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Could Bill Derail Hillary's Hopes of Being Secretary of State?; No Presidential E-Mail; Senate to Vote on Joe Lieberman's Future

Aired November 17, 2008 - 17:00   ET

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


BLITZER: We have some new information coming into THE SITUATION ROOM about Barack Obama, Hillary Clinton and a possible role for her as secretary of State. Two Obama transition officials tell CNN that their team is now moving deeper and deeper into the vetting process -- looking at former President Bill Clinton's finances and post- presidential dealings, seeking records to look for potential conflicts of interests should Hillary Clinton be nominated to become secretary of State.
So here's the question -- could Bill Clinton prove to be a stumbling block for his wife?

Our State Department correspondent, Zain Verjee, has been working the story for us -- Zain, what do we know about this, because this train seems to be leaving the station rather quickly?

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: It does, Wolf. You know, sometimes we think of the Clintons together -- Billary. Well, now there are new questions over whether the connections and the fundraising of the former president could hurt Senator Clinton's chances of becoming secretary of State.

(BEGIN VIDEOTAPE)

VERJEE (voice-over): We've been down this road before.

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: We need to be together, but we do more good, sometimes, when we're apart.

UNIDENTIFIED MALE: Yes, understand.

B. CLINTON: It's like two for the price of one.

VERJEE: That was in 1992, when Bill Clinton was running for president.

But now, will a package deal help or hurt Hillary Clinton become the next secretary of State?

SEN. BARACK OBAMA (D), PRESIDENT-ELECT: She is somebody who I've needed advice and counsel from. She is one of the most thoughtful public officials that we have.

VERJEE: Word that the New York senator may be tapped as America's top diplomat has put Bill Clinton under scrutiny. Barack Obama's strict ethics rules could conflict with President Clinton's globetrotting, high priced speeches abroad in places like China and Saudi Arabia, and his undisclosed overseas fundraising for both his global charitable foundation and presidential library.

(BEGIN VIDEO CLIP FROM "AMERICAN MORNING")

JAMES CARVILLE, CNN CONTRIBUTOR: He's very active abroad and that's something that has to be looked at and it has to be dealt with.

UNIDENTIFIED FEMALE: Right.

CARVILLE: And it's certainly a legitimate concern. And I think that they're working hard to try to get that done.

(END VIDEO CLIP)

VERJEE: The "New York Times" reports the former president helped broker a mining deal between a Canadian donor to his foundation and the authoritarian government of Kazakhstan.

Former presidents have conflicted with U.S. policy. Take Jimmy Carter, who angered the Bush administration by meeting with the Palestinian militant group, Hamas.

CONDOLEEZZA RICE, SECRETARY OF STATE: I find it hard to understand what's going to be gained by having discussions with Hamas about peace.

VERJEE: The up side of both Clintons on the world stage, President Clinton's foundation efforts are admired and both Clintons are hugely popular around the world.

UNIDENTIFIED MALE: Hillary Clinton would bring a lot to the table and she would be probably more powerful than most secretaries of State.

(END VIDEO TAPE)

VERJEE: And Ed Henry just reported, Wolf, that two Obama transition officials didn't say how fast this financial information is being turned over, but they did shoot down a report by Politico suggesting that transition officials are annoyed by slow cooperation from the Clintons. One official said, Wolf, that that's just not true.

BLITZER: So, Zain, is there a compromise in the works, how they might finesse all of this?

VERJEE: Well, If they're able to plow through all of it and Hillary Clinton does get the nod, it seems that President Clinton would likely have to wall off, in some kind of capacity, his personal private financial interests and maybe just focus on the humanitarian work that doesn't have a conflict of interest. He probably also would have to be more transparent and disclose all his financial dealings -- Wolf.

BLITZER: Thanks very much. He does disclose a lot right now, together, as some members of the Senate -- they have to do pretty thorough financial disclosure statements, which we review and the public gets to see every year.

All right, Zain.

Thanks very much.

President-Elect Obama came face-to-face with another former rival today, meeting in Chicago with Senator John McCain for the first time since the election.

Let's bring in our political analyst -- senior political analyst, Gloria Borger -- Gloria, you're getting little nuggets on what may have emerged at that meeting in Chicago today.

GLORIA BORGER, SENIOR POLITICAL ANALYST: Well, I was told -- and this is from the Obama side of the equation -- that the meeting was very cooperative, went very well and about half of the meeting was taken up with talking about the ways in which they could work together to change the way -- that that word change comes up again -- change the way in which Washington works.

And, you know, Wolf, McCain can be very useful to Obama in lots of areas, because they do agree on all kinds reform issues. They agree on cutting out earmarks, corporate welfare, defense procurement, changing those things; and, also, do not forget immigration; and, very importantly, the closing of Guantanamo Bay.

BLITZER: They have a lot of issues on which they basically see pretty much eye to eye.

