Return to Transcripts main page


Illinois Senate Seat Fallout; Obama: Illinois Governor Should Resign

Aired December 10, 2008 - 16:00   ET


WOLF BLITZER, CNN ANCHOR: Happening now, the breaking news we're following. A mystery in the Illinois governor's corruption case has been solved. New information on Congressman Jesse Jackson Jr.'s connection to the controversy.
We're expecting Congressman Jackson to answer questions about this matter within a matter of a few minutes. We'll bring you his news conference live.

The president-elect takes a tougher line against the Illinois governor, accused of trying to sell Barack Obama's former Senate seat. This hour, the backlash from the startling charges of power abused.

And the auto industry is getting closer to getting a bailout. Or is it? The White House and Congress set to reach an agreement, but there still may be some serious roadblocks preventing a vote and a deal.

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


REP. JESSE JACKSON JR. (D), ILLINOIS: I feel very good. I have done nothing wrong. This is a very serious matter that is going to restore confidence at the end of this process in the government in Illinois, and that is long overdue.

So a lot of people are going to be touched and affected by this process. But I am confident that we have engaged in no wrongdoing. The facts are going to bear themselves out. And our state is going to be all the better for it.

Thank you.


BLITZER: Congressman Jesse Jackson Jr. speaking out only a few moments ago. He's about to have a full-blown news conference, make another statement and answer reporters' questions.

Stand by. We'll have live coverage.

There's brand new information in connection with the staggering corruption charges against the governor of Illinois. At issue, the identity of candidate number 5, a prospect for Barack Obama's former Senate seat, a post Governor Rod Blagojevich allegedly was trying to peddle to the highest bidder.

As I said, we're standing by for a news conference with Congressman Jackson. He's one of several contenders for the Obama Senate seat.

You're looking at live pictures from Capitol Hill. He'll be walking up to that microphone momentarily.

Our Brian Todd has been looking into all of this.

The developments, they're quickly moving. We don't know where it's going to wind up. But update our viewers on what we know, Brian, right now.

BRIAN TODD, CNN CORRESPONDENT: We've been making calls all day on this, Wolf. Late information on the identity of candidate 5, who was often mentioned in this complaint against Governor Rod Blagojevich from a law enforcement source. This is from our Justice Correspondent Kelli Arena.

A law enforcement source says that Congressman Jesse Jackson Jr. is the so-called "candidate 5" mentioned so often in this document. Jesse Jackson Jr.'s attorney also told a news conference a short time ago that he, the attorney, assumes also that Jesse Jackson Jr. is candidate 5. But from our law enforcement source -- again, from Kelli Arena -- saying that while Jesse Jackson is candidate 5, there is no evidence that candidate 5 or anyone connected with him approached Governor Blagojevich in any improper way.

There is no conversation with candidate 5, according to this source, that -- with candidate 5 that was ever picked up on any bugs or wiretaps. That's according to our law enforcement source. And no evidence that candidate 5 is aware that anyone -- or if anyone approached Governor Blagojevich in an improper way, and no evidence that candidate 5 is aware of any improper dealings with Governor Rod Blagojevich, Wolf. But it looks now, just about every indication pointing to Jesse Jackson being that candidate 5.

Very significant because of some of the things that are said in this document.

BLITZER: Well, let's talk about that a little bit. Why is it potentially explosive, who the Senate candidate number 5 might be, based on the 76-page document that was filed yesterday by the U.S. attorney in Chicago?

TODD: Much of that can be explained here on page 72 of this complaint that was unveiled yesterday so dramatically about Rod Blagojevich.

Page 72 of this says essentially that Blagojevich thought he could cut a deal with candidate 5. Here's an operative sentence. Rod Blagojevich stated he might be able to cut a deal with candidate 5 that provided Blagojevich with something "tangible up front."

Another part of this page 72 says that Blagojevich described an earlier approach by an associate Senate 5 as follows: "We were approached pay to play. That he would raise me $500,000 and emissary came (ph), implicating that someone maybe connected to Jesse Jackson approached Rod Blagojevich at some point, possibly offering something.

But again, no evidence of any wrongdoing, no evidence that candidate 5, now identified as Jesse Jackson Jr., knew of any wrongdoing. He has said to everyone connected to this that he is not going to -- that he is going to cooperate with the investigation. He's been asked to interview with the prosecutors. So that's where we have it at this point.

BLITZER: And we're standing by for his news conference, Congressman Jesse Jackson Jr., the son of the civil rights leader Jesse Jackson.

We'll go there live, Brian, once he starts speaking. These are live pictures you see from Capitol Hill.

Barack Obama is taking a stronger stand today about the future of the Illinois governor and this entire corruption case against him. Obama's initial response to the charges against Rod Blagojevich prompted some to ask, where's the outrage?

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

Jessica, did Barack Obama need to put even more distance between himself and Blagojevich? Because that was the question that was raised yesterday.

JESSICA YELLIN, CNN CORRESPONDENT: That's right, Wolf. And there are calls for Barack Obama to say much more, particularly from Republicans who are now pressing this issue.

At the very least, this story throws Obama off message, drowns out his message about his agenda, and raises questions about what his team is not saying about any possible contacts with the governor.


YELLIN (voice-over): Barack Obama is stepping up the pressure on Governor Blagojevich to resign through an aide, telling CNN, he believes "... under the current circumstances, it is difficult for the governor effectively do his job and serve the people of Illinois." That statement comes amid questions about what Barack Obama is not saying regarding the charges against the governor.

Yesterday, the president-elect was careful about the words he chose.

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: So we were not -- I was not aware of what was happening.

