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Stunning Job Losses in November; Auto CEOs: We Could Collapse Soon; Interview With Commerce Secretary Carlos Gutierrez

Aired December 5, 2008 - 16:00   ET


WOLF BLITZER, CNN ANCHOR: Happening now, America's biggest job losses in three decades. There are startling new numbers out today, and there's a huge challenge for the president-elect, Barack Obama. This hour, why the economic crisis may be even worse -- worse than it seems.
Plus, new fuel for supporters of the big three bailout. The new jobs report adding to the fireworks as automakers make yet another desperate appeal to Congress.

And a powerful congressman under fire again. Democratic Congressman Charlie Rangel of New York paid his son some major campaign bucks to create a Web site. Did he cross any ethical line, and what, if anything, will the House Speaker Nancy Pelosi do about it?

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

Stunning job losses in November. More families across America facing personal crisis right now.

The Labor Department reporting 533,000 jobs vanished last month alone. That's the biggest loss since 1974.

The unemployment rate climbed to 6.7 percent, the highest in 15 years. And even more layoffs are on the horizon.

Check out some of the worst corporate cuts announced recently. AT&T slashing 12,000 jobs. Dupont shedding 2,500 jobs. The Avis Budget Group cutting another 2,200 jobs. Viacom slashing 850 positions.


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Today's job data reflects the fact that our economy is in a recession. This is in large part because of severe problems in our housing, credit, and financial markets, which have resulted in significant job losses.


BLITZER: All right. Let's go to our Chief Business Correspondent Ali Velshi. He's here.

Ali, the 533,000 job losses last month, that by no means tells the full story. What about the jobs that the U.S. economy simply aren't counting in their loss?

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Well, let me tell you, you said it was stunning. It is stunning. You'd think we'd be immunized to these things, but we're not.

Those job cuts that you just announced, those layoffs, those are not even included in this report. These are the November job losses, 533,000 versus 320,000, that we thought we were going to loss.

That means that in the first 11 months of 2008, you add it all up, we've lost 1.9 million jobs. A third of those have been since September. A quarter of them were in November alone.

Now, that means we're going to top two million this year. That's an average of 172,000 jobs lost every month.

Economists tell me very clearly that in a healthy economy, just to keep up with the growth in the working age population, the United States needs to add 100,000 to 150,000 jobs a month. They need to add 100,000 to 150,000 a month. We're losing an average of 172,000 a month, and the pace is accelerating, Wolf. That's the problem. How do you get out of recession if people can't buy things, if they can't spend, if they are not paying their taxes, they're actually recipients, in many cases, of money from the government?

The other thing to remember, Wolf, the unemployment rate has gone from 6.5 to 6.7 percent. But that only measures people who are employed or are on unemployment benefits and actively looking for a job. Almost half a million people in November dropped off that list entirely.

So economists say don't dwell on the low 6.7 percent unemployment rate. The situation is more dire than that.

BLITZER: Because that number, that 6.7, presumably is going to go up.

Nearly two million jobs, as you say, lost this year alone. Give us some more context, some more perspective on potentially what this means for the economy as we go forward.

VELSHI: Interesting scenario. Let me take you over to the wall for a second.

We started this recession in a housing crisis. That's not typical. We've never seen a recession in the United States start from the subprime mortgage crisis. Usually it's something else, and then people can't make their payments and then they lose their homes.

Look at this. In November, 1.3 million foreclosures. That's an increase of 76 percent. A foreclosure is after you've defaulted, after three months of not paying, the bank moves in to try and get your House.

If you add up all the foreclosures and the delinquencies, people in America who are late on their mortgages, look what you've got. You've got 10 percent of all mortgages in the United States are affected. Ten percent of all mortgages in the United States are in danger right now.

Now, that's a problem, because these are new people who have lost their jobs. Many of these are not subprime. These are prime, these are people who had good jobs, who didn't buy more house than they could afford, but they lost their job and this whole credit crisis has affected them.

That means we're going back into a loop where unemployment is now causing a new leg of a housing problem, Wolf. A lot of problems today.


VELSHI: Really dire, yes.

BLITZER: Certainly dire. Thanks very much.

And potentially it could get worse. The president says the disturbing job loss is even more reason to help the nation's automakers. Today he expressed worry about the companies and what might happen to workers and their families. So the president's urging Congress to act right now.


BUSH: I put out a detailed plan recently that uses money that Congress appropriated last fall. For the auto industry, money that can be used so long as the companies make hard choices on all aspects of their business to prove that they cannot only survive, but thrive.

It is important that Congress act next week on this plan. And it's important to make sure that taxpayer money be paid back if any is given to the companies.


BLITZER: He's talking about an existing $25 billion program not intended to bail out the automakers, but rather to help them make more fuel efficient cars.

