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THE SITUATION ROOM

Barack Obama Resigning U.S. Senate Seat; Automaker Bailout Stalling; President Bush Gives Economic Pep Talk Amid Job Loss

Aired November 13, 2008 - 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: Happening now, Barack Obama gives up power. He's resigning his U.S. Senate seat, and this sets off a flurry of speculation over how this will impact his administration, and a flurry of speculation over who will get Barack Obama's job.
And as the U.S. bleeds more and more American jobs hitting one historic high, President Bush gives Americans an economic pep talk. But are investors looking beyond him already?

And Sarah Palin does something she'd never done in the national spotlight, but it did not go as planned. Are her fellow Republican governors really standing behind her?

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

Barack Obama is making power moves. After winning a job promotion, the president-elect of the United States is resigning his U.S. Senate seat. That will touch off a whirlwind of changes regarding the urgency to replace him, what this might mean for Obama's administration and how many Democratic allies he might have in Congress.

Let's go straight to CNN White House Correspondent Ed Henry in Chicago.

Ed, talk a little bit about the ramifications of this announcement today. We all knew it was coming, but it came pretty quickly.

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Very interesting timing, Wolf. And the back-story on President-elect Obama's decision to make this resignation effective Sunday is that he had no intention of going to next week's lame duck session of Congress. Instead, wanting to continue to focus on assembling his cabinet, the rest of his administration as well, mid-level jobs, all the way up to the senior jobs.

This gives his potential successor the chance to maybe be sworn in as early as the beginning of next week and participate in that lame duck session. And that could be pivotal if Democrats need that one vote on something important such as the auto bailout bill, any number of pieces of legislation that may be coming up. This also gives either he or she, that successor, a leg up on seniority.

If they're sworn in as early as next week, they get seniority over the new freshman senators that get sworn in in January. So Barack Obama's successor is likely to then get a better committee assignment.

Now, he said today, Barack Obama in a statement, "It has been one of the highest honors and privileges of my life to have served the people of Illinois in the United States Senate. I leave the U.S. Senate and begin the hard task of fulfilling the simple hopes and common dreams of all Americans as our nation's next President."

Now, obviously the next most important question, who fill this seat? A lot of speculation on a couple of people close to Barack Obama, Representative Jesse Jackson Jr. of Illinois, also Tammy Duckworth, who's a veterans official here in Illinois, and actually on Veterans Day was with Barack Obama here in Chicago.

This decision, though, will not be made by Barack Obama. It will be made by the Democratic governor here, Rod Blagojevich -- Wolf.

BLITZER: You know, there will be some other resignations from the U.S. Senate. We know for sure Joe Biden, the senator from Delaware, will have to give up his seat. A lot of speculation who might replace him.

But in filling out the cabinet, let's say he picks John Kerry to be secretary of state. There could be another resignation from Massachusetts.

In other words, the face of the Senate and the House, for that matter -- Rahm Emanuel in the House, giving up his seat to become the White House chief of staff -- there could be some dramatic changes.

HENRY: That's right. There's going to be all kinds of dominoes falling, this has a domino effect.

As you say, Joe Biden giving up his Senate seat. John Kerry, if -- it's a big "if" -- he were picked, tapped to be secretary of state. Then that would have an opening in Massachusetts.

Now, the House seats are different. Ram Emanuel giving up his House seat in Illinois. That will not be an appointment by the governor. That will be a special election. But you're absolutely right, a lot of new faces, especially because there will be all kinds of other potential cabinet appointments from the Senate.

So far, Joe Biden has said that he would not give up his Senate seat until he's sworn in as vice President. But my colleague Candy Crowley is hearing that that could change. And it's possible, only possible at this point, Joe Biden could speed that up -- Wolf.

BLITZER: There's a lot of speculation his son, the attorney general, Beau Biden, might get that seat down the road. We'll watch closely with you.

Ed's in Chicago.

We're also just getting word right now into THE SITUATION ROOM of a major blow to Democratic hopes to push through immediate federal aid for the auto industry. A top Democratic Senator on the Banking Committee says that legislation may have to wait until after Barack Obama's administration is sworn in on January 20th.

Let's go to Kate Bolduan. She's on Capitol Hill working this story for us.

The big three U.S. auto manufacturers, they say they need action right now, they insist they can't really wait until January 20th, Kate.

KATE BOLDUAN, CNN CORRESPONDENT: That's right, Wolf. They do.

We've been hearing a lot and we've been talking a lot about congressional Democrats pushing this legislation, this bailout for the auto industry. Well, today, one key Senate Democrat is pulling back a bit.

Senator Chris Dodd, the top Democrat on the Senate Banking Committee, saying today that there's virtually no Republican support for the auto bailout legislation. Dodd suggesting in light of that, that Democrats should consider holding off pushing this legislation until the Obama administration comes in.

