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THE SITUATION ROOM

Obama 'Appalled' by Senate Scandal; Auto Bailout Hits Skids; Interview With Colin Powell

Aired December 11, 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, the president-elect disappointed and appalled. For three days, he's been fine-tuning his message about the Illinois governor's corruption scandal. This hour, what Barack Obama said, what he knew. We have all the details coming up.
And an auto industry bailout hits the skids. The Senate Republican leader is picking a fight with his party's lame duck president right now.

And Colin Powell speaking out about gays in the military and what the president-elect may do about it. Colin Powell's exclusive interview with CNN, over a decade after he was at the center the of the Don't Ask, Don't Tell debate.

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

Barack Obama went before reporters today knowing he would be thrown off message. His official announcement of Tom Daschle as his choice for the Health and Human Services secretary was overshadowed by the scandal consuming Illinois politics right now. That would be the corruption case against the state's governor accused of putting Obama's former Senate seat up for sale.

CNN's Jessica Yellin is in Chicago covering the transition to power for the president-elect.

It wasn't exactly what Barack Obama would have liked on this important day in announcing his secretary for Health and Human Services.

JESSICA YELLIN, CNN CORRESPONDENT: No, Wolf. The headline from his press conference got drowned out by the Blagojevich scandal, but Barack Obama often says it better the second time around, and today was nos exception. He did offer more details as he sought to put distance between his transition team and the growing scandal.

(BEGIN VIDEOTAPE)

YELLIN (voice-over): President-elect Obama left no room for doubt on this...

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: What I'm absolutely certain about is that our office had no involvement in any deal-making around my Senate seat. That I'm absolutely certain of.

YELLIN: And he emphasized what he said the day the scandal broke.

OBAMA: I had no contact with the governor's office. I did not speak to the governor about these issues. That I know for certain.

YELLIN: But he left plenty of questions unanswered. The biggest of all? Did anyone on his team have contact with the governor's office about the vacant Senate seat. And if they were aware of the governor's scheming, what did they do about it?

The president-elect kicked that can down the road.

OBAMA: I've asked my team to gather the facts of any contacts with the governor's office about this vacancy so that we can share them with you over the next few days.

YELLIN: He also left open the possibility that someone on his team had contact with federal authorities, carefully choosing when to say "I" or "we."

OBAMA: I have not been contacted by any federal officials. And we have not been interviewed by them.

YELLIN: Saying he's appalled by the charges, the president-elect renewed his call for Blagojevich to resign.

The two men seemed cordial when they met at a governors' event nine days ago, but that was before Mr. Obama was aware of the other names Blagojevich had for him.

OBAMA: We were not, I think, perceived by the governor's office as amenable to any deal-making. And you know, I won't quote back some of the things that were said about me. So -- this is a family program, I know.

(END VIDEOTAPE)

YELLIN: Now, Wolf, a transition aide tells us about this fact- gathering that's going on internally, that it is not formal, but rather more informal. They say a small universe of people is involved, so no broad e-mail was sent to the whole staff, for example. And they will not elaborate on when we'll hear more, but say what the president-elect said in the next few days -- Wolf.

BLITZER: We're going to have a lot more, Jessica, on this story coming up later here in THE SITUATION ROOM.

President-elect Obama, by the way, has revealed his nominees for more than half of the cabinet-level posts in his incoming administration. The former Senate majority leader Tom Daschle is Obama's tenth major pick now that he's been nominated as Health and Human Services secretary. We're still waiting official announcements about who will ahead the departments of Interior, Education, Energy and Housing and more.

A deal on bailing out the auto industry in peril right now in the U.S. Senate. The Senate minority leader and some other Republicans are standing firmly against the proposed $14 billion compromise, and that puts them directly in conflict with the president of the United States.

Our Congressional Correspondent Dana Bash has been working the story for us.

There is enormous fear out there, Dana, that this deal could be on the brink of collapse. What's the latest?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well, the latest is that President Bush is actually making calls up here to Capitol Hill to try to save it. But I can tell you, Republicans are in no mood to listen to him.

In fact, I spoke with a Republican leader earlier who said he purposely did not participate in negotiations with the White House and Democrats because he said he knew he would likely not be able to back this compromise. And today it looks like he may have sealed its fate.

(BEGIN VIDEOTAPE)

BASH (voice-over): Call it a sign of complicated times for beleaguered Republicans. The GOP Senate leader came out against an auto bailout negotiated by his party's lame duck president.

