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Gates' Press Conference; Obama Meets the Governors; Worst Month in 25 Years; Capitol Hill Tree Lighting

Aired December 2, 2008 - 17:00   ET


WOLF BLITZER, CNN ANCHOR: And to our viewers, you're in THE SITUATION ROOM.
Happening now: dramatic new pictures of the moment bullets started flying in Mumbai, people scrambling for shelter, as the slaughter begins. There's new information coming out right now about the terror plot, new questions about why it succeeded. Stand by. We're going live to Mumbai.

With America mired in a deep recession, Barack Obama sits down with the nation's governors. A former rival appreciates the gesture, but some are hoping the next president will offer a lot more than just friendship.

And, as carmakers make their case to Congress, federal help may come too late for many car dealers. We'll explain why you and your community may be sharing their pain.

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

We have stunning new details right now in the massacre in Mumbai and gripping new images, as well. The video coming out today showing the attack on the train station -- people ducking for cover as bullets fly. Indian authorities are revealing more about the terrorist assault and those who carried it out. At the same time, they're grappling with accusations of poor security, especially following word that U.S. officials actually warned India -- India of a seaborne attack.

Let's go straight to our senior international correspondent, Nic Robertson.

He's in Mumbai watching and reporting on this story -- Nic, what's the latest? What are you picking up?

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, Wolf, as each day goes by after the attack, we're beginning to see more cell phone video emerge -- more closed-circuit camera television emerge from various areas around the city. And we've also heard for the first time in detail from the -- from Mumbai's police commissioner. And he gave details about the attack, describing what he said was a suicide mission.


ROBERTSON (voice-over): With each day of the investigation, more dramatic video. Here, two of the gunmen begin their ruthless killing spree -- their large backpacks and military stride hint at their deadly capability.

HASAN GAFOOR, MUMBAI POLICE COMMISSIONER: They were trained by some ex-army officers and their training lasted, for some people, for a year; and for some, for more than a year.

ROBERTSON: In his first news conference since the attack, Mumbai's police chief said the gunmen had come to "create a sensation and kill as many people as possible."

There were 10 of them, he said, on a suicide mission, directed by the phone over a controller inside Pakistan.

GAFOOR: It appears that it was a suicide attack and I do not think that they had any plans or any hope of (INAUDIBLE).

ROBERTSON: More dramatic video taken from a surveillance camera at the train station -- one of the first places to be attacked has also been released. Cops can be seen cowering behind pillars. Local news stations say it's because they lacked weapons to defend themselves.

There is a rising tide of anger here that the police were not better prepared. They had been warned, according to U.S. officials, of a sea-borne attack. Gafoor denied he had actionable intelligence capable of heading off the attack. The intercept, he said, was too vague.

GAFOOR: Saying that The Taj Hotel and other places of that type can also be exposed to such dangers.

ROBERTSON: Five taxis were used by the gunmen, according to Gafoor. They spread their terror and confusion by planting bombs in at least two of them. He also denied reports of an earlier mission by a team to plan the attack.

GAFOOR: They were shown very detailed maps and they were shown how they could go there. And, in any case, they had gone in attacks.


ROBERTSON: Well, when the police commissioner was asked what sort of cooperation he was getting out of the -- out of the one arrested gunman, he let out a very wry smile and said the cooperation was very good, confirming that the gunmen said he was a Pakistani.

When the commissioner was asked about local involvement and local help that many experts here believe these gunmen must have had, the police commissioner said that they've found none so far -- Wolf.

BLITZER: You mentioned, Nic, that former army officers were training these terrorists. Which countries were they from?

ROBERTSON: Well, you know, Wolf, he was asked that. The commissioner -- Commissioner Gafoor was asked that on several occasions. And he appears to sort of want to tamp down the rising tensions and temperature with Pakistan at the moment, because he said these gunmen were from Pakistan. And the clear implication was that they were being trained by former Pakistani military officers. That has been the allegation all along, that the terror group that these gunmen were associated with had a history of getting training from former Pakistan military officers.

But he backed away from that, though, surprisingly, Wolf, the local television stations here are polling the population to find out what they think the government should do about the -- about Pakistan. Ninety percent of people in one poll here said that they thought India should strike back at Pakistan -- Wolf.

BLITZER: Wow! That's very, very worrisome. All right. Nic is in Mumbai for us. He's standing by. He's covering this story.

India is demanding that Pakistan turn over militant leaders suspected of involvement in the Mumbai plot and earlier attacks in India, as well. And suspicion is directed toward one terror group in particular.

Our justice correspondent, Kelli Arena is joining us live -- Kelli, what are you picking up about this group?