YELLIN: Not "we," but "I," leaving open the possibility that one or more of his aides did have contact with the governor's office. And according to the complaint, Blagojevich wanted to talk to at least one of Obama's aides. The governor is quoted saying on November 13th that he'd like to call one of the president-elect's advisors and ask him, "Can you guys help raise $10 million or $15 million?"

It's not clear whether that call ever happened. And the prosecutor went out of his way to make it clear Obama is not in his crosshairs.

PATRICK FITZGERALD, U.S. ATTORNEY: The complaint makes no allegations about the president-elect whatsoever.

YELLIN: But there's the perception issue. The man who promised to run the most candid White House in history is saying...

OBAMA: As this is an ongoing investigation involving the governor, I don't think it will be appropriate for me to comment on the issue at this time.

YELLIN: Sound familiar?

SCOTT MCCLELLAN, FMR. WHITE HOUSE PRESS SECRETARY: But our policy has been that this is an ongoing investigation. We're not going to comment on it.

YELLIN: It begs many questions.

UNIDENTIFIED MALE: How did the campaign talk to Governor Blagojevich? What did Senator Obama know about his friend and her chances? Why did she abruptly, Valerie Jarrett, take herself out of the running? There are a series of questions here that just haven't been answered.


YELLIN: Now, Wolf, we had originally heard that Barack Obama might be making some sort of personnel announcements this week, and now we're told that those aren't happening until later, maybe even next week, which raises the question, do they not want to put Barack Obama in front of the press taking questions, questions like the ones raised in this piece? The larger issue here is, until Barack Obama addresses some of these questions, they will continue to dog him. Even though there's absolutely no suggestion of wrongdoing, stonewalling never works well for a politician -- Wolf.

BLITZER: Excellent point.

Jessica Yellin covering the transition in Chicago.

Let's bring in our White House Correspondent Ed Henry. He's learning names of future leaders, cabinet secretaries under Barack Obama.

What are you hearing?

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: That's right. CNN has now learned that for energy secretary, three sources close to the transition say that Dr. Steven Chu is likely to be named next week by the president-elect as energy secretary.

He's very well known in energy circles. He runs the Lawrence Berkeley National Laboratory in California. He won the Nobel Prize in 1997 in physics.

But the big question is going to be, if in fact this goes forward, will he have the political clout? He doesn't have a lot of political experience. Will he have the clout to pass a massive energy reform bill?

Barack Obama has said that's going to be one of his top priorities early next year. And I can tell you, I've been talking to some senior Democrats privately who say they wonder if he'll have the political clout to get oil companies and others who don't want to change the status quo to come on board for a major energy reform bill. And that's why it's also interesting that a couple of other big names have been out there sort of floating around as potential picks for energy secretary.

We've heard in the last couple of days Governor Arnold Schwarzenegger as a possible pick. I can tell you though, a source close to the governor told me that he's interested only in serving out his term through 2010 in California.

Another big name, retired General Colin Powell. Because of the fact that Barack Obama has talked about energy as a national security issue, some people in Democratic circles saying Secretary Powell, former secretary of state, could be considered for energy. But a source close to Secretary Powell just told me a short time ago he will not take any specific cabinet role in an Obama administration. A little news there that, instead, he will leave the door open to an informal role. If Barack Obama comes to him and says he wants him to be a Mideast envoy, for example, Secretary Powell would be open to that.

But we're now hearing from three sources close to the transition that Barack Obama is likely to name Dr. Steven Chu next week as his energy secretary -- Wolf.

BLITZER: Thanks very much.

Ed Henry.

There had been some talk that Colin Powell could be education secretary since he's passionate about the education system. But you're reporting now based on a source, a good source, that he's unlikely to accept any formal job.

HENRY: Exactly.

BLITZER: He would be happy to help out in any informal way he could.

HENRY: Troubleshooter, Mideast envoy, something like that.

And one other quick thing we should note is three sources close to the transition say Carol Browner, the former EPA chief in the Clinton days, is going to be named next week as a sort of climate czar, a new job within the White House.

BLITZER: And I know that that's something Al Gore has been pushing for, as you know as well.

HENRY: Absolutely.

BLITZER: Ed, thanks very much.

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

JACK CAFFERTY, CNN ANCHOR: Assistant Senate Majority Leader Dick Durbin, the Democrat from Illinois, called yesterday "a sad day for my state." That's an understatement.

Sad day, to be sure. His state's governor hauled off in handcuffs to appear before a federal judge. But in Illinois, it's not like this kind of stuff has never happened before.

There is, in fact, a pattern of corruption among governors in the Prairie State. Counting Governor Blagojevich, four of the last seven Illinois governors have been arrested.

Democrat Otto Kerner who was Illinois governor from 1961 to 1968, convicted of taking bribes from the manager of two horse racing tracks and spent some time in the joint.

Dan Walker, also a Democrat, held the job from 1973 to 1977, served time in prison for -- after he left office for receiving improper loans.

And Republican George Ryan, who served as governor from 1999 to 2003, charged with accepting gifts in return for political favors, that pay to play thing. Sentenced to six years in prison in 2006. He is currently on the inside.

Blagojevich, of course, charged yesterday with, among other things, trying to sell President-elect Barack Obama's Senate seat. It's a proud tradition, isn't it?

And don't even start on the history of corruption in the city of Chicago. It's only a three-hour program. We simply don't have the time to go into it.

Here's the question then: When it comes to political corruption, what it is about Illinois?

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

BLITZER: I don't know, but that's a good question, Jack. Thanks very much.

CAFFERTY: I don't either.

BLITZER: Stand by.

He's a sitting United States congressman with a very famous father, a very famous name. How will he explain his connection to the scandal that's reverberating from Illinois to Washington?