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: We simply cannot ask the American taxpayer to subsidize failure.

BASH: Mitch McConnell slammed the rescue deal hatched by the White House and Democrats, saying he worries taxpayer money would be wasted on auto companies that may not survive. He joined other Republicans saying a so-called car czar would not have enough authority to force the big three to restructure for the long term.

MCCONNELL: In reality, this proposal isn't nearly tough enough.

BASH: Instead, many Republicans are now rallying behind a proposal by Senator Bob Corker, a millionaire businessman from Tennessee.

SEN. BOB CORKER (R), TENNESSEE: So we have an opportunity to sort of thread the needle in a very simple way and cause these companies to be successful.

BASH: His plan dictates specific terms for restructuring in Detroit in exchange for a government loan. It forces a drastic reduction in the big three automakers' debt.

CORKER: If we put our money on top of the $62 billion in debt that GM has, there's no way they can be successful, even if we're selling 20 million cars a year in our country.

BASH: It also mandates that U.S. auto companies slash wages and benefits so their workers would be compensated the same as U.S. workers for Toyota, Nissan and Honda. It's an idea that is highly controversial among unions and Democrats, though CNN is told Democrats are negotiating with Corker, looking for compromise on his bailout idea.

Still, a sizeable group of Republicans say it's not Congress' job to rescue Detroit at all. Bankruptcy is best.

SEN. JOHN ENSIGN (R), NEVADA: Chapter 11 exists to protect both the employees and the company itself by giving them a chance to get things right.

(END VIDEOTAPE)

BASH: Now, there is a chance we could see a vote or even a series of votes on this at some point today or even into tonight. But in talking to people on both sides of this, they say they are still pessimistic that something can pass, even though as we speak, Wolf, there are talks going on to find another compromise. And if this does fail, expect Democrats to look to the White House and say it failed because of opposition from your own party, and they're going to once again ask the treasury secretary to use his power to save Detroit from collapse -- Wolf.

BLITZER: Yet another long night for Dana Bash up on the Hill.

Thanks, Dana, very much.

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

JACK CAFFERTY, CNN ANCHOR: Thanks, Wolf.

Defense Secretary Robert Gates plans to move three more combat brigades, about 20,000 additional soldiers, into Afghanistan by next summer. Gates is in Kandahar, Afghanistan, today, where he's meeting with U.S. military leaders.

The U.S. currently has about 31,000 troops in Afghanistan, which is about one-fourth the troop level that we have in Iraq. But violence has skyrocketed in Afghanistan over the last two years. 2008 has been the deadliest year for our troops since the war began there in 2001. Gates told reporters that the ideal size of the U.S. military presence in Iraq still being debated, even though a status of forces agreement has been reached for the Iraqi government which calls for some number of U.S. troops to be in Iraq through the end of 2011.

Gates is going through a bit of an awkward transition right now. Last week, President-elect Obama announced he would keep Gates on as secretary of defense. But for the next six weeks, Gates is still working for the Bush administration.

In a sign though that he's looking forward, Gates told reporters that building up the Afghan army and improving cooperation with Kabul on security operations is key for the Obama administration, an administration that he'll officially become a part of January 20th.

So here's the question: Should the U.S. send additional troops into Afghanistan?

Go to cnn.com/caffertyfile and you can post a comment on my blog -- Wolf.

BLITZER: Jack, thanks very much. It's a huge, huge story with enormous national security interests at stake.

Some Republicans may be trying to relive old battles with Bill Clinton. At issue, his fund-raising, his connections, and his wife's confirmation as secretary of state. Will he go before the Senate under oath?

Also coming up, what Barack Obama can learn from Bill and Hillary Clinton's mistakes. Health care reform hanging in the balance.

And Colin Powell now rethinking the controversy over gays in the military in an exclusive CNN interview.

(BEGIN VIDEO CLIP)

COLIN POWELL, FORMER U.S. SECRETARY OF STATE: I didn't want it to become a law, but it became a law. Congress felt that strongly about it. But it's been 15 years, and attitudes have changed.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: A prominent African-American Republican is not happy with his party's treatment of African-Americans. But that's not all General Colin Powell was talking about. In an exclusive interview with CNN's Fareed Zakaria, the former secretary of state makes some eyebrow-raising comments about Sarah Palin, as well as gays in the military.