BORGER: They do. They do. And in particular, politically, I think McCain could be very useful to Barack Obama on a very sensitive issue like what's the right way to close Guantanamo Bay. I mean McCain broke with lots of Republicans on that issue. He wants to close it. It wouldn't surprise me if Barack Obama said to John McCain, you can help me and take the lead on that for me.

BLITZER: And he could do that basically on day one if he wants to.

BORGER: He could.

BLITZER: He's the commander-in-chief. He signs an executive order and he says Guantanamo Bay, as far as the detainees are concerned, it's shut down.

BORGER: But it doesn't end there. There are lots of things that have to be worked out what you do with those detainees. And that's where John McCain can be very helpful, because he has an awful lot of credibility on those issues.

BLITZER: All right. Don't go away, because we're going to be coming back to Gloria.

Thanks very much, Gloria.

Let's go inside that meeting today between Barack Obama and John McCain.

I spoke with a reporter who was inside.

(BEGIN VIDEOTAPE)

BLITZER: And joining us now from our Chicago bureau, Ken Bazinet. He's the White House correspondent for the "New York Daily News."

Ken, you were the pool reporter. You went into that room where John McCain was received by Barack Obama. We saw the video, the body language.

What was going in that room?

Tell us a little bit about the atmosphere.

KEN BAZINET, "NEW YORK DAILY NEWS": It seemed like there had been some late conversation before we walked in. They were certainly ready for us. They probably did the usual, as you know, Wolf, cracked a joke about the press coming in. And everyone seemed very comfortable.

Rahm seemed -- Rahm Emanuel seemed very comfortable. Senator Lindsey Graham seemed very comfortable. And the two principles -- the president-elect, Barack Obama, and certainly Senator John McCain.

It seemed like they had been old friends and they were quite ready for this meeting.

BLITZER: So it looked like they had buried the hatchet from some of the bitter exchanges that occurred during the long campaign?

BAZINET: You know, it certainly began with Senator John McCain's concession speech. But I think if you're going to read the tea leaves and, as you say, look at the body language, it certainly looks like they have moved on. And, indeed, when Senator McCain was asked whether he was ready to step up and help the president-elect with his administration, his answer was, obviously.

So I think we can take a lot from that.

BLITZER: Did you sense that these two guys are going to work together down the road or this is sort of just one of these one shot deals?

A lot of people don't think that McCain would be in the administration formally.

But do you think they're going to be close allies?

BAZINET: You know, I think that Senator McCain probably wants to show that, indeed, his words are genuine. And I wouldn't be surprised if you didn't see him working as a front man, perhaps on global warming legislation. There are a lot of opportunities coming up, as you know. This is going to be a very aggressive legislative agenda that this White House plans to pursue.

So I think, you know, obviously, time will tell. But I think, you know, we both know Senator John McCain, to a degree. And know that he likes his actions to match his words more times than not.

So I think we wouldn't be -- I wouldn't be surprised at all to see this man step up and work with the White House on more than one occasion.

BLITZER: Whether it's energy independence or, for that matter, comprehensive immigration reform, the two men could obviously cooperate on that front, as well.

BAZINET: Absolutely. Absolutely. And I think we'll probably see some cooperation on some of the economic agenda, as well. I think it's pretty clear that Senator McCain's office is well aware that action does have to be taken. And I think, you know, certainly the president- elect has made it very clear that, you know, item one is this economy.

BLITZER: Ken Bazinet of the "Daily News."

Thanks for coming in.

BAZINET: My pleasure, Wolf.

BLITZER: Let's go to Jack Cafferty.

He's got The Cafferty File -- Jack.

They're all trying to make nice right now -- Jack. Not a huge surprise, but it looks nice.

CAFFERTY: Well, yes. A nice photo-op.

Republican Senator Jim Inhofe from Oklahoma -- a Republican senator -- wants to put a freeze on the remaining cash in that $700 billion bailout of the financial industry. In this week's lame duck session of Congress, Inhofe plans to push for legislation that will require Treasury Secretary Henry Paulson's plan for the remaining $350 billion in that bailout package to be voted on in Congress.

Despite promises from Congressional leaders at the time that there would be both, there is absolutely no transparency or Congressional oversight on where the first $290 billion has gone. That's our money.

Senator Inhofe suggests Paulson "may have given the money to his friends."

Inhofe, who voted against the bailout package when it was originally passed, said in a letter to fellow lawmakers this weekend -- quoting now -- "It is Congress' duty to have a say in what happens with the remaining authorized amount of $350 billion. It's clear that it was a mistake to sign a blank check to one man for such a tremendous amount of money." Duh.

Here's the question -- should Congress freeze the remaining bailout money?

Go to CNN.com/caffertyfile and can post a comment on my blog.

I was reading last week there is no one in the Congressional Oversight office. There's nobody working there. It doesn't exist.

BLITZER: Well, they'd better get someone there pretty quickly.

CAFFERTY: Yes, well.

(LAUGHTER)

BLITZER: All right, Jack.

Thank you.

CAFFERTY: You're welcome.

BLITZER: Some of the stories we're working on this hour -- he's hooked, along with millions of Americans. But unlike them, Barack Obama will likely soon have to give up his BlackBerry. Oh, my God.

