Return to Transcripts main page


President-Elect Obama's Cabinet Fills Out; Dow Jones Up Almost 500 Points

Aired November 21, 2008 - 18:00   ET


WOLF BLITZER, CNN ANCHOR: We want to welcome our viewers in the United States and around the world.
I'm Wolf Blitzer, and you are in the SITUATION ROOM.

You may be looking at people, some of the people who will be responsible for creating jobs, fixing the battered economy and improving America's reputation around the world.

We are watching breaking news right now regarding possible cabinet secretaries for the Commerce, Treasury and state departments. Our reporters are watching every angle of these fast-moving developments, but let's begin with our White House correspondent Ed Henry. He is covering the transition to power in Chicago. All right. Ed, what is the very latest?

ED HENRY, CNN CORRESPONDENT: Well, Wolf, what is quite interesting obviously is that president-elect Barack Obama knows a financial crisis is issue number one for him. That is why two sources close to the transition are saying that Tim Geithner, the head of the New York Fed, very highly respected on Wall Street it is now in line and on tract to be Treasury secretary and expected to be announced early next week, and secondly, Hillary Clinton, obviously, national security another top priority and three sources close to the transition telling CNN she is on track to be secretary of state, but that is more likely to happen after Thanksgiving.

There is one reporter in the "New York Times" saying that some people close to Clinton are saying that she is basically saying she will accept it and that it is a done deal, but I can tell you that people in the Obama camp are saying it is not quite that far yet that they are moving forward however.

And finally, Bill Richardson, someone who desperately wanted to be secretary of state and it is clear he is not going to get that, but instead, two sources close to the transition say he is in serious consideration for the Department of Commerce another important job dealing with the business community and dealing with the economy obviously. These two priorities for the president-elect obviously at the top of the list the economy and national security. Wolf.

BLITZER: And with national security, you are also hearing a name for the president's national security adviser?

HENRY: That is right. Jim Jones, a retired marine general, two sources close to the transition saying he is the leading choice from the president elect. Not a complete surprise because in the third and final presidential debate, Barack Obama flat out mentioned that Jim Jones is one of his top advisers and retired four-star general and someone who is highly, highly respected and this shows that he piecing together specifics on national security, a team of people with real experience, a lot of depth, Wolf.

BLITZER: Indeed. All right. Ed Henry in Chicago, standby.

Wall Street rallied on these reports of the Obama cabinet that appears to be coming together especially the proposed treasury secretary. Our chief business correspondent Ali Velshi is in New York. They apparently the investors at least on this day, Ali they loved the news.

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Yeah, and two very distinct reasons for this. One is that Tim Geithner was at the top of the list, and he appears to be a very capable candidate for the job of treasury secretary. But number two Bill, the wheels of the economy were coming off of the bus again this week. We had major, major problems; we were looking at a potential failure of General Motors one of the oldest names in the country, one of the biggest companies in the world through history. This auto deal was falling apart and there didn't seem to be any leadership.

It was clear that the White House was not in favor of bailing out the auto industry, we knew that Barack Obama has expressed sentiment that would favor bailing out the auto industry but it was going nowhere. Then we had a near failure of Citibank losing 50,000 people and discussions about its future and we had really devastating job numbers this week emphasizing what we already know that unemployment in this country is growing fast.

Tim Geithner was at the top of the list, now the interesting thing is we are checking on this now, these are only rumors really at the moment, but the number two guy on the list was thought to be Larry Summers, Harvard professor Larry Summers and former president of Harvard and former treasury secretary under Bill Clinton, but there is some talk that the Obama administration will also be announcing that Larry Summers will join the Obama economic team in a formal positions and that that might set him up to replace Federal Reserve Chairman Ben Bernanke when his term expires in 2010 so if that is true and we are checking on that, that is a two -for for the incoming Obama administration to get the number one and the number two on their list for secretary of Treasury.

Tim Geithner is 47 years old, speaks Chinese, he is the head of the New York Federal Reserve, and has been involved in all of the machinations (ph) that have gone in the financial world in the last year or so. So it looks like a good pick as far as the markets are concerned.

BLITZER: And he worked for Larry Summers. When Larry Summers was the treasury secretary, Tim Geithner was a high official in the treasury department during the Clinton administration. Ali thanks very much. Suze Orman by the way is standing by live; we are going to get some financial advice from her during these difficult times. There she is Suze standby we are going to get to you very soon.

We also want to take a closer look at some investor nervousness right now during this presidential transition. Mary Snow is in New York working this part of the story. What are you finding, Mary?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, that nervousness that you mentioned comes as it becomes increasingly clear that Wall Street is looking to Washington for clear signals.


SNOW (voice over): In a sign of just how desperately the markets are looking for direction, stocks lurched higher gaining nearly 500 points on news that New York Fed Bank president Timothy Geithner would be Barack Obama's new treasury secretary.