(BEGIN VIDEOTAPE)

FAREED ZAKARIA, CNN ANCHOR: What do you think is going to happen to the Republican Party? You sounded concerned then, and you always have been concerned about certain aspects of your party. Do you think it's moving in the right direction?

POWELL: We don't know yet. I don't know yet.

I think that in the latter months of the campaign, the party moved further to the right. Governor Palin, to some extent, pushed the party more to the right. And I think she had something of a polarizing effect when she talked about small-town values are good.

Well, most of us don't live in small towns. And I was raised in the South Bronx, and there's nothing wrong with my value system from the South Bronx.

And when they came to Virginia and said the southern part of Virginia is good but the northern part of Virginia is bad, the only problem with that is there are more votes in the northern part of Virginia than there are in the southern part of Virginia. So that doesn't work. But it was that attempt on the part of the party to use polarization for political advantage that I think backfired. And I think the party has to take a hard look at itself.

There's nothing wrong with being conservative, there's nothing wrong with having socially conservative views. I don't object to that. But if the party wants to have a future in this country, it has to face some realities.

In another 20 years, the majority in this country will be the minority. There was an article recently in "The New York Times" saying that most of our urban cities now have a minority majority as its population. And the Republican party has to begin appealing to Hispanics, to blacks, to Asians, because that's who we have lost, to a large extent, in recent elections.

And you can't appeal to them just by saying, you know, Horatio Alger, pull yourself up by your bootstraps and no more welfare and -- these sorts of loaded statements. The Republican Party has to now start listening to the African-American community and to the Hispanic and Asian and other minority communities and see what's in their hearts and minds, and not just try to influence them by Republican principles and dogma.

And so I think the party has to stop shouting at the world and at the country. I think the party has to take a hard look at itself.

ZAKARIA: Governor Palin, as the standard bearer for the next election, would not be the right direction?

POWELL: I think she came out on the national stage a little too soon, but she is -- she's a smart woman and she's a very distinguished woman. I just don't think that she contributed to the ticket at this time.

And we're going to have to not just rely on slogans. "Joe the Plumber" and "They're socialists" and that kind of labeling, which shifted almost every day, was not an effective response to what Senator Obama was doing in showing a consistent set of views with respect to how to deal with the economic issue. And that, I think, hurt Senator McCain. And I hope the party will not only analyze the problems we have with minorities, but take a look at how Senator Obama ran that campaign and the kinds of things that work.

ZAKARIA: Let me ask you about one social issue that you were associated with, which was Don't Ask, Don't Tell, the policy toward gay people being in the military openly.

Do you feel like the country has moved to a place where we could reevaluate "Don't Ask, Don't Tell?"

POWELL: We definitely should reevaluate it. It's been 15 years since we put in Don't Ask, Don't Tell, which was a policy that became a law. I didn't want it to become a law, but it became law. Congress felt that strongly about it. But it's been 15 years and attitudes have changed. And so I think it is time for the Congress, since it is their law, to have a full review of it. And I'm quite sure that's what President-elect Obama will want to do.

ZAKARIA: Let me ask you about how to organize a White House, because President-elect Obama has talked about a team of reveals. And the thing I was wondering about was, how come President Bush's team of rivals didn't quite work? There were strong personalities with strong views -- you, Dick Cheney, Don Rumsfeld. But it seemed as though it didn't quite work.

POWELL: We got a lot done. It wasn't we were fighting for four straight years over every issue. But there were disagreements, serious disagreements about how to handle Iraq. There were serious disagreements in the aftermath of the collapse of Baghdad. And there were serious disagreements about detainee policy that were well publicized.

And frankly, the system didn't function in a way that I thought it should have functioned, and we didn't always vet everything in front of the president in the manner that I thought it should be vetted. And for that reason, you know, I was somewhat disappointed. And at one point I said to the president, "It's time for you to make changes, and I should be part of that change."

(END VIDEOTAPE)

BLITZER: And Colin Powell had a lot more to say to Fareed Zakaria. You can see the entire interview this Sunday at 1:00 p.m. Eastern. "FAREED ZAKARIA GPS," 1:00 p.m. Eastern, right after "LATE EDITION."

Bill Clinton obviously wants his wife to become the next secretary of state, but might he wind up hurting her chances? Some Republicans right now apparently salivating at the chance to put both Bill and Hillary Clinton on the hot seat.

