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Obama Senate Seat for Sale: Illinois Governor Arrested; Car Companies Could Get Help Soon

Aired December 9, 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, breaking news. The Illinois governor charged with plotting to sell Barack Obama's former Senate seat. The staggering details on what the prosecutor is calling a corruption crime spree.
The president-elect speaking out about all of this just a short while ago. Stand by.

The bailout cliffhanger. What's slowing down a deal to rescue the U.S. auto industry?

And what Barack Obama wants from Al Gore. We have the inside story on their one-on-one meeting.

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

(BEGIN VIDEO CLIP)

PATRICK FITZGERALD, FEDERAL PROSECUTOR: The conduct would make Lincoln roll over in his grave. The governor's own words describing the Senate seat, "It's a (EXPLETIVE DELETED) valuable thing. A thing -- you just don't give it away for nothing."

(END VIDEO CLIP)

BLITZER: The federal prosecutor Patrick Fitzgerald laying out the astounding allegations against the governor of Illinois. Rod Blagojevich hiding behind his coat as police carted him off after his arrest this morning. The most brazen and disturbing charge of all, that Blagojevich was trying to peddle President-elect Barack Obama's former Senate seat to the highest bidder.

We have extensive coverage coming up, but let's begin with our justice correspondent, Kelli Arena. She has been looking at the indictment, looking at all the statements.

The U.S. attorney in this case says that this sitting governor has reached a new low.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: He sure did, Wolf. You know, there is nothing ordinary about this case, beginning with the arrest.

The FBI special agent in charge in Chicago called and woke up the governor at 6:00 a.m. He told him there were two agents outside of his door waiting for him. (BEGIN VIDEOTAPE)

ARENA (voice-over): Prosecutors accuse Illinois Governor Rod Blagojevich of trying to sell the Senate seat vacated by President- elect Obama.

FITZGERALD: The conduct would make Lincoln roll over in his grave.

ARENA: And they say they have got the proof on tape. The FBI tapped the governor's home phone and bugged his campaign offices.

ROBERT GRANT, FBI SPECIAL AGENT: The FBI agents that participated in this wiretap investigation were thoroughly disgusted and revolted by what they heard.

ARENA: The criminal complaint reads like a movie script, peppered with profanity. It quotes Blagojevich as saying the Senate seat was a valuable thing. "You just don't give it away for nothing."

FITZGERALD: The tapes reveal that the Governor Blagojevich wanted a number of things in exchange for make the appointment to the Senate seat -- an appointment as secretary of Health and Human Services, or an ambassadorship, or appointment to a foundation, a higher-paying job for his wife, or campaign contributions.

ARENA: The governor is also accused of going after a children's hospital, threatening to pull millions of dollars in funding unless the CEO made a campaign contribution. And he allegedly tried to get tough with publishers of the "Chicago Tribune," pushing to get editors who were critical of him fired. If they weren't, he allegedly threatened to hold back state assistance in connection with the sale of Wrigley Field.

Investigators say they have never seen anything like it, even in Chicago.

GRANT: If it isn't the most corrupt state in the United States, it's certainly one hell of a competitor.

ARENA: The governor has been under investigation for years, but agents hit pay dirt just in the last two months after they started listening in. Investigators say the shakedown operation was so rampant, they didn't have time to wait until the investigation was over.

FITZGERALD: We're in the middle of a corruption crime spree and we wanted to stop it.

ARENA: The governor has repeatedly denied any wrongdoing.

GOV. ROD BLAGOJEVICH (D), ILLINOIS: I don't care whether you tape me privately or publicly. I can tell you whatever I say is always lawful, and the things I'm interested in doing are always lawful.

(END VIDEOTAPE)

ARENA: Now, the governor did appear in court this afternoon to hear the charges against him. His bail was set at $4,500, and he was released on his own recognizance. He also had to surrender his passport -- Wolf.

BLITZER: And later, we're going to be speaking to Drew Griffin, Kelli. He was in the courtroom when all that happened.

Stand by. What an amazing story.

Even in the midst of all this stunning corruption, at least potential corruption, alleged corruption, Rod Blagojevich still has the power to name President-elect Barack Obama's successor in the U.S. Senate as long as he remains the Illinois governor. The Illinois senator Dick Durbin is urging the state legislature to quickly pass a law setting a special election to fill Obama's seat, rather than leave it up to Blagojevich.

(BEGIN VIDEO CLIP)

SEN. DICK DURBIN (D), ILLINOIS: A special election is costly, I know. But the alternative of a vacancy or a tainted appointment, those alternatives are not acceptable.

(END VIDEO CLIP)

BLITZER: Another option for Blagojevich, to resign. The Illinois lieutenant governor and attorney general were among the first today to call for the governor to step down.

One prosecutor says if Illinois isn't the most corrupt state in the nation, it's certainly, as you heard, "one hell of a competitor." The president-elect, a product of Illinois politics, is hoping to stay as far away as possible from this scandal.