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Well, Wolf, that group is Lashkar-e-Taiba. And while it may not be a name that's familiar to many Americans, in India, it has a long history.


ARENA (voice-over): It calls itself the Army of the Pure. Until it was banned in Pakistan in 2002, Lashkar-e-Taiba, or LeT, claimed responsibility for numerous attacks in India. They stopped fessing up, but experts say the group is as deadly as ever.

MATT LEVITT, FORMER FBI ANALYST: They're believed to have been responsible for attacks in the Mumbai trains in 2006, the attack on the Indian parliament in 2001 and a variety of other attacks not only in Kashmir, but also elsewhere in India.

ARENA: LeT wants to end India's control over Kashmir, but experts say its ideology is much broader and that it sees itself as part of a global jihad against the West.


SAJJAN GOHEL, ASIA-PACIFIC ORGANIZATION: And they have transnational linkages. People in the U.K. and Australia have been convicted for being members of the LeT.

ARENA: The group also has ties to Al Qaeda. U.S. officials say they both share training camps. And that's not all.

LEVITT: Al Qaeda fundraisers in the Gulf fundraised for Lashkar. Abu Zubaydah, one of the key Al Qaeda people picked up and now being held in Guantanamo, was captured in a Lashkar safe house in Pakistan.

ARENA: Much like Hezbollah, officials say the group has a non- terrorist wing, which runs schools and clinics across Pakistan -- making it extremely popular and more complicated to fight.


PETER BERGEN, CNN TERRORISM ANALYST: And when this annual gathering of this group happens, hundreds of thousands of people show up.

ARENA: While Pakistani intelligence was instrumental in helping create LeT, officials now believe it's off the leash.


ARENA: Those officials say the attacks in Mumbai are way beyond anything that Pakistan would have sanctioned or supported -- signaling that the group is on its own and may be more dangerous than ever -- Wolf.

BLITZER: Kelli, thanks for that report. Kelli Arena working the story.

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

JACK CAFFERTY, CNN ANCHOR: Wolf, the Republican Party has long been the party of small government, free markets backed up by big business. But that may be changing now.

Incoming Democratic President Barack Obama is bringing in some big guns to oversee economic policy and he's talked about a second stimulus package and a bailout of the auto companies as top priorities next month when he takes over.

And the big corporations are beginning to like what they're hearing. So much so that Peter Canellos, the "Boston Globe's" Washington bureau chief, suggests in a column today that big business is now shifting its loyalty to the Democratic Party.

The writing's been on the wall for a while. The Democrats out raised Republicans in the 2008 election. The financial sector alone donated more money to Democrats -- $65 million -- than to Republicans -- $59 million. And tradition has it that the big banks have long been supporters of the GOP. So why the shift?

Canellas points to the southern Evangelicals who he says have dominated the Republican Party and, in the process, driven away some very big contributors. Corporate executives who have big bucks but different beliefs have now begun to migrate to the Democratic Party, despite the threat of higher taxes.

And because many Republicans opposed the $700 billion bailout package that was passed in October and the rescue plan for the automakers, well, it looks like GOP isn't going to win back big business any time soon.

Here's the question -- what does it mean that the Democratic Party is becoming the party of big business?

Go to and you can post a comment on my blog.

One of the things it means is the Democrats are in power and those weasels in the corporations will navigate to whoever has got control of the purse strings.

BLITZER: Yes. And I know you know those weasels too, Jack. You've covered them for many years.


BLITZER: All right, Jack. Thank you.

She accused him of "palling around with terrorists." You remember that. But now Sarah Palin comes face-to-face with Barack Obama for the first time since the campaign ended, under rather different circumstances -- possibly looking for help from her former rival. Stand by.

And what does Barack Obama's choice of Hillary Clinton, Robert Gates and others for his new cabinet say about how he will govern? I'll ask our political contributors, Paul Begala and Alex Castellanos. They're standing by live.

And at the moment, he's the lone Republican in the Obama administration. Robert Gates staying on as Defense secretary and now speaking candidly about his differences with the president-elect. You're going to want to hear what he says right here in THE SITUATION ROOM.


BLITZER: A surprisingly candid news conference today by the Defense secretary, Robert Gates, staying on -- staying on as the head of the Pentagon for Barack Obama and detailing some of the extreme changes we can expect to see. We're going to see how extreme those changes are.

CNN's Kathleen Koch has been monitoring what's going on -- Kathleen, you're over at the Pentagon. What did he say, because a lot of our viewers didn't see that news conference and it was rather dramatic.

KATHLEEN KOCH, CNN CORRESPONDENT: Well, Wolf, certainly there are several areas where Barack Obama and Robert Gates do -- you know, they have a little bit of a difference of opinion. But the Defense secretary today carefully downplayed those differences.