Our Samantha Hayes is looking at this story for us.

What are you finding out, Sam?

SAMANTHA HAYES, CNN CORRESPONDENT: Well, Wolf, there are some Republicans in the Senate who would like to zero in on the most controversial part of Hillary Clinton's nomination, her husband's overseas business dealings. And some are indicating they would even like to call him to testify.

(BEGIN VIDEOTAPE)

HAYES (voice-over): As we wait to see what happens, a man worth watching is Senator Dick Lugar of Indiana, the top Republican on the Foreign Relations Committee. And he met with Senator Clinton yesterday.

GLENN THRUSH, WRITER, THE POLITICO: I think Senator Lugar would be the one that would have to make a lot of decisions on this. You know? A lot of the conservatives on the committee are making noise, and they really want to pressure the Clintons into disclosing as much as possible and potentially embarrassing them.

HAYES: The former president agreed to restrict his work overseas and provide a long list of donors to his foundation to clear the way for his wife's nomination.

Republican strategist Ron Bonjean says probing further is a high- stakes game for the GOP.

RON BONJEAN, REPUBLICAN STRATEGIST: And they have to look like they're just trying to make sure that the American people are protected with any loyalties that the president has given to his clients and to countries who have paid him for speeches and paid him for international deals. They can't go overboard though. This could seriously backfire on Senate Republicans if they really pushed it.

HAYES: Bill Clinton's office tells CNN that, "Senator and President Clinton have the highest respect for the Senate Foreign Relations Committee and are cooperating fully with the committee's process."

It's not just a question of whether Clinton will be called to testify, but of how much attention Republicans can focus on his activities.

LARRY SABATO, UNIVERSITY OF VIRGINIA: I just can't imagine this will actually happen. I'm sure that a compromise would be reached whereby Hillary Clinton herself would answer questions about former President Clinton's activities.

(END VIDEOTAPE)

HAYES: And the key here is Senator Lugar. He has a very good relationship with Democrats on the committee, and especially the former chairman, Joe Biden.

So, Wolf, at this point, it doesn't look like there is a serious threat to her nomination.

BLITZER: And we know that Senator Lugar also has an excellent relationship with Hillary Clinton, as well. So that will probably play into this. We'll see what happens, Sam.

Thanks very much. Samantha Hayes reporting.

Hillary Clinton won't be broke, by the way, as the next chief diplomat of the United States, but she will be earning less than Condoleezza Rice earns as secretary of state. In consideration of her nomination, Congress has lowered the next secretary of state's pay to $186,600 a year. That's about $4,700 less than Condoleezza Rice makes. That's because as a U.S. senator, Clinton voted to raise the secretary of state's pay and the U.S. Constitution says no member of Congress can assume a government post when he or she voted to raise the salary for that post. So that issue resolved right now. Republican senators might stands in the way of an auto industry bailout. Now some are asking if what they're doing will ultimately cost people jobs. More on that coming up in our "Strategy Session."

And a recovering drug addict goes to the White House to help President Bush announce something major about young people using drugs.

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

(NEWSBREAK)

(COMMERCIAL BREAK)

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

Happening now, he's appalled. President-elect Barack Obama again calls on Rod Blagojevich to step down. What kind of defense can the Illinois governor mount in a courtroom or the court of public opinion? Stand by.

A special forces team, the Silver Star, and the brutal battle in Afghanistan for which they earned it. We have dramatic video just coming out of this firefight. You're going to want to see it.

And Michael Chertoff is the man in charge of keeping them from sneaking across U.S. borders. So how did illegal immigrants allegedly employed by a cleaning company get through the homeland security chief's front door?

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

He's been arrested, ridiculed and pressured to resign, but if the scandal ridden governor of Illinois decides to thumb his nose at his detractors, they say they'll have the last laugh.

CNN's Susan Roesgen is following the story in Chicago. She's working the story. You have been talking to people who want him gone. What's the latest, Susie.?

SUSAN ROESGEN, CNN CORRESPONDENT: Well, the latest is, we are still waiting in front of his house, Wolf, for him to come home, maybe invite us in for a cup of warm tea, and chat with us what his plans are. That's what everybody wants to know. Everybody, it seems, especially lawmakers, powerful lawmakers, are saying, he has got to go.

(BEGIN VIDEOTAPE)

QUESTION: Are you going to work, Governor?

