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FA-18 Crashes in San Diego; Auto Bailout Deal 'Very Likely'; Obama to Meet With Al Gore

Aired December 8, 2008 - 16:00   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now, a deal to rescue the auto industry could be struck at any time. Congress and the White House trying to fast-track a bailout plan with some big strings attached. We have details.
President-elect Barack Obama's it's only going to get worse strategy, the groundwork he's laying right now for more economic hardship and eventual recovery.

And Caroline Kennedy's evolution. The once very private member of a political dynasty now possibly on the verge of becoming a United States senator.

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

All that coming up. But let's continue to follow briefly the breaking news out of San Diego right now, where a U.S. Air Force FA-18 went down in a residential neighborhood just a little while ago.

I want to bring in our Jamie McIntyre, who's been watching the story, our Pentagon correspondent.

Jamie, these FA-18s, they're pretty sophisticated. We understand this is a two-seater. What do we know specifically about what happened? Did the pilot or pilots eject safely?

JAMIE MCINTYRE, CNN SR. PENTAGON CORRESPONDENT: Well, Wolf, the details are still pretty sketchy, but what we know is within the past hour or so, this Marine Corps FA-18, a two-seat version used for training, did crash in the residential area of San Diego. It's from Marine fighter Attack Squadron 101 based there in Miramar.

We do know that that -- because it's a training squadron, they fly two-seat versions of the plane that usually typically has an instructor pilot and also a pilot who is learning how to fly these sophisticated aircraft. Of course, the FA-18 is a workhorse of both the Navy and the Marine Corps, been around for quite a long time.

Add any time a fighter pilot goes up, they know that they can have an engine problem, they can have a problem, but this is really the thing they try to avoid, ever letting a fighter plane like this crash in a residential neighborhood. The pilots do everything possible to try, if they're having difficulty with the plane, to try to put it down over water or over some kind of a deserted area.

We don't know the fate of the pilots. There are some eyewitness accounts that suggest at least one parachute was seen, indicating at least one of the two pilots ejected.

Normally when they eject, they both have to go out at the same time. They have to go in a sequence to make sure they don't run into each other. So it's not like one pilot can eject and the other one doesn't. We just don't know the fate of the pilots.

Again, without knowing a lot about exactly what happened to this particular plane, assuming they had some kind of a problem, they would have tried to steer it to a safe area, and then if they couldn't do that, they would just punch out -- Wolf.

BLITZER: And we'll stay on top of this story. A U.S. Marine Corps FA-18 military jet going down in a residential neighborhood in San Diego.

Jamie, once you get more information, you'll let us know and then we'll let our viewers know what's going on.

Let's move on to other news right now. Autoworkers rallying on Capitol Hill today to try to make sure their interests are protected in any bailout plan for the big three. Automakers could have billions of dollars of cash in their hands within a matter of only a few days under a Democratic draft proposal. The White House says it could sign off on a deal as early as today.

We're standing by for a statement, a news conference from the House speaker, Nancy Pelosi. But let's go to Capitol Hill. Our Congressional Correspondent Dana Bash has been all over this story.

What do we know right now? Where exactly do the negotiations for, what, the $15 billion stand, Dana?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well, negotiations at this point, at least among Democrats here on Capitol Hill, are over. In fact, they have sent a 31-page draft legislation bill to the White House for them to review it. And Democrats and the White House do hope -- they say that they hope they actually can get this done, help for Detroit done by the end of the week. But you know, with bailout fatigue really, really strong here on Capitol Hill and across the country, lawmakers are being very careful about the words they're choosing, making clear that this is only in return for accountability from the big three.

The Senate Majority Leader Harry Reid characterized it as no blank check or blind hope.

(BEGIN VIDEOTAPE)

BASH (voice-over): Under the Democrats' draft proposal, auto companies would get $15 billion in bridge loans as soon as next week, Monday, December 15th. It's just a fraction of the $34 billion auto companies asked Congress for, but enough, lawmakers hope, to keep the big three afloat as they answer Washington's calls for a major overhaul.

To ensure restructuring in Detroit, the president would appoint a so-called car czar who, by January 1st, would set up guidelines for struggling auto companies to reorganize, prove they can be profitable. If by February 15th that government-appointed czar does not see enough progress from the auto companies, he could recall their government loans.

That point, accountability for Detroit, has been a crucial component for any taxpayer money to bail them out, especially for the White House.

DANA PERINO, WHITE HOUSE PRESS SECRETARY: If the viability adviser says that they're not making progress, then that company, the automaker, would have to pay the taxpayer back right away. So there's incentive for everybody to work hard to make this work.

BASH: And an administration source tells CNN they may want to beef it up, require the czar to revoke Detroit's loan if companies don't prove they will become viable.

(END VIDEOTAPE)

BASH: Now, again, the White House just received this legislation from Capitol Hill. And again, they are reviewing it.