We're waiting right now for Congressman Jesse Jackson Jr. to come and speak. You're looking at live pictures from Capitol Hill.

Also, there's another unusual situation involving Illinois. A Democratic senator wants President Bush to help a Republican former governor get out of jail.

And how close are we to seeing a bailout for the U.S. auto industry? I'll ask the commerce secretary, Carlos Gutierrez.

Stand by. You're in THE SITUATION ROOM.


BLITZER: We're standing by for a news conference. You're looking at live pictures right now.

Congressman Jesse Jackson Jr., Democrat of Illinois, he's about to speak out in connection with the corruption case against the Democratic governor of Illinois. This case putting a big, fat bright spotlight on Illinois politics. It certainly is not pretty by any means.

Let's go to Jeff Toobin. He's helping us better understand what's going on.

The legal implications, Jeff -- you've read the 76-page document very closely, specifically focusing in on this Senate candidate number 5 that has now been confirmed to be Jesse Jackson Jr. Why potentially is this legally explosive?

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Well, I think it's very important to parse exactly what's in the document, because it may or may not be legally explosive.

What Blagojevich is quoted as saying is that someone on candidate 5's behalf -- and that now we know is Jesse Jackson Jr. -- offered him $500,000 in campaign contributions to make Jesse Jackson Jr. the senator. That may or may not be true.

Blagojevich may be lying to the person he's talking to. It may never have happened. If it happened, it may not have been with the knowledge of Jesse Jackson Jr.

So imputing anything criminal or improper or even embarrassing to Jesse Jackson Jr. may be unfair here. So it's potentially embarrassing, but that's all it is.

BLITZER: We know that they bugged -- the U.S. attorney and the FBI in Chicago, Jeff, they bugged his office, the governor's office, as well as, I believe, his home phone. Is that right? Because that's where the so-called evidence that's been documented in this 76-page document is coming from.

TOOBIN: His campaign office, his campaign telephone, and his home telephone.

BLITZER: Not the governor's office?

TOOBIN: Not the governor's office in Springfield, no.

BLITZER: All right. So we don't know the if Jesse Jackson Jr.'s voice is on any of those recordings?

TOOBIN: We don't know that. And the complaint does not quote Jesse Jackson Jr. at any point. So that's just an unknown at this point.

BLITZER: Sources have told us, law enforcement sources, they told us his voice is not on any of those recordings, which presumably is very good news for the Illinois congressman.

TOOBIN: It is, but again, what makes the situation so unusual is that the governor of a state ordinarily would have phone calls with senators, with congressmen, with public officials. So the mere fact that someone spoke to Governor Blagojevich is not incriminating, although now given how tainted he is, it's certain to be embarrassing.

BLITZER: And the whole notion of giving -- making a promise for $500,000 or $1 million in campaign contributions, in exchange for getting a job, that is brazen and obviously very, very illegal.

TOOBIN: Very, very illegal. And George Ryan, the current -- the predecessor governor, he's serving six years in prison for a crime that pales in comparison to what Blagojevich is accused of. So it just gives you some idea of how much exposure this current governor has, because his predecessor is doing a very substantial prison sentence for something that was not nearly as brazen.

BLITZER: And the defense that Blagojevich might be able to present -- I assume he's going to have some pretty good criminal defense attorneys -- if this evidence is as strong as it appears to be in this document that the U.S. attorney Patrick Fitzgerald put out, it's going to be tough to mount a defense.

TOOBIN: Well, defense lawyers always come up with a defense. And I think reading the complaint, it's likely the defense will be, look, you are just putting everyday politics in a criminal posture. Sure we were talking about campaign contributions, but there was no quid pro quo here. This was simply ordinarily political talk.

BLITZER: All right. Stand by for a moment because Jesse Jackson Jr., we're told, is walking into the room right now, although we don't see him yet in the screen. But he's apparently walking in right now and he's going to be making a statement.

So let's listen in. JACKSON: Well, the next time I introduce legislation, I hope all of you show up.

I was shocked and saddened to learn that Illinois Governor Rod Blagojevich was arrested yesterday by federal law enforcement officials. The details of corruption charges were staggering and stunning. If these allegations are proved true, I'm appalled by the pay-to-play schemes hatched at the highest levels of Illinois state government.

I think that I can speak for all Illinois residents when I express outrage at the thought that Illinois's now vacant Senate seat may have been put up for sale, offered to the highest bidder. Sadly, yesterday's criminal complaint casts another dark cloud over a state already beleaguered by corruption and scandal.

Clearly, the people of Illinois deserve better. They deserve to have their trust and their confidence in government restored.

In light of yesterday's criminal indictment, I believe that the governor, in the best interests of our state, should resign and forfeit his authority to make the Senate appointment. The fact is, anyone appointed by the governor at this point would be too severely tainted to serve the state effectively and without suspicion in the United States Senate.

Meanwhile, the governor's fate is in the hands of the justice system. We must allow that process to run its course.

As it does, I want to address rumors and reports about me and my involvement in this process. I want to make this fact plain. I reject and denounce pay-to-play politics and have no involvement whatsoever in any wrongdoing.

I did not initiate or authorize anyone at any time to promise anything to Governor Blagojevich on my behalf. I never sent a message or an emissary to the governor to make an offer to plead my case or to propose a deal about a U.S. Senate seat, period.

I thought mistakenly that the process was fair, above board and on the merits. I thought, mistakenly, that the governor was evaluating me and other Senate hopefuls based upon our credentials and qualifications.

Of those members of the United States Congress who have been mentioned as potential senators from Illinois, I have served longer than every one of them, except for Congressman Luis Gutierrez. I have more seniority.

In the 13 years that I've served in the Congress of the United States, I've only missed two votes, and there's no Democrat and no Republican in the Congress of the United States who can say that.