Meanwhile, the big three CEOs have returned to Capitol Hill today.

Let's go to Capitol Hill. Our Congressional Correspondent Dana Bash is watching what's going on.

Skepticism yesterday, Dana. How did it turn out today?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well, I can tell you, Wolf, that, you know, listening to President Bush in terms of the money for the bailout, Democrats definitely still do not agree with him on where the money should come from for an auto bailout. But to answer your question, you kind of get the sense here that across the board, there is more of a feeling that something should be done to help Detroit.


BASH (voice-over): Auto executives returned minutes after news broke of the worst unemployment report in three decades. And the committee chairman called it evidence why Washington cannot let Detroit fail.

REP. BARNEY FRANK (D), FINANCIAL SERVICES COMMITTEE: In the midst of the worst economic situation since the Great Depression, it would be an unmitigated disaster.

BASH: Skepticism still dominated about whether $34 billion taxpayer dollars can really put struggling auto companies on the road to profitability.

REP. DONALD MANZULLO (R), ILLINOIS: We need to encourage Americans to start buying cars again, and that is not an end (ph) to the plant.

BASH: Yet, concern that an estimated three million more jobs could be lost if the big three collapse yielded signs lawmakers may finally be ready to seriously look for compromise.

REP. PETER KING (R), NEW YORK: But the fact is I think the time for posturing is gone, the time for partisanship is gone. We have to address this very, very seriously.

BASH: One idea gaining traction among Democrats, condition any loan on the government restructuring the auto companies by either an oversight board or individual appointed by the president.

But leading Republicans say they'd only go for that if auto unions gave concessions on wages and benefits, and the United Auto Workers opened the door to that.

RON GETTELFINGER, UAW PRESIDENT: Yes, sir, we are willing to go back to the bargaining table, providing everybody else comes to the table, as well.

BASH: But it could be near impossible for deeply divided lawmakers to quickly agree on major restructuring in Detroit. So one veteran Democrat suggested a short-term bridge loan to GM and Chrysler to avoid collapse. But along with his idea, a lecture.

REP. PAUL KANJORSKI (D), PENNSYLVANIA: It almost looks to me like you hope that with that target coming down on us, you're going to get us to do something and just throw the money out there and say, go ahead, do with it as you will.


BASH: Now, a Democratic leadership aide tells CNN that the Senate Majority Leader Harry Reid has instructed top lawmakers to spend all weekend trying to come up with some kind of legislative option or options that they could bring to the Senate floor next week. That is their goal, according to this aide. And Wolf, that is quite optimistic given the fact that there is still little evidence of consensus on this very important issue right now.

BLITZER: And as I've been saying all along, the stakes clearly are enormous.

Dana, thank you. We'll check back with you soon.

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

JACK CAFFERTY, CNN ANCHOR: Wolf, President-elect Barack Obama isn't even in office yet, and already, members of his own party are whining. You'd think after the last eight years they would be so happy to have him on his way to the Oval Office that they'd keep their big mouths shut. But no.

Some Democrats, including House Financial Services Committee Chairman Barney Frank of Massachusetts, are complaining they want a more assertive Barack Obama. The president-elect insists there's only one president at a time -- and Congressman Frank, he's right about that -- although some say his numerous press conferences and his public image suggest that he's being more presidential than the president.

It doesn't matter. Members of his own party say he's not being aggressive enough when it comes to critical economic issues facing the country like the potential collapse of the auto industry and the mortgage meltdown.

President-elect Barack Obama called for an extension of unemployment benefits which passed, and has talked about a stimulus package before he takes office. He's also said he wants to help the automobile industry. But apparently that's not enough for the whiners like Congressman Barney Frank.

So here's the question: Is President-elect Obama being assertive enough when it comes to issues like the auto industry and the financial crisis?

Go to You can post a comment on my blog.

I mean, the guy can't win. You know? He's not even in office yet, and he's already got Democrats, not Republicans, his own people, whining about, well, you're not doing this and you're not doing that. Why would he even want this job?

BLITZER: There are a lot of whiners out there.

CAFFERTY: Indeed, there are.

BLITZER: Jack, thanks very much.

In these, the final days of the Bush White House, the economy is going from bad to worse. And even the president is now acknowledging that we are in a recession. I'll speak about that and more with the commerce secretary, Carlos Gutierrez. We'll talk about how the administration allowed this to happen.

And are Republicans clamoring for a Sarah Palin presidential bid in 2012? It's not too early to ask them. And guess what? We did.

And in our "Strategy Session," will Caroline Kennedy be tapped to fill Hillary Clinton's Senate seat? Lots of speculation on that front going on right now.

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


BLITZER: As you just heard, the nation's automakers are warning of a nightmarish economic scenario. If they don't get billions in American taxpayer money very soon, possibly millions of Americans will lose their jobs. So they continue to press their luck on Capitol Hill right now.