The other people who have to look at this are Republicans here on Capitol Hill. Wolf, getting buy-in from the Republican leaders in the Senate and House is absolutely crucial because we've already heard from some rank and file Republicans that they say that they might filibuster this. So, in order to get over that by the end of the week, you're going to have to have broad agreement in the White House, among Democrats and Republicans here on Capitol Hill.

We're getting ready to hear from the House speaker, Nancy Pelosi, to talk a little bit more about this legislation they sent to the White House not too long ago.

BLITZER: It's really a delicate, delicate moment right now. Stand by, Dana. We're going to get back to you.

The Obama transition going forward right now. The president- elect juggling economic policy, cabinet nominations and talks with political movers and shakers. He has a very high profile meeting scheduled for tomorrow with the former vice president, Al Gore.

Let's go to Jessica Yellin. She's covering this transition to power in Chicago.

What's this meeting with Al Gore, Jessica, all about?

JESSICA YELLIN, CNN CORRESPONDENT: Well, Wolf, don't expect Gore to be joining the administration. We're told that he likes his day job. But Obama himself has said that he's been talking to Gore for months about climate change, environmental policy. And in this major economic announcement Obama made over the weekend, he made it clear that green jobs will be a big part of any economic recovery plan. So Gore's vision is poised to become a reality. They will be talking about that and general economic policy in their meeting tomorrow -- Wolf.

BLITZER: And speaking of the economic policy, he's going forward. He seems to be coming up with some pretty specific details of what he has in mind.

YELLIN: That's right, Wolf. Obama's economic team is now in place taking daily meetings, figuring out an economic stimulus package that will, we're told at this point, cost less than $1 trillion. But it is something they do not expect George Bush to sign into law. They expect this to be a package they write, work on with Congress, and have it pass sometime quickly in January for Obama to sign soon after he takes office.

(BEGIN VIDEOTAPE)

YELLIN (voice-over): When it comes to the recession, Barack Obama is preparing Americans for a long winter, telling Tom Brokaw on "Meet the Press"...

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: As tough as times are right now -- and things are going to get worse before they get better.

YELLIN: But he vows to turn the economy around, offering hope to hard-hit Americans.

OBAMA: We're looking at pink slips, jobs being shipped overseas that devastate entire towns. And that's why my number one priority coming in is making sure that we've got an economic recovery plan that is equal to the task.

YELLIN: Obama is proposing a program that would save or create 2.5 million jobs, putting people to work making public buildings green, improving the nation's highways and modernizing public schools. The top Democrat on the Senate Public Works Committee has already started identifying projects.

SEN. BARBARA BOXER (D), CALIFORNIA: What we're doing is just getting our work ready so that if we have to move quickly to help him, we will.

YELLIN: In a letter to Obama released today, she says 585,000 bridges need improvement. Up to $286 billion a year is needed through 2020 just to repair the transportation infrastructure. And every $1 billion of highway construction spending supports 35,000 jobs.

Separately today, Democratic mayors were on Capitol Hill urging Congress to start that investment.

UNIDENTIFIED MALE: We are here to help build out America and put Americans back to work.

UNIDENTIFIED MALE: No handout, no bailouts. We're not here begging. This will be good for America.

(END VIDEOTAPE) YELLIN: Now, Wolf, there is Republican opposition to the stimulus. Many Republicans say tax cuts are a better way to stimulate the economy. But still, it is widely seen that there are enough votes on Capitol Hill to pass a stimulus even with Republican opposition -- Wolf.

BLITZER: All right, Jessica. Stand by in Chicago.

Barack Obama's latest cabinet pick is retired Army General Eric Shinseki. He's tapped for Veterans Affairs. Shinseki was previously involved in controversy regarding Iraq.

We'll have more on that coming up later.

He's the latest face on Obama's increasingly diverse team picks. Of the nine people Obama has officially chosen so far, only three are white men -- Tim Geithner for treasury; Jim Jones as the national security adviser; and Robert Gates tapped to stay on at the Defense Department. Three are women, one of whom is African-American. There's also an African-American male, along with a Latino.

There have not been official announcements, by the way, for eight cabinet posts, including departments handling health and human services, transportation, housing, education and energy. We're standing by for all of that.

Jack Cafferty is off today, so let's go right now to autoworkers.

Many of these autoworkers are desperate to hang on to their jobs. Does their union share some of the blame for the industry's financial crisis? Standing by live is the UAW president, Ron Gettelfinger. I'll speak with him live.

And new praise for Caroline Kennedy as a potential replacement for Senator Hillary Clinton. Why Caroline Kennedy is even considering the idea after years of trying to stay out of the political limelight.

And another huge blow to the future of newspapers. The Tribune Corporation goes bankrupt. What does it all mean?

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

(COMMERCIAL BREAK)

BLITZER: For U.S. automakers who are desperate for cash, help could arrive within a matter of only a few days. As we just reported, there's a Democratic draft proposal to quickly get money to the automakers, and the White House says it could approve it as early, potentially, at least, as today.