Listen here.

(BEGIN VIDEO CLIP)

SEN. CHRISTOPHER DODD (D), BANKING CHAIRMAN: I would like to see us do something. Right now, I don't think the votes -- I don't know of a single Republican who's willing to support -- and you've heard Senator Shelby publicly speak out on his opposition to doing anything in the automotive area. So I'd want to be careful about bringing up a proposition that might fail in light of the fact the authority exists, and under an Obama administration there seems to be greater willingness to deal with the issue.

(END VIDEO CLIP)

BOLDUAN: Dodd mentioning there Senator Richard Shelby. He's the top Republican on the Senate Banking Committee.

Shelby released a very blunt statement saying that "The financial situation," and I quote, "facing the big three is not a national problem, but their problem." Shelby goes on to say, I'm paraphrasing here, that this problem is because of their own mistakes.

Now, I should mention that a spokesperson for the top Republican in the Senate, Mitch McConnell, insists that Republicans are in favor and are willing of assisting the auto industry, but just not in the way that Democrats are proposing. And that, of course, Wolf, is by using money that was designated, set aside to assist the financial industry -- Wolf.

BLITZER: All right, Kate. Stand by on Capitol Hill.

As lawmakers fear the loss of jobs tied to the auto industry, other Americans are already losing their jobs. Big-time. One unemployment measure has hit a high not seen in years. And this comes as President Bush insists his administration's economic actions are beginning to bear fruit.

Let's go to our White House Correspondent Elaine Quijano.

He delivered a sort of pep talk today, Elaine, and this on the eve of a major international economic summit he's about to host.

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Well, that's exactly right, Wolf. The head of that global summit this weekend, President Bush tried to strike an optimistic tone, even in the midst of more bad economic news.

(BEGIN VIDEOTAPE)

QUIJANO (voice-over): As he prepares to host an international financial summit, President Bush said America would continue to lead in the global economy.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES OF AMERICA: The world will see the resilience of America once again.

QUIJANO: But his comments come on the heels of more evidence that right now; America's bleak economy is leading in the wrong direction. Last week, more than half a million Americans filed new claims for unemployment insurance, the highest level since the weeks after September 11th. Amid the continued downturn, the President traveled to Federal Hall in the heart of Wall Street to argue that recent government action is slowly making a difference.

BUSH: Credit markets are beginning to thaw. Businesses are gaining access to essential short-term financing. A measure of stability is returning to financial systems here at home and around the world.

QUIJANO: But some say investors are looking beyond the current President, who has roughly two months left in office. On CNN's "AMERICAN MORNING," economist Jeffrey Sachs told John Roberts the markets want reassurance from President Bush's successor.

JEFFREY SACHS, ECONOMIST: People want clarity. They want a vision. They want a direction. But an outgoing administration that has failed can't provide it anymore. That's the true fact of life.

QUIJANO: But with President-elect Barack Obama steering clear of the summit, and some European leaders pushing for global financial regulation, the outgoing President is defending western capitalism and free market principles, even as he acknowledges parts of the system are broken.

BUSH: And the answer is not to try to reinvent that system. It is to fix the problems we face.

(END VIDEOTAPE)

QUIJANO: But critics charge the Bush administration itself has violated free market principles with its massive $700 billion bailout plan, a plan they note has so far failed to get credit flowing freely again -- Wolf.

BLITZER: Thanks, Elaine.

Elaine's at the White House.

Let's go to New York. Jack Cafferty has "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: The economic picture continued to worsen today. Weekly jobless claims at the worst we have seen in seven years. Mass layoffs continue across a variety of sectors in our economy.

The markets remain in free-fall, although there was a late rally on Wall Street today. The Dow Jones Industrial Average off 33 percent for the year. Nasdaq and S&P 500 down around 40 percent each.

The Senate Banking Committee held a hearing today with representatives from banks getting money from that $700 billion financial bailout package. Committee members wanted to know where the money's going. Not an reasonable question. Bank executives say they are both lending the money and working with delinquent homeowners, and that the money is not going to pad executive paychecks.

A general counsel at Goldman Sachs told the committee that compensation "will be down very significantly this year across the firm, particularly at senior levels. We get it."

But what does down very significantly mean on Wall Street? According to Bloomberg Financial News, Goldman Sachs has set aside $6.8 billion for year-end bonuses; Morgan Stanley, $6.4 billion. Now, that figure's down from the record-setting $12.1 billion Goldman shelled out last year and the $10 billion that Morgan Stanley paid in bonuses.

Granted, they cut their bonus numbers roughly in half, but that's still a lot of money. And both firms are taking taxpayer money from the bailout package. Goldman Sachs and Morgan Stanley each got $10 billion of your money.

