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Obama's Latest Cabinet Pick-Daschle for Secretary of HHS; Interview with Mike Huckabee; The Recount in Minnesota; California Supreme Court Will Hear Challenge to Prop 8

Aired November 19, 2008 - 17:00   ET


WOLF BLITZER, CNN ANCHOR: New details emerging right now about the vetting of Hillary Clinton for a possible role as secretary of State. Her husband is now taking action to help her chances.
And open attacks on his fellow Republicans in a controversial new book -- the former Republican presidential candidate, Mike Huckabee -- he's here live. He's standing by to take my questions and questions from our I-Reporters, as well.

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

Another piece of the administration puzzle falling into place. Sources close to the transition are now telling CNN that President- Elect Barack Obama has chosen former Senator Tom Daschle to become the next secretary of Health and Human Services. But in this case, there's more to the job than perhaps meets the eye.

Let's go to CNN's Ed Henry. He's in Chicago covering the transition for this president-elect. What's going on -- Ed?

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Well, Wolf, as you know, Tom Daschle is a real power player and he knows that the health secretary doesn't always have a lot of clout. So he pushed to get a second job title, to make sure he's the one writing the health bill instead of staffers in the White House.


HENRY (voice-over): Even as he went to bat for Barack Obama, Tom Daschle was also campaigning for health care reform.

TOM DASCHLE (D), FORMER U.S. SENATOR: Most members of the National Guard don't -- aren't entitled to any health coverage once they leave Iraq. They're only entitled to it as long as they're in active combat situations. They come back and they lose it.

HENRY: Now, as the president-elect's pick for secretary of Health and Human Services, the former Senate majority leader will benefit from deep political connections.

SEN. MAX BAUCUS (D), MONTANA: And I'm elated. I mean, Senator Daschle knows -- Senator Daschle knows, clearly, the Congress. They've promised we have to get -- be able to have health care reform passed this year. I think it's a terrific choice. HENRY: But it will take a monumental effort to deal with exploding costs at a time when almost 46 million Americans lack health insurance. That's why, in addition to his cabinet seat, Daschle boosted his clout by negotiating to also serve as White House health czar -- to get full control of the incoming president's plan.

ELLEN MARIE WHELEN, CENTER FOR AMERICAN PROGRESS: An idea can't just happen in D.C. It has to actually get to the point where we can move it through Congress. And as majority leader, he was known as a consensus builder.

HENRY: In a recent book, Daschle pushed for universal health coverage by expanding the Federal Employee Health Benefits Program to include private employer plans together with Medicare and Medicaid.

Republicans charge that gives the government too much control and say Daschle's recent work for a Washington lobbying firm runs counter to Obama's promises of shaking up the system. The Republican National Committee put out a statement declaring: "Obama promised to change America's health care system, but his nominee-to-be secretary is no change agent."


HENRY: Now, this is a very sensitive point, because Daschle's wife, Linda, is a lobbyist at a firm that has a lot of health clients. But a source close to Daschle told CNN that Mrs. Daschle is going to leave the firm by the end of the year to make sure that she clears any potential conflicts of interest -- Wolf.

BLITZER: Ed Henry. Thanks very much.

We're just standing by to hear from the former president of the United States, Bill Clinton. He's at a rally down in Atlanta for Jim Martin, the Democratic challenger to Saxby Chambliss. Once we see Bill Clinton, we'll go there live. Stand by for that.

Meanwhile, we're learning new details right now about the vetting of Hillary Clinton for a possible position as the secretary of State.

Brian Todd is working this story for us -- Brian, what's the latest?

BRIAN TODD, CNN CORRESPONDENT: Well, some incremental movement here, Wolf. As you know, Hillary Clinton has not responded formally yet to Barack Obama's request that she consider being his secretary of State. We're told the vetting process is going along smoothly, even as the two sides deal with the man who was a political lightning rod during the primaries.


TODD (voice-over): Officials with the Obama transition team tell us they're taking a close look at Bill Clinton's finances and post- White House dealings, which observers say could be the biggest obstacles to Hillary Clinton getting the nod for secretary of State. BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: That's for them to work out. Whatever they do, I'll support.

TODD: To help the vetting process, the former president, according to a source familiar with the discussions, has agreed to be more transparent about who's giving to his charitable foundation. A former Clinton adviser not involved in the vetting rejects any notion of possible conflicts of interest, spurred by reports that Bill Clinton has solicited donations from countries like Saudi Arabia, that his wife may have important dealings with as secretary of State.

LANNY DAVIS, FORMER CLINTON ADVISER: In my judgment, money contributed by a foreign nation to the Clinton Foundation, which is used to help people, such as people with aides or malaria or tsunami victims, does not constitute any kind of a conflict.

TODD: Otherwise, we're told this has been a harmonious vetting process. Hillary Clinton's and Barack Obama's respective teams -- locked in mortal combat during the primaries -- now working together very carefully.

JIM VANDEHEI, POLITICO: The thing you want to make sure of is that you don't end up having a pick of Hillary Clinton as secretary of State and then there being a distraction, particularly early in the first term.