KOCH (voice-over): Robert Gates says he won't be a caretaker secretary and that his stint as Barack Obama's Defense secretary is open-ended. Gates, who once opposed Iraq withdrawal timetables like the 16-month one favored by Barack Obama, now says such a schedule was "agreeable."

ROBERT GATES, U.S. SECRETARY OF DEFENSE: He also said that he wanted to have a responsible drawdown. And he also said that he was prepared to listen to his commanders. So I think that that's -- that's exactly the position the president-elect should be in.

KOCH: But the man who says he considers himself a Republican, though not a registered one, also differs with the president-elect on other issues -- Iran, missile defense, nuclear disarmament. Gates would only say that Obama had made it clear he wanted a team who would tell him what he thought.

GATES: There will, no doubt, be differences among the team and it will be up to the president to make the decisions.

KOCH: Still, Gates says the Pentagon will be different under an Obama administration.

(on camera): What immediate changes will we see?

GATES: Well, I think that, clearly, one of the -- one of the first priorities of the administration will be to look at our strategy and approach in Afghanistan.

KOCH (voice-over): Another change -- closer scrutiny of the Pentagon budget and spending. As to political appointees at the Pentagon, Gates said they should still assume they're leaving, but he will have a hand in recommending their replacement to Obama. Gates has thrown away the clock he carried that counted down to January 20th, now that he's taken a job he vowed publicly not to keep.

GATES: So I spent a long time hoping the question would never be popped. I then hoped he'd change his mind. And yesterday it became a reality.


KOCH: An interesting bit of trivia. These two men met to talk about Gates staying on on November 10th -- the very day Obama came to Washington to meet with President Bush. And Gates said they had their secret meeting at Reagan National Airport in a firehouse. He said that the personnel actually pulled the fire trucks, all the engines and equipment out so the men could pull their vehicles in and meet unseen and uninterruptible.

BLITZER: And I remember, that was a great mystery at the time. We covered it live.

KOCH: Mystery solved.

BLITZER: We were wondering, who is he meeting at that firehouse at Reagan National Airport. And now we know.

KOCH: Yes.

BLITZER: Kathleen, thank you very much.

KOCH: You bet. BLITZER: It looks like President-Elect Obama will soon fill another seat at his cabinet table -- and it's another big name. Sources telling CNN Obama plans to nominate the New Mexico governor, Bill Richardson, to be his secretary of Commerce. We're going to bring you that announcement tomorrow morning. There will be live coverage right here on CNN.

Meantime, the president-elect met with the nation's governors today, including one who campaigned hard against him in the fall.

Let's go to CNN's Suzanne Malveaux -- Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, now that the country is officially in a recession, it was really a chance for the governors to sit down face-to-face, behind closed doors, talk to Barack Obama about ways that they feel they can get out of this financial mess, this crisis. It's far from clear what the best approach is. Even the governors are disagreeing.


MALVEAUX (voice-over): In an unprecedented move, the president- elect sat down with the nation's governors before taking office -- a gesture to underscore the serious financial crisis facing the state's leaders and Barack Obama's pledge to address it.

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: A special message I want to deliver to my Republican colleagues who are here. I offer you the same hand of friendship, the same commitment to partnership, as I do my Democratic colleagues.

MALVEAUX: That olive branch was well-received by Alaska's governor, Sarah Palin, who during the campaign, accused Obama of "palling around with terrorists."

GOV. SARAH PALIN (R-AK), FORMER VICE PRESIDENTIAL CANDIDATE: The campaign is over. And I so appreciated this meeting that we had. And, you know, I'm quite optimistic about moving forward in a bipartisan manner, as we do forge this partnership between states and the federal government.

On the campaign trail, I tried to convince the majority of voters that governors knew best. Obviously, that didn't work. I'm here and V.P.-Elect Biden is there. But I look very forward to working with him.

MALVEAUX: Obama and Congressional Democrats are pledging an economic stimulus package once he takes office -- as much as $700 billion worth to try to create new jobs.

Some of the governors are arguing, while they're not begging for money, they do want a piece of the pie.

GOV. ED RENDELL (D), PENNSYLVANIA: I think we're fairly confident that that we're going to get help. What the amount is and what the final product will look like, I don't think any of us have a clue.

MALVEAUX: Federal aid like food stamps, unemployment benefits and money for projects to build state roads and bridges, which they say will create much needed jobs.

But not everyone agrees taking federal bailout money is the right approach. California Governor Arnold Schwarzenegger, who declared his state was in an economic crisis.