I thought mistakenly that the governor was going to make a decision in the best interest of our state, as well as our nation. I thought mistakenly that the governor was considering me based on my 13 years of hard work on behalf of the people of our state, as well as our nation. I thought mistakenly I had a chance and I was being considered because I had earned it.

Clearly, I was badly mistaken. I did not know that the process had been corrupted. I did not know that credentials, that qualifications, that a record of service meant nothing to the governor. I did not know that the governor and his cronies were attempting to use the process to extort money and favors in a brazen pay-to-play scheme.

I wanted to be considered for the appointment because I believe in public service. I believe that Illinois deserves another senator serving alongside Senator Dick Durbin, who shares the values and will work to fix our economy, make our nation more energy independent, provide health care for all Americans, and provide our children with a world class education, the values of the president-elect.

That's what I shared with Governor Blagojevich on Monday, when I had the opportunity to meet with him for the first time in four years. I want to repeat that. I met with Governor Blagojevich for the first time in four years on Tuesday.

I presented my record, my qualifications and my vision. The media saw me enter the governor's office, and after a 90-minute meeting about my record, my qualifications, the media saw me exit Governor Blagojovich's office.

Despite what he may have been looking for, that's all I had to offer. And that's what we discussed.

To the people of Illinois, I want to thank you for the opportunity to serve you. I want to thank the thousands and thousands of people who supported me for the Senate, writing letters, making phone calls, sending e-mails and circulating petitions.

I want to thank the "Chicago Sun-Times," "The Chicago Defender," "The Southtown Star," "Indigo" magazine, the "Kankakee City News" for their editorial endorsements.

I want to thank the business, labor, clergy, civic and community leaders and the thousands of honest, hardworking Illinois citizens who supported me.

We did it right. They did it right. We pressed to make what would have been a private process a public process, that their voices might be heard.

Know this -- I spoke to the U.S. Attorney's Office on Tuesday. They shared with me that I am not -- I am not a target of this investigation, and that I am not accused of any misconduct.

In the days ahead, federal law enforcement officials want to meet and discuss what I know about the Senate selection process. I look forward to cooperating with the hardworking men and women of the United States Attorney's Office and the Justice Department. I look forward to sitting down with them and cooperating fully and completely under this federal investigation.

I have retained the advice of legal counsel, Mr. James Montgomery Sr., who held his own press conference earlier this afternoon in Chicago. On his advice, and due to the ongoing investigation, I will not be taking any questions. But I do want to add one point before I leave.

This morning I got a text message from my little sister who told me that she was proud of me. She was proud of what I've done for this nation.

In the 14 years that I've nearly served in this Congress, I've tried to honor this institution and I've tried to honor public service because I believed that it is a noble profession. It is a profession that requires the highest possible sacrifice. It is public service, but it is private sacrifice.

And so this morning, she told me, "Jesse Jr., I'm proud of you." That came from my little sister.

And I felt that kind of pride over the last two and a half years in our state. And I know this is a low moment for the people of our state, but watching the president-elect carry himself in such an extraordinary way across this country to build bridges that had never been built in this country, even I had become inspired.

And so, somewhere along the way, over the last two and a half years, I got the idea that if a skinny kid with the funny name could be president of the United States, that a short kid with a somewhat controversial but certainly a high-profile name could be a senator from Illinois. I entered this process with that expectation, and I hope that the people of the state of Illinois and the people of our country will measure me based upon the content of my character.

Thank you very much for having me.

QUESTION: Were you ever told or led to believe that you were going to get the job?

QUESTION: Did anybody ever lead you to believe you were going to get the job?

BLITZER: All right. So you see the reporters trying to get some questions to Jesse Jackson Jr., the Democratic Congress from Chicago. But he said on the advice of his attorney, he's not going to be answering their specific questions, although you did hear a very flat rejection of any allegations that he did anything improper in connection with his long-stated desire to be named the next United States senator from Illinois, replacing Barack Obama.

Jeff Toobin is our senior legal analyst, himself a former U.S. assistant attorney.

What did you make of what we just heard, Jeff?

TOOBIN: Well, it was a categorical statement of lack of wrongdoing. He didn't take any questions, so there are certainly more questions to be asked -- what were the nature of the contacts? But I think he is certainly entitled to be thought innocent until proven guilty of anything.

One thing that struck me about the comment is the way he was winding up. I thought he was going to say, in light of all this I am going to withdraw as a candidate to be a senator. That's where he seemed to be heading, but he didn't go there.

So, presumably, whoever is going to be naming this senator, whether it's Blagojevich, unlikely though that may be, or Patrick Quinn, the lieutenant governor, Jesse Jackson Jr. is still going to be in the running.

BLITZER: If he's done nothing wrong, Jeff -- and a lot of viewers probably would be a little confused -- you're a lawyer, you understand this. Why would his own lawyer tell him, you know what? Don't answer reporters' questions?

TOOBIN: Well, I think that is the legally safe course, because he doesn't know what the physical evidence shows. He doesn't know what's on the tape -- what's on the tapes.

So, if you say nothing, you don't risk being contradicted by the evidence down the line. However, if you are a public official, particularly one who hopes to be named United States senator, I think, politically, it's a real disadvantageous situation to be in to be refusing to answer questions.

So, I think it's legally smart. Politically, I think it's a lot more questionable.

BLITZER: Yes, I think you make an excellent point.

Jeff, I want you to stand by, because we're going to stay on top of this story.

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

Happening now: The Illinois governor facing scathing accusations, but the governor's wife is also caught up in this scandal. Federal officials say she's also caught on tape saying eye- popping things. We're investigating.