Let's go to Chicago. CNN's Jessica Yellin is covering the transition to power.

And only moments ago, we heard from the president-elect, Jessica. What did he say?

JESSICA YELLIN, CNN CAPITOL HILL CORRESPONDENT: Wolf, Barack Obama said that he was not aware that this was happening, and a transition aide tells CNN that today's news comes as a surprise to them.

(BEGIN VIDEOTAPE)

YELLIN (voice-over): President-elect Barack Obama on charges against his state's governor.

BARACK OBAMA (D), PRESIDENT-ELECT: I had no contact with the governor or his office, and so we -- I was not aware of what was happening. And as I said, it's a sad day for Illinois. Beyond that, I don't think it's appropriate to comment. YELLIN: The federal prosecutor made it plain -- Barack Obama was not involved.

FITZGERALD: I should make clear the complaint makes no allegations about the president-elect whatsoever, his conduct.

YELLIN: The complaint alleges Governor Blagojevich was angling to profit off naming the replacement for Barack Obama's Senate seat, including the president-elect's own preference. CNN reported that Valerie Jarrett, Obama's adviser and friend, was believed to be the president-elect's preference to take that seat. She withdrew from consideration while the investigation was ongoing. She was named as a senior adviser to Obama in the White House.

The complaint does not name Jarrett, but it calls this person "Senate candidate 1," describing her as a female and an adviser to the president-elect who "... was likely to be supported by the president- elect." The complaint goes on to quote Blagojevich saying, "Unless I get something real good for Senate candidate 1, (EXPLETIVE DELETED) I'll just send myself. You know what I'm saying."

The prosecutor says that ploy fell apart when the candidate in question decided not to seek the Senate seat.

FITZGERALD: This part of the scheme lost steam when the person that the governor thought was the president-elect's choice of senator took herself out of the running. But after the deal never happened, this is the governor's reaction: "They're not willing to give me anything but appreciation. (EXPLETIVE DELETED) them."

YELLIN: Today, Illinois Senator Dick Durbin says he spoke to Governor Blagojevich two weeks ago and the governor pressed him to see if there's any chance Valerie Jarrett would like to put herself back into consideration for that seat.

DURBIN: By the time the governor returned my call, Valerie Jarrett had taken her name out of the running and had told me personally. It came up in the conversation when the governor asked me if I thought that she was serious about not being appointed. And I said, "Yes, she told me point blank she was, and I accept her word on that."

(END VIDEOTAPE)

YELLIN: Now, Wolf, I want to emphasize that there is absolutely no suggestion whatsoever that there was any wrongdoing in any way by Valerie Jarrett, by Barack Obama, by anyone involved in the transition or in his future administration. In fact, there is no allegation of wrongdoing related to any of this by the Obama people. But it is never fun, of course, for a politician to even be suggested in the context of such an ugly investigation as this one. And a lot of discomfort over in Obama world right now -- Wolf.

BLITZER: Good point. Very strong point, Jessica. Thank you for that. The Illinois governor has been under investigation for quite a while and, only yesterday, only hours before his arrest, he essentially dared prosecutors and anyone else to go ahead and tape his conversations. Listen to this.

(BEGIN VIDEO CLIP)

BLAGOJEVICH: I don't believe that there's a cloud that hangs over me.

UNIDENTIFIED FEMALE: Well, getting back to that...

BLAGOJEVICH: I think there's nothing but sunshine hanging over me.

Let me answer that. The true question is -- and by the way, I should say, if anybody wants to tape my conversations, go right ahead; feel free to do it. I appreciate anybody who wants to tape me openly and notoriously.

(END VIDEO CLIP)

BLITZER: That was yesterday. This is the headline, by the way, in an extra edition of the "Chicago Sun-Times" today. You can see it right behind me, one word -- "Busted."

Let's go to Jack Cafferty.

Jack, you and I have covered these stories for a long time. If you read that 75-page indictment, you know what? It's really, really brazen and shocking, I've got to tell you. I've covered these kind of scandals for a long time. This one may set a new record.

JACK CAFFERTY, CNN ANCHOR: This guy is just a punk. You can see it in that sound bite you just played. He's an arrogant punk who thinks that, you know, he is bulletproof. Well, he's not.

Blagojevich, his chief of staff, arrested this morning, early on. Corruption is the charge -- 76 pages is the information I have in the complaint -- spelling out allegations against the governor including trying to sell President-elect Barack Obama's Senate seat. You know, like eBay.

The evidence seems clear. They got him in wiretaps. They hooked up both his home phone and his campaign office phone, and they got him right by the situation.

The depth of the corruption is breathtaking, as Wolf mentioned. Even for Illinois. And, you know, they set the standards in some of this stuff.