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: I will not ask the federal government for help until we get our act together in California. We have to live within our means, so -- which means that we have to make cuts and we have to raise taxes. It's as simple as that. When we have done that, then we can go to the federal government. But right now, we've got to get our own fiscal house in order.


MALVEAUX: Well, the one governor who was notably absent today is New Mexico's governor, Bill Richardson. That is because he's going to be with Barack Obama tomorrow in Chicago. Obama is going to be announcing that it's his pick as Commerce secretary -- Wolf.

BLITZER: Suzanne, thank you.

The scramble is on, by the way, to fill Hillary Clinton's Senate seat now that she's been tapped to become the next secretary of State. Her husband is sending a message that he is not interested, a spokesman for Bill Clinton saying speculation that the former president might want the job is "completely false."

New York's Democratic governor, David Paterson, says he'll name someone next month to fill Senator Clinton's seat until a special election can be held back -- ahead in 2010.

Growing problems for the U.S. auto industry and it turns out they could end up being problems for all of us. The disturbing ripple effect that could spread from Detroit to your town.

And Barack Obama filling his cabinet with moderates -- could he use them as cover for a more liberal agenda?

I'll ask our political contributors, Paul Begala and Alex Castellanos. Stand by for that, right here in THE SITUATION ROOM.


BLITZER: The numbers are now in and November goes down as the worse single month for auto sales in the U.S. in a quarter century. Sales plunged for both imports and domestic vehicles. Take a look at this -- General Motors down 41 percent from last November. Ford down 31 percent. Toyota down 34 percent. Honda down 32 percent from a year ago. And now G.M. is saying it needs $12 billion in government loans if it's to continue operating at all.

Let's go to CNN's Mary Snow.

She's working the story for us -- Mary, there are ramifications for a lot of us way beyond the auto industry.

MARY SNOW, CNN CORRESPONDENT: Yes, Wolf. You know, the ripple effects are hurting local governments and communities. And that's the result of lower car sales translating into hundreds of auto dealers shutting down, with the majority of them sellers of American cars.


KEVIN HOLDORF, AUTO DEALER: Do you know if she reported any deals today?

SNOW (voice-over): Kevin Holdorf says he's never seen a slowdown this bad in the 22 years he's been at this New Jersey dealership. He says roughly 55 new cars sold last month -- a third of fewer sales than in good times. And that's better than most.

While staff and spending have been cut, the effects go far beyond the dealership's doors.

HOLDORF: We deal with a lot of charities in the area -- senior citizen centers, local high schools, Little League. And if any business, especially ours, is having a rough time, that's less that we can give back.

SNOW: So far this year, the National Automobile Dealers Association says about 700 of roughly 21,000 dealers nationwide have gone out of business. And the number is growing. The group is taking out ads urging help from the federal government.

ANNETTE SYKORA, NATIONAL AUTOMOBILE DEALERS ASSOCIATION: Dealers are the local public face of the automobile industry in communities and towns all across America. And so when they go out of business, not only do we lose consumer convenience and competition, but then that economic impact is very dramatic.

SNOW: Part of that dramatic impact, says one policy analyst, is the drop in state revenues.

IRIS LAV, CENTER ON BUDGET AND POLICY PRIORITIES: In a typical state, the auto sales will make up maybe between 12 and 15 percent of all sales tax revenue.

SNOW: And some states could be higher. In New Jersey, one trade group estimates auto dealers make up about 20 percent of all retail sales. It estimates that for every 1 percent drop in new car sales, the state loses more than $8 million in sales tax revenue. And it comes at a time when states are struggling and people are looking to government for more help with unemployment benefits and social services.

LAV: The state and local governments are pretty stuck unless the federal government comes in and helps them out.


SNOW: And it's estimated that by the end of this year, three million fewer cars will be sold compared to a year ago. And that means a loss in billions in sales tax revenues -- Wolf.

BLITZER: And that's going to have, as you point out, a real serious ripple effect.

All right, Mary. Thank you.

Millions of dollars over budget and later than anyone anticipated. Eight years later, the Capitol Visitor Center is finally finished. Was it worth the wait and the money?

Also, President Bush says he's the reason some people voted for Obama. Paul Begala and Alex Castellanos -- they're here to discuss what the president calls -- and I'm quoting now -- "a repudiation of Republicans."

And some people think Obama's national security team means he'll be a centrist, not very liberal. What does that mean? Could it be the opposite?

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


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

Happening now, to run or not to run -- a first term Republican senator decides on the latter for 2010. We're going to weigh the impact on the GOP and what Mel Martinez's decision says about party confidence. Stand by.

Wall Street bounces back a little bit today. The Dow Jones regaining 270 points after yesterday's 680 point slide. Slightly more upbeat news from Ford and General Electric today get credit for the boost.