Joining us now is the United Auto Workers president, Ron Gettelfinger.

Mr. Gettelfinger, thanks very much for coming in.

RON GETTELFINGER, UAW PRESIDENT: Thank you, Wolf. BLITZER: What do you make of this $15 billion initial loan, if you will, to the big three automakers?

GETTELFINGER: Well, we're just hopeful that we can get the emergency bridge loan passed and get a recovery here under way.

BLITZER: Is $15 billion going to do it, or will the automakers need more?

GETTELFINGER: Well, obviously, when we were in Congress testifying, the request was for $34 billion. But look, we'll take this emergency bridge loan. This should get us through March. And by then, we should have restructuring plans in place.

BLITZER: What do you think of this idea of having what they're calling a car czar? The name Ken Feinberg, a well known Washington attorney, being mooted for that position, overseeing the big three.

Is that a good idea?

GETTELFINGER: Well, we're not opposed to a trustee or some kind of a committee to oversight. It's going to be necessary, and we're really not opposed to it. I would just hope that they would give all of the parties, all of the stakeholders involved, the opportunity to sit down and try to work this out though before somebody starts putting pressure on one way or the other.

BLITZER: General Motors, the CEO, Rick Wagoner, told me last week when I interviewed him, yes, they've made mistakes, and he takes personal responsibility for some of those mistakes.

Has the UAW made mistakes over the years which contributed to this crisis right now?

GETTELFINGER: Well, there's no question, Wolf. We're all human and there's been mistakes made in the past by everybody involved. But if you take a look at the other side of the coin and look at all of the great things that we're doing, the safety record, the productivity, the quality of the product, there's been a lot of wonderful things done. And in addition to that, our union stepped up and made a lot of concessions in the past, and most recently from '05 to '07, to just last week.

BLITZER: By all accounts, GM is in the worst shape compared to Ford and Chrysler, although Chrysler's not far behind, if at all. Do you go along with Chris Dodd, the Democratic senator from Connecticut, who suggested over the weekend that it's probably time for Rick Wagoner to step down?

GETTELFINGER: Well, Wolf, obviously, our focus here has been on getting this emergency funding. I hadn't really thought about that that much. I've been asked that question a couple of times.

But if you go back to '07, following the conclusion of national negotiations, General Motors' stock was over $42 a share. We all know where it's at today. It didn't get there because of what management has done.

We negotiated an agreement that was hailed by just about everybody that looked at it as being a transformational agreement. Rick Wagoner and the other auto executives had nothing to do with the crisis that we see in our economy right now, this major economic downturn that we have not seen the likes of since the Great Depression.

BLITZER: Are UAW workers ready to scale back their wages to put them in line with Americans who work at Toyota plants in the South, for example?

GETTELFINGER: Well, you know, really, we need to not mix apples and oranges here.

First of all, 10 percent of the cost of an automobile is labor. So you only have that 10 percent. I can show you documents where at least one of the companies in the South claimed that they are higher paid than a UAW contract.

But here's the other question. If we're going to open the wages to what's paid at another location, does that also mean that we're going to look at all of the management scale there, all of the dealer contracts, the supplier contracts, the demographics of the workforce and all of that?

I don't think one of the foreign brands that operate here would be open to that. If they are, we'll take a look at anything that comes before us. But again, 10 percent of the cost of an automobile or a truck belongs to labor, so we can't make labor the scapegoat.

Labor's been there. It's that there's other parties that need to come to the table. All of the stakeholders need to be there and do their part.

BLITZER: One final question if you have a second for a quick answer. If Chrysler, which is in deep trouble, is bought out by one of the other two, Ford or GM, how many jobs do you estimate would be gone from the UAW ranks?

GETTELFINGER: I think there would be several, but I've never focused on that. I think there's other alternatives for Chrysler that would be much better. And that's the route I would prefer that we pursue. I just don't see how you take a crippled company and mix it with another one that's not in good shape and come out ahead.

BLITZER: A fair point. All right.

Ron Gettelfinger is the president of the UAW.

Good luck to you, Mr. Gettelfinger, and all the men and women of the UAW.

GETTELFINGER: Thank you very much, Wolf.

BLITZER: He's Barack Obama's pick to become secretary of Veterans Affairs, but retired U.S. Army General Eric Shinseki was previously caught up in controversy. Did he really speak truth to power and face punishment for it? Jamie McIntyre is standing by.

And dancer-in-chief. What's got President Bush up and moving to the beat? Check it out.

(NEWSBREAK)

(COMMERCIAL BREAK)

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

Happening now, they were sent to Iraq to protect VIPs. Now they face charges and possibly jail time. Five former Blackwater security guards now indicted of manslaughter and other charges.

Stand by.

With Americans struggling to hang on in this economy, they were laid off with little notice and no money. So for over four days, they've told their employer heck no, they won't go. We'll go to Chicago.