Joining us now to discuss what's going on is the Commerce Secretary, Carlos Gutierrez.

Mr. Secretary, thanks very much for coming in.


BLITZER: The last time we spoke, you made it clear, President Bush made it clear, that there is $25 billion out there in existing Energy Department funds that could be used to help the auto industry. You say use that money as opposed to the $700 billion, which also has been approved that's helping the big financial giants, the banks and others.

I mean, the money comes from U.S. taxpayers. What's the difference if it comes from the $700 billion or the $25 billion? It's still coming from the same U.S. Treasury.

GUTIERREZ: Well, the $700 billion were earmarked for the financial industry, and very specifically. It was done for the financial industry to get the industry back in shape, to get credit flowing. And we believe it's important to keep that commitment and not open up that rescue package to so many other industries that it's going to be tough then to haul it back and put a limit on it.

The good thing about it, as the president said this morning, there are $25 billion that have been allocated to the automobile industry. So the money is there. It's been allocated to the industry. Congress just needs to act to amend that Section 136.

We suggested this two weeks ago. We continue to believe that the solution is here. We also would like to see that the companies have a plan for viability and are willing to make the tough choices that will lead to that. BLITZER: Let me just show our viewers some statistics out there as part of the government bailout for Citigroup -- $45 billion; AIG, $40 billion; Wells Fargo, $25 billion; JPMorgan Chase, $25 billion; Bank of America, $25 billion; Goldman Sachs, $10 billion; Morgan Stanley, $10 billion.

Once again, what's wrong with using some of that money that is bailing out all of these financial institutions, using it for Ford, GM and Chrysler, when, literally, at least a million, some say as many as three million jobs, are on the line right now in an enormously difficult economic time?

GUTIERREZ: Well, we believe that it's very important to stay focused on the financial industry and to ensure that that money goes where it was intended. The great thing about it, Wolf, is that we have an alternative. We have an option. We have something that we can -- that we can use without getting into the debate as to, where do you stop?

BLITZER: But if Congress insists on saying they're not going to use that money, the $25 billion from the Energy Department, they want to use some of the money from the $700 billion, is that a hard and fast Bush administration stance, you're not going to accept any money from the $700 billion?

GUTIERREZ: We have been very clear. We brought forward a solution two weeks ago. We haven't heard solutions from the Congress. We haven't heard ideas.

We believe that that 136 is right there. It's just waiting for us to use it. And we don't understand why we should be having this debate about where the money comes from, especially since we don't have to have the debate about the rescue package.

We have a solution. The president offered this up three weeks ago. We hope the Congress takes it so we can move forward and ensure that this industry doesn't fail.

BLITZER: In a nutshell, very quickly, the two million jobs, nearly two million jobs lost this year alone -- that number is going up -- is there one single reason why this economy has turned so sour?

GUTIERREZ: Wolf, it's a good question. Let me just go back to September to date.

The last three months, we have seen an increase in the reduction of jobs. And that is a very clear demonstration of why we say that Wall Street is linked to Main Street, that the financial economy is linked to the real economy.

That's when the credit crunch started. And we're seeing that being reflected in the loss of jobs. That's why priority number one has to be to have a laser-like focus on ensuring that the financial system gets fixed.

BLITZER: It sounds like that's even, from your perspective, more important than fixing the auto industry.

But I want to ask you on another subject, totally unrelated, a subject close to your heart, Cuba -- Fidel Castro writing a column in Cuba saying Cuba is open to a direct dialogue with the president- elect, Barack Obama.

Is it time for a direct dialogue to start between the Cuban government and the U.S. government?

GUTIERREZ: We think it's time and the president thinks it's time for that system in Cuba to change. It hasn't worked. It's not working. People are being oppressed.

There was an article this morning about Internet bloggers now being harassed and being threatened with jail time. The time is for that system to change, not to legitimize a government that has done nothing but oppress and keep a whole society down. It's time for change in Cuba. That's the only thing that needs to happen now.

BLITZER: Carlos Gutierrez is the commerce secretary until January 20th.

Mr. Secretary, thanks for joining us.

GUTIERREZ: Thank you, Wolf.

BLITZER: Appreciate it very much.

What might the powerful speaker of the House do with one of the most powerful members of the House? Charlie Rangel, he's embroiled in new controversy, dogged by some ethics questions. We're going to talk about that. Brian Todd is working the story.

And we're also seeing the worst job loss in more than 30 years. But one group says there is a way to potentially create nearly two million jobs right away.

We'll explain right here in THE SITUATION ROOM.



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

Happening now, counting up Barack Obama's war chest. Millions spent, millions still left in the bank. The president-to-be broke all sorts of records for campaign fund-raising. We're crunching these staggering numbers.

