much for joining us.

PALIN: Thank you. Anytime. Thank you, Wolf.

BLITZER: As we say, better late than never.

PALIN: Thank you, Wolf. Appreciate you.

BLITZER: Thank you.

(END VIDEOTAPE)

BLITZER: So as you can see, she's really in the middle of a media campaign right now. That was my interview with Governor Sarah Palin today -- one of many she's done over the past few days, after pretty much shunning the news media out on the campaign trail.

So what do we know about her now that we didn't know before? Stand by. We'll discuss.

Plus, President-Elect Barack Obama skipping President Bush's economic summit this coming weekend, sending surrogates instead. Why? The best political team on television is standing by live to discuss this and more.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Let's check in with Lou to see what's coming up right at the top of the hour -- Lou, what are you working on?

LOU DOBBS, CNN ANCHOR: Wolf, thank you.

Tonight, we're reporting on an incredible statement today by Treasury Secretary Henry Paulson. Paulson acknowledging that his ill- conceived bailout plan, in which he was planning to buy so-called toxic assets, unnecessary and unworkable a plan, by the way, I opposed from the beginning. We'll have that report and tell you what's going on with this federal government and our economic crisis. Crude oil and natural gas prices are plummeting. Crude oil prices today falling to the lowest level in 21 months. I'll be joined by oil man T. Boone Pickens, who will tell us what these plunging energy prices mean for his plan for energy independence.

And a new setback for supporters of former Border Patrol agents at the center of an outrageous miscarriage of justice. We'll have that report and a great deal more.

Join us at 7:00 Eastern for all of that and a great deal more, from an Independent perspective -- Wolf, back to you.

BLITZER: All right, Lou. Thank you. We'll see you in a few minutes.

So what do we know about Sarah Palin now, a little more than a week after the election, that we didn't know before? Let's talk about that and more with our senior political correspondent, Candy Crowley; our own Dana Bash; and our CNN political contributor, Steve Hayes, who's a senior writer for "The Weekly Standard." They're all part of the best political team on television.

Dana, you spent a lot of time covering McCain and Palin. She's really opening up a lot more now. And she said to me, she deeply regrets not doing it during the campaign.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Yes, I saw that. I saw that and I liked your reaction. Well, we tried.

BLITZER: We've been there, you know?

(LAUGHTER)

BLITZER: We tried to get an interview.

BASH: I think that's one of the most interesting things that we learned, is that she can sit and have a discussion -- a lengthy discussion -- with a journalist. She's fine with doing that. But I think one of the most interesting things is what she didn't say that -- an answer that she didn't give to one of your questions, which is what's the future of the Republican Party?

Wolf, that is why the Republican governors are here. I talked to several of them all day out in the hallway. And a lot of them had a lot of different answers, a lot of different ideas. And she didn't seem to have one. And she's going to give a speech tomorrow morning on this subject. So, presumably, she'll come up with one by the time we get to the morning.

BLITZER: Yes. And, Candy, she said she needs more information, specifically on the big issue right now -- -- at least on this day -- whether the federal government should bail out the auto industry -- the auto manufacturers right now. She said she's not ready to commit on that issue. She wants more information which, perhaps, is understandable. They don't manufacture a lot of cars in Alaska right now. But if she wants to be president she supposedly should know more about that, right?

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, sure. But I also think that, given the vulnerable state of the Republican Party -- and you have so many voices saying here's what we should be about -- I think a cautious Republican, at this point, who may or may not have some kind of design on the future presidency at this point, says, well, let me just -- I just need a little more information. I want to see about this -- because she did come back and say but, listen, I think we can't just be bailing people out, that people have made bad decisions.

So she was -- you know, she didn't know the detail of what was out there. I think a smart politician, at this point, who is looking toward the future, wants to kind of read the temperature of others in the party that she'd like to represent, if she does.

BLITZER: Yes, which is understandable, as I said.

All right, Steve, you know, you and I and Dana, we're here in Miami. And we're seeing what's going on with a lot of disappointed, shall we say politely, Republicans. When she walks around the halls here, there are 20 or 30 cameras and photographers and reporters chasing her. But a lot of other Republican governors, when they're walking around, you know, they're just walking around maybe with an aide and no media chasing them. She's a rock star here with these Republicans.

STEPHEN HAYES, SENIOR WRITER AT "THE WEEKLY STANDARD": Yes. I mean, she certainly is. I mean, I saw John Hoeven today from North Dakota today walking around. He was essentially alone. And he could pass by people in this group and really go unrecognized. But Sarah Palin certainly had a throng of 20 to 30 people, as you say. Bobby Jindal, too. He walked by just a couple of minutes ago and had, you know, a group of probably 15 or 20 people -- people, you know, walking along quickly next to him, trying to get a word in, trying to see what he thinks.