And the Mumbai terror investigation winds through Pakistan's mountains. Pakistani forces raiding militant sites, and they've rounded up several militants. Will this put them any closer to figure out who terrorized Mumbai?

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

A powerful new vote of support for Caroline Kennedy becoming a United States senator. New York Mayor Michael Bloomberg said today that Kennedy is a very experienced women and "can do anything." The former first daughter reportedly is open to replacing Hillary Clinton in the U.S. Senate if and when Clinton is confirmed as secretary of state.

Let's bring in our Brian Todd. He's working the story for us.

It's a little bit of a different Caroline Kennedy now than we've seen over the years.

BRIAN TODD, CNN CORRESPONDENT: It certainly seems to be, Wolf. She's never held public office or expressed much public interest in doing so, but she's already said Barack Obama's campaign has inspired her much like her father inspired others, and now there's talk of another Senator Kennedy.

(BEGIN VIDEOTAPE)

TODD (voice-over): Over the past year, she's become more publicly involved in politics than ever.

CAROLINE KENNEDY, DAUGHTER OF JOHN F. KENNEDY: I've never had someone inspire me the way people tell me my father inspired them. But I do now -- Barack Obama. TODD: Now Caroline Kennedy may be ready to dive much deeper into the arena. She recently called New York Governor David Paterson and asked about the Senate seat that would be vacated if Hillary Clinton's confirmed as secretary of state.

GOV. DAVID PATERSON (D), NEW YORK: She just called me and asked me a few questions. And I'm sure if she's interested, she'll call back.

TODD: Whether she'll make that call depends on who you talk to. We couldn't reach Caroline Kennedy. A source close to the family and other Democrats say it's more than a passing thought.

DONNA BRAZILE, DEMOCRATIC STRATEGIST: I hear that she's interested. She's testing the waters, she's talking to people who know a little bit about that race because, of course, if Governor Paterson decides to choose her, she would have to run in 2010 and for a full term in 2012.

TODD: One Kennedy associate tells us she's not close to a final decision. If she wants the appointment and gets it, Caroline Kennedy would be an instant star in a seat that's had several, from her own Uncle Robert to the woman whose opponent she so famously endorsed this year. She could clearly raise the estimated $30 million needed to win the seat outright in two years, but there are questions over whether the woman widely described as shy and self-deprecating has the resume or personality for the post.

FREDRIC DICKER, STATE EDITOR, "THE NEW YORK POST": The general sense in New York now is that this state is in desperate straits, the massive deficits, the loss of upstate population, facing calamitous tax increases, and that we need fighters in Washington.

(END VIDEOTAPE)

TODD: So, while the debate continues on whether Caroline Kennedy has the personality for that fight, it's worth looking back at the folks in her who have had it and who she would be compared to.

Her father, John Kennedy, spent 13 years in Congress before his election as president. Her uncle Robert, elected to the same Senate seat that she might be up for now, that was back in 1964, and her uncle Ted Kennedy, who she is said to be very close to, has now been serving since 1963.

Then there is her generation. We're going to bring in the two figures that you may be familiar with. Her cousin Joe Kennedy, Robert's son, served in Congress from 1987 to 1999. Another cousin Patrick -- that's Ted Kennedy's son over there from Rhode Island -- he's been a congressman from there since 1995, a lot to live up, Wolf. We're going to see if Caroline Kennedy really wants to jump into the arena, like...

(CROSSTALK)

BLITZER: I suspect she does. That's what I'm hearing. But we will see, obviously.

Now, speaking of people in Hillary Clinton's camp, I don't know what she thinks about this. We do know that, as you point out, Caroline Kennedy did endorse Barack Obama, not Hillary Clinton, for the Democratic presidential nomination.

TODD: That's right. And, publicly, the Clinton camp is basically saying she's going to respect this process. Whomever the governor chooses is going to be fine with her. They just want to make sure that it's someone who can win that seat in 2010. But a friend of the Clintons tell us there is no animosity between the two families, that they are still very close.

BLITZER: Good. Good to hear that.

Thanks very much.

(LAUGHTER)

BLITZER: We will see what happens.

TODD: OK.

BLITZER: Brian Todd, appreciate it.

Print journalism in new trouble today, the Tribune Corporation, which publishes 10 daily newspapers, now filing for bankruptcy. But big-city newspapers, like "The Chicago Tribune," "The Los Angeles Times," "The Baltimore Sun," may actually be in great, great peril.

Let's bring in Howard Kurtz of CNN's "RELIABLE SOURCES" and "The Washington Post."

Howie, what does it mean that The Tribune Corporation is in such huge trouble that they actually formally have to file for bankruptcy?

HOWARD KURTZ, CNN CONTRIBUTOR: Well, it's bad news for the business, Wolf.

Sam Zell, the Chicago businessman who bought the company a year ago, is blaming "factors beyond our control having created a perfect storm."