He lost his home and his loved ones when a U.S. military jet slammed into the family's house. Now a devastated man in San Diego makes a desperate plea to anyone who's listening.

And you could help save them, but they could kill you. We're talking about man-eating sharks. With blood swirling in the water, why would people be diving in to help save these giant whites?

Anderson Cooper, he will be here live to explain this part of CNN's "Planet in Peril" coverage.

I'm Wolf Blitzer. You're in THE SITUATION ROOM. A plan to bail out America's auto industry seems to be in trouble once again. We have learned earlier today that the White House and the Democratic-controlled Congress had reached an agreement. But now Republicans on the Hill are weighing in, and many of them are not happy at all.

Let's go to our congressional correspondent, Dana Bash.

She's been looking at this very important story.

It seems to be a deal, no deal. What's the latest? What do we know, Dana?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: What we know, Wolf, is that Bush aides worked for days and days with congressional Democratic aides, coming up with this deal to help -- help the auto industry, but it landed with a thud inside the Senate Republican Caucus today.

Even Republican senators who say that they think that this is absolutely necessary, that they want this, they say, right now it, it does not have the votes to pass the Senate.


BASH (voice-over): Within minutes of the House Democratic decision to move forward on agreement with the White House to bail out auto companies, word from Senate Republicans they may kill it.

SEN. JIM DEMINT (R), SOUTH CAROLINA: Americans are not stupid. They will know that this bailout is only a temporary solution.

BASH: White House Chief of Staff Josh Bolten and Vice President Dick Cheney rushed to Capitol Hill to try to sell the deal for Detroit to their fellow Senate Republicans. Several GOP senators described the closed-door meeting as intense. No sale yet.

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: I haven't made a final decision that I have announced myself.

BASH: Many Republicans in this still evenly divided Senate complain that the $14 billion bailout that Bush officials negotiated with congressional Democrats fails to guarantee that struggling auto companies must revamp to become competitive.

SEN. DAVID VITTER (R), LOUISIANA: Isn't that, to use a common phrase, just ass-backwards? Fifteen billion dollars, and then later, after that's out the door, we will see a detailed restructuring plan?

BASH: Under the bill filed in the House, a so-called car czar would bring together auto companies, unions and other parts of the industry to come up with long-term restructuring plans by March 31.

SEN. DEBBIE STABENOW (D), MICHIGAN: This is about the underpinnings of our economy, and, fundamentally, whether we are going to compete with every other country. BASH: In attempt to lure Republicans, the czar was given the power to force carmakers into bankruptcy if they don't revamp to become viable.

Still, several Republicans say, their biggest problem with the bailout is that the czar lacks enough power to mandate long-term change in Detroit.

SEN. JOHN ENSIGN (R), NEVADA: How does anybody expect some car czar or some politician to be able to make the decisions that are right from a business standpoint for these car companies?


BASH: Now, as of now, the House is actually planning on voting on this, this evening, Wolf.

And, as for the Senate, a Democratic leader aide says that they are furiously trying to come up with a process, so that some Republican concerns can be addressed, enough so that they can actually pass this at some point in the Senate. But, again, at this point, it's looking very tough -- Wolf.

BLITZER: All right, Dana, we want you to stand by and monitor this on the Hill.

But let's get the Bush administration's response to what's going on.

Joining us now here in THE SITUATION ROOM, the commerce secretary, Carlos Gutierrez.

Mr. Secretary, thanks for coming in.


BLITZER: So, you heard the report. It looks like the problem isn't the president. The problem isn't the Democrats. It's your fellow Republicans on the Hill. What's going on?

GUTIERREZ: Well, it's very disappointing, because you just heard someone say that this is backward, because we should give -- we should get the plan first and then the money.

And that would be fine in theory. The problem is, over the next couple of weeks, these companies run out of money.

BLITZER: You're speaking about General Motors...

GUTIERREZ: General Motors.

BLITZER: ... Chrysler and Ford?

GUTIERREZ: Chrysler, just the two.

BLITZER: Just General Motors and Chrysler. Ford is relatively OK.

GUTIERREZ: Ford seems to be OK right now.

So, if they run out of money, it becomes a collapse. It becomes a total disaster, hundreds of thousands of jobs. That's very different than saying, let's go through March 31, give them time. If we're not pleased with their restructuring plan, then they can do a planned Chapter 11. This is not a planned Chapter 11. This would be a disaster.

BLITZER: We're talking about $14 billion as a bridge loan between now and the end of March. Is that right?

GUTIERREZ: That's correct.

And they need that literally over the next couple of weeks. They will need that through March.

BLITZER: So, the president has signed off on this? Is that right?

GUTIERREZ: The president has said from the beginning, using 136 loans, using loans already...


BLITZER: From the Energy Department.

GUTIERREZ: From the Energy Department.

BLITZER: So, he signed off on this. So, the question is, is he making calls to Republicans in the Senate?


BLITZER: Are you doing that? Are you trying to get...


BLITZER: You heard David Vitter, the Republican senator from Louisiana, say, no way.

GUTIERREZ: Well, we're all making calls. We are all making calls. We are all doing everything we can to make sure that people understand how high the stakes are.

And, you know, we can't just say we would like to see the plans first and then the money. The reality is that, over the next couple of weeks, these companies need to make some payments.

BLITZER: All right.

So, tell us what -- the basic thrust. If you call up a Republican senator right now, Carlos Gutierrez, and you have 30 seconds to say, here are the stakes, here's what it involves, we want you to vote yes in favor of this legislation, what are you going to say?

GUTIERREZ: Well, this is -- first of all, these companies need money over the next couple of weeks. If they don't get the money, they collapse.

BLITZER: General Motors.