What's going on?

And the Obamas are now talking candidly about their upcoming move to the White House. We'll hear what they're saying.

Also, sidelined for months by brain cancer, now Senator Ted Kennedy returns to Capitol Hill. He's eager to begin working on an ambitious agenda with the president-elect. And tens of thousands of acres burned, some 1,000 buildings destroyed -- now critical changes in those Southern California wildfires. We're live on the fire lines right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: He's addicted, like a lot of us. But Barack Obama will likely have to give up his beloved BlackBerry when he becomes president of the United States on January 20th.

Mary Snow is working this story -- Mary, what are the issues involved?

Why would Barack Obama have to give up that BlackBerry?

MARY SNOW, CNN CORRESPONDENT: Well, can you imagine giving this up?

We all have one. It's a very hard habit to break. But the big issue is that nothing remains personal. Some former White House officials we spoke with say it will have to be a decision he makes with his legal advisers about whether he really wants his most private communications subject to public record.

(BEGIN VIDEOTAPE) SNOW (voice-over): It was a constant companion along the campaign trail and even at his daughter's soccer game, though Michelle nudged him to put it away. But President-Elect Barack Obama may need to ditch his BlackBerry once he takes office.

ANDY CARD, FORMER WHITE HOUSE CHIEF OF STAFF: It's not likely that the White House counsel, the lawyer for the president, will say that he will be able to use e-mail or BlackBerry or communicate in a digital way with his friends or colleagues.

SNOW: That's because of the Presidential Records Act, says former White House chief of staff Andy Card. It requires written correspondent by a president to become official record. Because of that, President Bush stopped e-mailing shortly before being sworn in.

CARD: He had to give up the e-mail. And I remember when we told him that he wasn't able to sit down at the computer and bang out a message. He took it pretty hard.

SNOW: President Bill Clinton didn't have the problem, since he didn't use a computer at the White House.

Vice President Al Gore did. And a former adviser says toward the end of the administration, Gore had a BlackBerry.

MIKE FELDMAN, FORMER ADVISER TO VICE PRESIDENT GORE: Mobile e- mail technology was just beginning to be developed. And so this was -- he was on the cutting edge. But now, of course, handheld e-mail is ubiquitous. Blackberries are everywhere.

SNOW: President-Elect Obama is the first president entering the Oval Office who has used technology so widely -- not just his own personal use of devices, but text messaging and e-mailing supporters and raising donations online. But with more use of technology comes the threat of security breaches. Both campaigns saw their Web sites hacked this past summer.

(END VIDEO TAPE)

SNOW: And some security experts say there could be security concerns with using a BlackBerry. A spokeswoman for the transition team says no decisions have been made about whether Obama will take his BlackBerry with him or whether he will be e-mailing.

BLITZER: We have to give up our Blackberries?

SNOW: A very hard thing to do.

BLITZER: Very hard, indeed.

Let's see if he manages to do that. He's quit smoking, apparently, so he can give up the BlackBerry, too.

SNOW: That's right.

BLITZER: Mary, thank you. The BlackBerry, by the way, was a Canadian invention. It was almost 10 years ago that the device was first launched by Canadian wireless company Research In Motion. Since 1999, the number of users has grown to some 19 million and total sales are expected to grow to $9 billion by year's end.

Wow! What a success.

President-Elect Barack Obama is presenting his weekly radio address in a new format online.

Let's go to our Internet reporter, Abbi Tatton -- Abbi, tell viewers how he's doing this.

ABBI TATTON, CNN INTERNET REPORTER: Wolf, the Obama team has taken the radio address, added video and they've put it on YouTube.

(BEGIN VIDEO CLIP)

OBAMA: If Congress does not pass an immediate plan that gives the economy the boost it needs, I will make it my first order of business as president.

(END VIDEO CLIP)

TATTON: His weekly address on the economic crisis. His team says that these addresses will continue on the radio and on YouTube when he is in the White House, echoing a promise that Barack Obama made last year, when he said that as president, he would do online fireside chats so he could interact with Americans.

If you want to respond to what he's saying, though, there's no room to do it here. Unlike with his campaign videos, the opportunity to comment on this channel has been disabled. But that doesn't mean that people aren't watching and linking to this video -- three quarter of a million views since yesterday -- Wolf.

BLITZER: And usually that radio address airs at around 10:05 a.m. Saturday mornings on a lot of radio stations all across the country.

Is YouTube going to be available at that time or will there be a delay or do we not know?

TATTON: They're putting it out -- they put it up on Saturday after that radio address was broadcast. And now you can access this at any point -- Wolf.

BLITZER: All right. Good. Good to know.

Thanks very much.

Not only radio, but YouTube -- the Saturday morning radio address.

The eyes of the world are on them as they prepare to move to the White House. Now Barack and Michelle Obama are speaking very candidly, very personally about the changes they're facing and why still hasn't all sunk in yet.

Plus, America's future in space -- under the Obama administration, what's the next president planning to do for NASA?