But one factor that wasn't beyond his control was his decision to buy the company a year ago and take on a staggering $13 billion debt load. And now that the economy is tanking, especially in areas like real estate and auto, which are big newspaper advertisers, that company's got a lot of problems.

BLITZER: And there is even an ominous sign for "The New York Times" today. Tell our viewers about that.

KURTZ: I don't want to put this in the same category, but, "The Times," like a lot of papers, is having a cash crunch. And so "The New York Times" is putting up its own building, its own Manhattan skyscraper, as collateral in seeking $250 million in new loans, credit, of course, hard to come by these days, forcing "The Times" to take this move, "The Times" stock down 60 percent in the last two years, "Washington Post" stock down 40 percent.

BLITZER: It's really amazing, what's going on.

Now, some say newspapers should follow the example of "The Christian Science Monitor." A lot of us growing up used to see that newspaper as a special newspaper. But tell our viewers what happened to "The Christian Science Monitor" and if that model is useful for other newspapers to follow.

KURTZ: I don't know. Maybe we will all just be Web sites in five years. But "The Christian Science Monitor," which is mailed to people, so it's a very slow-form delivery, is basically going to Web site-only publication.

"U.S. News & World Report" has cut back to monthly publication. They're only going to be a Web site.

Here's the problem, Wolf. Web sites are great. We're all getting into it probably a little bit too late. But the revenue you get from Web sites doesn't support the big reporting staff that you see in this room and in newsrooms around the country that do the kind of local reporting, the investigative reporting, and original reporting that people expect from newspapers.

Until we can figure out how to make that transition, there's going to be a lot more bad news to come, as Obama says about the economy, a lot more bad news to come for the newspaper industry in general.

BLITZER: A whole restructuring of what is going on.

Howard Kurtz hosts CNN's "RELIABLE SOURCES" every Sunday morning, 10:00 a.m. Eastern, with a critical look at the media.

Howie, thanks very much.

KURTZ: Thank you.

BLITZER: Financial giant Merrill Lynch has suffered a devastating year, with losses every quarter and total losses for 2008 more than $10 billion -- that's with a B -- billion dollars.

But should Merrill Lynch's CEO get a bonus worth more than most Americans will ever see?

Our chief business correspondent, Ali Velshi, is joining us now.

Ali, tell us what's going on, because this is one of those stories that's going to generate some outrage out there.

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Yes.

John Thain is the -- is the CEO of Merrill Lynch. he joined the company in 2007, after we knew how much trouble Merrill Lynch was in. He was the CEO of the New York Stock Exchange and actually had taken over there after Dick Grasso had resigned. And you remember there was a big kerfuffle over how much Grasso was being paid.

So, anyway, Thain comes into Merrill Lynch and ends up selling it to Bank of America. In many cases, it's regarded that it was something he did that saved that company from bankruptcy. So, he's sort of taken the position that things are better off than if he weren't there.

But the stock price has plummeted under him. And that may not be attributable to him, but it has gone down. And the company lost $12 billion in 2008. So, that's where it sort of seems a little unusual that a company that has not done well, while it may have done better than if Thain weren't there, is going to pay a big -- big bonus.

So, anyway, the compensation is meeting to discuss this. They have been meeting today. There's been some resistance, we're told, to John Thain getting that sort of bonus. He does get a salary.

The other thing to keep in mind is that Merrill Lynch is not a company that took money from the federal government. Bank of America, which they're being sold to, was a recipient of TARP funds, but Merrill Lynch wasn't. Those two companies have not yet merged. Both companies have agreed to the merger, but it's not done yet.

So, Bank of America, and when we asked for comment, said, we have nothing to say, because it's still an independent company.

BLITZER: And there's been another round of job cuts announced today. What's the latest on that front, Ali?

VELSHI: Yes, we have a lot of job cuts accumulating.

Dow Chemical is cutting 50 -- I'm sorry -- 5,000 full-time jobs and closing 20 plants around the world. 3M is cutting 1,800 jobs. And Anheuser Busch, the brewer, is going to cut 1,400 U.S. jobs. That's 6 percent of its U.S. work force. This is just piling up.

We had one day last week, Wolf, where we saw more than 22,000 jobs lost. And, of course, we had the big unemployment number on Friday, which showed that, in November, which is the last month that we have a full month's records for, more than 533,000 jobs lost. So, it just continues.

BLITZER: And we will see what happens in this month, in December.

Ali, thank you for that.

Barack Obama's choice for veterans affairs secretary may be playing well with the critics of the Bush administration, but there are some questions about retired General Eric Shinseki and his stance on the Iraq war. Our Pentagon correspondent, Jamie McIntyre, is standing by live.

Mitt Romney sets the stage for 2012. Does the failed Republican presidential candidate have a shot in the next election? What is he doing right now?

And a third day of rioting in Greece -- a teenager's death triggering rage and fresh violence right now.