And more Nixon tapes declassified -- CNN's Brian Todd delves into what insights newly released recordings reveal about the former president.

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

We're standing by for the lighting of the Christmas tree up on Capitol Hill. Nancy Pelosi getting ready to organize that. Once that happens -- there she is. She's speaking right now. Once we see that lighting, we're going to show you that picture. It's always a dramatic scene. We're getting ready to hear and to see what's happening on Capitol Hill.

In fact, let's listen in briefly to Nancy Pelosi and see how close we are to the lighting of this tree.

(JOINED IN PROGRESS) REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: Wave to them. They can see you, although you can't see behind the tree. They're wonderful and they're visiting with their families. And we think of them every day in this holiday season. We want to give them special thanks. Some are far from home. All of them have made a sacrifice for our country and we want to thank them. And I thank you for joining me in that.

This year, we are joined by a remarkable young man who helped me light the 2008 Capitol Christmas tree. His name has been mentioned earlier, Chris Gabrielson, who is a student at Sunnyside Primary School in Havre, Montana.

There's Chris. There's Chris. This tree...


PELOSI: Yes, Chris!


PELOSI: Not yet, though. Not yet.


PELOSI: This tree was trimmed with young people in mind -- with Chris -- like Chris in mind, because it continues our commitment that I started when I became speaker -- the greening of the Capitol to fight global warming. Our tree uses energy-efficient L.E.D. lights. When the holiday season ends, the light's mulch will be used here on the capitol grounds. The roughly 5,000 ornaments that Chris and his fellow Montanans handcrafted will also be donated to local charities, will be used and donated to local charities.

I want to thank the architect the of the capitol Steven Ayers and deputy undersecretary Simpson for selecting and decorating this year's tree. The holidays are a time to join with family and friends to celebrate the many blessings bestowed on us. I hope while you're here, this is a special day, because this morning we dedicated the capitol visitors' center. It's on the other side of the capitol, and I hope that you have time and can take time to visit there and learn more about our country's early days as -- as envisioned by our founders and practiced by the Congress.

And all of us who spoke there this morning spoke about in god we trust, all of the gifts that god has given us and how blessed we are. We should also say a prayer this holiday season when the peace we hope for ourselves and for our families is visited upon all of the people in the world, to the air force band, to our heroes on the balcony, peace on earth is made possible because of your sacrifice, and we thank you and we pray for you. There's nothing more beautiful than the excitement of children, both young and old, as a decorated tree is lit for the first time.

With Chris' help, we're going to light the Christmas tree, but I'm sure Chris wouldn't mind if lots of the other little children came up and joined us as we did that. Some of them may want to be up here.

Does anybody want to be up here as we light the tree? All right. Come on up. Be in the picture. Be on TV. Do any of our celebrities or politicians want to join us here?

Leave it for the kids.

Leave it for the kids. Thanks, darling. Any more kids?

UNIDENTIFIED MALE: Get them all together.

PELOSI: Young at heart. Here we go. Here they all are. Oh, my god, lots of kids here. Lots of kids here. All right. Not shy at all. OK. Now here we. Are you ready? Are you ready to turn on the lights of this beautiful tree from Montana, while blessed we are with this beautiful evening so we can see so clearly the beautiful gift that people of Montana have given to the people of America. So, Chris, how does this work? What do we do here? Chris, you have to just do that, OK? That will do it. Come on, Chris. Here we go. One, two,

UNIDENTIFIED MALE: It didn't work.

PELOSI: It did.

BLITZER: All right. So there it is, the beautiful lighting of the Capitol Hill Christmas tree. This tree coming in as we heard from Montana. It was originally 100 feet. It was cut down to 73 feet. It's a stub alpine fir and will stay lit on Capitol Hill. In the coming days, we will see the White House light its Christmas tree as well. The president and first lady will be there for that. It's an annual tradition right here in Washington.

Senator Mel Martinez, a first-term Republican from Florida, will not seek re-election in 2010. He made the announcement in Orlando today, saying he wants to spend more time with his family. Let's go to our senior political analyst Bill Schneider.

Bill, what's behind this decision? It comes as a surprise to a lot of us.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: In many ways it signifies the failure of the Republicans' outreach to minorities and problems facing the party in 2010.


SCHNEIDER: Special pride in Florida Senator Mel Martinez, former chairman of the Republican Party and the only Latino Republican in the senate.


SCHNEIDER: Well, I was saying the Republicans have always taken special pride in Senator Mel Martinez. He's the former chairman of the Republican Party and the only Latino Republican in the United States senate -- Wolf? BLITZER: It looks like we had a little technical problem with your tape over there. But do we know what's behind this decision, how frustrated Republicans might be? The Democrats in the senate right now are up to 58. There's still two open races in Georgia. We're about to know later tonight who won in Georgia and then in Minnesota, where there's a recount going on. What are we hearing about Martinez saying he wants to spend more time with his family? We hear that a lot but there must have been other factors.