TODD: Former Clinton advisers say the family is likely bringing in long time legal advisers to help steer her through the vetting, heavy-hitters like Robert Barnett, Cheryl Mills and David Kendall, who was Bill Clinton's lawyer during impeachment. None of them would comment.


TODD: Then there are the pros and cons that Senator Clinton herself has to weigh. Former advisers tells us she likes the Senate, likes the independence that she can exert there. So working for someone else may be an adjustment.

Now, on the other hand, they say, she clearly sees the benefits of helping Barack Obama reach some of his foreign policy goals and she likes the structure of the secretary of State's job -- one reason that we're told she wasn't all that enamored of being possibly his vice presidential pick -- Wolf.

BLITZER: And you're getting a sense of who exactly is vetting Hillary Clinton right now.

TODD: That's right. Now, a transition aide with the Obama team tells us that a gentleman named Tom Parelli -- he was a close friend of Barack Obama's from Harvard Law School -- is pretty heavily involved in this process. It gives you a sense of just how important the Hillary Clinton vetting process is for Barack Obama at this stage.

BLITZER: A lot of anticipation on this story.

TODD: Yes.

BLITZER: Brian, thank you very much.

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

JACK CAFFERTY, CNN ANCHOR: Barack Obama won the White House on a message of change -- 53 percent of Americans saying they wanted something new and different in Washington.

Well, Obama is certainly new and different, but the same cannot be said for some of his early appointments -- a lot of them, in fact. It's like that song, everything old is new again. Obama prepares to take over and he is asking a bunch of former Clinton administration members to come on board.

John Podesta, who is overseeing the Obama transition team, is a former Clinton White House chief of staff. Rahm Emanuel, who will serve as Obama's chief of staff, is a former Clinton aide. The president-elect's choice for attorney general, Eric Holder, served in the Clinton administration as deputy attorney general under Janet Reno. And Peter Orszag, who has been picked to head Obama's Office of Management & Budget, he worked in the Clinton White House as a special assistant to the president at the National Economic Council.

Then, of course, there's Hillary -- the former first lady, current junior senator from New York being asked about the position of secretary of State. And if she gets that job, then I suppose we get Bill back by association. More than half of those named to Obama's transition or staff posts so far have ties to the Clinton administration.

And that's the question: What message is Barack Obama sending by surrounding himself with so many former members of the Clinton administration?

You can weigh in on that at, where you can post a comment on my blog -- Wolf.

BLITZER: Jack Cafferty. Thank you.

The president-elect calling world leaders only to have details of some of those calls leaked. What is Obama doing with all those e-mail addresses amassed during the campaign? Stand by. We've got information on both of those stories.

Also, a massive undertaking begins recounting all the votes in Minnesota's squeaker Senate race. The candidates are only 215 votes apart. Those are live pictures you're seeing of the recount in Minnesota.

And Mike Huckabee -- he's here in THE SITUATION ROOM. He's getting ready to explain live some of his criticisms of some of his former GOP rivals, including Mitt Romney. He's also going to be taking questions from our I-Reporters. Mitt Romney getting ready to take those questions, right here in THE SITUATION ROOM.


BLITZER: Former Republican presidential candidate Mike Huckabee is raising some eyebrows with his brand new book that's just come out. It's called "Do the Right Thing." And in it, he takes a few shots at some fellow Republicans, including the former presidential candidate, Mitt Romney.

Mike Huckabee is joining us live right here in THE SITUATION ROOM. Thanks very much, Governor, for coming in.

MIKE HUCKABEE (R), FORMER PRESIDENTIAL CANDIDATE: Delighted to be back with you, Wolf. Thank you.

BLITZER: Let's talk about the book in a moment.


BLITZER: Talk politics a little right now.

Is it time to put politics aside right now, if you're a good, strong, conservative Republican, and do what you can to help this president-elect?

HUCKABEE: Absolutely. And I've made some comments recently that Barack Obama was not my choice, but he will be my president on January 20th. I feel that way. This is my country. I love it. I want it to do well. And so if we elect a president and he's inaugurated, I want him to be an effective, good president for every American -- and that includes me.

BLITZER: So if he were to call -- reach out -- he's reaching out to Republicans and others. If he were to call you and say you know what, I need your help, can you give me some help on a specific issue that may be of interest to him and to you, would you help him?

HUCKABEE: You know, I think he's calling me right now. My cell's going off.


BLITZER: Is that him?

HUCKABEE: No. It's --

BLITZER: You would take his call and you would help him, right?

HUCKABEE: You know, I would take his call. I don't think he's going to wants me to be part of his administration. That's (INAUDIBLE) --

BLITZER: No. I'm not saying that. I'm just saying if he wanted some advice from you.

HUCKABEE: Oh, yes. I would certainly do that, because, again, I want him to do well. And if I think he's taking us in a wrong direction -- if he's going to raise taxes or if he's going to do something that threatens the sanctity of life or the Second Amendment, you know, I'm going to be outspoken about that. But I'm going to give him the benefit of the doubt. Let's let him become president and start his administration. Nobody should (INAUDIBLE) of that.

BLITZER: This is an historic moment in our country right now. You did very well in Arkansas when you were running for governor with African-Americans.