It includes Blagojevich allegedly instructing his chief of staff to tell the Tribune Company to fire members of the "Chicago Tribune" editorial board in exchange for assistance from the Illinois Finance Authority in selling the Chicago Cubs and the financing or sale of Wrigley Field. Illinois political corruption is not new. Governor George Ryan is doing six years in the joint for fraud and racketeering. Former governor Dan Walker, convicted after leaving office for bank fraud. There was Rostenkowski. There was all the stuff that went on under the Daley (ph) machine in Chicago for years and years and years.

This could be a new low, though. Under Illinois law, it is up to the governor to name the replacement to fill Barack Obama's Senate seat. Whether Blagojevich will still get to do that remains to be seen, but the prosecutor, Patrick Fitzgerald, said this afternoon the governor retains the right to name the replacement despite today's arrest. They said he might even be able to do it from a jail cell.

Although if he is either, A, impeached or, two, resigns, that would answer the question. But as of right now, he can still do it.

Here is the question: Do you believe that Illinois Governor Rod Blagojevich was trying to sell Barack Obama's Senate seat?

Go to CNN.com/caffertyfile and you can post a comment on my blog.

He's a punk.

BLITZER: Yes. That's what a lot of people are concluding. And some people believe even worse than that, Jack.

CAFFERTY: Well, you can't use the other words that he used in the wiretaps because we have a family program here.

BLITZER: That is correct. All right. Stand by, Jack.

We're going to get more on this. Jeff Toobin, our legal analyst, is standing by as well.

There is a new busing crisis that is brewing right here in the nation's capital. Can Washington, D.C., handle the busloads of tourists that will descend on the nation's capital for the Obama inauguration? We're investigating. Thousands and thousands of buses.

And the White House and Congress inching toward a deal on a bailout of the big three automakers. We're going to tell you where the rescue plan stands at this minute.

And I'll ask a U.S. senator why he supported a bailout of the banking industry but is against the plan to save automakers.

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

(COMMERCIAL BREAK)

BLITZER: An FBI official says this about the Illinois case -- and I'm quoting now -- "If it isn't the most corrupt state in the United States, it's certainly one hell of a competitor."

That's just one of many eye-popping quotes made today when it was announced that the governor of Illinois allegedly tried to sell Barack Obama's Senate seat. The U.S. attorney involved said Governor Rod Blagojevich sat in the middle of a political corruption spree and that it was all caught on tape.

(BEGIN VIDEO CLIP)

FITZGERALD: The tapes reveal that Governor Blagojevich wanted a number of things in exchange for making the appointment to the Senate seat -- an appointment as secretary of Health and Human Services, or an ambassadorship, an appointment to a private foundation, a higher- paying job for his wife, or campaign contributions. At one point, he proposed a three-way deal that a cushy union job would be given to him as a higher rate of pay where he could make money. In exchange, he thought that the union might get benefits from the president-elect, and therefore the president-elect might get the candidate of his choice.

(END VIDEO CLIP)

BLITZER: Fitzgerald also mentioned an ethics reform act that will go into effect in Illinois next month. And he said governor was working quickly before then. Listen to this.

(BEGIN VIDEO CLIP)

FITZGERALD: A month or so ago, a $1.8 billion tollway project was announced. While that tollway project was being announced, Governor Blagojevich was privately seeking to have a person benefiting from that contract raise $100,000 in contributions. And privately, the governor said, "I could have made a larger announcement but wanted to see how they would perform by the end of the year. If they don't perform, (EXPLETIVE DELETED) them."

That's a quote. And the word "bleep" was not the word he used.

(END VIDEO CLIP)

BLITZER: And Fitzgerald added that the governor was furious at criticism from a major newspaper so he allegedly wanted political payback.

(BEGIN VIDEO CLIP)

FITZGERALD: The "Chicago Tribune" had not been kind to Governor Blagojevich, had written editorials that called for his impeachment. And Governor Blagojevich and defendant John Harris, his chief of staff, schemed to send a message to the "Chicago Tribune" that if the Tribune Company wanted to sell its ball field, Wrigley Field, in order to complete a business venture, the price of doing so was to fire certain editors, including one editor by name.

In the governor's words, "Fire all those (EXPLETIVE DELETED) people. Get them the (EXPLETIVE DELETED) out of there, and get us some editorial support."

And the bleeps are not really bleeps.

(END VIDEO CLIP)

BLITZER: All right. Let's bring in our senior legal analyst, Jeff Toobin, a former assistant U.S. attorney who understands the enormity of what's going on right here.

I don't think we can overstate how big of a deal this is, can we, Jeff?

JEFFREY TOOBIN, CNN SR. LEGAL ANALYST: You know, you really can't, Wolf. And it starts, the enormity, at 6:00 a.m., because what happened in this case is the governor was arrested in his home at 6:00 in the morning.

In most white-collar cases, the defendant is allowed to surrender, it's done through lawyers. It's an orderly, rather slow bureaucratic process, over the course of a day. But Fitzgerald was so concerned that Blagojevich was going to do something as governor today, maybe appoint -- appoint a senator or sign a bill -- that he felt he had to arrest him this morning.