The U.S. Supreme Court holds talks today on whether or not to consider a lawsuit challenging Barack Obama's future presidency. Plaintiffs say the president-elect is not a natural-born American. Stand by.

O.J. Simpson sentenced for armed robbery and kidnapping. If it holds, he'll spend at least nine years in prison. Here's the question -- was justice served?

All that coming up in our next hour right here.

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

Every day Barack Obama gets closer to becoming president of the United States. It seems there is more dire news though about the U.S. economy every single day, as well. Today's jobs numbers driving home the enormous challenge the president-elect is taking on.

Our Senior Political Correspondent Candy Crowley is covering the transition to power in Chicago, watching all of this for us.

He's not wasting any time in expressing his concern about these really dire job numbers, is he, Candy?

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: No, he's not. I mean, after almost every day of bad economic news, the Obama transition does, in fact, put out a statement. The problem is that each time there is bad economic news, it raises both the expectations as well as the pressure on Barack Obama, because some people on Capitol Hill want him to step up.


CROWLEY (voice-over): November brought the worst monthly job loss figures in more than 30 years. Barack Obama's transition office issued a written statement with the usual warning. "The economy," Obama said, "is likely to get worse before it gets better, but now is the time to respond with urgent resolve."

But for Obama, now is in 46 days, when he can begin to implement his plan to create jobs. That includes pumping federal money into states for road and bridge and public school projects, offering a temporary $3,000 tax credit to companies that add jobs, and eliminating the capital gains tax for investments in small businesses.

On Capitol Hill, there is a growing fear that 46 days will be too late to solve the most urgent business at hand -- what to do about the big three. The president-elect says the auto industry cannot be allowed to go under, but Democrats want more.

SEN. CARL LEVIN (D), MICHIGAN: I hope that the president-elect would also take a more forthright and positive and public stand now that these hearings are over.

CROWLEY: This is as much about politics as policy. Obama's support for the plan could provide some cover for lawmakers who see the polls.

In the latest CNN/Opinion Research Corporation poll, six in 10 Americans oppose federal assistance for the auto industry. But Obama's politics are different. If he were to put his stamp of approval on a plan, it could fail, a loss of political capital before he ever takes office. SEN. CHRISTOPHER DODD (D), CONNECTICUT: I don't think he necessarily wants to get drawn in -- and I wouldn't blame him -- to a situation he cannot really effectuate.

CROWLEY: Still, Capitol Hill sources say the Obama team, at many levels, have discussed the bailout, including talks between the president-elect and the congressional leadership.


CROWLEY: But, at this moment, there is no sign either on Capitol Hill or in the Obama transition office, that he intends to take a aggressive stance when it comes to some of the solutions for what ails this economy -- Wolf.

BLITZER: Candy Crowley, covering the transition to power in Chicago, thank you.

And, as we know, nearly two million jobs lost this year alone. Could nearly two million jobs be created and be created really quickly? One group thinks the answer is yes, and describes a not-so- secret way to do it.

Abbie Boudreau of CNN Special Investigations Unit is here in THE SITUATION ROOM today.

You have been looking into this with your team. What are you discovering?

ABBIE BOUDREAU, CNN SPECIAL INVESTIGATIONS UNIT: Well, Wolf, imagine if 1.8 million new jobs could be created.

Well, that's what the American Association of State Highway and Transportation Officials says could happen if states get the money to pay for critical road and bridge projects.

We were given exclusive access to the association's new report, that puts the cost of all these projects at a staggering $64 billion.


BOUDREAU (voice-over): The report lists more than 5,100 projects around the country that the association says could be started within six months, if they only had the money.

JOHN HORSLEY, ASSOCIATION OF HIGHWAY AND TRANSPORTATION OFFICIALS: You have got states in every part of the country that have needs and have practical projects ready to go that can put a lot of people to work.

BOUDREAU: John Horsley, the group's executive director, says the new construction and repair work will generate just the kind of economic stimulus the Obama administration is looking for, creating a possible 1.8 million new jobs.

Just this past week, President-elect Barack Obama told the nation's governors he's looking forward to listening.

BARACK OBAMA (D), PRESIDENT-ELECT: Where you think an investment on the part of the federal government will make the biggest difference, how we can reduce health care costs, rebuild our roads, our bridges, our schools, and ensure that more families can stay in their homes.

BOUDREAU: The report says, Utah needs $10.8 billion for crumbling roads and bridges, Florida $6.9 billion, California $5 billion. Pennsylvania needs $1 billion, partly for fixes to interstates in Philadelphia, fixes that could begin shortly after a check is written.

I went along with bridge inspector James White (ph), as he examined an elevated section of I-95 built in the 1960s.