Here's the question: what does it mean when Goldman Sachs and Morgan Stanley are planning to pay $13.2 billion in year-end bonuses next month?

Go to CNN.com/caffertyfile. Post a comment on my blog -- Wolf.

BLITZER: Jack, thank you. It's going to irritate a lot of folks out there. That's what it means.

Governor Palin holds her very first formal press conference, but it was cut short. One last...

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Let's have one more. Let's have one more question. Who do you want?

(END VIDEO CLIP)

BLITZER: So what happened at the governors meeting? We have the inside story. That's coming up. We'll go live to Miami. You'll want to see this.

And Vice President Dick Cheney is about to give Vice President- elect Joe Biden a tour of his new home. It's happening live. We're going to take you there as it happens. Stand by.

And later, the CIA director talking about the hunt for terrorists and what happens to his job.

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

(COMMERCIAL BREAK)

BLITZER: So which Republican governors really stand behind Governor Sarah Palin? Many of them stood on stage with her today over at the Republican Governors Association meeting in Miami, but their show of unity was beset with some awkward moments.

Let's go to Miami. Dana Bash watching the story for us.

And Dana, I think it's fair to say, there was an awkward moment or two there.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: That's definitely fair to say, Wolf.

You know, Sarah Palin is making abundantly clear here at this meeting that she wants to be a force for the Republicans in the future, but this is a conference full of Republican governors who want the same. And today, it did make for some palpable tension.

(BEGIN VIDEOTAPE)

BASH (voice-over): Sarah Palin entered a ballroom at the Republican Governors Conference to do something she never did in her 68 days as vice presidential candidate, hold a formal press conference.

(on camera): Given that, what message are you trying to convey here?

GOV. SARAH PALIN (R), ALASKA: I'm trying to convey the message that Republican governors are a unique team, a unique group. They are here, we are here together, united. Ready to reach out to the new administration, to offer solutions that we know will work.

BASH (voice-over): But despite the 26 cameras and 100-plus reporters there, the press conference lasted only 11 minutes and abruptly ended after just four questions.

UNIDENTIFIED MALE: Thank you all for coming and participating.

BASH: Cut off, no doubt, because of the awkward staging, a dozen of Palin's fellow governors brought in to stand behind her. A last- minute decision designed to show unity, but resulted in Palin's colleagues and possible future presidential competitors looking like silent supporters, which several governors told CNN made them uncomfortable.

One unhappy GOP governor eying a 2012 run who asked not to be named called it "odd" and said it "... unfortunately sent a message she was the defacto leader of the party." Another governor shrugged off concerns Palin was sucking up all the oxygen.

GOV. HALEY BARBOUR (R), MISSISSIPPI: That's just somebody running down a rabbit trail. There are plenty of options here.

BASH: As for Palin, she told reporters it's time to put the failed McCain campaign behind them, but then delivered a speech about the future of the GOP and largely talked about the past.

PALIN: I'm going to remember all the young girls who came up to me at rallies to see the first woman having the privilege of carrying our party's VP nomination nation, and they inspired me.

(END VIDEOTAPE)

BASH: Now, Palin did urge her fellow Republicans to keep Barack Obama in check, and also make clear she thinks that Republicans should continue to fight corruption and lower government spending and shrink the government in general.

But Wolf, I talked to several Palin supporters after the speech, which was billed as the way forward for the Republican Party, and many of them told me that they were disappointed because they thought she perhaps could have given a little bit more detail for her vision for the Republican Party -- Wolf.

BLITZER: All right, Dana. Stand by, because I want to discuss this with you a little bit later.

Dana Bash working this story down in Miami.

Topping the Republican governors' agenda, how to help their party regain its political footing. I was in Miami yesterday for the opening of the Republican Governors Association meeting.

(BEGIN VIDEOTAPE)

BLITZER: And joining us now, the governor of the home state right here, Florida.

Governor Crist, thanks very much for coming in.

GOV. CHARLIE CRIST (R), FLORIDA: Thank you, Wolf. Great to be with you. BLITZER: A lot of depressed Republicans walking around this hotel right now. What's the first thing they immediately need to do to try to get their act back together?

CRIST: The first thing is to reach out. The first thing is to be a party of inclusion, to reach out to Hispanics, African-American voters, and send a message that's more hopeful, more optimistic about the future of our state, the future of our country.

BLITZER: What happened? What was the big blunder that resulted in losing not only the White House, but increasing the Democratic majorities in the House and Senate?

CRIST: Economic meltdown had an awful lot to do with it, as we all know. And I think that the attachment to the past administration relative to the economy really hurt the ticket. But in Florida, things went pretty well. But for the top of the ticket, we had great results in the Sunshine State for the Republican Party and for the people, most importantly.

