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Obama Considering Hillary Clinton For Secretary of State?; Bailout Nation

Aired November 14, 2008 - 22:00   ET


ANDERSON COOPER, CNN ANCHOR: Tonight, we begin with breaking news: big news about who Barack Obama wants to be the next secretary of state.
We have learned today that president-elect Obama met secretly over the last two days with two former rivals on the campaign trail, Senator Hillary Clinton and Governor Bill Richardson. Multiple sources tell CNN that Senator Clinton and Obama had -- and I quote -- "serious discussions" yesterday in Chicago. And today, Obama met with Richardson.

And we're told that Obama was gauging Senator Clinton's interest in being secretary of state. And she was led to believe the ball is now in her court. So, why then meet with Richardson today? From what we're hearing, he would be a strong candidate for the post if Clinton says she's not interested.

Candy Crowley has the breaking news.


CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Will she say yes? No way she will say it in public.

SEN. HILLARY RODHAM CLINTON (D), NEW YORK: Let me just say that I'm not going to speculate or address anything about the president- elect's incoming administration.

CROWLEY: People would know the senator from New York believe she would accept if offered the secretary of state spot.

The wow factor would be enormous, but she is an "on the one hand/on the other hand" possibility. Widely popular overseas, Clinton could deal with patching up international relations, while the president wrestles with the economy, or her popularity makes her seem like the overseas president, or the selection makes him look confident. Joe Biden wanted to be the go-to foreign policy guy, or the two like each other. She would offer a strong voice for a president who clearly wants to put together an all-star Cabinet.

And there is the other Clinton, with broad and deep relationships with many heads of state, as well as global initiatives he's dedicated to. More importantly, did some foreign contributions help build the Clinton Library? Does any of it make for conflict of interests if his wife becomes secretary of state?

And then there's this.


NARRATOR: It's 3:00 a.m., and your children are safe and asleep. But there's a phone in the White House, and it's ringing. Something's happening in the world.


CROWLEY: A Secretary of State Hillary Clinton would be the same person who blistered her commander in chief with a crushing ad suggesting he wasn't up to the job. She called him naive, sniffing at the suggestion he would meet with the leaders of hostile nations without precondition. And he demeaned the experience she claimed as a former first lady.

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: My experience is grounded in understanding how the world sees America, from living overseas and traveling overseas, and have -- having family beyond our shores.

And it's that experience, that understanding, not just of what world leaders I went and talked to in -- in the ambassador's house, who I had tea with.

CROWLEY: On the other hand, it is amazing what rivals put behind them when a mutually beneficial opportunity arrives. And the president-elect seems enamored of the idea. He loves that book about the Lincoln Cabinet written by Doris Kearns Goodwin.

OBAMA: One of my heroes is Abraham Lincoln. And, a while back, there was a wonderful book written by Doris Kearns Goodwin called "Team of Rivals," in which -- talked about how Lincoln basically pulled in all the people who had been running against him into his Cabinet, because whatever, you know, personal feelings there were, the issue was, how can we get this country through this time of crisis? And I think that has to be the approach that one takes, whether it's vice president or Cabinet.

CROWLEY: Is it for real? The most telling hint is the silence from Obama land. They're not denying the story.


COOPER: Candy Crowley joins us now.

So, let's just be clear on exactly what we know or what we don't know. He has not officially said, will you be the secretary of state? But it never really works that way. He sort of sussed her out, because doesn't want to ask her and then have it be rejected. Is that correct?

CROWLEY: Well, right, because there have, in the past, been for instances when people have asked -- when a president-elect has asked someone to be in their Cabinet, and the person says no, and somehow that leaks out. And you don't really want to have that. So, yes, you want to -- I mean, it's like a lawyer. You want to make sure you know what the answer is before you ask it.

On the other hand, they are saying -- yes, these Democratic sources are saying he was simply trying to find out if she would take it if he offered it. Sort of adding to that, I'm told by a source about today's meeting with Bill Richardson. The source says it was clear that the Hillary Clinton selection was not a done deal.

COOPER: But would the Richardson meeting be an equal -- I mean, that he's an equal rival for the job with Hillary Clinton, or that if Hillary Clinton didn't take it, or didn't signal that she was interested in taking it, he would be very high on the list? Do we know?

CROWLEY: It -- it was unclear to me. No, we don't know.

Bill -- Bill Richardson obviously has credentials which are amazing, including being the U.N. ambassador, including being a troubleshooter in the Middle East and in other dangerous spots.

But it's not always about the resume. He clearly has a heavier resume than Hillary Clinton, but she, again, has that kind of wow factor and that -- that recognition overseas that -- that may help in terms of healing international relations.

So -- so, we will see. We -- we just know that he came away with the impression that it's not a done deal.

COOPER: All right, Candy, thanks. Candy, stick around.

Joining us now for digging deeper, not only Candy, but CNN senior political and former presidential adviser David Gergen, and "New York Daily News" columnist Errol Louis.