Our Miles O'Brien is standing by with a full report.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Let's go back to Zain.

She's monitoring some other important stories incoming into THE SITUATION ROOM right now -- Zain, what's the latest?

VERJEE: Wolf, it's the latest blow to an already reeling labor market -- Citigroup announced today that it plans to cut about 53,000 jobs. This is the latest move by the struggling bank to cut costs to deal with the credit crisis. This would be a 20 percent reduction in Citigroup's workforce from its peak levels late last year.

Meanwhile, the Dow lost more than 223 points today. It closed at 8273.

Japan is now officially in a recession, its first since 2001. Japan's cabinet office announced today that its economy shrank in the third quarter, after also dropping in the second quarter. Recession is defined as two straight quarters of contraction. Japan's announcement comes on the heels of Friday's announcement that the European Union is in a recession.

One out of four U.S. veterans of the 1990 to 1991 Gulf War suffer from Gulf War Illness. That's the finding of an extensive federal report. And the condition is identified as a consequence of exposure to toxic chemicals. Symptoms include things like memory problems, chronic headaches and widespread pain. There's no known cure. The report notes that funding for research into the illness has dropped dramatically since 2001 and it calls for a renewed federal research commitment.

And former Beatle Paul McCartney says he wants to release an experimental track his group recorded back in 1967 called. Wolf, it's called "The Carnival of Lights" and the band played the 14-minute recording for an audience just once at an electronic music festival in London. Now, the track is said to include things like a distorted guitar, organ sounds, some gargling, some shouting. McCartney would need permission from Ringo Starr and the widows of John Lennon and George Harrison to release the track -- Wolf, you're a Beatles fan.

BLITZER: Oh, yes.

VERJEE: And a Shakira fan.

BLITZER: I would love to hear -- I'd love to hear that gargling especially.

(LAUGHTER)

BLITZER: I think that the distorted guitar, it sounds right up my alley.

VERJEE: Yes, it does.

BLITZER: Let's hope we get that.

VERJEE: It does.

BLITZER: You know, I love bands and I love music.

VERJEE: And you love Shakira.

BLITZER: Shakira, too. Because her hips don't lie.

(LAUGHTER)

BLITZER: All right, Zain, stand by.

Veteran Senator Ted Kennedy is back at work on Capitol Hill. The 76-year-old Massachusetts Democrat has been gone since May, battling brain cancer. Kennedy says that he feels fine and he's anticipating a very productive Congressional session.

(BEGIN VIDEO CLIP)

SEN. TED KENNEDY (D), MASSACHUSETTS: I feel fine. I'm looking forward to the session. And we've got a lot of work to do. And I'm looking forward, particularly, to working with Barack Obama on health care. And we're looking forward to working with all the administration on our agenda.

So we're very, very thankful for all the good thoughts and prayers that we've received over the time. We're looking forward to this session. And we're delighted to be back.

QUESTION: All right. Senator, are you going to be able to -- are you going to introduce a universal health care bill early next year?

KENNEDY: Well, we're going to have -- I'm very hopeful that this will be a prime item on the agenda. The president -- Barack has indicated that this would be a prime issue. And I believe that it will be. There's some major issues, obviously, the economy and also environmental issues.

But the president-elect has indicated that this is going to be a priority and I certainly hope it will. We've got a good team. They've been working over the period of the late summer and into the fall and they've been doing a lot of good work. And I think we've got a good start on it. And we've already...

(CROSSTALK)

QUESTION: You'd like to sign that bill early next year?

KENNEDY: Well, yes. And he's stated that.

(END VIDEO CLIP)

BLITZER: Let's stay on Capitol Hill right now.

Dana Bash is just getting some new information on Senator Joe Lieberman and what might happen to him in this new Senate.

What are you hearing -- Dana?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well, Wolf, two Congressional sources are telling our Congressional producer Ted Barrett and me that it looks like -- it looks like Joe Lieberman is going to likely keep his Homeland Security chairmanship and instead, what Senate Democrats -- it looks like they're going to do -- is strip him of a subcommittee chairmanship on the Environmental Committee.

That is obviously a much less prominent role. And the back story, as our viewers, I'm sure, remember, is that Joe Lieberman is Democrat a turned Independent who campaigned pretty hard and pretty aggressively against Barack Obama and for John McCain. And that angered a lot of Democrats here on Capitol Hill.

And what Senator Harry Reid, the Senate majority leader, had told Lieberman, we were told, in a private meeting just the week before last, is that he wanted to punish him by stripping him of that very important chairmanship of the Homeland Security Committee.

Lieberman made publicly to us, through an aide and others, that that was not acceptable to him, that -- he made clear he was talking to Republicans.

But then we also know that Barack Obama, the president-elect, weighed in and said that he wants to let bygones be bygones.

So what is going to happen is tomorrow morning, Wolf, there is going to be a private, behind closed doors, secret ballot vote. But what we understand from these sources is that that vote is going to simply say that Joe Lieberman can keep his Homeland Security chairmanship, but in exchange, he has to agree to step down from a lesser subcommittee role on a separate environmental committee.