BLITZER: Because Florida went for Barack Obama, unlike in 2004, didn't go for the Democrat in 2000. It was very, very close.

Was it is John McCain, was it George Bush? What was the big issue?

CRIST: Well, I think the prior administration probably had a lot do with it. I don't think there's any question that people wanted change. And to President-elect Obama's credit, he really seized on to that change message in a very effective way. And I think we need to unify behind him.

BLITZER: What would you have done differently? Let's say he had selected you as his vice presidential running mate, because there was a lot of talk that you were on that short list.

CRIST: Well, I don't know what would have been done differently, to be perfectly honest with you. I think that, you know, what we need to do is look forward, look to the future. And that's what this meeting is all about. It's about having a more inclusive party, a party that works for the people, that utilizes common sense, and makes certain that public service is something that's foremost and to the front.

BLITZER: So it's not just enough to go and reach out to the base, the conservative base, the social conservatives, the religious conservatives? You've really got to find some middle ground, some moderates out there who will come back to the Republican Party?

CRIST: Wolf, there's no question about it. Those other issues are very important, but I think it's even more important as we go forward to be more inclusive, to be more open.

BLITZER: So how do you do that with Hispanics, for example, Latinos? And you have a huge Latino community here in Florida.

CRIST: We certainly do. Reach out to those communities. That's exactly what we do here in the Sunshine State.

BLITZER: Because a lot of them were alienated by all the illegal immigration rhetoric that came from some Republicans.

CRIST: Well, that's not something that we espouse in Florida. We're probably the most diverse state in the country. We understand that this is a melting pot, that this country is a melting pot. We need to reach out to all people and include everyone, and include them at the table.

BLITZER: All right. Let's talk about you.

They're looking for a leader, these Republicans, right now. Your name is frequently mentioned. Do you see yourself emerging in the next four years as a top leader of the Republican Party?

CRIST: Well, that's for others to decide. My job is to be the best governor of Florida that I can possibly be, to get up and work every day to make sure that the quality of life that my fellow Floridians appreciate and enjoy continues. We have good education, we protect our environment, we keep our taxes low. And we have a hopeful, optimistic, bipartisan, almost nonpartisan way of getting things done.

BLITZER: Because you've really been hit hard by the economic crisis in the country. The housing industry and a lot of other related industries in this state are hurting.

CRIST: Well, certainly it's challenging. It's probably more challenging in other parts of the country, to be frank. But, you know, Florida is a state that comes out of the wilderness much quicker usually economically. I think that we will again.

BLITZER: All right. I know you're getting ready for a huge, huge day, and it's coming up one month -- I think one month from today.

CRIST: One month from today.

BLITZER: You're getting married. I've met your bride and she's lovely.

CRIST: Thank you.

BLITZER: Congratulations. How excited are you?

CRIST: Very excited. Carol and I are very excited about the wedding day. It is one month from today. I can't wait.

BLITZER: Good luck and congratulations.

CRIST: Thank you, Wolf. And hello to mom, too.

BLITZER: Thank you.

CRIST: Thank you, sir. (END VIDEOTAPE)

BLITZER: Some familiar names have gone from the governor's mansion to the White House. Most recently, George W. Bush was the governor of Texas for five years before becoming president. Ronald Reagan, of course, was governor of California from 1967 to 1975, before he was elected the United States' 40th president back in 1980. And Calvin Coolidge was governor of Massachusetts before becoming vice president and then president upon Warren Harding's death in 1923.

I'm sure all of you knew that.

The country is riding a wave of optimism, and there are new polls to prove it. But are expectations too high for the president-elect?

And he came up short for the presidential election, so why is John McCain returning to the campaign trail today?

You'll see him live. That's coming up right here in THE SITUATION ROOM.

(NEWSBREAK)

(COMMERCIAL BREAK)

BLITZER: To our viewers, you're in THE SITUATION ROOM.

Happening now: Dick Cheney and Joe Biden face to face. The current vice president is about to give his successor a tour of the vice presidential residence. What will he say to the man who called him during the campaign the most dangerous vice president in American history?

Also, want a job in the Obama administration? Thousands and thousands of people do. Better get all those skeletons out of the closet. We're going to you about the extraordinary lengths the president-elect's transition team is taking when it comes to background checks. You will be interested in this, especially if you want a job.

And John McCain back on the stump -- just over a week after losing his bid for the White House, the former Republican presidential candidate is heading back -- back -- to the campaign trail. We are going to tell you what's going on. You will see it live right here.

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

It's true that politics makes for some strange bedfellows. The man who essentially suggested that no other vice president has been as bad as Dick Cheney is meeting with Dick Cheney right now.

Let's go to Brian Todd, working this story for him.

There could be some awkward moments, although I suspect both men will be very, very civil, shall we say.