David, what do you think? Does -- does Hillary Clinton want this? Should she want it?


One, it's unimaginable that Barack Obama would have had her come to Chicago unless he intended to make her the first choice. And it's also unimaginable that she would go to Chicago unless she were seriously interested in the job. So, I'm sure that there's some -- there's no question she...


GERGEN: Yes, go ahead.

COOPER: There's no way he would float this to her, saying, might you be interested, and then take it back and say, well, I'm not going to offer it to you? It seems like, if he's floating it at all, that's -- that's more or less he's -- he's offering it to her?

GERGEN: Exactly right, because if -- Anderson, he cannot dangle this and then say no to her, and -- because after dissing her, in effect, for the vice presidency, and then this, too, that would be a huge riff, not only with her, but with large sections of the Democratic Party.

So, I just have to believe that this is number-one choice, but he's also putting himself in a place where he has a backup in Bill Richardson, or possibly John Kerry or others.

But it's -- but it's -- I do think that the "Team of Rivals" notion, it's not lost upon Barack Obama that -- that Abraham Lincoln asked not only his biggest rival, but his biggest rival was the governor and -- and former senator of New York, William Seward.

And, when they came in, everybody said, how can they make this work? And Lincoln, because he was the president, could bend Seward to his will. And, once he did that, they became the two closest people in the Cabinet. And Seward became his closest friend and partner in governing.

And think about that possibility for Barack Obama.

COOPER: Errol, it brings up the question, then. What do you think the relationship is like between these two? I mean, they are at heart politicians and pragmatists.

ERROL LOUIS, COLUMNIST, "THE NEW YORK DAILY NEWS": Well, that's right. And they have got a lot in common.

Both of them want to be in the main currents of history. Both of them want to be moving across the world stage, making the big decisions that are going to determine the fate of the country over the next few years. And, compared to that, you know, some spat during a primary competition really means almost nothing.

And I think both see themselves as enhancing one another. You know, there's a real possibility they could fall into some sort of a -- some synergy, kind of a mutual-admiration society.

COOPER: Candy, how much -- and I know there's a lot we don't know. And this is based on reporting from you and Gloria Borger and Jessica Yellin and others, folks who have been doing this over the last couple of days -- do we know what the timetable for Hillary Clinton making a decision is?

CROWLEY: No. I have -- I have no idea about that.

They are not talking about that, actually, inside the Clinton camp, nor, so far as I can see, inside the Obama camp. So, obviously, this is not something they would announce on a weekend, so I pretty much reassure you that it's not going to happen over the weekend.

But they do -- look, this is one of the key positions that they wanted to roll out early. And I think, probably, you know, keeping the speculation going may not be all that helpful, and perhaps we will get it soon. We were told that we would get some before the end of November, but I -- I don't know her time schedule.

COOPER: All right.

We're going to have more with Candy and Errol Louis and David Gergen.

Guys, stay with us for a moment.

We will also take a look at how Clinton and Obama got to this point, digging deeper into their relationship, and, also, as I said, with our panel.

Let us know what you think of the idea. Our viewers are talking right now online. Our live chat is going on at And check out Erica Hill's live Webcasts during the break as well.

Also tonight, a down day on Wall Street, and the big three carmakers begging for a bailout. Can we really afford to become a bailout nation?

Plus, what really happened when Michelle Obama and Laura Bush met closed doors at the White House? We have seen the photo, but what did they actually talk about? Well, tonight, Laura Bush is speaking out.



CLINTON: I'm very happy there is so much press attention and interest in transit...


CLINTON: ... especially guesses about my own.

But, in the off chance that you're not here for this important issue, and are here for some other reason, let me just say that I'm not going to speculate or address anything about the president- elect's incoming administration.


COOPER: That's how Hillary Clinton began her remarks today at a meeting of transit officials in Albany, New York, what you would expect her to say. Of course she's not going to give anything away, even about -- even as the buzz about her becoming the next secretary of state is growing.

At least two things are certain, though. The Clinton name carries a lot of currency in Washington, no doubt about that, and around the world. And despite the often bitter primary, Senator Clinton has made good on her promise to help Barack Obama win the election.

Let's take a look now at the relationship and more on the breaking news with Randi Kaye.

(BEGIN VIDEOTAPE) CLINTON: Enough with the speeches.

RANDI KAYE, CNN CORRESPONDENT (voice-over): If you listen to Hillary Clinton in the primaries, it might be hard to imagine why she would now consider becoming secretary of state for Barack Obama.

Just for starters, when asked at the CNN debate in South Carolina last year whether they would meet with leaders of rogue foreign countries, Obama said yes, Clinton no.

CLINTON: We're not going to just have our president meet with Fidel Castro and Hugo Chavez and, you know, the president of North Korea.

KAYE: The next day, Clinton called Obama's position irresponsible and naive. Obama struck back, saying, the only thing that was irresponsible and naive was voting to authorize the Iraq war, as she did. He opposed it.