ROESGEN (voice-over): Still going to work, as if nothing has changed. But, for Illinois governor Rod Blagojevich, the options have dwindled to just two: Jump, or be pushed. LT. GOV. PAT QUINN (D), ILLINOIS: I think that the governor has lost the confidence of the people of Illinois. And when you, in public life, at a statewide level, have no confidence from the people, in a democracy, there's nowhere else to go, but to resign and to step aside.

ROESGEN: That's Lieutenant Governor Pat Quinn, on deck to take over. And if Blagojevich won't step aside?

LISA MADIGAN, ILLINOIS ATTORNEY GENERAL: I am prepared to take action.

ROESGEN: Illinois Attorney General Lisa Madigan says, if the governor won't quit, she will take the standoff to court.

MADIGAN: I have the opportunity to actually go to our Illinois Supreme Court and ask them to declare, basically, that our governor is unable to serve, and to put in our lieutenant governor as the acting governor.

ROESGEN: The state legislature will hold a special session Monday and could begin the process of impeachment. Normally, impeaching a governor would be a tall order, but now even the neighbors want the governor to go.

JOHN POWELL, NEIGHBOR OF ILLINOIS GOVERNOR ROD BLAGOJEVICH: If I saw him walking down the street, I would tell him to his face, "You should resign."

ROESGEN: And with newspaper headlines screaming for the governor's head, Illinois lawmakers are under intense pressure to get him out as soon as possible.

(END VIDEOTAPE)

ROESGEN: And, speaking of the newspapers, Wolf, the federal investigators in this case have subpoenaed records from "The Chicago Tribune" to try to make their case that the governor wanted to have editorial writers who poked fun at him fired.

That's the latest on the case today -- Wolf.

BLITZER: We will watch it together with you.

By the way, Lisa Madigan, the attorney general in Illinois, she will be my live guest in the next hour, right here in THE SITUATION ROOM. Lots of good questions for her.

But let's turn back right now to some of the things you just heard here in THE SITUATION ROOM only a few moments ago. In that exclusive interview with CNN's Fareed Zakaria, Colin Powell said it's definitely time to reevaluate the ban regarding gays in the military.

And General Powell also took some swipes at his own party. That would be the Republican Party. Joining us now is Ken Blackwell. He's running to become the next chairman of the Republican Party. He's the former Ohio secretary of state.

Ken Blackwell, thanks very much for coming in.

KENNETH BLACKWELL, FORMER OHIO SECRETARY OF STATE: Good to be with you, Wolf.

BLITZER: You -- you agree with General Powell, it's time to reevaluate the don't ask/don't tell policy in the U.S. military?

BLACKWELL: No, I don't. I dent have General Powell's experience in the military, but I think that the present policy is -- is working and should be held in place.

BLITZER: Because a lot of gays don't think it's working. They think a lot of talented young men and women who happen to be gay, they are getting kicked out, even after the U.S. taxpayer spends hundreds of thousands of dollars training them for sophisticated missions.

BLACKWELL: Well, I think the legislative process works. I think this issue has been vetted, discussed, and decided upon. And it works.

BLITZER: All right. Let's move on.

You're running to become the next chairman of your party, the Republican Party. And General Powell, the former secretary of state, also took some swipes at what's going on, the setbacks in 2006, the setbacks just now, last November.

I want to play this little clip for you, and then I will give you a chance to respond.

BLACKWELL: Mm-hmm.

(BEGIN VIDEO CLIP)

POWELL: The Republican Party has to now start listening to the African-American community and the Hispanic and Asian and other minority communities, and see what's in their hearts and minds, and not just try to influence them by Republican principles and dogma.

And, so, I think the party has to stop shouting at the world and at the country.

(END VIDEO CLIP)

BLITZER: All right, what do you think of that advice, Mr. Blackwell?

BLACKWELL: Well, I think General Powell really doesn't fully understand what happened this past election cycle and -- and -- and the previous one. The Republican Party didn't take its message out to the 300 -- 3,300 counties of this country. We ran, I think mistakenly, a 28- state campaign, as opposed to running a 50-state campaign.

We must rebuild our infrastructure, so that we can tell our story. There's nothing wrong with our principles. I was so delighted that Chairman Duncan asked me to be one of the vice chairmen of the Republican Platform Committee.

We have a clear, concise, conservative platform. And I think we now have to go out and, in discussion and in conversation with -- with all Americans, you know, make the case for why this is the way for us to go.