HUCKABEE: I did -- 48 percent of the vote of African-Americans in my state. And it was not lost on me, of the historical significance of this election. As a child, growing up in the South, seeing the evil of segregation -- it was horrible what happened in this country. It's inexcusable. It's a part of our history that I'm embarrassed by as an American.

But I'm also proud to see us move to a place where, as I've said this, 50 years ago, Barack Obama, at best, could have served coffee in the White House. Now he will be walking in as its primary resident. I think that's a great moment for America. Forget politics.


HUCKABEE: That's just a great American moment.

BLITZER: It's pretty amazing, when you think about it. All right. Here's what you write about Mitt Romney in the new book, "Do the Right Thing": "His attitude of disrespect trickled down through his ranks to and was one of the reasons that while there was a generally good camaraderie among the candidates, there was an almost universal discomfort with Romney and his team." All right. Explain.

HUCKABEE: OK. First of all, let me say that 240 pages of the book -- you've read most of what the Mitt Romney passages are. There's not --

BLITZER: Because you're getting a lot of buzz on this -- those criticisms.

HUCKABEE: That's all I've been getting. And the truth is this book is not about looking back at the campaign. This book focuses on the future of the Republican Party. It's not about Mitt Romney, if anybody reads this because they say I want to see what he really dishes out on Mitt Romney.

What I try to do is to be candid and honest. There was an obvious issue that people in the Republican Party who were running for president were having. I tried to explain why. I tell the why of that and other stories.

BLITZER: So why did you dislike him?

HUCKABEE: I didn't dislike him. It wasn't a matter of dislike. It was a matter of he was taking positions on issues that he had never taken before at the same time he was bashing people like me, who had been consistent in our own views and putting television ads on --

BLITZER: But he was flip-flopping. You didn't like the flip- flopping.

HUCKABEE: -- John McCain, on Rudy Giuliani, on me and everybody else, saying they're not consistent.

But the key thing I wanted to just say, this book is not about what's wrong with Mitt Romney or anybody else. I try to just tell it in the context of the story -- of the narrative of the campaign.

What this book says here, if we are going to try to hit the reset button on the Republican Party, move forward, bring us back together and really become a majority party again and attract people like those African-Americans who voted for me in Arkansas, we'd better change some things.

BLITZER: And you've got a blueprint in the book, as well. Here's what you say about President Bush: "Many of the party's long time supporters were turned off by Washington's incompetent in handling Iraq and Katrina, its corruption and its profligate spending."

HUCKABEE: That was not all directed to President Bush. A lot of that was the Congress.

BLITZER: But it was his administration.

HUCKABEE: Yes. But you've got to blame Congress for a lot of this. The Republican Congress is to be faulted for spending as if they never had heard of the Republican Party and, also, for what I think was really not policing corruption within their midst, as they should have, and expressing outrage that the American people -- that the American people were expressing.

And then look what happened in the bailout. I mean the last things Republicans wanted our Republicans to do is to come up here and vote to give taxpayer money to private industry. That's the most un- Republican thing I've ever heard of in my life.

BLITZER: Because a lot of people said the era of big government is back thanks to a Republican administration.

HUCKABEE: Oh, gosh, coming back? It's never been so big.

BLITZER: All right. Let's go to the I-Reports right now.


BLITZER: We asked our viewers to submit some video questions for you. Turn around.

HUCKABEE: All right.

BLITZER: And you'll watch Jordan Klein of Los Angeles. He says he's a Democrat.

HUCKABEE: All right.

(BEGIN VIDEO CLIP) JORDAN KLEIN, LOS ANGELES: Governor Huckabee, one of the main reasons that the Republicans lost this year is that they lost the minority vote overwhelmingly. What can the party do to reach out to minority voters and dispel the notion that the GOP is just a white man's party?


HUCKABEE: Well, part of the problem that the Republicans have had, they wait until October, two weeks before the election, to go over to the African-American community and say by the way, we'd sure like to have your vote. It's about building relationships. It's also about not changing the message.

See, this myth is that all African-Americans are liberal. That's nonsense. African-Americans want the same thing that every other American family wants -- safe neighborhoods; good, decent, solid schools for their kids; opportunities for jobs. They want to be able to know that if they go out there and work real hard, the government is not going to take three fourths of their paycheck away from them. They want to have a sense of respect and they want equal justice, so that the 19-year-old black kid doesn't go to prison for 20 years for half a lid of marijuana while the 19-year-old white kid living in the upper crust neighborhood ends up getting probation and a counseling session.

BLITZER: And the same goes for Hispanics, as well.

HUCKABEE: The same goes for everybody.

BLITZER: All right, here's another question, from Barbara Rademacher of Arkansas, a state you love and governed for a long time.

HUCKABEE: I do love it. Yes, I do.

BLITZER: She's a long time Huckabee supporter who voted for him in the primary, wound up voting, though, for McCain.



BARBARA RADEMACHER, ARKANSAS: I'm so disgusted at the way the Republicans acted during the election -- just so totally disillusioned with them that my fear is they might have dragged you down if you had been their nominee.


HUCKABEE: Well, hold on -- OK (INAUDIBLE) --


RADEMACHER: Governor Huckabee, what would you do to reform the Republican Party?


BLITZER: That's the question.