SCHNEIDER: He's a first-term Republican. He won Florida in 2004 by just one point, a very narrow victory. This year Barack Obama won Florida by three points. And 2004 was a much better year for Republicans. So he's obviously worried about re-election. It would be a very tough election next year. Normally a midterm election is good for the party out of the White House, which would be the Republicans in 2010. But, as I said, Florida went for Barack Obama. There are a lot of independent voters in Florida, and it looked like it would be a very tough re-election for Senator Martinez.

BLITZER: All right, we'll watch very closely to see the fallout from this. Thank you. Bill Schneider. Alex Castellanos and Paul Begala are standing by live. We'll assess what's going on.

And Richard Nixon and Henry Kissinger, raw and unfiltered. What they talked about, how it impacted. And that's just for starters of the latest recordings from the Nixon White House. We are getting those.

Stand by. We will be right back.


BLITZER: Let's get back to what we just heard from Bill Schneider. Mel Martinez, the Republican incumbent Senator from Florida, former chairman of the Republican national committee, he's decided not to seek re-election in 2010. Is this a sign of Republican disillusionment? Let's discuss this and more with our CNN political contributors, Democratic strategist Paul Begala and Republican consultant Alex Castellanos. Alex, what do you make of this?

ALEX CASTELLANOS, REPUBLICAN CONSULTANT: First of all, merry Christmas, Wolf. It's a little discouraged to see Congress can't light the national Christmas tree but they are going to fix our economy. But merry Christmas anyway.

BLITZER: They eventually lit it.

CASTELLANOS: They got it going. Good for them.

I think Florida is not as bad of shape for Republicans as some might have it. First of all, the two Cuban-American Congressmen down there who share the same background as Mel Martinez faced really tough races this time, were heavily targeted by the Democrats, had a lot of money against them and guess what? They won.

So the prospects for Mel Martinez, who's done a very good job as Senator, were actually very good. He's retiring for personal reasons. When he became mayor, you know, years ago, he never planned to spend a life in politics. Besides that, a lot of Republicans are now encouraging Governor Jeb Bush, the former governor of Florida, who's going to set the gold standard for governing down there, they are encouraging him to look at this race. He said, I heard from Governor Bush today and he said he will take the next month and look at it.

BLITZER: That would be a formidable challenging for any Democrat, Jeb Bush. He's a pretty popular former governor in Florida, Paul, don't you think?

PAUL BEGALA, DEMOCRATIC STRATEGIST: Yes, I think -- my advice, I think he's a former client of Alex's. Let me give him some free advice. Change your name. Run as John Ellis not John Ellis Bush. The Bush brand is probably croaked Mel Martinez. I will say, even as a Democrat, Senator Martinez is one of the good guys in this business. He does love his family. He has three great kids and grandchildren. I happen to know this because my boy used to play little league with his son Andrew, who is a hell of a ball player, too.

It's not just that but the politics of it. He was in Bush's cabinet and Bush's chairman of the Republican Party. That puts a big partisan and Bush stamp on Mel Martinez. The Republican governor of Florida, even though with things going back for Republicans, Charlie Crist, very popular. Senator Martinez, very unpopular. Not because he's done anything all that bad but it's the Bush stain.

So I think I'd really worry. The Democrats are happy they don't have to run against Mel Martinez. They are looking at Alex Sink, the CFO down there. There's a number of really good Congressmen as well, Allen Boyd, one of the blue dogs or Kendrick Meek or Ron Kline. Democrats feel they have a strong bench there.

BLITZER: Let's talk about President Bush for a moment. I want to play a little clip of what he told ABC News and get your assessment. Listen to this.


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I think it was a repudiation of Republicans and I'm sure some people voted for Barack Obama because of me. I think most people voted for Barack Obama because they decided they wanted him to be in their living room for the next four years explaining policy. In other words, they made a conscious choice to put him in as president.


BLITZER: But he does say at the beginning of that clip, you heard, Alex, I think it was a repudiation of Republicans, his reference to the losses that the Republicans suffered not only in the White House race but in the races in the house and senate.

CASTELLANOS: Well, I think that's true, it was repudiation of the Republican brand. Of course, that brand was defined by the top of the ticket, by the top of the party and that is the Bush administration. You know, the Bush administration's done many things right. It kept us safe for seven years. But Republicans are supposed to be the party of order and security and making things Republican on time, and Democrats the party of compassion and caring.