That's how urgent this case was. And that's just the beginning of the astonishing developments in this case.

BLITZER: He must have thought he was immune, because, you know, he's been under investigation on unrelated matters for some time. Hasn't he?

TOOBIN: Well, this case is in three parts. And the first part is the investigation that's been going on for a long time, the so- called pay to play scandal, which is a fairly garden variety corruption scheme where he is alleged to have essentially extorted campaign contributions in return for state contracts.

But what the bravado that you're referring, to the incredible fearlessness that Blagojevich displayed, is in parts two and three -- the idea that he was conditioning support for this Tribune deal on firing of the journalists at the Tribune and, of course, selling Barack Obama's seat in the United States Senate. That, I think, is something that no one expected.

BLITZER: And Patrick Fitzgerald, the U.S. attorney in Chicago, a lot of us remember him going after Scooter Libby, the chief of staff of the vice president. We remember that high-profile case and all the publicity that was generated then. This guy is -- talk a little bit about Patrick Fitzgerald, because going after a sitting governor like this is not easy.

TOOBIN: Well, Patrick Fitzgerald, I think it is safe to say, is the finest prosecutor in the United States. And it began well before he was in Chicago, because here in New York, he was an assistant U.S. attorney in Manhattan, where he led the prosecution of several of the most important terrorism cases pre-9/11.

It was as a result of those great successes that he was appointed U.S. attorney in Chicago by President Bush. He's been an enormous success in Chicago, and he was appointed the special prosecutor in the Scooter Libby case, where he won that very difficult trial. And, now he is prosecuting a sitting governor.

Now, I have to say, this is Illinois, where sitting governors tend to be prosecuted. He is the fourth governor since the 1970s to be prosecuted. But still, it doesn't mean it's easy to do.

BLITZER: Not easy to do it by any means.

All right. Stand by, Jeff, because we've got a lot more to discuss. We're going to come back to this story.

Meanwhile, President Bush essentially says he's done it before and the U.S. must do it again, if need be. That would be strike in a country seen as a threat even before it attacks the United States.

And more on owner breaking news, the top story. The man in charge of picking Barack Obama's replacement is accused of trying to sell Barack Obama's Senate seat. So how should that seat be filled right now?

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

(NEWSBREAK)

(COMMERCIAL BREAK)

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

Happening now, oil prices tumble, and gas prices aren't far behind. In fact, their lowest level in almost five years, and still falling. Is $1 a gallon possible?

Former Vice President Al Gore meets with President-elect Barack Obama in Chicago. At issue, climate change and how to tackle it in the next administration.

And the aftermath of a disaster. Three people killed and a child still missing. We have new details coming into THE SITUATION ROOM on the investigation of that military jet crash into a San Diego neighborhood. It's all coming up here in the next hour.

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

The clock is ticking right now on a plan designed to save the U.S. auto industry and possibly millions of jobs. Congress and the White House are hashing out details of a $15 billion bailout. There's hope for an agreement by the end of today.

Let's go straight to our congressional correspondent, Dana Bash. She's up on Capitol Hill working the story for us.

What are these final sticking points? Because they were supposedly close yesterday. Still no deal yet today, Dana?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: That's right. They are definitely working behind the scenes as we speak, Wolf. The hope earlier today was that they would actually have something that they could vote on on the Senate floor today. That is not going to happen now, but they are working behind the scenes on a general consensus that there should be $15 billion in short-term loans for Detroit, as long as there is a government-mandated restructuring of those companies.

And to answer your question about the sticking points, that really is, obviously, what they have been talking about, really since yesterday between the White House and congressional Democrats. Because there are not a lot of them, we're told, but the ones that they do have are quite significant. And it has to do with just how the government is able to make sure that these auto companies restructure themselves, specifically the authority that the so-called car czar, the person who will be in charge of that, will have.

Republicans are worried that the way this legislation is written right now, that that car czar, so-called car czar, wouldn't have the actual authority to do what he or she needs to do.

And the other question is whether or not there's a guarantee that, if these auto companies don't restructure properly, that the taxpayer won't be -- be -- have a problem with that, and that the taxpayer would be able to get the loan back and that that car czar would be able to mandate that.

The last thing that you are hearing from Republicans, still, is their concerned over labor, that -- the fact that labor should be trying to curb their costs with regard to health insurance, with regard to pensions, and that the autoworkers need to be dealing with that, and that it should be written into this legislation.

Now, those are, again, just some of the sticking points are -- that I'm told they are talking about behind the scenes. Even so, Wolf, we are told that they are hopeful that they could come up with some kind of deal, maybe tonight. And they still do think that perhaps they could bring this to the floor of the Senate and the House at some point this week, but that is going to be the thing that we are all going to watch for.

Just because they have a deal, when they get a deal, the big question is going to be whether or not there are the votes to pass this. One Republican senator I was talking to who is really not going to be for this, in all likelihood, said that he thinks that, despite the Republican opposition -- and there is Republican opposition -- it is probable that this will get through the House and the Senate if they can come up with this compromise -- Wolf.