BLITZER: Do you think she's going to seriously think about 2012, because there are some strategists out there saying if she is, you know, she's got to start thinking about it fairly soon?

HAYES: Yes, I think that's probably right, she does. I mean, you saw today in your interview both the strengths and the weakness. She could communicate very well. She talked well. She presented herself well. But on the policy issues, I disagree slightly with Candy. I think she's got to be bold and come out and say, look, we're the Republicans. We don't do things like bail out the auto industry.

BLITZER: Let's talk a bit about President Bush's economic summit. It's coming up this weekend. Barack Obama making a decision -- you know what, one president at a time. He's not attending, but he is going to send Madeleine Albright, a former secretary of State, and Jim Leach, a former congressman, to represent him there. What do you think about this decision?

BASH: I think -- it seems to me a bit of a hangover from the campaign, which was the name of the game for the Obama campaign Obama campaign and for Barack Obama was to stay as far away as he could from the problems inside the Bush administration and the Bush policies he was spending day after day hammering away at, particularly on the economy. So it's not, I think, entirely surprising that the president- elect himself wants to stay away and not really enter this in such a big form until he really has the job.

BLITZER: Candy, how is it playing out where Barack Obama is right now and where you are, in Chicago?

CROWLEY: Well, at the Obama transition campaign, they're -- the Obama transition team certainly thinks it's a good decision. Listen, he doesn't want to own the problems. He wants to fix the problems. And so he can only do that come January 20th, although there are behind- the-scenes talks with the leaders on Capitol Hill about an automobile rescue package.

But he doesn't, at this point, want to be seen, you know, within the Bush administration, because that's -- right now, they would like it to be George Bush's problem so they can come in and fix it. And that's one of the reasons that he we know that he's said repeatedly at his press conference that he didn't want to send mixed signals, particularly on the international scene, as to who is president and who isn't. But they are sending people there. They do have some of their advisers that are going and will be there for any one of the staff of any of these countries that might want to talk to them.

BLITZER: Yes. We've got to leave it there, guys. A good discussion. And one of the problems if he went, these foreign leaders probably would be more interested in meeting with him than they would be with the sitting president of the United States, and that's a problem.

All right, guys, thanks very much.

An embattled Congressman accused of corruption. Now, a major court ruling on his case. So what's next for the Louisiana Democrat, William Jefferson?

And stuck for hours on the airport tarmac. Now there are new rules impacting stuck passengers. But many won't be happy about them.

Stick around. Lots more coming up right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Zain Verjee is monitoring some other important stories incoming into THE SITUATION ROOM right now -- Zain, what's going on?

ZAIN VERJEE, CNN CORRESPONDENT: Wolf, the $700 billion Wall Street bailout plan is getting a major makeover. Treasury Secretary Henry Paulson now says none of the money will be used to buy troubled bank assets, which was the initial focus of the rescue effort. Paulson says that will take too long. Instead, he's saying that the $250 billion will be used to buy stocks in banks, to encourage them to resume normal lending.

Corruption charges against Congressman William Jefferson will not be dismissed, after all. Today, a federal appeals court upheld the indictment against the Louisiana Democrat, which clears way for him to stay trial. His lawyers wanted the case thrown out, claiming the grand jury heard evidence it shouldn't have. Jefferson's pleaded not guilty to racketeering, money laundering, bribery and obstruction of justice.

And an important update on a story that we reported right here in THE SITUATION ROOM. The Navy won't have to limit the use of sonar in exercises off the California coast. Today, the U.S. Supreme Court lifted restrictions on sonar use and rejected arguments from environmentalists that the technology should be limited because it hurts marine animals and causes whales to beach themselves. The high court ruled that the value of the military exercises outweighs any negative impact on marine life.

Air travelers wanting a government guarantee they won't be stranded for hours on the tarmac aren't going to get one. Guidelines adopted today by a federal task force do not specify a time limit on how long passengers can be kept on a plane without the opportunity to return to the gate. The task force was dominated by the airline industry -- Wolf.

BLITZER: Thanks, Zain.

Coming up, a look at what's coming up in THE SITUATION ROOM.

Stay with us. We'll be right back.

(COMMERCIAL BREAK)

BLITZER: And remember to check out our political pod cast. To get the best political team to go, you can subscribe at CNN.com/situationroom.

Among my guests tomorrow in THE SITUATION ROOM, the CNN founder, Ted Turner. He'll be joining us live right here.

I'm Wolf Blitzer in Miami.

Up next, "LOU DOBBS TONIGHT" -- Lou.