DAVID GERGEN, CNN SR. POLITICAL ANALYST: They needed some assurance from Barack Obama not only of what direction that he is going to be going in, but who is going with him? Who is going to be captain of the team and who is going to be the co-captains and the other players on the team?

SNOW: The rally follows a steep sell off this week triggered by a renewed sense of fear and continued uncertainty.

DIANE SWONK, CHIEF ECONOMIST, MESIROW FINANCIAL: We have a lame duck Congress and a lame duck administration that have decided they no longer have a job to do.

SNOW: A major source of angst is whether the big three automakers will survive. After coming hat in hand to Capitol Hill and leaving with no resolution, Congress is taking a recess. Another question mark, what is next for the federal bailout program that outgoing treasury secretary Henry Paulson engineered.

ARTHUR HOGAN, JEFFERIES AND COMPANY: The unknown, Wall Street a pours it. You always see a sell off, you always sell on the news of Wall Street, and that is exactly what is happening right now.

SNOW: Obama has said there is only one president at a time, and the former presidential adviser David Gergen says it is up to Obama right now to lead from behind the scenes.

GERGEN: I think that he can push along a couple of things, a bridge for the automobile industry to ensure that it doesn't fall apart or go into bankruptcy before he becomes president, allowing himself time to think through what should the future of that industry be.

SNOW: David Gergen also says that another potential action could be some sort of help to homeowners, the bottom line; Obama doesn't want to enter office with an economy that is in total collapse -- Wolf. (END VIDEOTAPE)

BLITZER: Mary Snow looking at the story the Dow Jones Industrials once again up almost 500 points today and analysts say it is largely a result of this Obama team getting its act together and getting in shape as a lot of these names come forward.

Lets go to Jack Cafferty he has "The Cafferty File."

JACK CAFFERTY, CNN CORRESPONDENT: Here is some not so good news. The power and influence that the United States has in the world will decline in the next two decades and struggles for the world's natural resources will intensify according to a new government report. The national intelligence council's global trends 2025, a transformed world says that the world is in the middle of a historic transfer of wealth from west to east. That has been brought on by increases in oil and commodity prices as well as a shift of manufacturing and certain other industries to Asia.

The United States will likely remain the single most powerful nation on earth, but our economic and military strength will decrease considerably. It will continue to play a leading role in the global war on terrorism, the United States will. Nations like Indonesia, Iran and Turkey will likely gain power in their need for natural resources which will obviously increase. China though is expected to be our biggest rival by 2025. The report predicts that China will have the world's second largest economy by then and will be a leading military power.

So here is the question: How worried are you about the next 20 years? Go to and post a comment on my blog. Wolf.

BLITZER: Some of our viewers are worried about the next 20 minutes let alone the next 20 years, Jack.

CAFFERTY: Good point.

BLITZER: Thanks very much.

The markets certainly on a roller-coaster and thousands of layoffs every single day. Here is a question. Which jobs are the safest and which are in danger? We will talk about that and more with financial adviser Suze Orman she is standing by live and going to give us some good practical advice during these difficult times.

Also, Congress sent a letter to the big three automakers and demands they outline.

Plus, why the White House is now slamming Democratic leaders on the hill.

Plus, they work in one of the most beautiful list buildings in the world, but where they live is a different story for some members of Congress.

We will show you right here in the SITUATION ROOM. (COMMERCIAL BREAK)

BLITZER: Welcome back. We are watching what is happening in this battered economy, waiting for Barack Obama to make the final selections for his economic team, although some developments as you just saw here today. As Wall Street rallied today on news of possible cabinet picks, what can you do to save and protect your money?

Joining us now is a financial expert Suze Orman who is the host of the "Suze Orman Show" on NBC.

Suze, lots of questions out there and lots of worried people right now. Let's talk a little bit about the possibility of what would happen to folks living in the Midwest, Michigan, Ohio, Indiana, Illinois, if GM for example were to collapse.

SUZE ORMAN, FINANCIAL EXPERT: If GM truthfully collapsed which means that they not only claim bankruptcy, but they don't reopen, because you have to remember, Wolf, just because General Motors might claim bankruptcy, doesn't mean that all of the workers therefore have lost their jobs. It just simply means that some workers will have lost their jobs.

They will then restructure and then get out of some contracts, they will be able to close down some dealerships which many people say they have too many anyway of, so it is not that everybody loses their job possibly at once, but let's say that if everybody lost their job and it totally went away, if that is the assumption, then it will decimate real estate in the Midwest. No doubt about it. It will hopefully not come to that, but if it did it will not only affect the workers at GM, but it will affect those who live anywhere near any of those plants.

BLITZER: Now you are telling people, correct me if I am wrong that in a difficult economic time like this right now, be really careful with your money, don't spend it if you don't have to spend it right now, but if they were to take that advice, wouldn't that further decline the economy if folks are not buying and that of course stimulates economic growth.