Well, we didn't do a very good job with the order and security part. Americans feel that more uncertain about the world than ever. We spent more than we should have spent, and we're supposed to be the party that keeps that under control. Yes, we violated the Republican brand but it came from the top down, and I do think though it was a repudiation of this particular administration.

Interestingly enough, you know, Jeb Bush is his own brand in Florida. His numbers, even though his last name is still Bush, he's still loved down there because of the job he did. There's a new generation of Republicans out there, I think, that you're going to see emerge now after this administration is done. And I think Jeb Bush and Bobby Jindal, those guys are going to make it on their own, not as symptom or result of the Bush brand.

BLITZER: Listen to Peter Beinart. I'm going to read something to you, Paul, he writes in "Time" magazine about Obama's decision to pick some moderates, even hawks, if you will, not necessarily go to the liberal wing for the Obama party for his national security team. "When George W. Bush wanted to see the Iraq war, he trotted out Colin Powell because Powell was nobody's idea of a hawk. Now Obama may be preparing to do the reverse. To give himself cover for a withdrawal from Iraq and a diplomatic push with Iran, he's surrounding himself with people like Gates, Clinton and Jones, who can't be lampooned as doves." Does Peter Beinart have a point?

BEGALA: I think he probably does but although I would very careful not to try to ascribe political motives to what the president- elect is trying to do here. I actually think he's gotten the briefing. He's inheriting one whale of a mess. He wants the very best people. He's a pragmatic person. He's not the left ideologue that Sarah Palin and John McCain and others tried to point him as and know is he as perfect for what people on the left might have hoped. What he will be is very pragmatic. This whole ideological description, I think, is inept. Here's what he's going to do. He will responsibly re-deploy troops out of Iraq and end that god-awful war. He will end Americans torturing their fellow human beings in Guantanamo Bay. This is not exactly the radical left to do what George Washington said and stop torturing people.

BLITZER: We will leave it there, unfortunately, but continue, as I always say, this conversation. Paul Begala, Alex Castellanos, thank you.

A new view on an historic moment in American history. Audiotapes, you never heard these before of Richard Nixon and Henry Kissinger using some rather blunt language. The latest tapes from the Nixon White House coming up.

And lost in space, astronauts return from space without their missing toolbag. But you might be able to find it online. We'll explain right here in THE SITUATION ROOM. (COMMERCIAL BREAK)

BLITZER: Recording his White House activities helped lead to his downfall but Richard Nixon's file help provided provide a wealth of information on his presidency. Now there are more recorded documents that have just been released by the Niflen library and museum.

Let's go to Brian Todd. He's been digging through these audiotapes and documents. Tell the viewers what you're picking up, Brian.

BRIAN TODD, CNN CORRESPONDENT: Wolf, this is 200 hours of White House recordings, 90,000 pages of documents just released by the Nixon library and museum, much of this covering between the 1962 re-election and his inauguration. Some of the most colorful exchanges we found were present President Nixon and Henry Kissinger over what to do with the intractable North Vietnamese.


TODD: December 14th, 1972. Then-national security adviser Henry Kissinger returns to Washington from the Paris peace talks. Negotiations to end the Vietnam War have broken down. In a meeting with President Richard Nixon, Kissinger says the North Vietnamese have double-dealed him over and over Nixon, Kissinger has said they have done him over and over. He blurts out his frustration. Later in the conversation, Kissinger lays it on the line, about the only way he thinks the North Vietnamese would make concessions.

HENRY KISSINGER, FORMER U.S. SECRETARY OF STATE: I would recommend that we be open to the possibility of this settlement. If the other side meets some very minimum conditions that we have indicated. I would then recommend that we start bombing the bejeezus out of them within 48 hours.

TODD: The Nixon library director says listeners can take a simple message from the frustration over Vietnam shown by Kissinger and Nixon.

TIMOTHY NAFTALI, DIR., NIXON LIBRARY & MUSEUM: It's a reminder that our government, even though we're the most powerful in the world, government couldn't control everything.

TODD: In that same conversation, Nixon is inches towards ordering the bombing of North Vietnam. He tells Kissinger how he wants it presented to the public.

RICHARD NIXON, FORMER PRESIDENT OF THE UNITED STATES: This war must end. It must end soon. And if they don't want to talk, we will have to go there. If they won't return our prisoners we want to get back soon, we're going to take the necessary military action to get them back. That's what you've got to get across.

TODD: Later that day, Nixon orders the escalation of the bombing which did bring North Vietnam back to the bargaining table.


TODD: As we all know, a peace agreement was later signed in January of 1973. Despite that frustration shown by Kissinger with his North Vietnamese counterparts, he shared a Nobel peace prize with the lead negotiator that same year, Wolf, fascinating to see how some of that sausage was made.