GUTIERREZ: General Motors, Chrysler.

A collapse means hundreds of thousands of jobs in a chaotic way, where there is no way of controlling it. Under the plan, they would have -- the companies would have until March 31 to come forward with a restructuring plan, a real restructuring plan.

If the designee is not pleased with that plan, then they have 30 days left. And, if they decide to go into Chapter 11, being pushed by the designee, then they have time to...


BLITZER: When you say designee, what does that mean?

GUTIERREZ: This would be the person that...


BLITZER: The car czar, is that...


GUTIERREZ: Well, people are calling it the car czar.

A person that the president designates to oversee this to ensure that the numbers are being met, that there truly is a restructuring...


BLITZER: Because what they want to know, these Republicans -- and the American public -- that this $15 billion, or $14 billion, whatever it is, is not simply being thrown away, that there's light at the end of this tunnel.

GUTIERREZ: Well, and that's the president's first goal. He said that from the very beginning. We want to make sure that we're not throwing bad money...

BLITZER: Good money against bad money.

GUTIERREZ: Good money after bad money.


GUTIERREZ: And, so, he's been very clear.

We all want that. We all want the same thing. What we need to understand is that, if -- if this becomes a collapse, then it's out of control. It's hundreds of thousands of jobs.

I think we have the obligation to do that. This is a time to be pragmatic, to be practical, not ideological for theoretical. And -- and President Bush does not want this to be done in a -- in a chaotic way. He wants the -- he wants to give these companies a shot to be successful.

If they can't come up with a plan, then we try, but we think that hundreds of thousands of jobs at this point in time is worth the effort.

BLITZER: And, so, you only have a few days left, right?

GUTIERREZ: Absolutely.

BLITZER: The clock is ticking? How much time is there to -- to make this work?

GUTIERREZ: We want to get something done this week, no question about it.

BLITZER: This week, before Friday, you're saying?


BLITZER: But -- and what do you think? What are the -- what are the -- what are the chances?

GUTIERREZ: Well, we're going to be trying. And we're working very hard, the people in the White House.

We have a whole team of people doing outreach, working as hard as we can, letting people understand what's at stake here. Nobody likes to do this. The president doesn't want to do this. But it's a matter of -- of understanding that we have an obligation to do what's right for the country. And to let these companies collapse is not the right thing to do.

BLITZER: One final question.

Wholesale numbers came out today, much worse than people expected, maybe the worst ever, as you know. You're in charge of all of this. You're in charge of jobs in the country.

Are we heading towards a much deeper and longer recession than some economists expect?

GUTIERREZ: We believe that the way we can prevent a prolonged situation like this is the credit problem.

If we can get credit flowing, that is the single biggest thing we can do for our economy. Consumers can't borrow, they can't buy. Companies can't borrow, they can't expand. Part of the problem with the autos is that consumers who want to buy a car can't get credit.

So, easing credit, making sure that credit is flowing is job number one. And that's what the president wants to stay focused up until January the 20th.

BLITZER: And that's why he wanted that $700 billion bailout for the financial sector.

And we're hoping for the best.

Mr. Secretary, good luck.

GUTIERREZ: Thank you, Wolf. Appreciate it.

BLITZER: Thank you very much for coming in.

When Barack Obama becomes the first African-American president, he will live in a house built by slaves. We're counting down to his historic inauguration. Stand by.

And there's also renewed speculation about whether Colin Powell will have a formal or informal place in the Cabinet. You heard Ed Henry saying a little while ago it's not going to be formal, but he will be ready to be an outside adviser to the president-elect. Paul Begala and Tony Blankley, they are standing by for our "Strategy Session."

And there's more fallout over the $700 billion financial bailout. There are angry new demands and complaints about a lack of oversight.

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


BLITZER: The corruption case against the Illinois governor is putting a big, bright spotlight on Illinois politics. And guess what? It isn't pretty.

Let's bring in our senior political analyst, Bill Schneider.

Bill, a lot of us are thinking this is an old story in Illinois.

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: In some ways, it is. And if the charges are proven true, it would carry Illinois corruption to a whole new level.


SCHNEIDER (voice-over): Illinois has a rich history of political corruption.

ROBERT GRANT, FBI SPECIAL AGENT IN CHARGE: A lot of you were in the audience asked me the question of whether or not Illinois is the most corrupt state in the United States. And I didn't answer that question yes or no.

And I can't answer that question today. I don't have 49 other states to compare it with. But I can tell you one thing. If it isn't the most corrupt state in the United States, it's certainly one hell of a competitor. SCHNEIDER: Five Illinois governors have been criminally indicted. Three were convicted and went to jail. George Ryan, Rod Blagojevich's predecessor, is in jail now.

Illinois has a long history of corruption probes. This one is Operation Board Games.


SCHNEIDER: "Chicago Sun-Times" reporter Lynn Sweet has been covering corruption in Illinois for years.

LYNN SWEET, "THE CHICAGO SUN-TIMES": Illinois is a wide-open state, with very few laws limiting campaign contributions.

SCHNEIDER: Is the Blagojevich story really anything new? Yes, for several reasons, if proven true.

The stupidity -- the governor knew he was under investigation. The arrogance -- did he really expect a Cabinet appointment? And the grandiosity.

FITZGERALD: The most cynical behavior in all this, the most appalling, is the fact that Governor Blagojevich tried to sell the appointment to the Senate seat vacated by president-elect Obama. The conduct would make Lincoln roll over in his grave.

SCHNEIDER: And look at how prosecutors said he was trying to do it.

SWEET: The criminal complaint describes almost a marketing campaign to find the right deal, like a sports agent.