HUCKABEE: It's a good question.

BLITZER: She said she's happy you didn't get the nomination, because it might have dragged you down.


BLITZER: But what do you think?

HUCKABEE: Well, her dreams came true. I didn't make it.

BLITZER: You came close, though.

HUCKABEE: Well, you know, we did get close. But here's --

BLITZER: But go ahead, answer her question.

HUCKABEE: First of all, I would have strongly opposed the bailout. I would have put a flag in the ground and said no way -- no way, no how.

BLITZER: You won't have suspended your campaign --

HUCKABEE: Absolutely --

BLITZER: -- to come to Washington --

HUCKABEE: Oh, I would have come back to Washington, but it wouldn't have been to suspend the campaign. It would have been to bring the campaign right to Capitol Hill and say we're marching here with 80 percent of the American people who think this is the dumbest idea we've ever heard -- the government picking winners and losers in the private sector.

BLITZER: Do you think that hurt McCain?

HUCKABEE: It hurt McCain badly. I think it was a matter of conscience for him. But it was a -- it was definitely a hurtful thing, particularly among Republicans. The other thing I would do to try to restore the Republican Party is to recognize that we don't have any credibility if we say that we want to balance budgets and curtail spending and then we create these huge, humongous deficits that are going to be passed onto our grandchildren.

That's not only to me, wrong, but it's irresponsible, recklessly so. I would have a clear plan of what we would do with things like immigration, border security. I'd make sure that we had a change of (INAUDIBLE) --

BLITZER: It sounds to me, Governor, you still would like to be president and you'd like to get the Republican nomination in 2012.

HUCKABEE: You know, I -- BLITZER: That's what it sounds like to me.

HUCKABEE: Look, there is a part of me that wants to see some fundamental change. I may not be the one to lead it. You know, I'm doing this television gig and I'm going to be starting a radio commentary in January.

But we need to be talking big ideas. The reason that I pushed the fair tax, which is a complete restructuring of our tax system, is because that would give us structural change for our economy, not just simply throwing some money at a system that no longer is valid in a global economy like we have now.

BLITZER: The book is entitled "Do the Right Thing: Inside the Movement That's Bringing Common Sense Back to America." Mike Huckabee.

It's a nice cover. Let's put the cover -- take a look at that cover. You got the name bigger than the title of the book. But that's good, right?


HUCKABEE: And I even say nice things about Wolf Blitzer.

BLITZER: You do say some nice things about me.

HUCKABEE: It's worth the price of the book to see me say nice things about you.

BLITZER: There's nothing wrong with that.

HUCKABEE: No, there's nothing wrong with that.

BLITZER: Governor, thanks.

HUCKABEE: Great to see you, Wolf.

BLITZER: Thanks for coming back.

HUCKABEE: My pleasure.

BLITZER: Appreciate it. Good luck with the book.


BLITZER: Only 215 votes apart -- now a massive recount begins in the State of Minnesota -- the Senate race between Norm Coleman and Democrat Al Franken.


AL FRANKEN (D), MINNESOTA SENATE CANDIDATE: We believe that if they're all counted, we -- we think that we'll prevail, given sort of the history of things like this.

(END VIDEO CLIP) BLITZER: We're about to go live to Minnesota, where they're now working the recount -- almost three million ballots.

And President-Elect Obama on the phone with world leaders. His team has kept the details of those calls under wraps, but CNN is getting information from other parts of the globe. What the president- elect has been saying to world leaders -- Zain Verjee is standing by with the story.


BLITZER: City and county officials in Minnesota have now begun recounting nearly three million ballots cast in the state's tightly contested Senate race. The recount was triggered because Republican Norm Coleman leads Democrat Al Franken -- get this -- by only 215 votes.

CNN's Mary Snow is covering the story for us -- and, Mary, how soon is it going to before we know the official, final results?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, it could take weeks. Some say it might take even longer. And here's why. You see behind me, this is the recount in process. These election workers have been at it now for about seven hours. You see election officials handling the ballots. They are surrounded by election observers representing both the campaigns of Republican Norm Coleman and Democrat Al Franken.

Any ballots that might be contested are put to the side and it has a yellow Post-It on it. It is a very slow, methodical process. Someone described it today as watching, almost, bank tellers. And as the recount goes underway, Al Franken was on Capitol Hill today. He met with Senate majority leader Harry Reid and briefly spoke to reporters.


FRANKEN: Just basically fill them in on where we're going in Minnesota with the progress on the mechanics of the recount.

QUESTION: What do you feel like your prospects are right now to win this seat?

FRANKEN: I'm cautiously optimistic.


SNOW: Now, a spokeswoman for Franken says should he win, he should be able to hit the ground running. A spokesman for Norm Coleman calls the visit "overly presumptuous."

Senator Coleman was on Capitol Hill, as well, but did not speak to reporters. And as this is going on, Wolf, there are also legal challenges. There was a partial victory today for the Franken campaign. A county judge ruled that it could get -- the Franken campaign could get access to some information about absentee ballots. The Franken campaign is fighting to have some of these absentee ballots counted. It says that they were wrongly rejected.