(on camera): But this stretch road has already had its problems. I know it's been shut down due to structural problems just once before, not too long ago.

UNIDENTIFIED MALE: That's correct. The -- 95 was closed down a little further north of our location right now.

BOUDREAU: Right. And that was in March, when an inspector actually found a large crack in one of the support beams, and it was two inches wide, six feet long, and it caused an emergency closure of part of this road.

(voice-over): This was that giant crack. And this is what the closure looked like.

UNIDENTIFIED MALE: We have a serious problem in Pennsylvania.

Charles Davies with the Pennsylvania Department of Transportation says there is state money for basic maintenance, but he worries, without federal funding, needed overhauls won't get done.

(on camera): Do you fear that something bad could happen?

UNIDENTIFIED MALE: You sort of become fatalistic. I sort -- I sort of think, well, my luck's going to run out at some point. It just is.

BOUDREAU: But Pete Sepp of the National Taxpayers Union cautions that it's a bad idea for Congress to pick up the tab for something the states are supposed to pay for.

PETE SEPP, VICE PRESIDENT FOR COMMUNICATIONS, NATIONAL TAXPAYERS UNION: Many parts of our infrastructure need to be repaired, need to be fixed, but they need to be done in a thoughtful manner. Throwing money out of Washington, D.C., and showering it across the country on state and local projects is not the way to do it.


BOUDREAU: Now, Sepp says a better way to fund infrastructure is to send more federal fuel tax money back to the states. The Highway Association, though, maintains, a federal investment will pay off with better roads and all those new jobs.

BLITZER: And fixing the nation's infrastructure, if these are good projects, not just stupid ones, but the -- these are really good projects, that's one of the most important long-term needs the country has right now, because a lot of this infrastructure is a mess.

BOUDREAU: And these state officials that we talked to said, we have been waiting so long for this to happen.

So, they're trying to use this as an opportunity.


BLITZER: Abbie, thank you very much for bringing us that report.

The House speaker, Nancy Pelosi, has promised to clean up ethical messes in Congress. will she direct her efforts at the powerful chairman of the House Ways and Means Committee, Charlie Rangel? He's facing some new questions about how he spent campaign money and how his son benefited.

And how would Sarah Palin do against Mike Huckabee, for example, in a 2012 presidential primary? Republicans already are weighing in, in our brand-new poll.

And it's an overnight sensation out there on the Web. Some celebrities won't stop fighting a newly passed ban on gay marriage in California.

Stay with us. Lots of news happening today -- right here in THE SITUATION ROOM.


BLITZER: These are very heady days for Democrats here in Washington. But House Ways and Means Committee Chairman Charlie Rangel is taking some new hits -- at issue right now, the political cash he paid to his son to create a Web site, and what, if anything, the House speaker, Nancy Pelosi, intends to do about it.

Brian Todd has been looking into details.

What are you finding out, Brian?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, as you know, Charlie Rangel has made a career out of fighting the power in Washington, holding others accountable. Now he's facing a wave of political crises and new questions about his own ethics.


TODD (voice-over): He's one of the most powerful managers of your money in Washington. Now, Charles Rangel's own financial dealings are putting more pressure on his boss, House Speaker Nancy Pelosi, to replace him as chairman of the Ways and Means Committee.

Rangel's latest problem? He paid nearly $80,000 in campaign money to an Internet company run by his son for political Web sites. That's according to the watching group the Center for Responsive Politics, which looked over Rangel's campaign finance reports. The group says there doesn't appear to be anything illegal about the payments, but:

MASSIE RITSCH, COMMUNICATIONS DIRECTOR, CENTER FOR RESPONSIVE POLITICS: He spent tens of thousands of dollars more than the typical member of Congress appears to have spent for their own Web site. Moreover, he's not been in a competitive race recently. So, he could put up a pretty simple page with his picture on it and still get reelected.

TODD: This is the Web site Rangel paid all that money for: several spelling errors, a disclaimer saying, "Much of our content is currently unavailable."

Rangel wouldn't do an interview with us. His son, Steven, now a lawyer for another House committee, didn't return our calls and e- mail. Rangel's office issued a statement saying it's misleading to compare what congressmen pay for Web sites and that, in this case, they paid for what they call an aggressive Web presence.

But Rangel has other problems. "The New York Times" recently reported he fought to preserve a tax break for an oil company run by a big-money donor for a school named after Rangel. He denied playing a role in the tax break. But Rangel is also being investigated by the House Ethics Committee for using congressional stationary to seek donations for that school and for a host of other financial dealings. It's an investigation that he himself called for.

Pelosi pledged to drain the swamp of ethics violators when she took over. She now says she will wait until the Ethics Committee wraps up its probe, but doesn't foresee Rangel losing his committee chairmanship.