BLITZER: But the bottom line, he stays with the Democratic Caucus. He doesn't move to the Republican Caucus.

Is that right, Dana?

BASH: Exactly. That is -- it's our understanding is that this is something that Joe Lieberman is not happy about, but certainly is accepting, because of the fact that his goal was to keep control of that very important Homeland Security Committee chairmanship. And he's accepting this sort of lesser punishment, if you will, in exchange for this.

And that means that is he going to continue to symbolically caucus with Democrats.

I should mention one last thing, that there might be other votes, there might be other things taken up in the secret ballot meeting tomorrow morning that we just don't know about yet. But this is the headline, that it looks like he's going to keep his committee chairmanship -- Wolf.

BLITZER: Dana, breaking the news right here in THE SITUATION ROOM.

Thank you, Dana very much.

The new leader of the GOP not necessarily Sarah Palin -- at least according to Newt Gingrich, the former speaker.

We'll talk about the Republican power vacuum and a lot more with Hilary Rosen and Terry Jeffrey. They're standing by live.

Also, a peek at Barack Obama's book shelf right now -- what he's reading and what it reveals about how he may govern.

And we're also live on the Southern California fire lines right now, where there are major changes in just the last few hours.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

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

Happening now, the Obamas talk openly about their upcoming big move and what kind of White House they envision for their family -- candid comments. You're going to want to hear what they're saying.

Presidential reading material -- how what Barack Obama is reading right now could influence him in the White House. We're going to tell what you he's reading, what's on his book shelf. That's coming up.

And Barack Obama is facing big decisions about NASA as the next American president.

Is he changing his position on space exploration?

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

Less than two weeks after his victory speech in Chicago's Grant Park, President-Elect Barack Obama and his wife Michelle are now very busy preparing for their move to the White House and they're talking candidly about the first family, the new first family for the first time. Let's go to CNN's Sean Callebs. He's joining us now with more.

What are they saying, Sean? What are we hearing? SEAN CALLEBS, CNN CORRESPONDENT: First they're going to have to cope with how the world is changing rapidly. For Barack Obama it is no longer having an anonymity. He can't wander around neighborhoods, even getting his hair cut. He has to meet his barber at an undisclosed location. Clearly, his world will never be the same.

(BEGIN VIDEOTAPE)

CALLEBS: A couple of weeks removed from the election night excitement in Chicago, you'd think by now reality has set in for the soon to be 44th president and his family.

SEN. BARACK OBAMA (D), PRESIDENT-ELECT: Well, I'm not sure it's sunk in yet.

MICHELLE OBAMA, WIFE OF BARACK OBAMA: I guess I'm sort of like him. I'm not sure if it is really sunk in.

CALLEBS: Mr. Obama and his wife told CBS's "60 Minutes" their priority is making sure their two daughters Malia, 10, and Sasha, 7, remain grounded.

OBAMA: One of the joys of the campaign is seeing how the girls have adjusted to this thing. They have stayed their normal cheerful, happy, courteous, curious selves.

CALLEBS: The couple also talked about the tour of their new home from Laura Bush whom Michelle Obama called so gracious. Mrs. Obama says the White House is awe-inspiring and that the family intends to uphold what it stands for.

OBAMA: But I couldn't help but envisioning the girls running into their rooms and running down the hall and with a dog and you know start picturing your life there. And our hope is that the White House will feel open and fun and full of life and energy.

OBAMA: Sleepovers.

OBAMA: And sleepovers.

CALLEBS: By the way, no news yet on the dog front. But president-elect says the girls will have to wait until his family is settled.

Much more central to the Obama family, the president-elect's mother-in-law whom he adores. He told CBS's Steve Croft she could very well be living in the White House.

OBAMA: Well, I don't tell my mother-in-law what to do. But I'm not stupid. That's why I got elected president. So.

STEVE CROFT, CBS: She can if she wants.

OBAMA: She sure can if she wants. I think it's fair to say that Mary Ann Robinson is one of the unsung heroes of this campaign. We couldn't have done it without her. (END VIDEOTAPE)

CALLEBS: And exactly how? Well, Mrs. Robinson actually retired about 20 months ago while the Obamas crisscrossed the country time and time again to campaign. It was Mrs. Robinson who was watching the young girls all that time, Wolf and that led Barack Obama and his wife to know those kids were in great hands.

BLITZER: I guess the word's here's to you Mrs. Robinson takes on a new meaning right now. All right Sean. Thanks very much.

Let's get back to the story of Hillary Clinton possibly becoming the next secretary of state. What's going on that front? What would it mean? Joining us now our two strategists, Hilary Rosen is here with the hutchingtonpost.com, editor at large, and Terry Jeffrey, editor-in-chief of the Cybercast News Service. Guys, thanks very much.

What are you hearing, Hillary? Is this going to happen anytime soon?