The Coleman campaign is trying to fight that, saying today that there should be restraint urged. There's still a lot of back and forth in this hotly contested race. And, Wolf, in the unlikely situation where there is a tie, in the end, which is very unlikely, the secretary of state said if that happens, the winner would be determined by the flip of a coin. And that is not a joke.


SNOW: That is the practice (INAUDIBLE).

BLITZER: Very unlikely, but we'll watch every step of the way. Mary Snow is in Minneapolis for us. Mary, thank you.

All right. There's a story, an important one, coming from California right now. It's just developing. Our Deb Feyerick is working the story for us. What do we know -- Deb?

DEBORAH FEYERICK, CNN CORRESPONDENT: Well, Wolf, California's highest court will hear legal challenges attempting to overturn Proposition 8, which banned gay marriage.

In the meantime, though, the court will not allow gay couples to resume marrying. Prop 8 passed this month with 52 percent of this vote. Three lawsuits claim the ban limits the civil rights of a very vulnerable minority group -- Wolf.

BLITZER: We'll stay on top of that story with you, Deb. Thank you.

Confidential calls between President-Elect Barack Obama and world leaders -- now some of those details leaked to the media. We're looking at reports from across the globe. We have new details.

And former President Bill Clinton campaigning for the Democratic challenger in a Senate runoff -- can he make the difference? You're looking at these live pictures in Atlanta. Stand by to hear from Bill Clinton live.

And details of a stem cell medical breakthrough and the surgery that changed one woman's life. Dr. Sanjay Gupta is standing by.


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

Happening now, Barack Obama working the phones -- the new president-elect calling world leaders. And now word is getting out about what they're talking about.

Also, tapping into the Net roots -- the Obama campaign has 10 million people on its e-mail list. And even though the campaign is over, it's asking people to stay involved. We'll tell you how.

And it's being called a medical milestone -- a major breakthrough on stem cell research. Our chief medical correspondent, Dr. Sanjay Gupta -- he's here and he's going to explain what's going on.

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

As part of his transition to power, President-Elect Obama is calling world leaders speaking today with the presidents of Colombia, Nigeria, Senegal, South Africa, as well as the United Nations secretary-general. That's standard procedure. What's not necessarily standard are the multiple leaks to international news media that are resulting from similar calls. Our state department correspondent Zain Verjee has details -- Zain?

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Wolf, world leaders are looking for a signal, a connection with the president- elect.


VERJEE (voice-over): He's lying low working the phone with world leaders. On the other end of the line, word is leaking out through local media reports that CNN can't independently confirm.

Obama's already spoken to the Israeli prime minister and now in a call to Palestinian leader Mahmoud Abbas, his aide says, "Obama promised he'll continue efforts to push the peace process forward in order to arrive at a two-state solution." Policy and personal overlap in the often self-serving accounts of these high level chats.

Unconfirmed but Argentinean reports say Obama recalled his college days reading famed Argentinean writers.

A Turkish paper reports Obama believes Turkey should fight the Kurdistan workers party which it considers its al Qaeda.

In the Irish Times, a chat with the Irish prime minister led to an invitation there.

An official Kazak website reports Obama talked to its leader about fighting terrorism and the spread of nuclear weapons.


VERJEE: Some world leaders are reportedly a little miffed that it's taken awhile for Mr. Obama to return their calls of congratulations. But without a look at the transcripts, it seems the president-elect is telling them what they want to hear -- Wolf?

BLITZER: Zain Verjee reporting. Thank you, Zain.

President-Elect Obama's team is also trying to keep his millions of online supporters close during this transition. Let's go to our internet reporter Abbi Tatton. Abbi, how is he trying to do this?

ABBI TATTON, CNN INTERNET REPORTER: Wolf on YouTube today, a video of a meeting of an Obama transition team. This is the energy and environment policy team. It appears alongside an invite for people to submit their ideas for this group and others in the weeks going forward. And there's also been a promise from transition chief John Podesta and in email sent out to keep providing windows like this one into what they're doing.

Over the last couple days, there have been a couple of attempts to reach out to their online supporters. This is a customer survey that was sent out to the e-mail list last night. The customers here being the online supporters that appear on that list and they're asking who are you, how involved were you during the campaign? And what do you want the movement to focus on going forward? This is being submitted. People can submit this back through the Barack Obama website giving them a lot of the feedback and a lot of useful data to attach to that email list -- Wolf?

BLITZER: Abbi, thanks very much.

Let's get back to the Obama transition right now. I want to talk about what's going on with our CNN political contributor Hilary Rosen. She's editor at large for and Republican consultant, Alex Castellanos. They're both part of the best political team on television.

What does it mean, Hilary Rosen, the fact that Tom Daschle, the former Senate majority leader is, now going to become the secretary of health and human services with a specific focus on trying to reform the nation's health care system? What does it mean to you?

HILARY ROSEN, HUFFINGTONPOST.COM: Well, obviously, health care is a big priority for Senator Obama. He must have made that clear to Senator Daschle because Senator Daschle wouldn't take this gig unless he thought it was going to be significant.

But I think it says something else about President-Elect Obama, something that's comforting I think for people which is he wants to get a lot done quickly. And to do that, he needs toe put people in these jobs that can act on their own, that have stature (sp), that have the ability to bring people along, that have the ability to like Senator Daschle does to, go to Capitol Hill directly without using up too much of the president's juice but has some juice their own.