Old news, say some.

HILARY ROSEN, EDITOR AT LARGE, THEHUFFINGTONPOST.COM: I don't think that they have major differences on -- on policy issues, you know, that their difference on the war was many years ago. And, since then, they have really come together.

KAYE: A long way and a lot closer together -- their positions on troop withdrawals are now very similar. During the campaign, Hillary Clinton trumpeted her experiences overseas as first lady, and questioned Obama's readiness to lead.


NARRATOR: It's 3:00 a.m., and your children are safe and asleep.


KAYE: Remember Clinton's 3:00 a.m. ad? Some political experts say it cost him the Ohio primary.

ROSEN: I think any relationship at -- at this high level has to be based on -- on trust and on mutual respect. You know, he wants the -- the best talent he can find.

KAYE (on camera): The problem Hillary Clinton now faces is what she wants to do. After a life-changing campaign, does she really want to return to Capitol Hill as the junior senator from New York? She has huge name recognition overseas and signaled this week that she might consider doing something new. When asked if she would serve in an Obama administration, she said:

CLINTON: Let me just say that I'm not going to speculate or address anything about the president-elect's incoming administration.

KAYE (voice-over): The true nature of their relationship is not known, but Clinton campaigned relentlessly for Obama... CLINTON: Now is the time to close the deal for Barack Obama.


KAYE: ... 60 campaign stops in all, including this show of unity in Unity, New Hampshire.

OBAMA: I have admired her as a leader. I have learned from her as a candidate.


OBAMA: She rocks.


OBAMA: She rocks.


KAYE: What would the relationship be like between Secretary of State Clinton and President Obama?

ROBERT ZIMMERMAN, DEMOCRATIC NATIONAL COMMITTEE: I think Hillary Clinton's greatest strength is that she's a coalition-builder. He's going to be very focused on the economy in his first term, without question. That's going to be a major, major issue, the domestic agenda. And she bring instant credibility to the national agenda. So, I think her ability to build coalitions, her ability to bring together, build strong teams, I think that would be a major advantage.


KAYE: Advantages Barack Obama may have seen all this time, but may only now be ready to capitalize on.

Randi Kaye, CNN, New York.


COOPER: Well, let's dig deeper with CNN senior political analyst and former presidential adviser David Gergen, once again, Candy Crowley, and CNN contributor and "New York Daily News" columnist Errol Louis.

David, what about the calculations that Hillary Clinton is making about now? I mean, if she -- if she gets -- if she takes this job, she could -- she could get fired one day, and then she's out of a job. And then there's also questions about her future political opportunities. What do you think is the calculus going on?

GERGEN: Well, I think, first of all, she has to decide about whether she wants to stay in the Senate. And, as Randi Kaye said, being a junior senator, she's not the committee chairman. She's not in leadership. And she may have to wait a number of years to do that. That's not necessarily a really exciting role for her. It may be too tame for her, after the campaign.

I think the second -- and, so, the secretary of state thing would obviously give an alternative that would be very exciting.

The second thing, she really has to sit down with her husband and work through, where does this leave him? After all, he's very involved in the Clinton Global Initiative, doing good around the world. How does that -- could he continue to do that? Would he have to shut it down? Could he take money from people? There are lots of secondary questions.

But I think what really appeals to her -- you know, one of the reasons she wanted to be president, why -- she did want to direct the foreign policy of the United States. She would -- did want to set a new direction. And this would give her that part of the action. She would be subordinate and she would have to work in a team setting, but, even so, the secretary of state -- we have had great secretaries of state, like George Marshall and Dean Acheson, who have been remembered as enormously creative.

And, you know, one of the last presidents who thought he was going to get a Noble Peace Prize, Richard Nixon, saw is go to his secretary of state, Henry Kissinger. So, you know, there are a lot of things that are appetizing about that for someone who wants to have a creative role.


COOPER: Errol, according to "Politico," 31 of the 47 people so far named to this transition staff, to the posts, have ties to the Clinton administration.

Does this contradict Barack Obama's message of change?

LOUIS: Oh, no, no, not really.

Listen, a lot of them were junior staffers the first time around. They're coming back. They're -- they're moving up. They're making careers. I think it in no way makes it seem as if, you know, this government in waiting that was assembled is -- is not going to be 100 percent loyal to Barack Obama.

And one thing I -- I want to mention, you know, the -- you showed some of the footage of Hillary Clinton in Upstate New York. She does not see herself spending the rest of her days in -- in public service dealing with transportation officials about, you know, bus and train service in rural Upstate New York.


LOUIS: And to watch all of the people, that -- many of whom used to work for her, going into government and rising up through the ranks, I mean, she's going to want part of that action, too.