Look, there's always been a lot of hand-wringing after a defeat. I was in Washington in 1993, and Republicans were, you know, huddling around watercoolers or watching delirious Democrats move into offices. And one of the things I know, this too, will change.

We regrouped. We refocused. We reorganized. And then we went out and won. And, in 1994, we took the Congress. And we're going to do that again. But we must be organized around some principles. And -- and we have to have integrity.

BLITZER: All right.

BLACKWELL: We -- what we witnessed, Wolf, was that, sometimes, too many Republicans campaign like Ronald Reagan, and then we fell into the trap of governing like Jimmy Carter.

BLITZER: Well, I just want...

BLACKWELL: And that -- that -- that cost us.

BLITZER: I just want you to clarify. You said Secretary Powell doesn't understand something. What exactly doesn't he understand?

BLACKWELL: Well, I said he understands the military.

He talks about us shouting. He says that -- you know, he went to this geographical divide. We have to play in all of the political arenas across this nation.

BLITZER: I think that is what he was saying, though.

BLACKWELL: We -- we -- but...

BLITZER: Isn't that what Colin Powell was saying?

(CROSSTALK)

BLACKWELL: But that's -- but that is what I'm saying, is that we, in fact, didn't go into, not just the African-American communities and the Latino communities. There were whole states that we were underdeveloped, underprepared in, and we didn't engage. And we must develop the infrastructure. We must carry our message into those states, into those counties, into those townships and villages across this -- this country.

And I think our message is the message. When we speak it and we behave it, clearly, people respond favorably, because this is a center-right nation.

BLITZER: All right. Let's talk a little bit about the biggest issue out there right now, jobs and the auto industry, the U.S. auto industry.

You're from Ohio. Your state is going to be affected by what happens, as well.

Carlos Gutierrez, he's the secretary of commerce. He was here in THE SITUATION ROOM yesterday. He's a Republican, speaking for the Republican president, George Bush.

He writes today in "The Washington Post": "The failure of the U.S. auto industry would have ramifications far beyond Michigan; the impact would be widespread. If Congress fails to act now, U.S. real gross domestic product could decline by more than 1 percent and the country would be likely to lose more than a million jobs."

Yet, there are plenty of Republicans in the Senate right now who are going against President Bush, and saying, this proposal, this compromise, should go down to, the $14 billion bailout.

If you were chairman of the Republican Party right now, where would you come out on this issue?

BLACKWELL: After consultation with Republican legislators, I am sure, and, in that discussion, I would be for making sure that they file Chapter 11, they restructure, and get it right.

Wolf, when you reward bad behavior and bad performance, all you get is more bad behavior and bad performance. Look...

BLITZER: So, you are -- you disagree with the president of the United States right now?

BLACKWELL: I disagree with the president. Yes, I do.

BLITZER: All right, we will leave it on that note.

Ken Blackwell is running to become the next chairman of the Republican Party.

You have got several competitors out there. We will see what happens at the end of January, when the votes happens.

Mr. Blackwell...

BLACKWELL: Competition is good.

BLITZER: ... thanks very much for coming in.

One challenge for who -- whomever becomes the next Republican Party chairman will be how to catch up with Democrats online. When candidates jump into the race, they will surely try to show how Web- savvy they are.

Let's go to our Internet reporter, Abbi Tatton. What are we picking up, Abbi?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, for a race that's going to be decided by 168 members of the Republican National Committee, there sure is a lot of online campaigning going on from these candidates, Saul Anuzis, to start off with, Michigan party chair and candidate. He's been keeping people updated on his Twitter account, getting up a following on Facebook.

And then there's Mike Duncan, the current chair, who announced his reelection this week with a new Web site and an online video touting his use of technology.

Also on YouTube, you're going to find Chip Saltsman, used to be Mike Huckabee's campaign manager. His announcement bid video is now online.

The pressure is on for whoever takes the helm of the Republican National Committee to catch up with the Democrats in terms of online campaigning. Some of the pressure has been coming from this group called Rebuild the Party. This is a Web site set up by a group of young conservatives, who are urging the Republican Party to put resources, put staff, put money behind the use of the Internet in the coming years.

And they're certainly getting listened to. It's got almost 7,000 members at this point. And, of those publicly announced candidates for GOP chair, of the six of them, three have already signed on to their plan -- Wolf.