ORMAN: I know, obviously, I was on a show today and I was criticized by saying that if they follow Suze Orman's advice exactly what you just said, what will happen to the economy. The problem is this, if you do not have money, you cannot afford to buy something. And most people were buying things with what? Credit cards, taking out money from their homes with home equity lines of credit and taking loans out of their 401(k) plans and cashing out of certain things that they had saved up all to do what? To buy these things, and then, as the economy started to get tougher, now what is happening is that the credit card companies are decreasing credit limits and they are revoking credit cards altogether and increasing the interest rate to 32 percent.

People don't have anymore money at all, Wolf. So what are you going to do here? It is that if you have money to spend and you don't have credit card debt and you have eight months of emergency money and you have everything going, go on, and spend all that you can if you want to. But the majority of Americans today are literally one paycheck away from bankruptcy. They cannot afford to spend.

BLITZER: There are people out there who do have money and they can afford to buy a car or even a new house right now, but, you know what, they cannot get a loan either a mortgage or a loan, because the banks, they don't want to give out these loans in this kind of troubled environment. So what are they going to do?

ORMAN: Well, what they do is to plot along until some how the true crisis is the credit crisis which is what we talked about for a long time that the money was tightening up. Look at the yields on treasuries a three-month treasury s is almost at zero percent and a ten-year treasury, 30-year they are at 3 percent, these are the lowest interest rates ever, really, Wolf. So money is frozen and people want their money to be safe and sound and credit cards as I said before, they are rescinding all of their credit and everything and nobody can get a loan.

So until the credit crisis has been fixed, we have a new crisis looming which is actually what is commercial real estate and commercial-backed securities, so until the credit crisis is fixed, and you can't spend money, because nobody will even lend it to you. So even if you have it, you cannot spend it, so we have problems.

BLITZER: You know some people are reluctant to buy these Treasury bills or these insured CDs because the interest as you point out is negligible, is tiny for right now, but you know what a tiny interest rate is a lot better than losing 40 percent in the course of the last year if you owned a lot of stocks.

ORMAN: Yeah, it is actually not that they are reluctant to buy them. Everybody has been buying them, which is why the interest rate is so low. When all of the money goes into treasuries, it forces the price of treasuries up, but the yields down. So, so many people have wanted their money just to be safe and sound that they have been willing to put the money into treasuries and not make any interest whatsoever just so they know that one day, they would get their money back. So, when you see that much money going into treasuries, you know how panicked people really, really are.

BLITZER: I know you are pretty pessimistic in the short term and the mid-term as well. How long do you realistically believe that this economic distress is going to continue?

ORMAN: A lot will have to do truthfully with how all of these new cabinet positions, how all of these people come and play together so-to-speak in the financial sandbox and will they come up with legitimate, legitimate solutions to the extraordinarily big problems right now that America is having. How long will it take for them to institute these, you know, solutions to these problems? So a lot will really truthfully be dependent on what will everybody come up with to fix these really horrific problems.

BLITZER: What is the single-most important thing that the incoming administration should be doing once it takes office? ORMAN: Real estate, real estate, financial, credit crises, free up the money, stop the foreclosures, figure out something so that people can stay in their homes, people can come back into real estate and get the interest rates to go down, and they have to fix the automotive industry and those are the big things.

BLITZER: How do they fix the real estate industry?

ORMAN: Well, that they are going to have to figure out, like you know we were really going quite well, and all of the sudden, we had a T.A.R.P. Program and the money was going to be used for a lot of these bad loans and everybody was feeling hopeful and then a week ago when Paulson came out and said, no, no, we will only use half of it, and that is when the things -- and you felt it as soon as he said it you could feel the fear come right back into the market.

So I think that has to happen again with real estate, there has to be a way for us to be able to revalue the actual mortgages that many of these people have to lower the amounts that they owe so that they feel they can afford the payment so that we keep people in the home, and we stop foreclosures so-to-speak to see if we can revamp any of these and we continue to help people to figure out a way for them to stay in their homes.

BLITZER: Suze, thanks for coming in.

ORMAN: Any time, Wolf.

BLITZER: Appreciate it. Suze Orman joining us.

Barack Obama's economic team taking shape right now, but are they the right people to get the U.S. out of it's financial mess? The best political team on television will weigh in.

And John McCain he steps away from the White House and now he is back at work in the Senate. He is keeping a low profile, and Dana Bash got an inside look at what is going on.

And the Obama family makes a decision about where the two little girls will be going to school. Stay with us. You are in the SITUATION ROOM.


BLITZER: Zain Verjee is monitoring some other important stories incoming into the SITUATION ROOM right now. Zain what is going on?

ZAIN VERJEE, CNN CORRESPONDENT: Well, Wolf, president elect Barack Obama and his wife have settled on the private Sidwell Friends School for their two daughters the same school that the Clinton's daughter attended a decade ago. A spokesperson for Michelle Obama said a number of great schools were considered, but they selected the school that was the best fit for the needs of their daughters. Ten year old Leah and seven year old Sasha.