BLITZER: Dana, you will watch it for us up on the Hill. We will see what happens.

If anything develops over the course of the next few hours, Dana, will let us know.

Let's talk about the possibility of this auto bailout happening.

Joining us now is Senator Bob Corker, Republican of Tennessee.

You don't like this bailout, this $15 dollar billion proposal that is on the table right now, do you?

SEN. BOB CORKER (R), TENNESSEE: I think we're missing a great opportunity that, before any U.S. tax dollars go into these companies, causing the bondholders to actually write down the face amount of their debt in a large proportion, maybe to 30 percent of what it is.

The capital structure of General Motors today, regardless of if the country is selling 20 million cars a year, is not sustainable. So, this is a perfect time, over the next three weeks, to call the bondholders to get the capital structure in the right way they can take equity for the balance, and to cause labor, which makes these companies noncompetitive, do the things they need to do over this first...

(CROSSTALK)

BLITZER: So, you're going to oppose -- you're going to vote against it if it comes up on the floor this week?

(CROSSTALK)

BLITZER: You will -- you will vote nay?

CORKER: As it is, that's correct. We think there's a much better, much more streamlined way for us to do this.

BLITZER: Because it looks like the White House and the leadership, the Democratic leadership in Congress, is getting closer and closer to this temporary loan, as they like to call it.

(CROSSTALK)

CORKER: As we see the ping-pong and as we see this developing, as it is today, we would not support it, but we have tried to offer a way, by the way, to cause this to happen in a much better way for the companies and a much better way for our taxpayers.

BLITZER: The argument is that, if the federal government can give $30 billion, whatever it was, to Bear Stearns...

CORKER: Right.

BLITZER: ... $200 billion to AIG, the giant insurance company, another $200 billion to Citigroup and all these financial -- these financial giants, what is wrong with spending $15 billion or $30 billion or $35 billion to save the pillar of American manufacturing, namely the auto industry?

CORKER: And I'm not saying that everything that's happened as it relates to the financial rescue has been perfect. And I'm not sure that it could have been.

BLITZER: You voted for it, though.

CORKER: I did support it. And -- and I think there's a difference between having a functioning financial system that CNN relies upon, the beauty parlor on the corner relies upon, having a financial system for all companies to function under, vs. going on under an industry basis system.

However, we still have tried to offer a solution that we think is far superior than the one that is being offered. And, by the way, it does get...

(CROSSTALK)

BLITZER: I want you to explain what your proposal is, but explain why you voted for the $700 billion bailout, but you're resisting what is a relatively modest sum, to save a million, two million, maybe three million jobs?

(CROSSTALK)

CORKER: I'm resisting it because we are missing a tremendous opportunity to cause these companies to be -- to overcome 50 years of issues, and we are missing that opportunity by virtue...

(CROSSTALK)

BLITZER: But there will be a car czar. There will be a restructuring. There are all sorts of demands that the White House and the Congress, if they approve this compromise, will be putting on Chrysler, Ford and GM.

(CROSSTALK)

CORKER: A crisis is the perfect timing, before the U.S. tax dollars go in, to solve this problem. And that is not what we're doing.

(CROSSTALK)

CORKER: We're also not making concrete demands of the UAW, which caused these companies not to be competitive on a daily basis.

So, the first is the capital structure. That should happen prior to our dollars going in. I know there is an ad hoc committee right now of bondholders for GM that is meeting, discussing these very things. And, yet, what we're going to do, it looks like, because I believe this will pass, by the way...

BLITZER: They have the votes?

CORKER: We're going to put money in prior to that occurring, and we will never get the bondholders to be in the same...

(CROSSTALK)

BLITZER: Give us, in 30 seconds, your proposal, what you think should be done.

CORKER: Two thing.

Number one, I think we ought to call the unsecured debtors to reduce the face amount of their debt by 70 percent, and take the rest in equity, cause labor on the VEBA payments that GM has to make to the VEBA, the Voluntary Employment Benefits Account, to take half of the $21 billion in equity, because, again, GM doesn't have the ability to pay it.

And, then, thirdly, by march, the UAW, March 31, has to vote to come on equal parity with the transplants, Nissan, Honda, Toyota, and let the secretary of labor certify that that has occurred. To me, that keeps us out of the car business. The companies can go forward.

And once the companies are companies that people will actually invest in, they're real companies. And that is not what we're doing with this process.

BLITZER: Senator Corker, thanks for coming in.

CORKER: Thank you.

Appreciate it.

BLITZER: Appreciate it.

CORKER: Thank you.

BLITZER: The inauguration of Barack Obama may bring a new kind of gridlock to Washington: millions of people, thousands of buses. The nation's capital is used to crowds, but can it handle what is about to happen?

And the cloud of corruption now hanging over the task of filling the president-elect's former Senate seat -- legal and political questions coming up in our "Strategy Session."