BRIAN TODD, CNN CORRESPONDENT: Probably, Wolf, just for the sake of politics or for the sake of appearances.

You know, Joe Biden's visit here to the vice president's official home, long anticipated, it brings him face to face with the man he so harshly criticized during the campaign.

(BEGIN VIDEOTAPE)

TODD (voice-over): A potentially charged encounter, given what was said on the campaign trail.

SEN. JOSEPH BIDEN (D-DE), VICE PRESIDENT-ELECT: Vice President Cheney has been the most dangerous vice president we have had probably in American history.

Dick Cheney has been wrong on everything for the last eight years.

(CHEERING AND APPLAUSE)

TODD: Tough words on the stump, but Dick Cheney's office says, campaign rhetoric is nothing new to him. And, to hear Joe Biden tell it, bygones are bygones.

BIDEN: In my discussions with -- with President Bush and Vice President Cheney, there is absolutely, absolutely total, complete, unadulterated cooperation.

TODD: On issues like the Iraq war, fighting terrorism and handling detainees, Cheney played a key role in shaping the policies of the outgoing administration that Joe Biden ran against. Will Biden have a similar influence on President Obama's policies, given his extensive background in foreign policy?

LARRY SABATO, DIRECTOR, UNIVERSITY OF VIRGINIA CENTER FOR POLITICS: I think Biden has a very different agenda than Cheney did. He's going to adopt what the president wants. He isn't going to attempt to interject what his agenda may be into the Obama administration.

TODD: Biden has already signaled that he aims to strike a different tone.

BIDEN: For all those people in government who are honoring the pledge to uphold the law and honor the Constitution, no longer will you hear the eight most dreaded language -- words in the English language: The vice president's office is on the phone.

TODD: In the meantime, Biden has been working quietly with the transition team on preparations. For a chief of staff, sources say, Biden has selected Ron Klain, who held that same post for Al Gore during the last Democratic White House.

(END VIDEOTAPE)

TODD: And, again, we're anticipating Joe Biden's arrival here in about 45 minutes. This is not expected to be a policy discussion, just an hour-long tour of the official vice president's house, along with their wives, Lynne Cheney and Jill Biden.

But, Wolf, you and I both know we would love to be kind of a fly on the wall in this event.

BLITZER: I would love to see what is going on inside. We will get readouts, I'm sure. We will see what happened. We will stand by with you, because I want to have live some coverage to see what they say, if they say anything. Thanks very much, Brian.

The home where Dick Cheney lives and where Joe Biden will soon be living is rich with history. You can see some -- some -- from some of the images previous vice presidents who have called it home. The residence was built back in 1893 -- 1893. It originally is the home of the superintendent of the Naval Observatory.

Congress turned it into the home of the vice president back in 1974. But three years passed before one ever lived there. It was Vice President Walter Mondale. And even though the nation's number- two chief lives there, the Naval Observatory, by the way, continues to operate there as well, fully functioning, indeed.

He doesn't take office until January, but president-elect Barack Obama may be already bearing the burden of some very, very big expectations.

Our senior political analyst, Bill Schneider, is taking a look at those expectations.

And, Bill, does the public really have high hopes for this incoming president?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Sky-high. It looks like Obama will take office on a wave of goodwill.

(BEGIN VIDEOTAPE)

BUSH: It is good for our country that people have hope in the system and feel vested in the future.

SCHNEIDER (voice-over): That, they do.

More than three-quarters of Americans believe conditions in the country will be better in four years. Barack Obama enters the presidency on an unprecedented wave of goodwill. Unprecedented? Well, at least for the past 30 years.

Three-quarters of Americans have a favorable opinion of Obama. That's higher than the favorable ratings for either President Bush or his father when they first got elected. It's higher than Bill Clinton's just after he got elected. The only new president who came close was Ronald Reagan, who got elected in similar circumstances in 1980, a wave of public discontent, an economic crisis, a foreign policy predicament.

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: The fact is, is that this president goes into office with more expectations than any president I can ever remember in my lifetime.

SCHNEIDER: What does the public expect of Obama? Two-thirds or more believe that, as president, Obama is likely to improve race relations, improve economic conditions, bring stability to the financial markets, cut taxes for most Americans, and make the country safe from terrorism.

Whew. Is that all? No. Most people also think Obama's likely to reduce the country's dependence on foreign oil, implement a plan to curb global warming, remove almost all U.S. troops from Iraq, without causing a major upheaval there, and win the war in Afghanistan.

FAYE WATTLETON, PRESIDENT, CENTER FOR THE ADVANCEMENT OF WOMEN: I think that that's the great danger to his presidency, that it will be -- too much will be expected of him.

SCHNEIDER: OK, but it was Obama who wrote a book called "The Audacity of Hope."