COOPER: Candy, what about this meeting on Monday with -- with Barack Obama and John McCain? What do we know about it? CROWLEY: Well, we know that it was put together, arranged by Rahm Emanuel, who is Obama's chief of staff, and Senator Lindsey Graham, who is sort of a best bud of John McCain. And they -- they know each other. They like each other. They have a longtime relationship.

And the two of them got this ball rolling. This looks to me, because of that, and since both of them will be in on this meeting, that this is less about Cabinet positions, and more about bipartisan reach-out, and that sort of thing, reaching out to Republicans.

The two do have in -- in common climate change and ethics reform. And -- and, clearly, John McCain could be helpful in the Senate for Barack Obama. And, in fact, Obama has already mentioned that. So, there may be some of that discussion. But it just doesn't have that Cabinet feel to it.

COOPER: David, is this common, though, for -- for two, you know, rivals on this level to -- to meet in the transition?

GERGEN: There is certainly precedence for it, you know, Richard Nixon and John Kennedy, in a very tough battle, coming together afterwards. There have been other times. There have also been times when there have been frosty relationships.

But I think that McCain has -- has shown a certain gracefulness and -- and grace and generosity here, as the -- as the vanquished going to the victor. It's as if the defeated general is going to the victorious general and presenting his sword.

And I think that -- and I think it's far more about the symbolism, as Candy is right, than about a Cabinet position. But I do think Barack Obama would have -- it would be in his interest talk to John McCain: "I want you to keep talking to me about Iraq and Iran. I want you to be at the table and in the conversation."

Because what he doesn't want to do is set up the Republicans -- and one of the reasons he might want to -- I think he's talking about Bob Gates staying at the -- at Defense. And can you imagine Hillary Clinton and Bob Gates? That's a very strong pair.

The -- that -- that he wants -- does not want to have the Republicans set up as a -- as a critic's corner, that everything he does is second-guessed, and he's accused of weaknesses. He's much better off bringing McCain into the conversations.

COOPER: Again, it's the "Team of Rivals" idea, I guess.

Errol Louis, Candy Crowley, David Gergen...

GERGEN: Yes, exactly.

COOPER: ... appreciate it. Thank you very much. Have a great weekend.

LOUIS: You, too. COOPER: Still ahead on the program tonight: The big three automakers are clamoring for a bailout. Will they get a lifeline? Should they? And how many more troubled companies and even cities can the government afford to help? Some tough answers for hard times.

And Bill Ayers speaking out for the first time since his name became a weapon in the election, talking about his violent past and more -- ahead.



REP. ELIJAH CUMMINGS (D), MARYLAND: They hear about the bailouts of Wall Street. They hear that their tax dollars are being paid to AIG, and these people are going on these junkets and all that. They hear all of that. But they feel like it's ring-around-the-rosy. They hear a lot of nice talk, but they still are being put out of their houses.


COOPER: Anger over the bailout -- Maryland Congressman Elijah Cummings grilling the architect of the Treasury Department's rescue plan, Assistant Secretary Neel Kashkari.

Now, this Monday, senators are going to take up the auto industry's plea. The big three carmakers want $25 billion to help them stay in business. Tomorrow, President Bush hosts the Global Economic Summit in Washington. Fifteen members of the European Union are now in a recession.

Meanwhile, tonight, the mayors of Atlanta, Philadelphia, and Phoenix are asking for some of that $700 billion bailout money. They say need -- they need the cash just to keep their cities running.

Back in the 1970s, when New York City asked help bailing its bills, check out this headline: "Ford to City: Drop Dead." Did not exactly go well.

Today, the Dow Jones fell more than 300 points, ending the week down 5 percent.

Lots to talk about tonight. It's our money. It's our future.

Joining us, CNN senior business correspondent Ali Velshi and CNN's Richard Quest across the pond.

Ali, how about that, three major U.S. cities asking for a share of the bailout, saying in a letter to Secretary Paulson today that they're bearing the brunt of the crisis?

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Yes, I mean, it's kind of interesting.

They're asking for some $50 billion. It's the mayors of -- of Phoenix, of -- of Atlanta, and of Philadelphia. Kind of interesting, because, typically, that's not how cities raise money when they get into trouble. What they do is, they cut services, they raise taxes, they sell bonds, they ask the state for help.

They're going right to the front of the line. They're going to the federal government. And -- and that's kind of a bit of the problem, Anderson, because, at this point, with that $700 billion, with the fact that the Treasury has sort of turned around and said, none of what they initially the bailout money was going to be used for is now going to be used for the same purposes. there are a lot of people getting in line.

So, you have the cities. You have got the automakers. And -- and -- and you have got a lot of confused taxpayers, saying, is this what the money was supposed to be for? -- Anderson.

COOPER: Well, also, Ali, I mean, Harry Reid now wants to take the -- a vote next week on emergency loans to the big three automakers as part of the government rescue plan. There's certainly controversy over this.

Let's talk a little bit about what's at stake and...

VELSHI: Right.

COOPER: ... why there is the resistance.