President Bush is on its final scheduled overseas trip. He arrived in Lima, Peru today for the Asia Specific Economic Cooperation's Forum. While he is there he will be meeting with leaders of China and other nations to press North Korea to give up its nuclear weapons program. Tomorrow the president delivers an economic speech to APEC.

Defense secretary Robert Gates wants to add a significant number of U.S. troops to the war in Afghanistan. He says that the extra forces are needed to provide more security for the elections next year. But he insists while the violence is on the upswing, the Taliban are not winning. He says the Taliban fighters are losing every real engagement with NATO or U.S. forces.

Nebraska lawmakers have approved changes to the state's controversial safe haven law. They have voted to restrict the age under which a child can be dropped off at the hospital without the parents being prosecuted. The law now says that no child older than 30 days can be dropped off.

Wolf, the U.S. has awarded the Full Bright Prize to noble peace Desmond Tutu. The retired South African Archbishop was honored with a $50,000 award for the human and civil rights award. He is an amazing man. You have met him.

BLITZER: Yes, I have met him and I have interviewed him and he is a terrific guy, a well deserved award from the United States to Desmond Tutu. Thank you, Zain, very much.

She made history with her presidential campaign.


SEN. HILLARY CLINTON (D), NEW YORK: Although we weren't able to shatter that highest, hardest glass ceiling this time, thanks to you, it got about 18 million cracks in it.


BLITZER: All right. Here is a question; will Hillary Clinton use her gender to make a difference if she becomes secretary of state?

And the new Senate, how will it differ from the old Senate? The best political team on television standing by live to discuss.

And John McCain is back at work on Capitol Hill after months in front of the camera and now this.


JOHN MCCAIN: I don't have a comment today and I thank you very much for asking. Thank you. Good to see you.



BLITZER: To our viewers here in the SITUATION ROOM. Happening now as Barack Obama's national security team begins to take shape, the president-elect may find himself with some powerful egos to manage. We are taking a closer look at his team of rivals. That is coming up.

Also, what can we expect from the next generation of Senators? We will talk about Washington's new guard with the best political team on television.

And new developments concerning the Verizon staff members who accessed Barack Obama's personal cell phone records. You are going to find out what happened and what Verizon is now doing about it.

I'm Wolf Blitzer, and you are in the SITUATION ROOM.

We are watching major developments right now regarding Barack Obama's cabinet picks. The self-proclaimed agent of change could be eyeing some agents of a muscular foreign policy. Let's go back to our White House correspondent Ed Henry who is in Chicago covering the transition to power. We are talking right now about a national security team that seems to be taking shape, Ed.

HENRY: Well, that is right, Wolf. Not just a team of rivals, but a team of high-powered players that may be hard to keep together.


HENRY (voice over): A power player on the world stage, a retired four-star general, and maybe President Bush's defense secretary, too. Even a former aide to Donald Rumsfeld is impressed with the national security team that president-elect Barack Obama seems to be putting together.

RAY DUBOIS, CTR. FOR STRATEGIC & INTL. STUDIES: You would have to conclude that these are as credible and competent a set of individuals as you will get.

HENRY: Three transition aides tell CNN that Senator Hillary Clinton who supported the war in Iraq is in line to be nominated as secretary of state. Two sources close to the transition reveal that retired marine general Jim Jones who also backed the war is the leading choice to be national security adviser. Picking a military man could have the fingerprints of Brent Scowcroft, a retired general himself, who was national security adviser in a Republican White House and is now providing counsel to Obama.

Scowcroft is close to currant defense secretary Robert Gates fueling speculation that the man implementing President Bush's Iraq policy may stay on board. The talk of so many hawks in senior roles is starting to alarm anti war Democrats who say nonetheless they have faith that the president-elect himself will drive the policy.

TOM ANDREWS, WIN WITHOUT WAR: He's a very skilled guy and I think he'll make the right decision. But for us, again the bottom line is to put people in place who are going to actually fulfill the mission. Step one -- get us out of Iraq within 16 months.

HENRY: There's also the question of whether a so-called "team of rivals" can get combustible.

Remember the first years of the Bush administration?

RAY DUBOIS, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES: These are individuals not lacking in ego. And it will be important that President Obama be able to manage those egos in a way that not only does the policy that he espouses get appropriately formulated and articulated, but, most importantly, implemented.


HENRY: Now senior aides say that the president-elect is confident he can keep all of the players together into one cohesive group, otherwise he wouldn't be picking them.

As for liberals' concerns about his stance on the war, a top aide says the president-elect's stance has not changed and will not change -- Wolf.

BLITZER: Ed Henry working the story of the transition to power in Chicago.

Let's get a little bit more now on what a State Department under Hillary Clinton might be like. We'll go to our State Department correspondent, Zain Verjee.