BLITZER: Abbi, thanks very much -- Abbi Tatton working the Web for us.

If Barack Obama has a hope of reforming the health care system, he has a lot to learn from the Clinton administration, what went wrong then and how to make it right now.

Plus, should Democrat Charlie Rangel be fired as the chairman of the House Ways and Means Committee? The ethics -- ethics investigation and the growing pressure on the House speaker, Nancy Pelosi.

And, later, "Planet in Peril." Our correspondent Lisa Ling, she will be joining us live with a preview of tonight's CNN documentary. She's been to the front lines of the environmental crisis.

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

(COMMERCIAL BREAK) BLITZER: President-elect Barack Obama says the nation must address health care challenges in order to emerge from the current economic crisis. And he's decided to select Tom Daschle to oversee reform and to push it through Congress.

Daschle was in the Senate in the Clinton era, when an attempt to overhaul health care famously crashed and burned. That was back then, in 1993.

Let's go to our senior political analyst, Bill Schneider. He's looking into the story for us.

What can this incoming administration, Bill, learn from the mistakes of that first year of the Clinton administration?

WILLIAM SCHNEIDER, CNN SENIOR POLITICAL ANALYST: Well, how not to do it.

(BEGIN VIDEOTAPE)

SCHNEIDER (voice-over): Health care reform?

OBAMA: White House Office of Health Reform.

SCHNEIDER: Democrats have been there, done that -- or, rather, did not do that.

SEN. HILLARY RODHAM CLINTON (D-NY), SECRETARY OF STATE NOMINEE: I did try in '93 and '94, and I like to say I have the scars to show for it. But I learned a lot Bush administration what we have to do.

SCHNEIDER: Like what? Like, you can't do it with a closed process that produces a scary 1,400-page plan. You will frighten Harry and Louise.

OBAMA: ... going to be an open and transparent process.

SCHNEIDER: In 1994, polls showed that most middle-class Americans were satisfied with their health care and their health insurance. What were they worried about? Losing it.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We have been clear about the reforms we want.

UNIDENTIFIED FEMALE: Private health insurance we can all have even if we have been sick, coverage we can keep even if we change or lose our jobs, coverage we can afford.

(END VIDEO CLIP)

SCHNEIDER: What about the goal of universal coverage? The public supported it in the 1990s, and they support it now.

CLINTON: This is a big difference between Senator Obama and me, because he doesn't have a universal health care plan. SCHNEIDER: But, to get to universal coverage, you cannot ask the middle class to give up what they have and like or turn it over to the government, which people feared would happen under the old Clinton plan.

That's why Obama is starting from a different premise.

OBAMA: That rising costs are unsustainable. We can't simply ensure everybody under the current program without bankrupting the government, or bankrupting businesses or states.

(END VIDEOTAPE)

SCHNEIDER: Cost control first, then universal coverage, that way, you can reassure Harry and Louise that they won't lose anything in order to get more people covered -- Wolf.

BLITZER: All right, Bill, thank you -- Bill going back and looking at the history of what not necessarily to do this time around. We will see if they learned that history.

As Barack Obama's team works to fill in jobs -- to fill jobs in his administration, consider this. You have a better chance, better odds of being admitted to Harvard than getting one of those plum Obama appointments. This year, Harvard accepted nearly 2,000 high school seniors, or about seven percent of over 27,000 students who applied for admission to the university.

But there's only about a one percent chance of being chosen for an administration job. The transition team says it's received about 300,000 applications for about 3,300 positions. Wow.

Coming up in our "Strategy Session": Senate Republicans have dug their heels in over the proposed auto bailout.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I have looked at this legislation that's come over. And it's like so many things we do around here. It's like a three-humped camel. I mean, you couldn't make it almost more ineffective and more complicated.

(END VIDEO CLIP)

BLITZER: But do they have a better plan, or are they -- are they tuning a deaf ear to Detroit's woes?

And "The New York Times" calls Speaker Pelosi to -- quote -- "muster the courage" to remove Charlie Rangel from his committee chairmanship. Will the speaker act?

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

(COMMERCIAL BREAK)

BLITZER: It's touch-and-go in the U.S. Senate right now whether the U.S. -- the federal government will provide the necessary assistance to keep the auto industry alive.

Let's talk about the political ramifications in our "Strategy Session."

Joining us, Karen Finney -- she's the communications director for the Democratic National Committee -- and Republican strategist and CNN political contributor Leslie Sanchez.