VELSHI: What -- $25 billion is -- is what the automakers want. This is Ford, Chrysler and General Motors.

Harry Reid and the -- the Senate Democrats do tend to support this idea. So do Senate -- so House of Representatives Democrats. The Republicans are not in love with this idea. The White House doesn't think it's a great idea. But the incoming administration, the Obama administration, does support the bailout.

Here's the controversy. It -- it's a big industry. The auto industry in the United States employs a lot of people, directly and through support services and suppliers. The question is this. They have burned through so much money over the last few years, is there some sense that, if they were to get this money, something would be different?

There are a lot of people who would say, let's tie it to restructuring the business. Let's tie it to being more green, more fuel-efficient, getting hybrid batteries developed, things like that. Others are saying, if you just give them the money at this point, they could burn through it.

And the experience with the $700 billion bailout, Anderson, is that, if we don't get this all worked out at the front end, taxpayers have no control over it at the back end.

COOPER: Richard Quest here in Washington.

Sorry. I thought you were in London, but you're obviously down in Washington to cover this -- this economic summit meeting.

Obviously, this is affecting people, not just in the United States, serious ripple effects around the globe. I was stunned to hear that -- that reports say the European Union is now in recession.

RICHARD QUEST, CNN CORRESPONDENT: The Eurozone, Anderson, is in the first recession of its 10-year history. Only France is managing to sort of show growth. And it's just a tenth-of-one-percent. It is pathetic in the extreme.

But that really doesn't tell the whole story: unemployment in Britain up 5.8 percent, and expected to go over three million, the worst for 11 years, the housing market in the U.K. absolutely destroyed beyond belief.

And, wherever you look in the world at the moment, I'm sorry to say, there is a feeling that much of the blame does lie at the door of the U.S. and the U.S. administration, for the -- the way the markets have been regulated.

It is in that context that these 20 leaders or so have come to Washington this weekend with a certain amount of: "Right, you got us into this. Now lead us out of it."

COOPER: What do we expect to come out of this meeting in Washington? I mean, there are going to be a lot of pictures. Is there actually going to be any substance?

QUEST: I think there will be an agreement on a fiscal stimulus, coordinated, so you get absolute, maximum bang for the buck.

But more -- but what's really crucial is a philosophical difference of opinion between the Europeans, who really are saying to the administration, listen, regulation, more regulation, better regulation, and the administration, which is saying, it's not broken.

President Bush actually said, it doesn't need to be reinvented.

What, of course -- and the reason this is so important this weekend is, they're getting it on the agenda. Bush may be a lame duck president, but they do know, if they get their oar in first, they will get their message across.

COOPER: Hey, Ali, very briefly, why not just allow the automakers to go bankruptcy -- go to bankruptcy court and -- and then renegotiate with the unions, renegotiate all the contracts, and -- and get it sorted out that way?

VELSHI: That's typically what one thinks of in the United States with bankruptcy. Look at the airlines. So many of them have been bankrupt.

They -- they go into bankruptcy. They renegotiate the contracts. They get rid of planes they don't want. They break their contacts with the unions, and come back leaner and meaner. There are a lot of people who say, in this economic environment, where it is so hard to raise money if you are a going concern, an operating business, the car companies will have very little ability to actually restructure, to actually have money coming in to restructure.

So, there's a danger that, if they file for Chapter 11 bankruptcy protection, it may be very little time before at least one of them goes into Chapter 7, which means they are gone. They may be able to sell their name to somebody or some of those brands, but the bottom line is, there is some danger that, if the auto -- one automaker goes into bankruptcy, the automaker may fizzle out.

Yesterday, I had a conversation with Carlos Ghosn, the CEO of Nissan and Renault. They have long been thought of as a company that would interested in having some kind of a relationship with a U.S. automaker, maybe even buying them. He told me point-blank they're not in a position to be buying any automakers. You know, there aren't a lot of companies that can buy an automaker. It's going to be a problem, Anderson.

COOPER: All right, Ali Velshi, thanks.

Richard Quest, as well, thank you very much.

Ahead tonight: Sarah Palin vs. Bill Ayers. He was talked about a lot on the campaign trail, but we never actually heard from him, until today. Coming up, Bill Ayers speaks out.

And the latest on a massive fire in Southern California -- it's burning in a community that is home to Oprah Winfrey and other stars. We will have the latest on the fire ahead.

Plus, what really happened when Michelle Obama and Laura Bush met at the White House. We've all seen that picture. Now for the first time Laura Bush talking about that meeting and Obama's election.


LAURA BUSH, FIRST LADY: There were leaders around the world who didn't think the United States would elect an African-American man. So I think it's a really important message about our own democracy to people around the world.


COOPER: More details on what she said and what she said in that meeting between the Obama and the Bushes.


COOPER: That's a picture of Bill Ayers, the former '60s radical that John McCain and Sarah Palin used to try and cast doubt on Barack Obama's judgment. He is now speaking out. We'll have that for you in a moment.