And is Caroline Kennedy seriously considering replacing Hillary Clinton in the Senate? We will ask her cousin, Carrie Kennedy (ph). She will be joining us live right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: When Barack Obama is inaugurated as president of the United States, he is certainly hoping to break the political gridlock here in Washington.

But his swearing-in is likely to create traffic gridlock that the nation's capital may not be able to handle, probably has never seen before.

CNN's Samantha Hayes has been looking into this story for us.

I guess millions of folks want to come to Washington to celebrate.

SAMANTHA HAYES, CNN CORRESPONDENT: They do. This is deeply personal for a lot of people.

And when we're talking about transportation issues, Wolf, just to give you an idea, even 1,000 buses in Washington, D.C., a day can cause a lot of problems. That is what happens during the Cherry Blossom Festival in the spring.

For the inauguration, we could be talking about 10 times that many.

(BEGIN VIDEOTAPE)

HAYES (voice-over): This is bus traffic on a normal day in the nation's capital, which is accustomed to hosting lots of tourists. But for the upcoming inauguration:

JIM DINEGAR, PRESIDENT, GREATER WASHINGTON BOARD OF TRADE: Just the sheer ability to accommodate 10,000 buses in this town will be a daunting task.

HAYES: And Jim Dinegar, who is looking out for the interests of businesses, says that transportation task is bigger than anything city leaders have tried to do before.

Even the Million Man March in 1995 did not bring in a million people. This inauguration, on the other hand, may reach five million. And most of them are sharing a ride and will need a place to park.

DINEGAR: You can't close off a tarmac at an airport or one of the air bases. Or you can't just say, we're going to take the section of the stadiums, because even those don't hold enough of these 10,000 buses.

HAYES: Ten thousand buses, nose to tail, would ring the beltway, the interstate around D.C., and go all the way to Baltimore.

PETER PANTUSO, PRESIDENT, AMERICAN BUS ASSOCIATION: We know the buses are coming on January 20, but we don't know what to do with them when they get here. To the city, we have said, please tell us. We need to know right away. We're only 42 days, I believe, away from the inauguration. We're running out of time. And -- and the phones are continuing to ring every single day.

(END VIDEOTAPE)

HAYES: It's coming up fast. And the city told CNN that organizers are working on bus parking and other big issues related to the inauguration. But they won't go into specifics right now.

They're saying that they're going to announce this information coming up soon, along with a lot of other things that they have been working on. So, just wanted to give you a little more information. It's interesting -- a lot of folks saying, OK, I'm just going to ride the metro.

Well, 1.2 million ride the metro train and buses daily. You can imagine what is going to happen for the inauguration, when millions more are coming into town. Four million, maybe even five million, that is the expectation, some of the estimates for January 20, when this happens.

D.C. Transit is increasing service for this. Wolf, they are considering rush hour to be 4:00 in the morning until 7:00 at night on Inauguration Day. So, they're going to be running continuing service during that day and longer on the day after that. So, it's going to be feat to pull this off, but they are working hard to get it done.

BLITZER: I can only imagine what is going to be going on. The hotels are completely full.

HAYES: Yes.

BLITZER: And I may just sleep in my office the night before and get ready, instead of going out to my home.

(LAUGHTER)

BLITZER: Who knows what is going to happen.

HAYES: There could be a lot of cots in the bureau that night.

BLITZER: Yes.

(LAUGHTER)

BLITZER: I suspect there will be. Thanks very much for that.

You may have noticed, by the way, that the CNN logo on the bottom of your screen right now is green. Why the color change? The network is gearing up for a new "Planet in Peril" special on population growth with Anderson Cooper, Dr. Sanjay Gupta, and Lisa Ling. It airs Thursday night, 9:00 p.m. Eastern, right here on CNN. I think you're going to want to see it.

In the "Strategy Session": The Illinois Senator Dick Durbin says he and Barack Obama kept their distance from the embattled Illinois governor.

(BEGIN VIDEO CLIP)

SEN. RICHARD DURBIN (D), ILLINOIS: We all have varying levels of cooperation with the governor. Mine was extremely limited. And I believe that President-elect Obama would say the same.

(END VIDEO CLIP)

BLITZER: But how much of a headache could the Blagojevich scandal be for the president-elect?

And 10,000 people marching on the parliament in Greece, as protests continue on this day over the death of a teen. We're going to Athens for a live report -- right here in THE SITUATION ROOM.

(COMMERCIAL BREAK) BLITZER: Out on bail and facing corruption charges right now.

The arrest of the Illinois governor, Rod Blagojevich, has rocked the political community, rocked Chicago and Illinois, all across the country. It was Blagojevich who was to appoint someone to fill president-elect Barack Obama's Senate seat. So, what happens right now?

Joining us in our "Strategy Session," Karen Finney -- she's the communications director for the Democratic National Committee -- and Republican strategist John Feehery.

What happens next in Illinois, Karen?