She's got more on this part of the story -- Zain.

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Wolf, if past performance is any indication, women's issues are going to be a big part of what Hillary Clinton may champion.


SEN. HILLARY RODHAM CLINTON (D), FORMER PRESIDENTIAL CANDIDATE: My mother was born before women could vote. My daughter got to vote for her mother for president.

VERJEE (voice-over): Hillary Clinton has championed women's rights.

CLINTON: A woman who risked her life to bring slaves to freedom along the underground railroad. On that path to freedom, Harriet Tubman had one piece of advice -- if you hear the dogs keep going.

If you see the torches in the woods, keep going.

VERJEE: She kept going as she ran for president and will likely keep going if she returns to the international stage.

CLINTON: We weren't able to shatter that highest and hardest glass ceiling this time, but thanks to you, it's got about 18 million cracks in it.

VERJEE: As first lady, she visited 82 countries. Her critics charge she claims too much foreign policy benefit from those trips, was never an inside player. But she did move past the ceremonial duties, meeting with women's groups and challenging the repression of women, most memorably, her supporters say, in China in 1995.

CLINTON: It is a violation of human rights when women are denied the right to plan their own families. And that includes being forced to have abortions or being sterilized against their will.

VERJEE: The same women's empowerment message in her book, "It Takes A Village".

If she does become secretary of State, she would have to walk a fine line in countries like Saudi Arabia -- a key U.S. ally whose record on women's rights has come under fire.

During the presidential primary campaign, she rejected suggestions gender would hold her back in countries that don't take women seriously.

CLINTON: I have had many high level meetings with presidents and prime ministers in Iraq, Afghanistan, Kuwait, Pakistan and many other countries. I believe that there isn't much doubt in anyone's mind that I can be taken seriously.


VERJEE: Present and past secretaries of State Condoleezza Rice and Madeleine Albright have themselves shattered glass ceilings as women. They've also promoted women's rights around the world, really laying the groundwork Hillary Clinton could build on -- Wolf.

BLITZER: Zain Verjee reporting.

A good report.

A few weeks ago, Republican John McCain was only steps away from the presidency. Now he's back at work, as far as his day job is concerned, on Capitol Hill.

Dana Bash covered the Arizona Republican's every day on the campaign trail.

Now she's following his readjustment to life on Capitol Hill -- Dana.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Wolf, a group of school kids saw John McCain here the other day and they started to cheer. It was proof that after being the Republican nominee, he will never go back to being just another senator.

But after watching him here all week long, it's clear that's exactly the image he's trying to project.


BASH (voice-over): John McCain racing through a marbled corridor in Congress -- no aides, no security and no interest in talking to reporters right now.

SEN. JOHN MCCAIN (R-AZ), FORMER PRESIDENTIAL CANDIDATE: Thank you very much. I don't have any comment today and I thank you very much for asking.

UNIDENTIFIED MALE: Thank you, sir.

MCCAIN: Thank you.


MCCAIN: It's good to see you.

BASH: He ducks into his quiet Senate office, a world away from this...


UNIDENTIFIED MALE: The next president of the United States, John McCain.



BASH: Some half a dozen McCain confidants we talked to insist he is determined not to dwell on what might have been, as he tries to figure out how to be most effective back at his day job.

Steve Duprey was McCain's constant campaign companion.

STEVE DUPERY, FORMER MCCAIN CAMPAIGN ADVISER: He's bending over backward to reenter into the Senate and not come in like some former nominees have and sort of act that because they were the nominee, they're now sort of king of the hill.

BASH: McCain did keep a stunningly low profile during his first week back. He attended Senate Republican meetings and lingered a bit after a classified briefing about Iraq.

But he was absent from the a debate over an auto bailout and not on the Senate floor to bid farewell to colleagues leaving Congress.

Yet McCain was busy behind-the-scenes. Friends came by to check in. He met privately with the Spanish foreign minister. CNN was granted exclusive access.

MCCAIN: As you know, I met with the president-elect and we had a very good conversation and we'll work together.

BASH: As a presidential candidate, McCain liked to joke about his rocky relationships on Capitol Hill.

MCCAIN: My friends, I was not elected Miss. Congeniality in the United States Congress again this year, I'm sorry to say.

BASH: The GOP leader McCain often sparred with insists things are different now.

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: He is our most prominent senator, without a question. He is very popular in our conference.

BASH: That may be, but as McCain readjusts, he seems most comfortable doing it solo.


BASH: McCain confidants insist he means it when he says he wants to work with Obama on areas where they have common ground, like climate change. And he plans to be here for a while to try.

This week, McCain let it be known that he plans to stay in the Senate -- that in 2010, after 24 years as a senator, he wants to run for a fifth term -- Wolf.

BLITZER: Good luck to him, of course.

Thanks very much for that, Dana.

The plot is thickening right now. Someone from the phone company snooped into Barack Obama's records -- what Verizon is now doing about it and how it happened.