CHRIS SMITH, "NEW YORK": I don't see what it gains her to challenge or confront Rangel. It probably, at this stage, would cause her more trouble than it's worth.


TODD: That's not going to stop the Republican charge against Charlie Rangel. House Minority Leader John Boehner has called for him to step down.

But analysts say, considering the support he has elsewhere in Congress, it will take an indictment for that to happen. And there is no indication that any criminal investigation of Charlie Rangel is under way right now -- Wolf.

BLITZER: And that latest story in "The New York Times" about Charlie Rangel, that created a major dustup out there.

TODD: That's right, and an unusual one. Rangel fired back, countering "The Times." That's not unusual.

But what was strange was that "The Times" then took the step of counterattacking Rangel, breaking down his argument point by point. It was a public flare-up, very recently. It's -- it's going to be something bearing watching: Charlie Rangel vs. "The New York Times."

Yes, we will watch it together with you. Thanks very much, Brian Todd.

In our "Strategy Session": Caroline Kennedy, when she endorsed Barack Obama, she hearkened back to the days of her father's White House.


CAROLINE KENNEDY, DAUGHTER OF PRESIDENT JOHN F. KENNEDY: Over the years, I have been deeply moved by the people who told me that they wished they could feel inspired and hopeful about America the way they did when my father was president.


BLITZER: Has Barack Obama's victory inspired her to serve in the U.S. Senate?

And it's never too early to talk about presidential politics. We have an early look, very early look, at the Republican crop of contenders. We will tell you what we know -- right here in THE SITUATION ROOM.


BLITZER: Democrats certainly buzz about the inauguration and the new Obama presidency. Disheartened Republicans would just as soon look away, way ahead, in addition to that, to 2012.

That brings us to our senior political analyst, Bill Schneider.

Bill, is it too early to start talking about 2012?


WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well, why not? It's only three years until the next Iowa caucuses.


SCHNEIDER (voice-over): Suffering from campaign withdrawal? We have just the answer: 2012. Why wait for the new president to take office? We can ask Republicans right now which candidates they're likely to support next time. And we did.

At the top of the list, Mike Huckabee and Sarah Palin, followed by Mitt Romney, Newt Gingrich, Judy Giuliani, and two less well-known possibilities, Louisiana Governor Bobby Jindal and Florida Governor Charlie Crist. Are Huckabee and Palin interested?

GOV. SARAH PALIN (R), ALASKA: It's crazy to close a door before you even know what's open in front of you.

SCHNEIDER: Huckabee's got a TV show and a new book. And guess where he showed up last month?

MIKE HUCKABEE (R), FORMER ARKANSAS GOVERNOR: Well, a lot of people speculated, why were you in Iowa? Well, the first chapter in the book is called, "I Love Iowa."

SCHNEIDER: Front-runners Huckabee and Palin have similar appeal. They're both conservative populists and Washington outsiders.

Who has more support among evangelical Republicans? He's a former preacher, after all, and a Southerner. Palin could hardly be less of a Southerner, but she's trying.

PALIN: I have had Georgia on my mind.


SCHNEIDER: But, before Republicans start thinking about 2012, they had better deal with what happened to them in 2008.

GOV. TIM PAWLENTY (R), MINNESOTA: We cannot be a majority governing party if you lose all of the Northeast, all of the Great Lake states, all of the West Coast, increasing numbers of Western states, increasing numbers of mid-Atlantic states, have a big deficit with women, have a big deficit with modest-income voters, have a big deficit with Hispanic voters, have a big deficit with African- Americans, and expect that's going to be a success formula for the future.



SCHNEIDER: Now, he mentioned women. Could Sarah Palin help Republicans recapture women voters? Not clear. This year, men had a higher opinion of Palin than women did. And, among Republican women, Huckabee edges her out -- Wolf.

BLITZER: Bill Schneider, thanks very much.

Joining us now to discuss this and more in our "Strategy Session," the Democratic strategist and CNN political contributor Donna Brazile and Republican strategist Tucker Eskew. He's a former senior adviser to the McCain/Palin campaign, worked very closely with Sarah Palin.

What do you think about these numbers? Huckabee, Palin, Romney, they're -- and Gingrich up there, Giuliani up there. There's a formidable array of Republicans. TUCKER ESKEW, REPUBLICAN STRATEGIST: It's a crowded field for a race that doesn't really exist yet. Republicans have plenty of time to sort this out. We have got some good leaders, but we have got a long way to go.

We do have to look back to '08. We have got to learn from '06. And we do have some bright stars for the future.

BLITZER: Is it -- is it too early for these Republicans to start jockeying right now? Donna, you're a former campaign manager for Al Gore. Looking ahead, as Bill Schneider said, only three years until the Iowa caucuses.