(END VIDEOTAPE)

SCHNEIDER: Reagan and Obama do have something else in common: a political movement behind them, with a similar objective, to transform the world -- Wolf.

BLITZER: Bill Schneider, thank you.

The presidential election is over, but a familiar face is back out there on the campaign trail. It's the return of Senator John McCain. And we're going to be bringing it to you live. We're going to tell you why he's out in Georgia right now, what it could mean for Democratic hopes to win even more Senate seats.

Another return, this, one of the Clintonites -- Barack Obama promised change. So, why are we seeing so many former Clinton staffers in the Obama White House?

And looking for a job in the Obama presidency? Better be ready to divulge all -- the detailed questions you have to answer to get a job.

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

(COMMERCIAL BREAK)

BLITZER: We're waiting in THE SITUATION ROOM, and we're waiting for two live events. You will see them: Dick Cheney meeting with Joe Biden, and John McCain returning to the campaign trail -- both events coming up.

We will be right back.

(COMMERCIAL BREAK)

BLITZER: Senator John McCain is back out on the campaign trail right now. Let's immediately go to CNN's Rusty Dornin. She's in Cobb County, Georgia.

RUSTY DORNIN, CNN CORRESPONDENT: Well, Wolf, the event here is just about to begin. Hundreds have shown up, energized to see the man who might have fallen short of the presidency, but could help put a key Republican in the winner's column.

(BEGIN VIDEOTAPE)

DORNIN (voice-over): Republicans hope the man who beat Barack Obama in Georgia with 52 percent of the vote in the presidential election can make those numbers a reality for the Senate incumbent, Saxby Chambliss. Chambliss is headed to a runoff against Democratic contender Jim Martin.

Aside from an appearance on "Jay Leno," this is McCain's first time in front of an audience since the election. He will stump for Chambliss near Atlanta with a number of other Republican legislators.

SEN. SAXBY CHAMBLISS (R), GEORGIA: As much support as we can get coming into Georgia, just to help us rally the troops, not dictate to folks how to vote, but just to talk about why it's important that they show up on December 2.

DORNIN: December 2 would be the runoff date. Martin says there's no word yet on whether he will get president-elect Obama to shine his star power for him. But he will have 100 Obama workers sent in from other states and 25 campaign offices at his disposal.

JIM MARTIN (D), GEORGIA SENATORIAL CANDIDATE: We have been able to open up 25 offices or more across the state, taking advantage of the same energy and resources that he has. So, he's been very helpful to us. Whether he will be able to come to Georgia or not, I don't know.

DORNIN: McCain's appearance with Chambliss has raised eyebrows. In the 2000 campaign, Chambliss ran a commercial slamming his opponent, a former Vietnam vet and triple amputee, and questioning his support of homeland security. McCain rebuked Chambliss publicly for that ad, calling it reprehensible.

(END VIDEOTAPE)

DORNIN: But this is a party fight to hold the Republican line. The Democrats need 60 seats for that filibuster-proof majority -- Wolf.

BLITZER: We're going to stand by and watch this event with you. Want to see what John McCain has to say. All right, Rusty, stand by with us.

Besides Georgia, by the way, there are more tight Senate races. In Alaska, Democrat Mark Begich now holds an 814-lead over the Republican incumbent and recently convicted Senator Ted Stevens. They're still counting votes in Alaska. It's not over with yet. In Minnesota, Republican incumbent Norm Coleman has a 206-vote lead over the Democratic challenger, Al Franken. There will be an automatic recount in Minnesota.

The GOP files a lawsuit, but there's a catch. It's challenging a law that John McCain co-wrote. You're going to find out about that and more.

Plus, it's Barack Obama mania -- tourists flocking to sites in neighborhoods around Chicago, from the barbershop to the pizza place where the president-elect once hung out.

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

(COMMERCIAL BREAK)

BLITZER: The Republican National Committee is taking direct aim in court at some of John McCain's campaign finance reforms. Is that a good strategy for the GOP?

Joining us now, our CNN contributor Hilary Rosen and the conservative commentator Terry Jeffrey.

It sounds like the Republicans are taking a slap at McCain, who co-sponsored, as you know, McCain-Feingold, the campaign finance reform legislation.

TERRY JEFFREY, EDITOR IN CHIEF, CYBERCAST NEWS SERVICE: I don't think if they intend to take a slap at McCain. They're taking a slap at his legislation, Wolf.

I think there's good and bad here for the Republicans. The idea that a national party cannot coordinate with candidates and local organizations, that is ridiculous. It's probably a violation of the First Amendment.

However, going after the soft money thing, if the Republicans get on the side of going all the way to the Supreme Court trying to justify corporate contributions and labor union contributions, I think they're probably going to be on the wrong side of that from the American people.

I think a better way for them to go is to lift is the limits on individual contributions, and then try and go out and raise money the way Barack Obama did.