SCHNEIDER: People suspected vote fraud in Illinois back in the 1960 presidential election. Richard Nixon had a narrow lead in Illinois, until shortly after midnight, when a late vote count in Cook County -- that includes Chicago -- put John Kennedy over the top. Well, Nixon conceded, and there was no investigation -- Wolf.

BLITZER: All right, thanks very much, Bill Schneider, for a little history -- good history, at that. Thank you.

He is certainly denying doing anything wrong or illegal, but might he be facing problems in the court of public opinion? We're talking about that in today's "Strategy Session," Jesse Jackson Jr., the congressman from Chicago, and his response to this scandal in Illinois.

Joining us now, our CNN political contributor the Democratic strategist Paul Begala, and Republican strategist Tony Blankley.

You heard his news conference just a little while ago. We carried it live. What do you think, legally and politically? PAUL BEGALA, CNN POLITICAL ANALYST: Well, and Tony and I were actually talking about this in the green room. We have both, unfortunately, been through this with clients, not ourselves.


BEGALA: And, legally, Toobin was right. The lawyers always tell you, don't say anything, right? But the political guys, like us, always say, look, just come forward, come clean.

And I will hasten to add that there's no evidence against Jesse Jackson Jr. whatsoever. And, so, let's not just kind of paint him with a broad brush. The only thing it is, is, apparently, he was referred to by Blagojevich himself. But there's no evidence at all that he did anything wrong. And I think that he was wise to make that statement.

BLITZER: Yes, that's a good point, because the only thing we know is what's in that 76-page document that the U.S. attorney, Tony, put out.

And there's references to what they recorded Blagojevich saying...


BLITZER: ... which is, someone, an emissary for candidate number five, which we now know is Congressman Jesse Jackson Jr., was throwing around all sorts of sums of money, half-a-million dollars, million dollars, or whatever, in order to get this Senate seat.

BLANKLEY: Yes. No, absolutely. We don't know of anything other than the subject matter, which will go on for months.

As Paul was saying, obviously, taking the strict legal advice may make sense legally. It doesn't necessarily make sense politically.


BLITZER: So, if he were your client, you would say, you know what, just have a news conference; answer all the questions?

BLANKLEY: I used to have -- I used to have fights with lawyers when -- who said, say this whole paragraph, but don't say anything else.

I would say, that's fine for the legal piece, but you're a politician. So, you have got to give an answer that serves that interest as well.

But there's another piece -- we're talking about performance, because we don't know any facts right now. But, watching Congressman Jackson, you don't want to be overly emphatic. You don't want to look like you're protesting too much, to be too aggressively denying. You want to be firm, but not -- I thought he came out -- and I haven't seen him talk a lot, but I thought he came out very, very much emphatically.

I thought you want to be a little bit easier, I think, and not look like you're denying more that you know need to, like you're protesting too much.

BLITZER: At the same time, and you're -- in addition to being a great political strategist, you're a lawyer as well. You went to law school. So, you understand the conflict that is there.


BLITZER: But, if you're a congressman, and you want to be a United States senator, it's tough to say, you know, my lawyer says I should shut up and not answer your questions, so that's what I'm going to do.

BEGALA: It's very tough.

And he has a right to clear his good name. As he kept pointing out, he's had 13 years in the Congress, not a hint of scandal in those 13 years. He served admirably for that time. And he's got a right to go out and mount his public defense. But, like I said, the lawyers are telling him...


BLITZER: So, if he were your client, if he called Paul Begala and said, Paul, what should I do?

BEGALA: You know, it's a tough tension, because I don't have any idea what the facts are. And, as Toobin said, nobody knows what Fitzgerald has.

But I think our viewers need to understand that, when a Senate seat is up, it is perfectly legitimate, it is good for people to call the governor and say, hey, my friend Wolf would make a great senator, or even Wolf can raise a lot of money for our party, because he's a good fund-raiser.

These things are fine. It's when you cross the line, as Blagojevich did, and put it up for sale. What we don't know is...


BLITZER: Allegedly. Allegedly.

BEGALA: Allegedly. Thank you. Allegedly.

So, there's nothing wrong with people advocating for someone they think would be a good senator. There's nothing wrong with that.


BLANKLEY: Let me take another point about following your lawyer's advice. When you're under oath, then I think you want to lean towards following your lawyer's advice. But when you're just in front of a camera, your words are not going to be legally incriminating on you. And you ought to play your best political judgment about -- whether you're innocent or guilty, whatever it is, at this point, you're in a -- primarily a political zone, and you're not hurting yourself legally, as you would be when you're under oath.

So, I think, if he were looking when to listen to the consultant, when to listen to the lawyer, maybe wait until you're under oath to listen to the lawyer.

BLITZER: And we don't know who the successor to Barack Obama will be as the junior senator from Illinois. We don't even know how that person is going to be named or if there's going to be a special election or what's going on.


BLITZER: But the prospect of Jesse Jackson Jr., who was on this show and he publicly said, as he did on several other shows, he would very much like to be that senator.

BEGALA: Right.

BLITZER: He thinks he's earned it, he deserves it.

What are the chances that he will be the next senator from Illinois?

BEGALA: You know, I think we ought to wait and let this shake out a little bit.

I think he was very above-board with and with others in saying that. And, again, I think that's a good thing, right? He served well in the Congress. He thinks he could serve well in the Senate. He makes his case in public. And there's nothing wrong with his friends and allies making his case in private.

And there's no evidence that anybody did anything more than that, except these comments that are on tape by Blagojevich himself, which are not evidence at all. It's just pretty low-quality hearsay.

BLITZER: Colin Powell, he enforced Barack Obama, as you know, in the final weeks before the election.


BLITZER: There was some suggestion, you know what, He would be a great education secretary, maybe an energy secretary.