Ayers came up many times during the presidential campaign, often by Governor Palin who accused Obama of palling around with terrorists. As a member of the group the Weather Underground, Ayers carried out bombings at the Pentagon and the Capitol.

In an interview with Wolf Blitzer earlier this week, when asked, Palin continued to push the Ayers-Obama connection. Here's the raw data.


GOV. SARAH PALIN (R), ALASKA: 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.


COOPER: You know what Sarah Palin thinks about Bill Ayers. There she said it. Today Ayers went on camera in an interview with "Good Morning America" to tell his side of the story and tell us what he thinks of the charges Palin and others have made against him.


BILL AYERS, FORMER WEATHER UNDERGROUND MEMBER: I think that the dishonest narrative is one to demonize me. Let's remember that what you call a violent past, that was at a time when thousands of people were being murdered by our government every month, and those of us who fought to end that war were actually on the right side. So if we want to replay that history, I would reject the whole notion that demonizing me or the Weather Underground is relevant.


COOPER: Well, now to the historic welcome we saw this week. President-elect Barack Obama and Michelle Obama arriving at the White House, greeted by President Bush and first lady Laura Bush. That was on Monday. We saw that photo of Laura Bush and Michelle Obama. But until today, we didn't know what they talked about and what she thought of the election results.

Here's the first lady in her own words.


ELAINE QUIJANO, CNN CORRESPONDENT: The role of the first lady is certainly something that I'm sure you discussed with Mrs. Obama earlier this week. How did that visit go? Could you tell us any anecdotes?

BUSH: It went great. It was very private, really. I mean, it was really much more, I think, two mothers talking about home more in this visit because, of course, I showed her the rooms that are our girls' rooms now that I think are the perfect rooms for her girls when they move there. We talked more about really making the White House a home for a family and what I know from having lived here and from visiting my mother-in-law when she made this family a home and from reading about all the other families that have lived here, is this house really can be a home. And I know that they'll make it that way for their little girls.

QUIJANO: Certainly, there must be some increased pressure, a lot of scrutiny, of course, living in the White House. I was wondering, did you share any advice with her as a mother who has been through it, having had two daughters spending some formative years?

BUSH: Not really. I mean, I don't -- I think I showed her the closets. I showed her all the things that women are interested in. But I didn't try to give her a lot of advice. I know she knows that she can make it a home, and that's what she wants to do.

QUIJANO: Last question, then. Your husband the day after the election talked about it being a stirring sight to see the Obamas because of the historic nature of have the nation's first African- American president. I wonder if you could share your thoughts on that, as well.

BUSH: Well, I also think it's very, very important. I think it's important for American history. I think it's a message to everybody in the United States of what's possible.

But it's also a message around the world, because I know, because I heard from them, that there were leaders in the -- around the world who didn't think the United States would elect an African-American man. And so I think it's a really important message about our own democracy to people around the world.

QUIJANO: Mrs. Bush, thank you so much.

BUSH: Thanks a lot.

QUIJANO: Thanks a lot.


COOPER: Laura Bush in her own words.

We're also following breaking news right now in California. A Bush fire has scorched thousands of acres, more than a hundred homes, in a place where celebrities like Oprah Winfrey and other stars live. We'll have the latest on that.

And more on our breaking news. Hillary Clinton and Barack Obama meeting to talk about her becoming secretary of state. What does it show about both that they're seriously considering this? Details ahead.


COOPER: Breaking news here in Southern California. An inferno continues to rage out of control. Look at those pictures.

Now, this brush fire is about 100 miles up the coast from where we are right now, Los Angeles. At least 15 -- 1,500 acres have been destroyed; thousands have been evacuated.

The epicenter is a community full of mansions and famous people. Among them, Oprah Winfrey. Take a look.


COOPER (voice-over): An eerie sight over Montecito, California. Parts of this enclave for the rich and famous reduced to a smoldering fire pit. You see the pictures: flames swallow palatial estates, leaving some as shells, others in ruins.

Officials call it the Tea fire, fueled by high winds and dry air. It's centered in Santa Barbara County, just north of L.A. It's destroyed more than 100 homes, scorched 2,500 acres, and forced 5,000 people to evacuate.

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: We tried to respond very quickly to the needs, the local needs, and this is a fire that has spread very quickly.

COOPER: They're battling it from the sky, using DC-10 tankers to douse retardant on hot spots. Helicopters are also being called into action overhead.

But it's the ground war that's the most intense. You see it here in CNN iReports. An Army of firefighters, at least 500, are on the front lines, desperately trying to save what they can.

ERIC EACKER, FIREFIGHTER: It's one of the bigger fires that I've been on. Lots of -- lots of expensive real estate so there will be some -- some heartbroken people out there.

COOPER: Another challenge, the water supply. Montecito officials say the reservoir supply is down to just ten percent. They're asking residents to conserve their water.