BLITZER: You also found another fascinating recording, Brian, involving Nixon and a very young Senator Joe Biden?

TODD: That's right. 1972, just after Joe Biden's election to the senate, Nixon called to console Biden over the death of his wife and child. We'll bring you that the next hour.

BLITZER: All right, Brian. Thanks.

Richard Nixon isn't the first president to use secret recordings. Franklin Roosevelt recorded over oval office press conferences in 1940. It had a bulky microphone in the lampshade on his desk. Harry Truman inherited that setup but wanted nothing to do with it. And a monster of a machine in a dummy telephone. And John F. Kennedy had microphones in the cabinet room and the oval office and recorded nearly 300 meetings as many phone conversations. Also, Lyndon Johnson recorded thousands of phone calls, including sensitive conversations on the Vietnam war and on civil rights. A little history for you right there.

Space shuttle "Endeavour" and its crew safely landed on Sunday but not all the equipment made it back to earth. A bag of tools lost in the space walk is floating in space. You can track its location actually online. How do you do that? Abbi Tatton is here with information. Wow.

ABBI TATTON, CNN INTERNET REPORTER: Wolf, we saw this video the moment when astronaut Heidi Marie's tool bag floated away. There it goes out of her hands. $100,000 worth of scrapers and grease guns lost forever. That is until it showed up in the skies above New Jersey.

See, tracking the errant tool bag has become quite the pastime for amateur astronomers. They are watching it on this map which is posted online. There it goes right now heading towards Australia, they claim to have captured video of the tool bag in the night sky. This posted on YouTube by Kevin Fedor. You see it moving very quickly there in the Ontario, Canada. NASA says this will fall to earth sometime next summer, but then it will burn upon return. So no chance of a grease gun ending up in your backyard.

BLITZER: All right. Thank you. Fascinating material. It's amazing what's going on.

John McCain and Condoleezza Rice, the former presidential candidate and secretary of state, they're both on their way to India right now both hoping to help in the wake of the Mumbai attacks.

Plus, she made some attacks, but now Sarah Palin and Barack Obama, they're meeting face-to-face. We have details in THE SITUATION ROOM.


BLITZER: I just want to point out to our viewers that in THE SITUATION ROOM, our political coverage seems to be making a pretty big impression on viewers and a lot others. But who knew the guys on "Monday Night Football" are watching as they are. Listen to the shout out we got during last night's game when commentator Tony Kornheiser compared one team's locker room to a campaign spin room. Listen to this.


TONY KORNHEISER, ESPN BROADCASTER: It was an unbelievable sort of spin room circumstance, worthy of either James Bond or -- I didn't get it at all.

MIKE TIRICO, ESPN BROADCASTER: I thought you were Wolf Blitzer for a second, here in THE SITUATION ROOM.


BLITZER: That was Mike Tirico. Nice to get a shot out on "Monday Night Football," isn't it?

CAFFERTY: It is. It's scary the shots of the fans in the stands.

BLITZER: Yes, that is also true.

CAFFERTY: Monday night, they're way out of control.

The question this hour: What does it mean that the Democratic Party is becoming a party of big business?

Randy in Salt Lake City writes: "It means nothing will change. We now live in a fascist nation where corporate profits are private and corporate losses are socialized. It doesn't matter who's in the White House, the corporations run everything. We're all doomed."

Jackie in Dallas writes: "To me it means that someone is swallowing the KoolAid big time. President-Elect Obama, the titular head of the Democratic Party, has shown that he doesn't want his administration to be unduly influenced by big business but it's foolish to assume or even hope that big business won't play a major role. What are the jobs going to come from? Where are the products to be made here going to come from if not from big business?"

Gip in Florida writes: "Jack, where have you been? This is how it's done. Business 101 has nothing to do with politics. Both parties are corrupt and not going to change. They know Americans are not going to demand ethics and morals. We have none!"

Brian in Trinidad: "The Democrats may not be the party of big business but they have certainly taken on the mantle that they will sell out their mothers for the right price. I'm sorry but I don't see the bright lights coming out of the Obama White House that so many of you media big shots see. I think he'll be worse at getting the job done than Bush."

Richie in Wisconsin: "That's a loaded question. I don't think the Democrats are becoming the party of big business. I just think that they're becoming the party that's going to get stuff done, abetted by the Republicans. The markets can smell a dying breed when they need to. They recognize the failings of the Republicans just like the rest of the country did."

If you didn't see your e-mail here, you can go to my blog, look for yours there among hundreds of others -- Wolfman?

BLITZER: All right. We will, Jack. Thank you.