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

(COMMERCIAL BREAK)

BLITZER: He's first Japanese-American to become an Army four- star general and would be the first Asian America ever to lead the government's second largest agency, the retired General Eric Shinseki Obama's pick for secretary of Veterans affairs.

Those facts aside, there are also some other questions surrounding General Shinseki.

Let's go to our senior Pentagon correspondent, Jamie McIntyre. He's covered him for some time.

What's the latest? Because he gets a lot of praise from critics of the Iraq war for standing up to Defense -- supposedly standing up to Defense Secretary Donald Rumsfeld.

MCINTYRE: Well, that's right, Wolf.

The story that's grown up around General Shinseki is that he spoke truth to power and was punished for it. But the facts suggest a slightly different, perhaps little less complimentary narrative.

(BEGIN VIDEOTAPE)

MCINTYRE (voice-over): For better or worse, General Eric Shinseki's distinguished 38-year Army career has been largely reduced to these 29 words, uttered in a Senate committee almost six years ago.

(BEGIN VIDEO CLIP, FEBRUARY 25, 2003)

GEN. ERIC SHINSEKI, ARMY CHIEF OF STAFF: I would say that what's been mobilized to this point, something on the order of several hundred thousand soldiers, are probably, you know, a figure that would be required.

(END VIDEO CLIP)

MCINTYRE: That off-the-cuff guesstimate just a month before the invasion of how many U.S. troops it would take to secure Iraq turned Shinseki into a poster boy for Bush administration critics.

For years, they have argued the general's sage advice for a larger ground force was ignored by his civilian bosses, Defense Secretary Donald Rumsfeld and his deputy, Paul Wolfowitz, who famously dismissed the high-end estimate.

In naming Shinseki as his pick for veterans secretary, president- elect Obama seemed to be subtly rebuking Rumsfeld, calling Shinseki someone who always stood on principle. OBAMA: No one will ever doubt that this former Army chief of staff has the courage to stand up for our troops and our veterans.

MCINTYRE: But Shinseki has critics, too, who say, in fact, he never stood up to Rumsfeld, never pressed for more troops in Iraq, and when asked in a private meeting of the Joint Chiefs if he had concerns about the war plans, never said a word, according to two people who were in the room.

Asked by "Newsweek" two years ago to respond to the criticism he didn't press his concerns, Shinseki e-mailed back: "Probably that's fair. Not my style."

(END VIDEOTAPE)

MCINTYRE: But nobody disputes General Shinseki has had a distinguished military career.

And now that he's serving a president who wants his advice and counsel, he has the potential to make a difference in the lives of tens of thousands of wounded veterans and their families -- Wolf.

BLITZER: And we wish him only the best. It's a tough assignment, secretary of veterans affairs. And we wish him, as I said, only the best.

Jamie, thank you.

In our "Strategy Session": Mayors come to Washington pushing for their plan.

(BEGIN VIDEO CLIP)

MICHAEL BLOOMBERG (I), MAYOR OF NEW YORK: All of these projects and more involving our bridges and schools are ready to go. They have gone through the design and the approval process. They have gone through all of the political requirements. They just need money.

(END VIDEO CLIP)

BLITZER: But can the government spend its way out of a recession?

And, sometimes, actions matter much more than words. President- elect Barack Obama's chief speechwriter finds himself in a little bit of hot water over a lewd picture posted online.

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

(COMMERCIAL BREAK)

BLITZER: A former presidential candidate may be ready to run again -- repeat -- may be ready to run again. That would be Mitt Romney. He's making some new moves, suggesting he won't take no for an answer when it comes to getting into the White House.

Let's discuss that and more in our "Strategy Session."

Joining us, the Democratic Tony Coelho -- he's a former Al Gore campaign chairman -- and our CNN political contributor, Republican strategist Leslie Sanchez.

What do you think? Is it too early to start testing the waters for 2012? We're -- we're only three years away from the Iowa caucuses.

LESLIE SANCHEZ, CNN POLITICAL CONTRIBUTOR: We're -- we're starting this campaign today.

(LAUGHTER)

SANCHEZ: But, actually, it is.

I think the real midpoint is going to be the 2010 elections. That's what we see as a midterm report card, so to speak, if Barack Obama's still doing fairly well, people tend to give them a pass. I don't think -- I think that's when a lot of Republicans are going to make up their mind. If you think back to 1992, a lot of Democrats did not think George H.W. Bush was beatable. And, for that reason, you had other candidates like Bill Clinton move forward. It could be the same thing in 2012.

BLITZER: If McCain had won, Tony, and one of the Democrats came to you right now and said, "You know what, I want to start testing the waters, see what's going on for 2012," would you say that's ridiculous, don't think about it, way too early, or would you say, sure?

TONY COELHO, DEMOCRATIC STRATEGIST: Sure. Absolutely.

If you -- if you really want to run for president, you have got to start planning now. You can't wait until 2011.

BLITZER: Why do you have to start so early? It sounds...