HILARY ROSEN, HUFFINGTONPOST.COM: This constant commenting how Bill Clinton might hurt his wife's chances I think is nonsense. Bill Clinton is in many respects the most vetted person in this country. You know, Hillary Clinton does financial filings as a senator every session. When she ran for president, they divested themselves. I gather at great personal cost of all of their blind trusts so that that wouldn't exist. This is a vetted family. And I think that the fact that it is taking a couple of days for this all to sink in for Hillary Clinton to talk to her husband who had been out of the country, I think that people are sort of making too much out of this. That there's something wrong here.

BLITZER: Terry, over the weekend, Henry Kissinger, the former Republican Secretary of State, he weighed in, thought it was a great idea. The number two Republican in the Senate, Jon Kyl weighed in, thought it was a very good idea. Republicans I think seem to think Hillary Clinton at least some of them would be an excellent secretary of state.

TERRY JEFFREY, CYBERCAST NEWS SERVICE: Well, if she's nominated, she's going to get confirm. On the surface, she is an excellent choice. She has the skills. She could be an excellent secretary of state. I think one of the issues in talking about Senator Clinton's financial disclosures, "The Washington Post" talked about on Saturday, Wolf, since he's been out of the White House, Bill Clinton has made millions of dollars in honorary speeches, many overseas in Saudi Arabia and the People's Republic of China. I think there will be an issue there. Apparently it's one that the Obama people are looking at that his international financial ties would be an issue.

BLITZER: A lot of these former presidents have done exactly the same thing. Jimmy Carter, the first President Bush, when Gerald Ford was alive he was giving speeches all over the world. What's wrong with doing this?

ROSEN: All of his income has been disclosed. JEFFREY: It's true. They have done that. I don't think they've done it to the extent that Bill Clinton has. When we talked about going to the Persian Gulf at a time when there's two wars in that region of the world involving the United States and making money there or going to the People's Republic of China and making money there when clearly there are some conflicts of interest between the United States and the PRC. It's an issue. She would be confirmed if he nominates but it is an issue.

ROSEN: Everything has been disclosed. There's never been an implication that somehow former President Clinton has been acting in contrary to American interests in anything he's done.

BLITZER: All right. I want to talk about the future of the GOP, Terry, because I know this is a passion of yours. You're interested in what's going on. Newt Gingrich, the former speaker and someone who's been muted as a potential leader once again of the Republican Party, listen to what he said about Sarah Palin possibly being a leader or not.

(BEGIN VIDEO CLIP)

NEWT GINGRICH (R), FORMER HOUSE SPEAKER: I think she is going to be a significant player, but she's going to be one of 20 or 30 significant players. She's not going to be the defacto leader.

(END VIDEO CLIP)

BLITZER: Do you agree with him?

JEFFREY: There's some truth in what he's saying. I can tell you the conservatives I talk to Wolf they think that the leader of the Republican Party at least from a conservative perspective will emerge by leading. So they're not ready to settle behind any one candidate or any one leader for their party or the movement. I will say it's not 20 or 30. I think it's more like three or four. Sarah Palin is probably the leader in there because she was so popular among conservatives and grassroots republicans during this presidential campaign. And she's very well positioned. She has to do something with it, and that is lead on public policy fights that really matter to the grassroots.

ROSEN: I bet Newt Gingrich couldn't even name 20 leaders much less 30. This seems clearly about his own personal ambition which has been fairly well-known for a while. He wants to be the leader of the Republican Party. He wants to run for president in 2012. He's trying to position himself just like a lot of those governors last week at the Republican Governors Association were unhappy at the attention Sarah Palin's getting. So is Newt Gingrich.

BLITZER: Do you think he regrets not running this time? Because there was a lot of talk before he decided not to run that he could throw his hat in the ring this time around.

JEFFREY: Well, I don't know. This would have been a tough election cycle for a republican to win. I don't think it was impossible. If John McCain had come out for example against the bailout, he might have been able to beat Obama. No, I don't think that -- but I agree with.

BLITZER: Do you think he's positioning himself for 2012?

JEFFREY: Clearly he is a positioning himself. He's in with a number of other people. I don't think he has the advantages Sarah Palin has. Quite frankly, she has new to the scene. She has yet to really make her national persona known. It started to form in this campaign. She would be difficult for him to edge out if she handles herself correctly.

BLITZER: She certainly has a following.

ROSEN: She sure does.

BLITZER: All right guys. Thanks very much, Hillary and Terry.

Burned to the ground. Hundreds of homes destroyed. California is picking up the pieces after the weekend's devastating firestorm.

What's on Barack Obama's book shelf right now? How what the president-elect is reading could influence him in the White House.

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

(COMMERCIAL BREAK)

BLITZER: Calmer winds are helping firefighters right now get a handle on three wildfires raging in southern California. They've scorched nearly 40,000 acres and destroyed nearly 1,000 homes and buildings in the Los Angeles area from Orange County up to Santa Barbara. CNN's Kara Finnstrom is in Los Angeles only blocks away from one of those fires that's been going on.

Nearly an entire mobile home community was destroyed. Wasn't it, Kara?