Also, not quite the comforts of home -- where some members of Congress have to sleep. That's coming up. I think you'll want to see this, right here in THE SITUATION ROOM.


BLITZER: All right. The Obama economic team, as you now know, it's taking shape.

Let's talk about it with our senior political analyst, Gloria Borger; and our CNN political contributors, Dana Milbank and Steve Hayes.

It looks that not only Hillary Clinton seems to be getting ready for the State Department, but Bill Richardson, the Commerce secretary, and Timothy Geithner, the secretary of the Treasury.

GLORIA BORGER, SENIOR POLITICAL ANALYST: Right. And I think, you know, once the Hillary Clinton piece seemed to fall into place, then these other pieces seemed to follow. And what we're also learning, Wolf, is according to one source close to the transition, that Larry Summers, the man who is not going to get the Treasury secretary job, but was once Treasury secretary under Bill Clinton, they're looking for a significant role for him in the Obama administration on economic policy. So that could also be announced pretty quickly.

BLITZER: And as Ed Henry said, maybe perhaps even setting the stage for him to replace Ben Bernanke as Federal Reserve chairman when his term expires.

BORGER: A couple of years down the road.


I wonder if anybody could have believed when Obama was in Grant Park a couple of weeks ago, when he said, "Change has come to America" that he meant, well, we'll move the chief of the New York Fed over to the Treasury department and we'll get the old Energy secretary and put him in Commerce...

BORGER: I don't buy that.

BLITZER: He needs people with experience.

MILBANK: And that's exactly right. I think it's a -- it's a very shrewd move. I think it's just very surprising. But there are a lot of very conventional characters being brought in here. As you reported, he's even sending his daughters to the school that the Clintons sent their daughter to. It's very much the conventional route.


BLITZER: Sidwell Friends here in Washington.

What do you think about General Jim Jones, potentially, as the national security adviser?

He's a four star Marine, a former NATO supreme Allied commander. He's got a lot of experience.

STEPHEN HAYES, SENIOR WRITER AT "THE WEEKLY STANDARD": Yes, he certainly has the chops to do it. He was close to John McCain and remains close to John McCain. And I think that he's very well- respected. He was skeptical of the surge, which I think, you know, probably comes up when people talk about him in this context. But I think, you know, Republicans will stand and applaud along with Democrats.

BORGER: Well, that works for Obama, though, being skeptical of the surge.

HAYES: Right. Right.


BLITZER: Yes. Listen to what Peggy Noonan wrote in "The Wall Street Journal." She's a former speechwriter for President Reagan. "To invite in the Clintons -- and it's always the Clintons, never a Clinton -- is to invite in and to summon drama that will never end -- ever. This would seem to be at odds with the atmospherics of Obamaland."

What do you think about that?

BORGER: Well, I think it tells you a lot about Obama, because you think he doesn't know that? Of course he knows that. He'd have to be living under a rock not to know that.

But I think he's self-confident enough. I think he really wants Hillary Clinton in that job because of the face she's going to present to the rest of the world. And I think he -- he can tell her, if things aren't working out well, things have got to change.

So I think it shows a very self-confident president-elect.

BLITZER: A lot of people are saying that, Dana.

Don't you agree?

MILBANK: I think Gloria is absolutely right. I mean, of course there's going to be drama. They could book out the Kennedy Center and sell tickets. We know that. And it's -- it's going to be very...

BORGER: You'd be in the front row.

MILBANK: It's going to be very exciting for us. But it is a sign of confidence. And he said her assets, which are this huge personality who carries a lot of weight around the world, outweighs whatever little drama we're going to have over at the Kennedy Center.

BLITZER: Yes. And I think it's clear -- at least this is the impression I'm getting -- that this relationship that is emerging between Barack Obama and Hillary Clinton is -- they're getting closer and closer on a daily basis. But, you know, I'm not on the inside...

HAYES: Well...

BLITZER: That's just the impression I'm getting.

HAYES: I would say I get a different impression. I mean, you look at just what's happened over the past 48 hours. She was going to take it. No, she wasn't. She's thinking seriously about it. Maybe not.

Was it offered, was it not?

I mean we have honestly had six different turns in this story in 48 hours. This is unprecedented drama.

MILBANK: That was just the first act.

HAYES: And it's a preview...


HAYES: It's a preview of what is to come.

BLITZER: Yes. But, you know, a lot of those leaks are coming from aides -- whether Obama aides or Clinton aides -- who may or may not be reflecting their own personal feelings, as opposed to the principals' feelings.

HAYES: There's no doubt. You're right about that. But those aides are going to go with her to the State Department, in all likelihood.

BORGER: Maybe.

HAYES: I mean this is -- this is exactly the kind of drama that he was known for avoiding. Peggy Noonan is exactly right. And this is, I think, why it's going to be a problem going forward.