BLITZER: Alex, as you remember back in '93, Hillary Clinton the first lady was in charge of getting universal health care. That's what, President Clinton wanted during his campaign. Didn't exactly work out. Here's the question -- can Tom Daschle, the former Senate majority leader, can he do what Hillary Clinton and the Clinton administration could not do back in '93-'94?

ALEX CASTELLANOS, REPUBLICAN STRATEGIST: He's got a better shot at it just because of the composition of the Senate. Now the Democrats have 58 votes. May have 59 if they can steal Minnesota.


CASTELLANOS: Which they seem to be still working on.

BLITZER: Steal is a tough word. CASTELLANOS: It's a political word. But they're trying to count a lot of votes, guess a little voter intent there. Yes, he's got a shot.

One is Daschle is a Clinton guy, is an Obama guy, not a Clinton guy. He was Senator Obama's mentor in many ways when Senator Obama got to the Senate. So they've had a lot of Clinton people in the administration who having around it. That's one thing. He's loyal to Obama, too.

Two, Daschle has sharp elbows. He is not a bipartisan figure. And this tells you that Barack Obama is concerned about keeping Democrats in line. He's got enough votes to get a lot done but he wants to make sure the Democrats in the Senate don't come to him with a left wing health care plan that pushes the economy over the edge. So Tom Daschle is the Rahm Emanuel of the Senate.

BLITZER: That's an interesting comparison. You want to weigh in, Hilary?

ROSEN: Well, I think it's worth pointing out. The major difference I think between the effort for health care reform now and the previous efforts and that's why I think Tom Daschle is going to be good at this, it's much more nuanced than it is forcing the issue. These health care plans that are being proposed now both Senator Obama and frankly Hillary Clinton's later plan when she was running for president do not talk about reinventing the health care delivery system. They build on top of the existing system and take out some of the bigger risks. You will not see as dramatic a pushback I believe on health care reform this time as did you last time.

BLITZER: Alex, we're waiting to her from the former President Bill Clinton. He's down in Atlanta getting ready to speak for Jim Martin, the Democratic challenger to Saxby Chambliss. They'll have a runoff election next month. What do you make of this contest? Who's the favorite in a runoff which is a lot different than the election back on November 4th when you had presidential candidates running, as well?

CASTELLANOS: It's much different than in November. The favorite now is Saxby Chambliss and no the Democrat. The Democratic tide that swept this country kind of exhausted itself on the beach. Now we have a Democrat-controlled Senate, and the question is not are we going to have change is change going to go too far. So that tide that swept in a lot of Democrats I think has receded a little bit. And so that advantage of Saxby Chambliss. The same thing happed in Louisiana when Bush was elected in 2004. There was a runoff election and Landrieu kept the seat after a Republican gain of six or seven Senate seats earlier in November.

BLITZER: Let me ask you this, Hilary. Bill Clinton getting ready to speak for Jim Martin, the Democratic challenger, any moment now. We'll go there live. Al Gore getting ready to go into Georgia. Should Barack Obama, the president-elect of the United States, go to Georgia and campaign aggressively for Jim Martin, the Democrat? ROSEN: You know I think that's a call that Jim Martin has to make. He knows his race best. I don't think that Georgia is and the outcome of this race is any referendum on Democratic power. You know, John McCain won this state by five points. There was a comfortable margin. This was never going to be a Democratic sweep state. Having said that though, there is nobody better in there than Bill Clinton and al gore coming in after him who understand and can talk to folks about the issues in the country in that unique way.

BLITZER: Are you saying Hilary that Al Gore and Bill Clinton, both sons of the south, could do better for Jim Martin than Barack Obama might be able to do in Georgia?

ROSEN: I don't know the answer to that. But I think you can't go wrong with bill Clinton. And you can't go wrong with al gore. And you know, I think that this race is going to be basically what folks in Georgia do. But Jim Martin has a big uphill climb.

CASTELLANOS: Wolf, I think Bill Clinton didn't carry a lot of juice for Hillary Clinton, even the Democratic primaries much less in the general election. He's not going to help the Democratic candidate down there. Obama doesn't have to go to Georgia to go. He can send the army. The army is e-mail. The army's on the internet. The army is Facebook. He's got that e-mail list. He's got those people out there that he can mobilize. So Obama is going to Georgia even when he's not there.

BLITZER: Guys, we'll leave it right there. Hilary Rosen, Alex Castellanos, thanks very much.

A powerful update to a story we've been covering here in THE SITUATION ROOM.

AUGUSTINE REYES, FIRE VICTIM: There was a lot of happy memories in this house. And we -- we just had to come here and say good-bye. Say good-bye. Bye house.

BLITZER: A boy with autism and a family's struggle. There's been an outpouring of support since our first report ran right here in THE SITUATION ROOM. Up next, we're going to show you much more of this very emotional scene.

And stem cell research. We've all heard about its great promise but now it's about more than just potential. And promise. Our own Dr. Sanjay Gupta is standing by to tell us about a major break through that could affect all of us.