KARA FINNSTROM, CNN CORRESPONDENT: Yeah. Wolf, the magnitude of the destruction is overwhelming. If you take a look behind me here, each of these piles of rubble represents what was somebody's home and each carries its own story of tremendous personal loss.

(BEGIN VIDEOTAPE)

AUGUSTINE REYES, FIRE VICTIM: This is all that's left of my house. This is it.

FINNSTROM: When Augustine Reyes walked through the rubble of his home, he told us as hard as it was for him to understand, he didn't know how to explain it to his son Jonathan.

REYES: He's 7 years old. And he's autistic. And he doesn't do well with change. So, this is going to be very hard to explain to him. And bring him. It's going to be very hard. FINNSTROM: Moments after that interview, the mobile home park was sealed off by fire officials. Nobody was allowed back in until Monday morning when vans began shuttling families in back and forth from a local high school.

JANE REYES, FIRE VICTIM: My goal was to find Jonathan's hot wheels. Had he an obsession with hot wheel cars and everybody that knows him always brought him a hot wheel car. And he had a bin of hot wheels. And I wanted to go and try to find him one of his hot wheels because he has none.

FINNSTROM: But the Reyes chose not to return to their home because for now, they are not permitted to get out of police vans. In a few days, they will go back hoping to find some of their son's treasured belongings.

REYES: But yesterday, he told me, I know my house burned down. But mommy, just go get my pillows.

REYES: What he calls it huh-uh.

REYES: That's what he calls his pillows.

REYES: And he rocks himself to sleep.

REYES: In a fetal position.

REYES: In a fetal position. And that's how he's always calmed himself to fall asleep.

FINNSTROM: The Reyes family says they will find a way to help their son move forward. They did get out with his beloved goldfish.

(END VIDEOTAPE)

FINNSTROM: And really, just a remarkable family. They're so happy they escaped with each other. We didn't get to meet Jonathan today because he's back in school. They're trying to salvage as up of that old routine as they can.

BLITZER: Kara, we'll check back with you watching this heart breaking story out in Los Angeles.

Barack Obama once talked about delaying space exploration. But now?

OBAMA: Going to be clear. We cannot cede our leadership in space. That's why I'm going to close the gap, ensure that our space program doesn't suffer when the shut goes out of service.

BLITZER: So what will a new president mean for the U.S. space program? Miles O'Brien is standing by live with a closer look.

Plus, the latest on those southern California fires. We have more information coming in.

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

(COMMERCIAL BREAK)

BLITZER: In just a little more than two months, Barack Obama becomes the leader of the free world. What is he doing right now to get ready to govern? Let's take a closer look at what's on the next president's book shelf and it may provide some answers. Samantha Hayes is here in THE SITUATION ROOM working the story.

What can you tell us, Samantha?

SAMANTHA HAYES, CNN CORRESPONDENT: President-elect Barack Obama certainly has a lot on his plate right now but he's still maintaining a reading list and he's looking to the lessons of history as he prepares to guide a nation in crisis. President-Elect Obama has been focusing on two presidents who also led in tumultuous times, Abraham Lincoln and Franklin Delano Roosevelt. In an interview with "60 Minutes" on Sunday, Mr. Obama said he's been reading about the strategies of both men.

(BEGIN VIDEO CLIP)

OBAMA: I've been spending a lot of time reading Lincoln. There's a wisdom there and a humility about his approach to government, even before he was president, that I just find very helpful.

(END VIDEO CLIP)

HAYES: Lincoln in the book "Team of Rivals" by Doris Kearns Goodwin which examines Lincoln's candidates that he beat in a primary and appointing him to senior positions in his administration. He did that and was able to hold the nation together.

BLITZER: There's another book, FDR, the first 100 days which looks at the challenges Roosevelt faced in his first 100 days.

HAYES: Uh-huh.

(BEGIN VIDEO CLIP)

OBAMA: What you see in FDR that I hope my team can emulate is not always getting it right, but projecting a sense of confidence and a willingness to try things and experiment in order to get the people working again.

(END VIDEO CLIP)

BLITZER: All right. We spoke to him, the author. What is he saying about these first potential 100 days for Barack Obama?

HAYES: Well, first of all, Anthony Badger, the author of that book, said that he's honored that the president-elect may be reading it. He said based on his knowledge of that time period and the president, he has some advice for the president-elect.

(BEGIN VIDEO CLIP)

ANTHONY BADGER, CAMBRIDGE UNIV.: One of the things Obama has to do is to be flexible and to work with congress and to work across the aisle. But above all, he has to do what Roosevelt did in his first fireside chat, which was to install confidence in the American people.

(END VIDEO CLIP)

HAYES: And he says -- Badger says that if the incoming president is going to be able to reassure Americans, what he really has to do right now is create jobs. And he thinks that's going to mean starting with rescuing the auto industry.

BLITZER: We'll see what happens. I bet all of these books that he's reading, a lot of other folks will read as well.

HAYES: This one is quite long. You'll have to be a speed reader.