(LAUGHTER)

BLITZER: I know you have been trying to figure this out.

(LAUGHTER)

KAREN FINNEY, COMMUNICATIONS DIRECTOR, DEMOCRATIC NATIONAL COMMITTEE: Yes, I have been trying to make sense of it.

Well, it looks like folks are calling for -- either for him to step down or looking for a way to either do a special election, or an impeachment proceeding. I mean, that seems to be the direction that we're going in.

BLITZER: Three options, none of which are very good for Rod Blagojevich.

But, right now, I suspect he has got bigger problems on his agenda.

JOHN FEEHERY, REPUBLICAN STRATEGIST: He has got bigger problems, but I don't think he's going to go anywhere. I think he wants to stay being governor.

I don't think -- I think he was trying to auction off this seat, which is obviously not good news for Barack Obama or for any Illinois Democrat. And I think they are going to try to impeach him, but that is going to take too long.

So, Dick Durbin has been talking about this special session to get the special election, to have a special runoff. The irony is, if they -- that they do the election the same time that they do the election for Rahm Emanuel, who Rod Blagojevich used to have his seat. So, there's all kinds of internal dynamics here in Illinois. I'm from the South Side of Chicago. I'm from Illinois. For me, this is just kind of old home week.

BLITZER: You worked for Dennis Hastert when he was the speaker. He is from Illinois.

But it's pretty -- the brazenness of the allegations -- and, let's repeat, these are allegations that have been included in an indictment by the U.S. attorney there.

The brazenness, though, it's -- it's -- it takes your breath away.

FINNEY: And I think that's really what has shocked people. And I think everyone can agree it's pretty appalling, what are in these allegations.

And I think that's why you have seen Democrats move pretty quickly throughout the day to make it clear that we can't -- we have to ensure that whoever replaces the president-elect in his Senate seat can't, in any way, shape, or form, be linked to this controversy.

BLITZER: Yes, go ahead.

FEEHERY: And I also took away that the -- the U.S. attorney, Fitzgerald, he -- it really took his breath away. He was shocked by the allegations, shocked by listening in on these conversations.

Now, Barack Obama has a big decision to make. Do you keep him there in Illinois? Do you promote him up to the district -- attorney general's office, or do you get rid of him? And he's -- he is in a tough spot, because, if he keeps him there, he keeps rooting around, if he promotes him up, that is not good politics. And, if he fires him, it's even bad politics. So, Barack Obama...

(CROSSTALK)

BLITZER: Well, you heard -- you heard...

(CROSSTALK)

BLITZER: You heard Jeff Toobin, our senior legal analyst, say that Patrick Fitzgerald is the best U.S. attorney out there.

FINNEY: That's absolutely right. He has got a very strong reputation.

And I don't -- I don't think there is any concern about him continuing to root around, because, look, the president-elect has set a very different tone in terms of transparency and in terms of the ethics standards that he is setting. So, I don't think there's a concern about that.

BLITZER: Is there a political problem here...

FEEHERY: Huge.

BLITZER: ... for -- for Barack Obama, for Dick Durbin, the senior senator in Illinois?

FEEHERY: Durbin, I don't -- less so. I think, for -- for Barack Obama, first, he's in Illinois.

Second of all, some of the same guys that were involved with Barack Obama, Levine and Tony Rezko, they are all mentioned in this indictment.

(CROSSTALK)

FEEHERY: And this is not -- this is where -- where Barack Obama became politically mature. This is where he got up. This is where he became president.

So, this -- for him, this is a very difficult time. And I think he has got to treat this very carefully.

FINNEY: Well, again, obviously, this is the talking points that we're going to be hearing from the other side.

But I think Barack Obama has made it very clear that he's going to set a totally different tone. He's not at all close with Blagojevich. I don't see -- I disagree with you there that this is a tough for...

FEEHERY: Of course you do.

FINNEY: Well, of course I do. That's my job.

(LAUGHTER)

BLITZER: You know, most of the scandals -- most of the political scandals, Karen, in recent years have involved Republicans.

FINNEY: That's right.

BLITZER: And they're all pretty well-known. William Jefferson, the Democrat in Louisiana with the 90,000-plus dollars in his freezer, he just lost his reelection bid.

(CROSSTALK)

BLITZER: But this is a high-profile -- high-profile Democratic sitting governor right now...

FINNEY: Yes.

BLITZER: ... that -- a huge embarrassment.

FINNEY: Well, look, I think there are two key points to this.

Number one, Barack Obama has been the polar opposite to the kinds of allegations that we're hearing. But, number two, I think this is a good cautionary tale, frankly, for Democrats and Republicans to remember, you can't get complacent. You can't be so bold as to think you're above the law.

And we have to remember that, you know, we all have to follow the laws, and no -- you know, no one is above the law.

BLITZER: Were you stunned, as I was reading, that 76-page indictment today? You say you grew up in the South Side of Chicago.