BLITZER: You know a lot about this campaign finance -- finance business.

HILARY ROSEN, CNN POLITICAL CONTRIBUTOR: Well, that's really what they're trying to do.

Their -- the purpose in challenging a law is so that they can get corporations to fund campaigns. And, typically, Republicans have done better for corporations than -- with tax cuts and other benefits. And what we saw in this campaign was that Democrats, for the first time, really outspent Republicans. And that's because individuals and small-dollar donations came through.

BLITZER: You know, I was -- I was in Miami yesterday at the Republican Governors Association meeting, met with a lot of Republicans.

One major Republican said to me, you know what? Take a look what -- what happened in this most recent campaign. Barack Obama raised $600 million, $700 million, maybe even more. As a sitting president, he could probably raise, over the next four years, a billion dollars to get himself reelected.

That means the Republicans right now, starting right now, Terry, they have to start raising a million dollars a day to try to compete with that kind of money.

JEFFREY: You know, there's some ironies here, Wolf.

First of all, the Republicans are going to have a tremendous opportunity to raise money from the grassroots of their own party, their own coalition, because, quite frankly, those people are going to be energized to oppose Barack Obama's agenda.

But, secondly, when you talk about corporate money, first of all, the Democrats have gotten a lot of corporate money in the past. Corporations like the people in power. The lobbyists...

BLITZER: That's why it will be easier for him to raise a lot more money for -- for his reelection.

JEFFREY: Exactly. Exactly. Exactly.

So, if the Republicans make it easier for big business to pump money into politics, they are going to pump money into the Democrats, because the Democrats have the power.

ROSEN: If that were the case, Democrats would be in favor of changing the law. But they're not.

What the Republicans are hoping is, because there's Republican appointment to the Supreme Court, they're going to undo years of thoughtful campaign finance regulation. You know, if the Republicans had a message that appealed to a mass of people, the way the Democrats did, this wouldn't be a problem. Instead, they're trying to sort of get the fat cats to pay for it.

BLITZER: A quick question: A lot of Clintonites are now coming into this transition process for Barack Obama. We just heard, Ron Klain is going to be the chief of staff for Joe Biden. He did that for Al Gore, as you probably remember.

Is this good for this whole notion of change, to bring back all these Clinton folks? ROSEN: Well, let's remember the change was from, you know, eight years of record deficits, war spending, and tax cuts for the rich of George Bush.

The change wasn't from a peaceful world under Bill Clinton, a, you know, booming economy, 22 million jobs created, and a surplus in our federal budget.

BLITZER: So, the answer is, yes, it's good?

(CROSSTALK)

ROSEN: And, by the way, if you're Joe Biden, and you look at the history of who have the most successful vice presidents ever been, it's been Al Gore. The fact that -- that he's got his guy is perfect.

JEFFREY: Wolf, I will say this. OK, these folks have a lot of experience in Washington.

But if there's one thing that Bill Clinton was great at, it was politics. Bill Clinton was an excellent politician. One of the reasons is, he surrounded himself with excellent political people. Rahm Emanuel, John Podesta, they're two of them. Ron Klain was with Gore.

This is going to be a very political administration. Barack Obama is surrounding himself with people who not only know how to present a message to the country that's politically adept, but know the inside hardball politics...

(CROSSTALK)

BLITZER: We're standing by to hear from John McCain. He's in Georgia, campaigning for the incumbent Republican Saxby Chambliss.

In Georgia, McCain beat Obama 52 percent to 47 percent, a five- point advantage for McCain. Is it realistic to think that Jim Martin can beat the incumbent Republican in a conservative state like Georgia?

ROSEN: Well, most political analysts would say no. The reason that there is a runoff is because there was a third-party candidate who siphoned off a number of the votes.

BLITZER: You need a majority, not just a plurality.

ROSEN: And you needed a majority.

But, look, there is enough frustration right now with Democrats. And as we see from CNN polls...

BLITZER: With Democrats, you're saying?

ROSEN: With Republicans.

And we saw from CNN polls this week how enthusiastic the country is. Close to 70 percent of the country is on Barack Obama's side here. You never know. Jim Martin could pull this off.

JEFFREY: I think you're going to find it persuasive among voters in other words Georgia they don't want to move the Democrats closer to a filibuster-proof majority in the Senate. They want some check, particularly conservative...

(CROSSTALK)

BLITZER: And we're going to hear a lot of that...

ROSEN: Our polling is showing, though, that people are perfectly happy to have the Democrats in charge.

BLITZER: Well, we will see how the people in Georgia are feeling about that...

(LAUGHTER)

BLITZER: ... not necessarily all of the people.

Guys, thanks very much.