DONNA BRAZILE, CNN POLITICAL ANALYST: No, it's not too early, especially given the enormous challenges the Republicans face in re- branding the party, building a larger tent.

Over the last five elections in this country, Republicans have lost first-time voters. So, they need a leader. They need somebody to go out there and to rebuild the party from the ground -- from the ground up.

BLITZER: You spent a lot of time, Tucker, with Sarah Palin...


BLITZER: ... over the course of this campaign. What do you think? Is she really interested in 2012?

ESKEW: I think she wants to keep her options open. And she is one of those leaders of our party that we're going to sort through and come to a conclusion on soon enough.

But let's remember, you look at the Pew Research Center. And they found that, in the last nine elections, among Republicans, the leader early on seven out of those nine elections was our nominee. So, there is an early struggle. And it might have some impact...


ESKEW: ... although, four years ago, you would remember it was Hillary Clinton and Rudy Giuliani leading those two tickets.

BLITZER: Everybody assumed it was going to be that. At least a lot of pundits did. And you can't be sure those pundits very often know what they're talking about.

BRAZILE: And I was one of them.


BRAZILE: And I didn't know what I was talking about. It was an unpredictable election year.

BLITZER: But she got close -- Rudy Giuliani, not so close.


BRAZILE: That's true.

But Palin is an energizing choice for Republicans. The key is -- is to help her expand her base and to help the Republicans, of course, repair their image.

BLITZER: Because a lot of people are advising her -- and I don't know if you're one of them -- you know what? Spend some time. Bone up on the issues, on foreign policy issues, domestic economic issues, and, then, maybe a year from now, start testing the waters out there.

ESKEW: And guess what? Do a great job as governor. We have got some of our most promising leaders in the state capitals. And she's certainly one of them.

BLITZER: Should she think about challenging Lisa Murkowski for that Senate race? Would that be a better stepping stone, do you think?

ESKEW: Alaska politics is full of turmoil. We will see what the time brings. Too soon to say.

BLITZER: Speaking about Senate -- senators, Hillary Clinton is going to be the next secretary of state. So, David Paterson, the governor of New York, he has to pick someone to replace her and represent New York State.

Caroline Kennedy's name is being widely mentioned, the daughter of the late president John F. Kennedy. What do you think?

BRAZILE: Well, earlier this week, Robert Kennedy Jr. took his name out of consideration. Nita Lowey took her name out of consideration. She's a congresswoman from New York.

Caroline Kennedy would be a great choice, of course. The Kennedy name is -- is -- is one and the Kennedy brand is one that everyone respects in the country -- well, most people respect in the country. And I think that she would be a very good candidate.

Of course, there are other people.

BLITZER: Do you think she's interested?

BRAZILE: You know, Wolf, based on what I...

BLITZER: Because you know.

BRAZILE: Well, you know, I'm going to call a Kennedy or two I know and see if she's interested.

Look, I think it would mean a great deal to have her in the Senate with President-elect Obama. But, of course, it's David Paterson's choice, and I will respect his wishes.

BLITZER: I have been told she is interested. ESKEW: Well, Wolf, what I want to know, there's a lot of talk about cable TV news hosts going home to be in the Senate.


ESKEW: Now, you're from New York. We -- your viewers want to know.


BLITZER: Not interested.


BRAZILE: Well -- and he's from Buffalo. And then Governor Paterson is also looking at -- looking for someone who can win upstate.

BLITZER: You know, maybe that's...

BRAZILE: So, we're just -- and, by the way, Tucker and I are both available. So, if you need a campaign manager, you know, we can put you on the spot right now.

BLITZER: No, I'm not interested, not interested.

BRAZILE: OK. You're ruling it out. You're ruling it out.

BLITZER: As much as I love my home state of New York, they have got enough without me up there.

ESKEW: How about putting somebody in there, though, who would buck some of the establishment, the way the man who used to hold that seat did, Pat Moynihan, somebody like Joel Klein, who's taken on the teachers unions in New York City?

I'm sure his politics is out of step with mine on many things, but he really is a school reformer who may have gotten bounced out of the Obama Cabinet, maybe into a Senate seat, if somebody's listening and pays attention to me...


BLITZER: I don't know if they are going to be interested in hearing what you have to say about that, Tucker, but it's an intriguing thought.




BLITZER: He's the chancellor of the New York City public school system.


BLITZER: And he's ruffled some feathers out there.

Let's talk about Illinois for a moment right now. Another Senate seat has to be filled there. That would be the Senate seat of the president-elect.

What are you hearing?

BRAZILE: I'm hearing that Jesse Jackson Jr. wants it. But the governor is really keeping a close counsel. He's looking at a number of people, including Tammy Duckworth, Lisa Madigan, who is the attorney general. So, this should be an interesting choice as well.