(CROSSTALK)

FEEHERY: Well, I wasn't that stunned, frankly. I mean, it's Rod Blagojevich. It's not like...

(CROSSTALK)

(LAUGHTER)

BLITZER: But by the -- you weren't stunned by, you know, the...

FEEHERY: Rod Blagojevich is a jerk. He's an idiot. This is not surprising.

I don't think this surprised anybody in the political establishment. People have been thinking this was going to happen for months for Rod Blagojevich. And this is kind of the way he operates. I mean, a lot of Illinois legislators on both sides of the aisle had not talked to Rod Blagojevich for months, because they just can't stand him.

So, this is not much of a surprise. I would say that this is -- it does show the peril, though, of one-party government. This happened to the Republicans with one-party government. It happening with Democrats. Democrats have dominated Illinois with one-party government. And now they're dominating the government here in D.C. So, there has got to be some concern about one-party government and...

(CROSSTALK)

BLITZER: Very quickly, Karen.

FINNEY: Well, I think that's why how we act going forward is so important.

We have passed strict ethics legislation. And as long as we hold ourselves accountable to those same, you know, rules, then I think we -- I think people will see that we -- we mean what we say.

BLITZER: We will leave it right there, guys. Thanks very much.

Jack Cafferty called him a punk. And John Feehery called him a jerk.

(LAUGHTER)

BLITZER: We will see what else is coming up here in THE SITUATION ROOM.

Plenty of actors have gone from Hollywood to Washington. Now there is another actress who is showing interest in politics. The woman who famously played "The Nanny," Fran Drescher, she has a big seat she wants to fill.

And gas prices keep getting lower and lower. Could they sink to $1 a gallon? And what will the incoming leader of the free world wear? We're taking a closer look at the fashion options for both Barack Obama and Michelle Obama for their inauguration.

Stick around. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: On our "Political Ticker" today: We're told Hillary Clinton and Condoleezza Rice talked about the challenges of being secretary of state when they sat down for dinner here in Washington last night.

The nominee to be top diplomat and the current secretary of state shared a catered meal at Rice's D.C. apartment. No specifics from the State Department about their conversation, but we do know they ate sea bass.

Sounds delicious.

Move over, Caroline Kennedy. The actress who played "The Nanny" on TV is expressing interest in Hillary Clinton's Senate seat. A spokesman says Fran Drescher is throwing her hat into the ring to win the appointment. Drescher has served as a public diplomacy envoy for the State Department, as well as being a former sitcom star.

And whoever is appointed to Clinton Senate's seat, by the way, Congressman Peter King is now saying he will run against that Democrat. The New York Republican says he's preparing a Senate bid, even if he has to challenge Caroline Kennedy. King says he will meet with campaign aides next week to discuss fund-raising for a potential 2010 race.

Season greetings from the first couple. President and Mrs. Bush released their holiday portrait today. It was taken earlier this month in the Blue Room over at the White House. It's a lovely portrait, as well.

And, remember, for the latest political news any time, you can always check out CNNPolitics.com. That's where you can also get our political screen saver, get all sorts of useful information on what is going on.

There's no doubt about it. CNNPolitics.com, that is the place you want to be to get all the political news. In just a short time, it's become the number-one news blog out there on the Web.

Let's check in with Jack Cafferty right now. He's got "The Cafferty File" -- Jack.

CAFFERTY: The question this hour, Wolf, is: Do you believe Illinois Governor Rod Blagojevich was actually trying to sell Barack Obama's Senate seat, as alleged in a 76-count criminal complaint?

Michael writes: "It's simply time to say enough. This guy, if convicted, ought to spend the next 25 years in prison, forfeit all his assets for the betrayal of the public trust. We sorely need a huge dose of transparency, accountability, consequence in both the public and private sectors. Relying on people in power to behave well solely based on their good character and reasonable moral values clearly does not work."

Matt writes: "Blagojevich was absolutely trying to sell president-elect Obama's seat. Coming from Chicago myself, I can tell you this man is hated in this state. And everyone knows how shady he is. I'm actually shocked and, of course, pleasantly surprised that he got caught. Throw the bum out."

Gus in California: "Sure, I believe it, but is that so much different from Marc Rich's pardon? Ambassadorships have been for sale for years. Business as usual, I would say."

Janice in Illinois: "I'm from Illinois. We are broke, no money for anything that matters to the citizens. This governor refused to live in our capital city, flies every day to his office in Chicago back and forth, huge cost to us. He is junk and he should be throw out."

Will writes: "Aren't we innocent until proven guilty and/or we confess to the alleged crimes?"

Uh, yes.

And Donna in Illinois: "Oh, you bet he was trying to sell the Senate seat. He would sell anything that isn't nailed down. I am ashamed to say I voted for this jerk. His language just shows what he thinks of the people of this state."

If you didn't see your e-mail here, you can go to my blog, CNN.com/caffertyfile. Look for yours, among hundreds of others -- Wolf.

BLITZER: All right, Jack, thank you.

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