We're going to go live to hear McCain once he starts speaking in Georgia, haven't heard much from him since he lost a little bit more than a week ago. You're looking at live pictures from that event in Georgia.

Meanwhile, the vice president-elect, Joe Biden, he is expected to arrive over at the Naval Observatory here in Washington in the next few minutes. We're going to go there live. He's got the meeting going up with the vice president of the United States, Dick Cheney.

And the director of the CIA has just finished talking to reporters about the threat of Osama bin Laden and what might happen during the new administration. We're going to go live and find out what happened.

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

(COMMERCIAL BREAK)

BLITZER: The director of central intelligence has just briefed reporters on what's going on in the war on terrorism, including the hunt for Osama bin Laden.

Let's go to Kelli Arena. She's working the story for us.

What did we learn, Kelli?

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Well, we learned that al Qaeda is still intent on attacking the United States, that they remain a very pertinent enemy, and that, seven years after the September 11 attacks, they are as viable and as dangerous as ever.

(BEGIN VIDEOTAPE)

ARENA (voice-over): CIA Director Michael Hayden still very much on the job, warning, the terrorist threat is undiminished.

GEN. MICHAEL HAYDEN, CIA DIRECTOR: Al Qaeda operating from its safe haven in Pakistan's tribal areas remains the most clear and present danger to the safety of the United States.

ARENA: It could very well be his swan song. Both Hayden and the national intelligence director, Mike McConnell, could be replaced by the president-elect.

There's a lot of pressure from Democrats, who say only a clean sweep can restore faith in the intelligence community. Even some Republicans are calling for change.

UNIDENTIFIED MALE: I do believe that a fresh set of eyes, a new team in place, working with Congress and working with President Obama, would be a positive thing.

ARENA: But defenders say that both men should be judged on their performance, not policy decisions made by the Bush administration.

UNIDENTIFIED FEMALE: You know, the intelligence community doesn't make policy, but they support the policy-maker and the decision-making process.

ARENA: Example: Neither Hayden nor McConnell was involved in the decision to allow harsh interrogation techniques on terrorist detainees held by the CIA. Still, both men defended that decision.

And Hayden still carries baggage from his earlier role as head of the National Security Agency, where he oversaw a huge and controversial expansion of the agency's domestic spy powers, all of which makes for a tough decision.

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: So, the message I want to send as president is that, number one, I want the best intelligence possible. And I don't want just good news.

ARENA: The two men are just part of the nation's security team. Homeland Security Secretary Michael Chertoff and Attorney General Michael Mukasey will definitely be replaced.

The only guy who stays put for sure is FBI Director Robert Mueller, who is serving a 10-year term.

(END VIDEOTAPE)

ARENA: Now, transitions can be vulnerable times. Terrorism experts say that those who wish to do us harm may think that this is a good time to strike.

So, knowing that, Director Hayden said today that the intelligence community is determined to make this the smoothest transition in recorded history -- Wolf.

BLITZER: Let's hope that happens.

All right, Kelli, thank you for that report.

Let's go back to Jack. He's got "The Cafferty File" -- Jack.

CAFFERTY: The question this hour is: What does it mean when Goldman Sachs and Morgan Stanley are planning to pay $13.2 billion in year-end bonuses? Each of these firms took $10 billion from the financial bailout package.

John in Colorado writes: "It means the top management for both companies must have been born on the sun. Unbelievable, in today's dire economic environment, that any financial institution would pull such an in-your-face stunt."

Liz in Maryland writes, "It means the companies' executives have no souls, no consciences, no common decency, and an overwhelming amount of greed."

Willow in Iowa: "We need to pass some kind of regulation stating, no bonuses can be given to companies in the bailout, and the top management payroll can be only a certain amount over other employees' compensation. We are essentially the owners now, until they buy themselves back, so we should be able to set the terms."

(LAUGHTER)

CAFFERTY: Sarah writes: "It means the bailout cash they received was given without precondition. The government gave them the money, and actually trusted that the companies would use it to start lending again, when in fact they just kept it as running capital for things like bonuses."

Greg in Kentucky: "It means that all systems are go for the continual looting of the U.S. Treasury -- or what's left of it. As usual, the only people asked to sacrifice significantly are the ones who can least afford it. It also sends a mixed message to Main Street, when Wall Street can take such an extravagant gesture in the face of the worst financial crisis since the Great Depression."

And John writes from Massachusetts: "What brain-dead big shot negotiated this mess? Treasury Secretary Hank Paulson came from Wall Street, and knew full well his cohorts get monster bonuses. Curious he wasn't insightful enough to negotiate their elimination."

If you didn't see your e-mail here, you can go to my blog at CNN.com/caffertyfile, and look for yours there, among hundreds of others -- Wolf.

BLITZER: All right, Jack, thank you.

And, to our viewers, you're in THE SITUATION ROOM.