BORGER: And I can tell you that Obama has told advisers that he's really unhappy, not only just about the Hillary Clinton leaks, but about leaks coming out of his transition, because he's not used to it.

BLITZER: Well, get used to it.

BORGER: All right. Well...


BORGER: Welcome to Washington.


BORGER: But he doesn't like it. He wants it to stop. And I've got to believe, if all of those leaks started coming out of the State Department, that Obama would put an end to it.

BLITZER: Dana, what's the biggest difference between this new incoming Senate as opposed to the last one?

MILBANK: Well, it's about 20 years younger, I think.


MILBANK: But -- and a lot more Democratic. But they're definitely -- have slain a few of the old bulls. We're losing Ted Stevens. Senator Byrd has lost his committee chairmanship. We saw poor John Dingell yesterday in the House, the poor guy is in a wheelchair, both knees have been replaced and they bumped him out of the (INAUDIBLE)...

BLITZER: A very young 69-year-old Henry Waxman taking him down.


MILBANK: Yes, a young pup at 69.


MILBANK: Exactly. Exactly.

BLITZER: So it's -- so what do you think about this?

MILBANK: (INAUDIBLE) for youngsters.

BLITZER: What do you think about the new Senate, as opposed to the old Senate?

HAYES: Well, I mean the question to me is whether they will be a check on Barack Obama and his ambitions or whether they will, like House Democrats, pull him left and challenge his agenda from the left. I think that's an open question.

BORGER: You know, I don't think the American public really cares a lot about whether Ted Stevens is in charge of Appropriations...


BORGER: ...or what Robert C. Byrd of West Virginia is doing or whether it's going to be Dingell or Waxman. But this whole idea of change in the Congress is something they're actually looking forward to.


BLITZER: Guys, we'll leave it on that note.

Thanks very much.

We're getting word right now of those firings at Verizon Wireless stemming from privacy breaches involving the president-elect, Barack Obama.

CNN's Brian Todd has the latest -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Wolf, we found out a short time ago that Verizon has taken action against employees who were involved in this breach.


TODD (voice-over): CNN is told by a source at Verizon Wireless, employees there have been terminated as a result of some getting unauthorized access to records from a cell phone used by Barack Obama.

The source did not say how many were fired, but said the company now considers this matter closed. The Verizon source tells us: "These were people employed to take care of customers and were only authorized to get into accounts if customers asked them to."

CNN and independent privacy expert Ari Schwartz asked other questions that Verizon says it can't answer now.

ARI SCHWARTZ, CENTER FOR DEMOCRACY & TECHNOLOGY: I was like (INAUDIBLE) how they're going to stop it from happening in the future and so -- because it sounds as though they need to take an extra step.

TODD: Verizon says the account has been inactive for several months. This was just a simple flip phone and Verizon says the employees could not have accessed voice-mail content or any text messages if Obama sent or received them.

SCHWARTZ: This is probably the type of information that they had access to.

TODD: Schwartz says those Verizon employees could likely see when Obama spoke on the phone, for how long and the numbers -- so they could have looked up who he had spoken to. The Verizon source did not say how this breach occurred.

Schwartz's biggest privacy concern now?

SCHWARTZ: What happens to -- not just to celebrities' information, but to the person who -- the employee that's accessing about their neighbor or their spouse -- and how do we stop that from happening?


TODD: And Schwartz has a broader privacy concern way beyond Verizon. He says this was a case that Verizon caught.

What happens with all these other companies, he says, where things like this happen every day that we don't know about, not just telecom firms, but credit card companies and other companies that store a lot of personal data -- Wolf.

BLITZER: Brian Todd, thanks very much.

Sometimes it's not -- repeat -- not so glamorous being a member of the United States Congress.


REP. JASON CHAFFETZ (R), UTAH: I don't want to spend $1,500 to $2,000 a month.


BLITZER: We're going to show you the extreme measures some lawmakers are taking to live on a Congressional salary right here in Washington.

And how worried are you about the next 20 years?

Jack with your e-mail and a lot more coming up, right here in the SITUATION ROOM.


BLITZER: Many of the newly elected lawmakers arriving here in Washington are quickly finding out that their own housing is one of the most difficult issues facing them.

CNN's Samantha Hayes is working this story for us.

It's pretty bad for a lot of the freshmen. Explain to our viewers what's going on.

SAMANTHA HAYES, CNN CORRESPONDENT: Well, Wolf, you know, their salary is about $160,000. That's a lot of money, but not when you're trying to split it between expenses at home and rent here in Washington, D.C. . (BEGIN VIDEOTAPE)

HAYES (voice-over): They work in one of the most beautiful and historic buildings in the country, but when the day is done on Capitol Hill, their surroundings change drastically.

REP. MIKE COFFMAN (R), COLORADO: I found a little bitty one bedroom efficiency.

HAYES: That's new Colorado Congressman Mike Coffman -- happy to be paying $1,375 a month for this.

COFFMAN: But I've got a fabulous view of the alley.