Montecito is located between the ocean and the mountains. It's an affluent village, popular with celebrities. Last year Oprah Winfrey hosted a fundraiser for Barack Obama at her rolling Montecito mansion. The fire does not appear to be threatening her property.

For many, however, the danger is imminent, and they can only wait to find out if they'll have a home to return to.

This man lost his house. He vows to rebuild and return, he hopes, to a paradise on earth that is now burning to the ground.


COOPER: Still to come, will Hillary Clinton be joining team Obama? The latest developments in his search for a secretary of state. But first, a historic moment at the Pentagon. The first female four-star general. Who is she? Find out ahead.


COOPER: So how do you make the White House a home? Laura Bush talks about what she told Michelle Obama. That is coming up.

But first, Erica Hill joins us with a "360 Bulletin" -- Erica.

ERICA HILL, CNN ANCHOR: Anderson, in a flawless nighttime launch, the Space Shuttle Endeavor lifted off from the Kennedy Space Center in Florida just hours ago. Seven astronauts on board for a 15- day mission to the International Space Station, where they'll expand the living space.

Eight people arrested, 168 dogs rescued today when Texas authorities busted one of the largest dog-fighting rings in the country. Charges were filed against another four dozen people. This caps off a 17-month investigation. But authorities say they are not done yet. Most of the dogs showed signs of injuries, and they did appear to be bred for fighting.

The Dow off 338 points for the session today. And the largest drop in retail sales on record is being blamed for that decline today on Wall Street.

Let's end on a high note here. A proud salute tonight for the Army's first female four-star general. General Ann Dunwoody was sworn in today after 33 years in the Army, although when she enlisted she thought she'd serve for only two. In her new role, Dunwoody will make sure the soldiers in Iraq, Afghanistan and around the globe have the equipment they need, Anderson.

COOPER: It's a vital job. Thanks, Erica.

Let's take a look at our "Beat 360" winners, our daily challenge to viewers to come up with a caption better than the one we can think of. So take a look at the picture: President George Bush winking at the United Nations yesterday before he spoke.

Kirk is our staff winner tonight: "My legacy looks so much rosier when I squint."


COOPER: That's pretty good. I like that one.

Our viewer winner is Anthony from Alameda, California. He joins the winner's circle with this: "Avast! Ye scurvy dogs! Heave to, or I shall destroy yar economy."


COOPER: Good. That's good. Anthony, a T-shirt is on its way. Congratulations. You can check out all the entries at and play along there on Monday, as well.

Still to come tonight, the latest in our political breaking news: Barack Obama meeting with Hillary Clinton to see if she's interested in becoming secretary of state.

But first, homeowners going underway, under -- way under...


DAN SIMON, CNN CORRESPONDENT: If you don't you mind my asking, what did you pay for your house?

MATTHEW BALZARINI, HOMEOWNER: We paid about $500,000.

SIMON: What's it worth now?


SIMON: Down $200,000.



COOPER: The California community at the epicenter of the mortgage meltdown.

Plus, what kind of dog should the Obamas not be looking for? Which ones should they skip? How about this one?




COOPER: "The Shot," coming up.


COOPER: Well, there's drowning in debt, and then there's being so completely capsized that your house is underwater. That's the term for what happens when a home's value plunges and more is owed on the house than it's actually worth. It's the position, sadly, that of course, no one wants to be in but sadly, now millions of Americans are facing.

One California community has a unique -- has a unique take on the situation, because they're all in the same boat.

Here's an up-close look with Dan Simon.

(BEGIN VIDEOTAPE) SIMON (voice-over): For people who wanted affordable housing in the San Francisco Bay area, it may have seemed like a no-brainer. Clean, wide streets, manicured lawns, tidy-looking houses.

This is Mountain House, California, 3,500 homes built on pasture land 60 miles east of the bay. Free of big-city problems like crime and pollution. But Mountain House has the distinction of being No. 1 in the country for underwater houses. That means they owe more on their mortgages than what their homes are worth.

(on camera) If you don't mind me asking, what did you pay for your house?

BALZARINI: We paid about $500,000.

SIMON: And what's it worth now?


SIMON: Down 200,000?


SIMON (voice-over): Matthew Balzarini is a San Francisco police officer. He says he chose Mountain House so his kids could have a nice house with a swimming pool. His goal now: to stay optimistic.

BALZARINI: We're still growing. We're still selling. Yes, it's slowed down significantly, but homes are still selling. And as far as, you know, foreclosures and things like that, there's some great deals for people. And they're jumping on them and moving in.

SIMON: It's understandable, though, why confidence could be in short supply.

(on camera) The first homes here began selling in 2003. The real-estate boom was under way. Back then, a typical house here would have gone for about a half a million dollars. Today they're going for about half of that.

It all adds up to this: about 90 percent of the people who took out mortgages are underwater.