(CROSSTALK)

BLITZER: It sounds ridiculous that, four years before an election, people already have to start making plans.

COELHO: It's like a business. You have got to set it up. You have got to get money people interested. You have got to get political people interested. You have got to get people who want to do the media. You have got to do all these other things you. You can't do it at the last moment. They may not be there, everything else.

You have got to start organizing, without really doing a lot public. But you have got to start organizing. And, if Romney really wants to run, he's got to start looking at it and doing all these things.

BLITZER: Because, presumably, he would want to snap up the good people...

COELHO: Absolutely.

BLITZER: ... and lock them into his camp before somebody else does.

SANCHEZ: I -- I think that's true, but I think this election proved traditional politics has been turned on its ear. Barack Obama was somebody did not have all the consultants, did not have all the money. Those people were shored up by the traditional Washington establishment, and very much Hillary Clinton.

It showed that the different dynamic can change based on the economic cycle, political cycle, national security cycle. It opens up the field for lesser-known names.

BLITZER: Because I still -- Donna Brazile yesterday, she agreed with you, Tony, that it's never too early. If you're really serious about wanting to become president, you have got to start thinking years in advance.

SANCHEZ: Years.

COELHO: Axelrod -- Axelrod is a well-known political figure.

(LAUGHTER)

COELHO: And he was with Obama way before even four years.

And, so, you know, if you really are interested, you have got to get out there and you have got really start organizing. And, look it, Romney has been running. I mean, he's talking about thinking of running. He's been running. He's -- he's -- it's just a question of how more advanced he gets. He's been running. He -- he wants to go.

Jeb Bush is going to run for the Senate seat in two years.

BLITZER: We don't know that for sure.

(LAUGHTER)

COELHO: Well, but it looks like he is going to.

BLITZER: He's thinking about it.

SANCHEZ: Yes.

COELHO: Well, he said he's interested.

BLITZER: Yes.

COELHO: I mean, he publicly said that.

BLITZER: So, does that clear the board in Florida, Leslie, that, if Jeb Bush, the very popular former governor, with a -- with a famous last name, if he says he wants -- he wants that seat currently held by a Republican, that it's his?

SANCHEZ: Pretty much so. I don't think you're going to find a lot of people who would disagree with that, because he's so incredibly popular. He built strong coalitions. And not like his first election, where he didn't necessarily have it, by his second, and moving on, had he strong tentacles into the state.

BLITZER: I mean, when I say it's his, the Republican nomination.

COELHO: Nomination.

(CROSSTALK)

BLITZER: Mel Martinez is dropping -- he's deciding he doesn't want to seek reelection. The Democrats could -- could have a formidable opponent in Jeb Bush, who is very popular in Florida.

COELHO: He's very popular. And, all of a sudden, he becomes the front-runner. He's a -- even the mere fact that he announced that he is considering it, he become the front-runner immediately.

If Romney decides, the mere fact that he said he's thinking of it, all of a sudden, he gives Palin and he gives all these others a fit.

BLITZER: Mike Huckabee.

COELHO: Mike Huckabee, because he -- all of a sudden, he moves in. He's the big kahuna in this race, just the mere fact that he says he's thinking of it.

BLITZER: All right.

SANCHEZ: You know, I think, to say, with respect to that, Governor Romney did an incredible job. He really helped bring the party together.

But a lot of people understand he had the money, he had the resources, he had the team early on as well. It doesn't necessarily guarantee anything.

BLITZER: Let me read a quote from today's "New York Times," Bill Kristol writing on op-ed page: "Obama wants to spend much of the stimulus on transportation infrastructure and schools. Fine, but lots of schools and airports seem to me to have been refurbished more recently and more generously than military bases I have visited."

You read that column by Bill Kristol. What do you think of the basic point that he's trying to make about Republicans vs. Democrats?

SANCHEZ: I thought the basic point was that mayor were asking for money. I didn't necessarily see so much there.

I think it's an issue of priorities. We know right now, in terms of the economics, you have to put the focus there. Yes, there's many military bases that are closing. That's been a conversation that has been going on for two decades. I don't think that's particularly new.

I think it's -- it's in terms of what the American people is looking for right now.

BLITZER: Tony?

COELHO: It's creating jobs. Where are you going to get your jobs domestically? And it's -- this is it. These jobs are ready to be funded, ready to go. These are...

BLITZER: You like this public works program that Barack Obama put together over the past few days?

COELHO: Absolutely, because it's an infrastructure. If we talk about, what are we lacking in this country, where are we really behind, it's our infrastructure.

BLITZER: But where is the money going to come from?

COELHO: It's going to come from the federal government, of course.

BLITZER: More -- more -- going into greater national debt?

COELHO: As -- as a matter of fact, if we really want to come out of this economic disaster that we have been put in over these last few years, we have to spend money to come out of it.

And, look it, as one who's a pay-go person, who doesn't think we should spent if we ain't got, this is a situation that's desperate. We have got to go ahead and spend in order to create jobs to turn this economy around. We're in serious trouble.