HAYES: It's a story of survival, really, from Hill staffers...

SUSAN KODANI, CAPITOL HILL STAFFER: We had an air mattress and a lamp, I think. And our cell phones.

HAYES: To even President-Elect Barack Obama, who once lived in this modest apartment that nearly burned down. He even talked about his old digs on "60 Minutes."


OBAMA: I used to get teased, not just by Michelle, but by my own staff.


HAYES: Some lawmakers split the cost of rent. It worked out a few years back for Senator Ken Salazar and Congressman John Salazar -- brothers from Colorado. But newly elected Congressman Jason Chaffetz of Utah refuses to pay any rent at all. He plans to live...

CHAFFETZ: I'll just flip that around like that.

HAYES: his office. Lucky for Chaffetz, he drew a low number in the freshman office lottery.

UNIDENTIFIED MALE: Mr. Chaffetz has selected six.


HAYES: That means he has his pick of office or living space.

CHAFFETZ: This is nice. I love that view. It's great.

HAYES: For Congressman Chaffetz and other lawmakers, it's all about maximizing their time in Washington while living on the dime.

CHAFFETZ: This is a little nicer than camping. I can go downstairs and take a shower.

(END VIDEO TAPE) HAYES: It's probably a mentality that many constituents wish that lawmakers could maybe get into the federal budget. That cot cost Chaffetz $44.89. And you heard him just say there, he's going to shower in the House gym.

BLITZER: Yes. It's not the first member of Congress that's been doing that.


BLITZER: But you know what, it's a lot of money, especially if you're supporting a family back in Utah or some place.


BLITZER: Samantha, thank you very much.

HAYES: You're welcome.

BLITZER: Let's go back to Jack.

He's got The Cafferty File -- Jack.

CAFFERTY: Maybe we ought to pay them a little more and then they wouldn't be so anxious to meet all those lobbyists down there.

BLITZER: Yes. That -- I'm sure they'd like that.


Our question this hour is how worried are you about the next 20 years?

We had an intelligence report come out saying that things are going to get a little tricky for this country and we're going to lose at least part of our dominance in the world.

Michael writes from Wisconsin: "I'm very worried. If we don't jettison the old failed ways of doing things, we're finished. The good old boys slap on the wrist for destroying a nation has got to stop. Country first or you go to jail forever."

John in California: "I'm worried about the massive debt my children will inherit. As a country, our answer to almost every problem for the last decade has been to borrow against our future and only now we're seeing the awful results. And this is just the beginning.

Our future is here, now. And the only answer our leaders have is to borrow even more furiously and rack up historic debt."

Karen writes: "If more isn't done to help the middle class, we might not have 20 years left to worry about. We've outsourced the jobs to foreign countries and sold or borrowed against most of our assets. There isn't much left to worry about." Grant in Michigan writes: "Twenty years, Jack? I live in Michigan. I'm way more concerned about waking up tomorrow morning, having a roof over my head, a car to drive and food on the table. Twenty years from now is beyond my comprehension. Get real."

Stacy in Virginia says: "You have to enjoy each day as if it was your last. Hug your kids, kiss your wife, tell them you love them, don't eat too much, sleep in on a Saturday morning now and again and don't worry all the time. Twenty years will fly by."

Dean in New York writes: "No worries at all, Jack. We have some of the best farmland and agricultural technology in the world. We grow more than enough food to feed the country every year. There is a global food crisis looming on the horizon. You think living without oil is tough, try living without bread."

And Larry in Texas: "The beatify of living one day at a time is it eliminates a lot of the worry in life, as it doesn't do any good to sit around and worry anyway. Fear causes us to do things that create more problems in the long run."

If you didn't see your e-mail here, you can go to my blog at, where you can find more armchair psychotherapy for yourself over this weekend -- Wolf.

BLITZER: That's a good idea, Jack.

Have a great weekend.

CAFFERTY: You, too.

BLITZER: Thanks very much.

Making history again -- the National Museum of American History reopening to the public after a major two year renovation. That story next.

And the National Museum of American History in Washington -- we'll be watching what's going on.

Stay with us.


BLITZER: The National Museum of American History here in Washington finally reopens to the public after a two year, $85 million renovation. Former secretary of State, General Colin Powell, was on hand to read President Abraham Lincoln's "Gettysburg Address."


COLIN POWELL, FORMER SECRETARY OF STATE: Four score and seven years ago, our fathers brought forth on this continent a new nation, conceived in liberty and dedicated to the proposition that all men are created equal.


BLITZER: President-Elect Barack Obama's picture has already been added to the gallery devoted to the American presidency.

That's it for us.

I'm Wolf Blitzer in THE SITUATION ROOM.

"LATE EDITION" Sunday, 11:00 a.m. Eastern, CNN.

Let's go to "LOU DOBBS TONIGHT".

Kitty Pilgrim is sitting in for Lou.