(voice-over) A disproportionately high share because the community is new. But nationwide, the statistics are also grim. At the end of September, the most recent data available, 7.6 million properties were underwater, another 2 million close to it. Combined, that is nearly a quarter of all homes with mortgages.

The 20 worst hit ZIP codes in four states: Florida, Nevada, Arizona, and California.

CAROLINE DAVILA, HOMEOWNER: I think everyone in the community at least knows one person who's lost their home.

SIMON: Back in Mountain House, Caroline Davila works as a real- estate appraiser. Her clients are her neighbors. She has to tell them the bad news.

But she and her family are victims of the market, as well. They got one of those interest-only mortgages which in a few years might balloon into a payment they can't afford.

DAVILA: With the children getting a little older, hopefully I can work a lot more than I have been pay down the equity line to pay off the car which should free up our monthly income to be able to pay whatever the loan adjusts to.

SIMON: For those in dire straits, there's this: foreclosure. In the last few months, a hundred homes here were taken over by the banks. So much for escaping big-city problems.

Dan Simon, CNN, Mountain House, California.


COOPER: So sad.

In "The Shot" tonight, we all know the Obamas are searching for a pet. What kind of dogs maybe would we maybe recommend they avoid? Take a look.




COOPER: I love them. That little dog is our "Shot" tonight. We'll have more of him ahead.

And then at the top of the hour, breaking news. All right, enough of the dog. Breaking news: the possibility that Hillary Clinton might be tapped by Barack Obama to be his secretary of state. The pros and cons and much more, ahead.


COOPER: So all the speculation, Erica, about a puppy for Sasha and Malia, for the Obamas, has unleashed rampant speculation, a lot of people sending in pictures of their adorable, eligible hypoallergenic dogs.

HILL: Lots of pictures.

COOPER: Yes. Well, tonight we gathered a few shots of dogs that are never probably going to call 1600 Pennsylvania Avenue home. We love these dogs, nevertheless, but they're probably not going to make the cut. It has nothing to do with hypoallergenic.

This dog's video, we first of all linked to on (ph). Take a look.

HILL: There's the cat. COOPER: The first is a cat video. All right.




HILL: There's no way that's real.

COOPER: I think it is real. I don't know.

HILL: I don't know. I'm not buying it.

COOPER: You don't buy it?

HILL: I don't know -- I don't think a dog really talks like that. But if it does, I don't think I would want to listen to it all the time either.

But you think that's bad, check this out. I actually have a couple for you to look at.


HILL: We'll take a look at the first one. We could call him or her Fang perhaps.


HILL: How about waking up to that face in the morning?

COOPER: I actually kind of like it. His eyes are great. The fangs are a little scary.

HILL: The fangs are a little scary.

And then, see, my dog does this. Literally, if you open the drawer where the foil is, they start to chase their tail because she chases shadows and reflections.

COOPER: Yes, a little Prozac would cure that.

Oh, my goodness.

HILL: Now, that was just classic. I think that could, though, be a little rough if, say, a head of state was over for dinner, and the dog got out and wanted to show a party trick at the White House.

COOPER: Wow, I've never seen that one.

HILL: No. I understand that you're having a good time yourself, luckily not diving in toilets. But you've had some good punch lines on "The Tonight Show" last night, you, Jay Leno yucking it up.

COOPER: Yes. HILL: Take a listen, shall we?

COOPER: All right.


JAY LENO, HOST, NBC'S "THE TONIGHT SHOW WITH JAY LENO": Were you disappointed that it's over? Did you go, "Aw"?

COOPER: I refuse to believe it's over. In fact, you know, we've been doing this so long I cannot remember a time I was not covering this election. So we still -- on weekends, I still get members of the best political team on television. We get them over to the house. And, you know, we sit around and we talk about polls that don't really exist. And...

LENO: You -- and you...

COOPER: John King stands at my TV screen, pointing at things.

LENO: And you have rows of experts, it seems like, just hundreds of people. Most people have a panel of three.


LENO: You have 1,500, 1,800 people.

COOPER: There was one night when I was afraid the fire marshal was going to shut us down. There were so many people.


COOPER: That was very fun to be on.

HILL: "Dramatic Anchor Video."

You know what would be even better?

COOPER: What's that?

HILL: If we had Wolf playing the soundtrack to the "Dramatic Anchor Video" from his band days.

COOPER: His band days. Right, from The Monkeys.

HILL: That's right.

COOPER: Because he had a band The Monkeys before -- he claims before the actual Monkees.

HILL: He was robbed.

COOPER: I don't believe him, but we'll see.

Erica, coming up at the top of the hour, breaking news: more details about the search for the next secretary of state. The buzz about Hillary Clinton. It's increasing by several decibels. We'll tell you what the sources are telling CNN.

Also ahead, U.S. automakers running on fumes, desperate for a bailout. Can the U.S. have a healthy economy without a healthy auto industry? Can we have a healthy economy with all these bailouts? That's the debate when 360 continues.