BLITZER: Samantha, thanks very much.

It's also the first full day together in space for the crew of the space station and the astronauts aboard the "Endeavour." But the future of the American space program is in somewhat of doubt right now because of money troubles. Let's go to our space correspondent Miles O'Brien. He's working on this story for us.

Miles, what can NASA expect from President-Elect Obama?

MILES O'BRIEN, CNN CORRESPONDENT: Well, Wolf, as you know, if you're a politician, you're used to promising the sun, the moon, and the stars. While no one from the Obama staff would discuss this specifically, candidate Obama has offered a vision for NASA that would warm the hearts of space cadets everywhere. But you might say that vision came after an aborted policy launch.

(BEGIN VIDEOTAPE)

O'BRIEN: NASA is counting down to a new administration at a crucial time. The space shuttles are headed toward museums in two years. There's little disagreement it's time to move on.

SCOTT ALTMAN, ASTRONAUT: They're getting older. You don't know what's out there. So that balance, while people would love to have more flights and get to fly, at some point you have to move on.

O'BRIEN: The space agency is now headed black to the moon with a new vehicle. President Bush laid out that ambitious agenda in January 2004.

PRES. GEORGE W. BUSH, UNITED SATES: We will give NASA a new focus and vision for a future exploration.

O'BRIEN: But the extra money promised to NASA then never came through. And now there are worries about the planned five-year gap between vehicles when U.S. astronauts will have to hitch rides to space on Russian rockets.

ROGER LAUNIUS, NATIONAL AIR AND SPACE MUSEUM: One of the problems that we do have is that visions without sufficient funding are really nothing more than hallucinations. And that is a challenge that -- that the new administration will have to wrestle with.

O'BRIEN: Obama has wrestled with himself on space. A year ago, he suggested the gap be made wider, that the savings from delaying the moon missions be spent on education. But then in August with the Florida race ever so close, candidate Obama came to Cape Canaveral with a retro position.

OBAMA: Let me be clear. We cannot cede our leadership in space. That's why I'm going to close the gap, ensure that our space program doesn't suffer when the shuttle goes out of service.

O'BRIEN: Obama is promising at least one additional shuttle mission and wants to expedite development of the new-generation rocket to close the gap. A gap which the NASA administrator Mike Griffin calls ...

MICHAEL GRIFFIN, NASA ADMINISTRATOR: It's unfortunate, unseemly, unwise.

O'BRIEN: It is way too late to fill the gap completely, but griffin has teams working on ways to shrink it.

GRIFFIN: I think we could probably end up taking a couple of years out of it for money. But we would still have a gap of several years' dependence upon Russia.

(END VIDEOTAPE)

O'BRIEN: And the shuttle budget, Wolf, is about $4 billion a year. Industry insiders say $2 billion could shave a year off the development of that new rocket. So for $6 billion, give or take, you might turn that five-year gap into a three-year gap. It's your money, though, right?

BLITZER: A lot of money no matter what. Miles, working the story, thank you for that.

President-Elect Obama taking an unusual step to get a handle on the economy, even before he takes office. We have details of what he's doing right now.

Plus, the drastic steps some people are taking to try to get their hands on the hottest tickets in town, tickets to the Obama inauguration.

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

(COMMERCIAL BREAK)

BLITZER: Let's go to Jack Cafferty with the Cafferty File.

Jack?

JACK CAFFERTY, CNN CORRESPONDENT: The question this hour is should congress freeze the remaining $350 billion of bailout money?

Robert writes from New Jersey, "The bailout money should be frozen. The entire bailout plan was hastily concocted by congress to help improve their public image and make Americans believe the government was doing something to help them. When congress rushes to pass a bailout plan worth $700 billion in less than a month, nobody should be surprised that the money is being misused and unregulated."

Cee in Kansas, "Freeze the remainder until there's accountability for the money distributed to date. Transparency was supposed to be built into this plan. Show us who got the money, how much they got, what they intend to do with it or what they did with it."

Ken in Washington says, "Paulson duped us all into thinking the world was going to come to an end unless taxpayers gave him $700 billion to do as he pleased. He gave taxpayers a wink and a nod regarding doing something constructive in order to convince us that his intentions were good. All he's done to date is help his crooked cronies on Wall Street and in the banking community."

Brian in Puerto Rico, "A freeze would seem a good move if they are unwilling to say what they've done with the money, they must have something to hide."

Jamie writes, "Yes, it's clear that Paulson and the Bush administration and even congress have no clue what's going on at this time and they're simply throwing money at everything that burps. It's time for a short pause. Put some deliberate thought into what it is we're trying to accomplish here."

And Gary in El Centro, California, "I'm afraid that horse is already out of the barn and well down the road on this one. Once again, the Bush administration scared us all into giving them absolute authority and no oversight. When will we ever learn?"

If you didn't see your e-mail here, you can go to my blog CNN.com/CaffertyFile and look for yours there. We post hundreds of them every hour.

Wolf?

BLITZER: Jack, thank you.