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


BLITZER: In southern California, firefighters are moving closer to containing the last of a series of wildfires that have swept through the region since last week. The so-called sair fire is the only fire currently not 100 percent contained. The fire has scorched more than 11,000 acres and destroyed 479 homes, the majority of them in a mobile home park.

CNN's Kara Finnstrom has been monitoring that angle of the story for us all week. She's at that trailer park with an update on one family's unique struggle -- Kara?

KARA FINNSTROM, CNN CORRESPONDENT: Wolf, when we first met Augustine Reyes, he told us as difficult as it was for him to deal with all this, his biggest worry was the impact on his son Jonathan. We were with the family as they brought Jonathan back for the first time.


JAN REYES, FIRE VICTIM: We're going to put gloves on and we're gonna put masks on.

FINNSTROM (voice-over): Augustine and Jan Reyes prepared his son Jonathan for this day.

JA. REYES: Let's go. Go see your house.

FINNSTROM: They told him a big fire burned down their home.

AUGUSTINE REYES, FIRE VICTIM: All this was burning, see all the brush?

FINNSTROM: Jonathan is 7 and has autism. He has a hard time understanding what he can't see.

A. REYES: See the nails on the ground? That's why I want you to be real careful. OK? I know. I know.

FINNSTROM: Jonathan's father feared bringing him here ever since he first saw the devastation.

REYES: He doesn't do well with change. So this is going to be very hard to explain to him.

FINNSTROM: But Jonathan's family and therapist knew he needed to see for himself what was left.

JA. REYES: He's trying to find a car.

FINNSTROM: Like many with autism, Jonathan has a fixation, cars. His most beloved possession, more than 500 hot wheels. Playing with them soothed him.

JA. REYES: Going to try to find some cars.

FINNSTROM: What they finally found, a part of a hot wheel.


FINNSTROM: Jonathan took it and his tricycle.

A. REYES: This is actually his first tricycle. There ain't nothing left. Nothing at all. It's incredible.

JA. REYES: It's hard to stay what it is that he's -- what he's thinking. I don't know.

FINNSTROM: Jan and Augustine say they don't want to leave the home that's been so safe, so familiar, so long.

JA. REYES: Jonathan, we're leaving. We're not coming back.


FINNSTROM: But autism makes the farewell even harder.

A. REYES: The house is no longer a house. So we're going to.

JO. REYES: Can we find it?


A. REYES: There was a lot of happy memories in this house. And we just had to come here and say good-bye. Say good-bye.


JO. REYES: Bye, house.


FINNSTROM: And that good-bye just the beginning. They say Jonathan's healing process will take a long time but also say they've been comforted by a tremendous outpouring of support. Since their story first aired, they've received hundreds of messages of support and offers of help, including one from Mattel. Mattel sent out a hot wheels team to determine which cars he lost and they're going to be shipping him all new ones -- Wolf?

BLITZER: All right. Kara, thank you. Kara Finnstrom with that. Let's hope for the best on that front.

Meanwhile, banks and investment houses, airlines and automakers, even major American cities. It seems like everyone is looking to Washington with their hand out seeking to get on the billions of government bailout dollars. CNN's Carol Costello is working this story and has more -- Carol?

CAROL COSTELLO, CNN CORRESPONDENT: Wolf, you know, if the big three could ask for cold hard cash from generous taxpayers what, about me? Why can't I have some of that money too? Well, a lot of people are wondering the same thing.


COSTELLO (voice-over): Want a piece of that $700 billion pie? Lots of Americans do. And we're not talking just the big three. But boat manufacturers, and Hispanic plumbers, really. The treasury department told me, you'd be amazed. UNIDENTIFIED MALE: Gentleman from Texas.

COSTELLO: Members of Congress are too and they're worried.

UNIDENTIFIED MALE: I read press reports recently that a group of plumbing contractors were applying for portions of the T.A.R.P. funds in order to refurbish some foreclosed properties making their case that that qualifies them as a financial institution. Can you give me a clearer black and white definition of what a financial institution is?

HENRY PAULSON, U.S. TREASURY SECRETARY: Congressman, I can't. We have a broad definition. We got very broad authorities of powers. But we certainly are not going to give money to plumbing contractors.

COSTELLO: Did you catch that? If he wanted to, Paulson could dole out cash to whomever he chooses. That and a simple two-page application for bailout funds has sparked bailout fever. Treasury officials told me a bait and tack shop asked for a line of credit. Even a time share company filled out an application. Oh, and states across America are interested, too, like California.

KAREN BASS (D), CALIF. STATE ASSEMBLY SPEAKER: And I think a couple of months ago, none of us would have envisioned making a request like interest from the federal government. Who would have envisioned a $700 billion rescue package?

UNIDENTIFIED MALE: If they can give $150 billion to AIG.

BASS: Can we have 5 or $10 billion?


COSTELLO: Philadelphia, Atlanta and Phoenix have directly asked for cash, too. Just because you ask for bailout money doesn't mean you'll get it unless maybe if you're a bank or a financial institution. Some 21 institutions across the country received anywhere from $17 million to nearly $7 billion -- Wolf?

BLITZER: Carol Costello, thank you.

Details of the stem cell medical breakthrough and the surgery that changed one woman's life. Dr. Sanjay Gupta reporting.