But you heard Ed Henry, our White House correspondent, report just a little while ago here in THE SITUATION ROOM that he's not going to take any formal position, but he would be more than happy to be an informal adviser to the president-elect.

He's been passionate about education, Colin Powell, as all of us know, for many years.

BLANKLEY: I mean, look, anyone would be a fool not to take the advice of Colin Powell, if you're president. He ought to be at some table.

On the other hand, you don't want too many cooks. I mean, he's -- with all his foreign policy and military experience, you have already got a national security adviser, a secretary of state, a secretary of defense. Another senior player is -- and a vice president who also has foreign policy experience -- another player just adds more debate to the situation.

I would think it might make more sense as sort of an education emissary, something like that, rather than another off-the-record senior adviser to further confound the conversation, although, standing alone, of course, he would be excellent in any of those jobs.

BLITZER: Or as a special envoy or something like that.


BLITZER: What do you think?

BEGALA: Right. I think special envoy would be, I think, probably something that perhaps would be useful.

I think bringing him in might also cause more problems with the progressive community, right? It's -- it's been hard enough for some of them to stomach the fact that Hillary Clinton is in there. Hillary voted for the war, but now has come around essentially to Obama's position, that we need to redeploy the troops of Iraq.

But General Powell, Secretary Powell, gave probably the most important speech, outside of speeches by the president or vice president. He gave famous speech to the U.N. that was deeply flawed, I think deeply dishonest. And there's a lot of progressives who are still very angry about that, that a lot of progressives feel that they were misled into that war, and that he was part of that.

And I think that would be perhaps a difficult sell.

BLITZER: No one is more angry than Colin Powell about that speech.


BEGALA: What he said was factually false. And I think he was used and misused.

BLANKLEY: He was not dishonest himself.

BEGALA: I think that's right.

BLANKLEY: He was briefed by the director of CIA, who sat right behind him...


BLITZER: Who was George Tenet.

BLANKLEY: Tenet, who sat right behind him during the testimony, and endorsed the accuracy, by him sitting there. And no one's ever suggested that General Powell intentionally misstated...


BEGALA: Right, nor have I.

And, in fact, there's been reporting that, before the speech, he used some pretty salty language to dismiss some of the allegations that he said were -- they were sort of barnyard waste, I think, is the way he...

BLITZER: Something like that.

BEGALA: ... he put it.

So, I don't want to impugn his integrity, but the speech itself was critical to going to war. And it said a lot -- the speech contained a lot of allegations that turned not to be true.


BLITZER: Paul and Tony, thanks.


BLITZER: Sick-out, with a twist -- why a group is encouraging gay people to skip work for one day.

And our own Anderson Cooper goes face to face with great whites in the shark-infested waters off South Africa. He's standing by to join us live. We're going to talk about what it's like and why this trip spotlights a "Planet in Peril."

And later: Oprah speaks out about her weight. You're going to hear what -- about the one day she felt so awful, she -- quote -- "wanted to disappear."

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


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

And we will speak later with Anderson about it.

Amid the controversy over California's Proposition 8, there's a new tactic. It's called Day Without a Gay, a strike called by members of the gay and lesbian community. And it's going on right now.

Our Internet reporter, Abbi Tatton, is going to explain what this is all about -- Abbi.

ABBI TATTON, CNN INTERNET REPORTER: Wolf, there are Web sites that are urging people not to call in sick today, but to call in gay. This Web site here, Day Without a Gay, is urging people to do this for the last few weeks.

It's a strike designed to coincide with International Human Rights Day. It's gay and lesbian participants hoping to show people the economic contribution they make to U.S. society, and say, hey, we deserve the same rights as everybody else.

There's a series of protests that have been going on, organized online, since the passage of Proposition 8. There were protests last -- demonstrations going on last month organized through Facebook groups, posted on to sites like CNN's I-Report. It's harder to see what kind of impact today's boycott is having.

On Facebook, there are a number of groups that have thousands of members saying that they are going to participate, but they also have people posting that: "I can't call in sick or gay today. I have a job. And, in this economy, it seems like a bad idea" -- Wolf.

BLITZER: All right, Abbi, thanks very much.

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

CAFFERTY: Yes. With unemployment climbing higher every month, I don't know if I would be real anxious to start doing protest sick-outs or whatever.

The question this hour: When it comes to political corruption, what is it about Illinois?

W. in Chicago: "Chill out, Jack. This is how Chicago and Illinois politics works. It's been this way my entire lifetime. It doesn't mean we, as Chicagoans, condone it, but you would be hard- pressed to find a Chicagoan who would exchange our city and lifestyle any other."

Chicago is truly a terrific town, one of my favorite cities in the country.

"Bob in Morristown: "Wasn't Chicago home to Al Capone, the center of organized crime, and its associated political corruption for our nation when we first experimented with legislating morality? It's not only a place where corruption has a long, colorful history. It's also a place where those seeking to expose corruption are likely to look for and to find it."

Terry writes: "Illinois isn't different from any states, and its politicians are not uniquely corrupt. Hold any jurisdiction, any state under the glare of the public spotlight, and watch the rats scurry to hide."

L.M. in Fayetteville, North Carolina: "It goes way back. I think it happened after Lincoln died. Somehow, prohibition or the '30s or the Depression or the cold weather and the stiff wind caused it. Everybody seems to know it, tolerate it, and vote for it, and be happy with it. Just keep it in Illinois."

And, finally, Katherine in Oklahoma: "Because we don't hear about the other states. I think this is a matter of what we hear being reported. Go to any other state, you will hear the same thing. It just ain't making national news -- that and long history of the mob being there."

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

BLITZER: Jack, thank you.