(CROSSTALK)

BLITZER: We heard the same message from former President Bill Clinton last week. Right now, the country is in such economic distress, you can't worry about that national debt, which has more than doubled over the last eight years.

SANCHEZ: That's -- that's exactly true.

And I think a point -- this is where Barack -- president-elect Barack Obama is laying his cards, his foundation of what he's arguing. It is definitely the demand and need. It's going to be a question if he's seen as somebody who is more like a Herbert Hoover four years from now, a one-termer who wasn't able to ease these political -- these economic ills, or somebody like an FDR. I think that's the bigger question.

BLITZER: How's he doing so far, do you think ?

COELHO: He's done fabulous. And...

(CROSSTALK)

BLITZER: You have no complaints?

COELHO: I have no complaints.

I'm just -- I'm concerned about -- you know, as someone who's an advocate for those of us with disabilities, I want to see what he does in that area. But I think he's doing a fabulous job. And the most important thing FDR said, we have nothing as a nation to fear but fear itself. This country is -- has been tied up in fear.

BLITZER: Tom Daschle is going to be, by all accounts, the secretary of health and human services. What do you think?

COELHO: He will be also the health czar...

BLITZER: That's right.

COELHO: ... at the same time.

BLITZER: Yes.

COELHO: And it's fabulous.

There's a guy who has written a book, who really understands this, who's committed to it. He -- he told me a long time ago that he would prefer this job over being chief of staff. This is something he really wants, he believes he understands.

(CROSSTALK)

BLITZER: So, that's reassuring to you?

COELHO: That's very reassuring to me. And here's somebody who can make it happen...

(CROSSTALK)

BLITZER: Reassuring to you, too?

SANCHEZ: I think so. I think a Republicans think he's somebody who has been effective, somebody who they think they can work with and are eager to see where he goes from there.

BLITZER: On that note of harmony, we will leave it alone, guys.

(LAUGHTER)

BLITZER: Thanks very much.

COELHO: Thank you.

BLITZER: President Bush is seeing double. The brand-new portrait of the president and what he had to say about it, that's coming up. And they were about to be laid off, but 300 workers are refusing to leave -- why Illinois' governor is taking on one of the nation's biggest banks over this issue. And dozens of Iraqi men, women and children gunned down in a Baghdad square -- now five Americans are facing serious charges. And there are questions about where the case is taking place.

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

(COMMERCIAL BREAK)

BLITZER: Here's a look at "Hot Shots" coming in from our friends at the Associated Press, pictures likely to be in your newspapers tomorrow.

In the Gulf of Aden, a Dutch soldier stands guard and looks for pirates.

In Malaysia, landslides force a woman and her dogs to leave home.

In Saudi Arabia, Muslim pilgrims pile on top of a van as they -- they make their way to the hajj.

And, in Ohio, a man dressed as Santa Claus avoids the rain and sleet with an umbrella -- some of the hour's "Hot Shots," pictures worth 1,000 words.

On our "Political Ticker": the kiss you may never have expected to see, Barbara Streisand getting a peck on the cheek from the man she accuses of stealing the 2000 and 2004 elections.

President Bush got cozy with the famously liberal entertainer yesterday when she was among those honored at the Kennedy Center. Streisand is quoted as saying -- and I will quote specifically -- "Art transcends politics." But she added that she would have preferred to receive the honor from Barack Obama.

A new image of President Bush captured on canvas -- the portrait was unveiled in Philadelphia over the weekend. Mr. Bush apparently was in a jovial mood. He joked that the artist had to use a lot of gray paint.

And listen how he greeted everyone at the unveiling.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Welcome to my hanging.

(LAUGHTER)

(APPLAUSE)

(END VIDEO CLIP)

BLITZER: An update now on the balance of power in the Congress right now.

It's Democrats 256 to 177 seats for the Republicans -- this after Democrats lost the seat in Louisiana over the weekend. The indicted incumbent, William Jefferson, was defeated in a vote delayed by Hurricane Gustav.

In Ohio, Democrats picked up a House seat held by Republicans for 42 years, most recently by retiring Congresswoman Deborah Pryce. Two House races, one in Louisiana, one in Virginia, still right now are pending.

The House Ways and Means Committee chairman, Charlie Rangel, says he has no intention of stepping down as head of that important tax- writing panel. The New York Democrat is under investigation by the House for possible ethics violations -- the most recent controversy to surface, an $80,000 payment to Rangel's son to create a campaign Web site.

Remember, for all the latest political news any time, you can check out CNNPolitics.com. You can get a lot of other important news there as well.

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

Happening now: A governor sides with laid-off workers and declares war on a financial giant, bearing his state -- barring his state, that is, from doing business with Bank of America.

Also, some of Barack Obama's big plans meeting some political resistance right now -- can the country afford a stimulus package, plus all those bailouts?