And he's promising to bring change to Washington. But so far, more than half of Barack Obama's staff appointments are recycled from the Clinton administration. Are his supporters getting what they bargained for? We'll update you on what we know right here on THE SITUATION ROOM.



DAVID LETTERMAN, TALK SHOW HOST: Barack Obama's putting his team together to take over the administration, and so far he has got his mother-in-law living with him. His mother-in-law, and talking about Hillary for secretary of state. And so you have your mother-in-law and Hillary Clinton, and sounds like smooth sailing to me.


BLITZER: Dave Letterman last night. All right. Let's go to Jack Cafferty. He's got "The Cafferty File." He is a very funny man, Jack Cafferty, David Letterman.

CAFFERTY: He is funny and you know it occurred to me when they announced shortly after the votes were counted that his mother-in-law was going to move into the White House with him, and here is a guy who becomes president of the united states and he still can't get away from his mother-in-law.

The question this hour is: What message is Barack Obama sending by surrounding himself with so many former members of the Clinton administration.

Gia writes from L.A.: "The primary reason Obama is picking al lot of Clintonites is because he wants people around him with quality experience who know what they are doing and how the system works so they can effectively implement his vision for change. I think it will allay fears for those who didn't vote for Barack Obama ability his lack of experience."

Shane in Quebec writes: "Picking smart able people who know how government works. I would like to see him pick Chuck Hagel and Colin Powell as well. They are very smart moderate Republicans who can help him. Obama knows what he is doing. I'm not worried."

Elaine from Peabody, Massachusetts: "I don't think President- Elect Obama is sending any message yet. He is surrounding himself with former Clinton staffers for now, but the list of vacant positions is enormously long. Let's take stock when a good number of cabinet positions have been filled."

Steve in Green Bay: "He is sending the message he is lipstick on a pig. It may have a shiny new face, but with the appointment of Hillary as secretary of state, all of the other appointments, the Obama presidency will merely be the Clintons part two which could lead to Hillary leading in 2016 which could lead to the Clintons part three and I could not be more disappointed in someone I truly believed to be about change."

Steve in Tennessee: "It sounds like he's playing a safe bet. I hoped he would be more daring. I would have liked to have gone in a brave new direction."

George writes this: "If you don't remember how well the country is doing when Bill Clinton was president, you need a refresher course in how the government should be run instead of what the Bushes have done to it. Bill Clinton had some of the smartest people in the administration and they will be a great asset to Barack Obama when he becomes president."

If you didn't see your e-mail, you can go to my blog at and you will see it among hundreds of others.

BLITZER: Thank you, Jack.

They are seeking billions of government dollars and they have come to Washington in private jets.

UNIDENTIFIED MALE: I am going to ask the three executives here to raise their hand if they flew here commercial. Let the record show no hands went up.

BLITZER: And now the lawmakers are calling them to task. What the heads of the big three automakers are saying in their own defense.

Plus, al Qaeda's number two leader hurling a racial insult at the President-Elect Barack Obama. We have new details on a terrorist tape just released.

We are about to hear from Bill Clinton, the former president, getting ready to speak in Georgia. Standby. You will hear it right here in THE SITUATION ROOM.


BLITZER: Word now of breakthrough that experts are calling a milestone in medicine. A team of European doctors have successfully transplanted a human windpipe engineered with the patient's own stem cells. Our chief medical correspondent Dr. Sanjay Gupta has these extraordinary details.


DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Behind every medical breakthrough, there is a story, and you are looking at one, 30-year-old Claudia Castillo playing with her kids. She is proof that stem cells can make a difference. Just a few months ago, a scene like this would have been impossible, her lungs and trachea were badly damaged after a terrible bout with tuberculosis. Look here, critical narrowing of the airways with not enough air getting into the lungs so, her doctors decided to build her a new airway using adults stem cells taken from her bone marrow, not from the embryonic stem cells that cause so much controversy. It has never been done before in a human.

PAOLO MACCHIARINI, SURGEON, HOSPITAL CLINIC OF BARCELONA: The jump between the human and animal investigation was a big mystery to me as well but we succeed.

GUPTA: Pictures tell it best. Take a look at. Doctors took a donor trachea from a 51-year-old who had died. For six weeks they methodically stripped away all the cells and leaving a matrix or scaffolding and then slowly they began to build up a new trachea using Claudia's stem cells and cells from a healthy part of the trachea. The transplant was next, rare shots inside of the operating room.

Adult stem cell transplants are not new. A heart valve was regrown in April of 2007. In 2004 scientists rebuilt bladder muscles using injective stem cells. And bone marrow is commonly transplanted to treat luekemia and other types of cancer.

Four days after her transplant, doctors say Claudia's windpipe was almost indistinguishable from a healthy patient's. Today, she has no complications and no signs of rejecting the transplanted tissue.

CLAUDIA CASTILLO, TRANSPLANT PATIENT (through translator): It is a long process, but, four months after they operated on me, it is much better. I'm fine now.

GUPTA: Doctors say they hope their success will open doors for future transplants to be performed and to help even more parents like Claudia return to normal lives.

Dr. Sanjay Gupta, CNN, New York.