You know, on both of these seats, I hope that the governor puts someone in there -- the governors put people in there who can actually win reelection in two or four years from now.

BLITZER: What do you think?

ESKEW: Even better, let's have somebody who can help our country.

Republicans and Democrats alike need some help on the economy, want to see our country move forward. We will not be attacking Obama just for the sake of attacking him. Standing our principle, our party needs to hold these new senators' feet to the fire, but hope that they succeed.

BLITZER: Well...

BRAZILE: I like that, by the way...


BLITZER: It's a historic moment right now. And we're all watching very closely.

Guys, thanks very much.

BRAZILE: Thank you.

ESKEW: Thank you.

BLITZER: You're not going to throw your hat in the ring?


BRAZILE: No, no. I'm from Louisiana. And Tucker is also from Louisiana.

ESKEW: Got a similar accent.


BRAZILE: So, we -- we have to go back home together. (CROSSTALK)


BLITZER: OK, guys, thanks very much.


BLITZER: Some famous Hollywood names are making a big political statement. And it's become an overnight sensation out there on the Internet. We are going to show you why.

Plus, Hillary Clinton's multimillion-dollar debt and the new push to erase it -- why Barack Obama is trying to raise money right now to clear it up quickly.

And Fidel Castro sends a message to Barack Obama. Could a meeting between the two be in the cards?

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


BLITZER: Proposition 8, the California ballot measure banning gay marriage, passed last month, but those against it are still fighting. Some -- now some celebrities are showing their opposition in a Web video that's becoming an overnight hit.

Let's go to our Internet reporter, Abbi Tatton.

Abbi, who's in it?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, Jack Black is in a starring role as Jesus. Here he is explaining why the Bible shouldn't be the basis for modern-day law.


JACK BLACK, ACTOR (singing): You can stone your wife or sell your daughter into slavery.

UNIDENTIFIED MALE (singing): Well, we ignore those verses.

BLACK (singing): Well, then, friend, it seems to me, you pick and choose.

UNIDENTIFIED MALES AND FEMALES (singing): We pick and choose.

BLACK (singing): Well, please choose love, instead of hate. Besides, your nation was built on separation of church and state.


TATTON: This is "Proposition 8; The Musical" on Web site Funny or Die, a star-studded cast who promised in their finale that gay marriage will even save the economy. In two days, it's had about two million views online. Its Oscar- nominated composer, Marc Shaiman, writing online that he should have written it six weeks ago -- Wolf.

BLITZER: Yes. All right, well, we will see what happens. That's a powerful video, indeed. Thanks, Abbi.

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

CAFFERTY: The question this hour, Wolf: Is President-elect Barack Obama being assertive enough when it comes to issues like the auto industry and the financial crisis?

Kim writes Kansas: "The Congress is the one that needs to be assertive at this point. They each do their five minutes of grandstanding at these hearings, instead of actually formulating a plan or accounting for the money that they have already handed out. Obama is playing by the rules. That sets a better example than the Congress does."

Tom in Iowa says: "We have a president in office, if that's what you want to call him. The GOP and the right-wing pundits would scream bloody murder if Obama tried to inject his will at this point. If he does anything, he ought to tell Barney Frank to shut up."

Donna in Jamaica, Kingston: "If he was any more assertive, President Bush would have to be moved to an undisclosed location. Barney Frank and Chris Dodd can't handle change. Instead of the Dems in Congress doing their job and pressing President Bush, they want Obama to baby-sit them through passing the rescue of the automakers and financial crisis."

Annie in Naples, Florida: "What do people expect? Eight years of unregulated favoritism for the rich and corporate entities. Frank ought to take a hike. He is a loudmouth blowhard, like the rest of these come-lately incompetents, who sit silently and do nothing for the past eight years either. I have to laugh. Barack Obama has accomplished more in the past few weeks than Congress has in the last two years."

Jay in Texas says: "President-elect Obama should just continue to state publicly what he will do when he takes office. He has plenty of work to do getting things ready for that day without worrying about Barney Frank and others in Congress whining."

And Liz in Maryland writes: "How would his being assertive be effective? It's not like he can actually do anything for 46 more days, but who's counting? Just let the man select his Cabinet and then get to work."

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

The guy is getting picked apart by his own party 46 days before he's officially even got the job.

BLITZER: Yes. All right, Jack, thank you.

And, to our viewers, you're in THE SITUATION ROOM.

Happening now, the U.S. economy hemorrhaging jobs, November's numbers just out, the worst in 34 years, leaving the newly unemployed desperate and scrambling.

Also, a remarkable statement coming from an American leader -- even President Bush is now talking openly of recession. But will he back a bailout for the auto industry?

And judgment day for O.J. Simpson today -- his emotional plea for mercy and his sentence for armed robbery.

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