The stakes right now for Republicans, because they're trying to block the president's plan, the speaker's plan, the Democrats' plan, if you will, stakes for Republicans right now huge.

(LAUGHTER)

LESLIE SANCHEZ, CNN POLITICAL CONTRIBUTOR: I think they are. You know, what more plans can we block?

Let's be honest. The truth is, no conservative wants to see nationalization of the auto industry. We know that. And I will tell you, the biggest pushback is coming on this car czar, which apparently would be looking at business plans and trying to make determinations that they don't feel that the government is prepared to do.

So, with respect to that and what several Republican colleagues are saying, there's a lot of reason to be concerned. But the problem is, this -- this is important. Secretary Gutierrez argued the right statement. Now, more than ever, we have to care about these million -- five million -- maybe more -- jobs, and it affects every congressional district in America.

BLITZER: Because, if it goes down in flames, though, they are going to blame the Republicans if a million jobs are lost. If GM goes down, if Chrysler goes down, a lot of folks will say, you know what, those Republicans are to blame.

SANCHEZ: You know, what is interesting is, there was a fight in the fall between Wall Street and Main Street. Who was looking out for this interest?

It's almost a day late, dollar short in terms of that argument. If this goes down, the economy continues to worsen, Republicans will be blamed. They will look specifically, politically, at Michigan and Ohio, and it's more trouble for the Republicans...

(CROSSTALK)

BLITZER: What do you think, Karen?

KAREN FINNEY, COMMUNICATIONS DIRECTOR, DEMOCRATIC NATIONAL COMMITTEE: Well, but, also, I think that it shows that the Republican Party would be seen as being out of touch with the American people, because a clear message from the election was, stop fighting, get something done.

And you have got, you know, House Republicans join in. We have got something passed in the House. The White House is on board. Senate Democrats are on board. So, if the lone holdout is the Senate Republicans, they are going to see -- be seen as the spoilers. I'm hoping they will back to the table and kind of come to it with that spirit of let's get something done.

BLITZER: What do you think is going to happen? Because the deadline probably is tomorrow.

SANCHEZ: Well, you know, they're going to face -- they're going to face it now, or they're going to face in January. I think you're looking at...

(CROSSTALK)

BLITZER: But GM might not last -- according to Ron Gettelfinger, the -- the president of the UAW, it might not last through the month.

SANCHEZ: Well, that's GM. But I think there's -- there's -- there's other parties involved here. And I think you're looking at a Republican alternative plan.

I tell you, the pushback is on this car czar and some of these other...

(CROSSTALK)

BLITZER:

SANCHEZ: I think they will come to the table.

BLITZER: I want to move to this other issue.

There seems to be a war under way, Karen, right now between "The New York Times" and...

FINNEY: Yes.

BLITZER: ... and Charlie Rangel. He's the powerful chairman of the Ways and Means Committee in the House.

And "The New York Times," which has been reporting on Charlie Rangel's so-called ethics issues...

FINNEY: Yes.

BLITZER: ... for some time, writes this today: "Ms. Pelosi must muster the courage to urge -- or demand -- that Mr. Rangel give up his chairmanship while the investigation proceeds. If he won't, she should strip him of his gavel." Wow. What do you think?

FINNEY: Well, look, let's go to the facts here.

Congressman Rangel has vigorously said -- denied the charges. There is an ethics investigation that is ongoing. And Leader Pelosi has -- or Speaker Pelosi has basically said she wants to see the outcome of that investigation. And I think there's no reason to suggest that she won't act accordingly. So, I know that, you know, there's a little bit of a back and forth there. But I think there's a different situation here with what's going on with Charlie Rangel than some of the other things West Bank seen. And I think we need to let the investigation run its course. I think that's a -- that's a fair point on the part of the speaker. And I -- again, I think there's no reason to suggest she won't do the right thing.

BLITZER: And there's no criminal charges that are hanging over Charlie Rangel's head.

(CROSSTALK)

BLITZER: There's may be some ethical questions involved, some of these deals he was working with, his son getting money for a Web site, and all of that. But no one is suggesting he was criminally involved in anything.

SANCHEZ: No. Nobody is suggesting that.

But a lot of people believe that Speaker Pelosi has a blind spot when it comes to liberals. People have no tolerance for the aura of corruption. I think -- and even if you look at president-elect Obama and what he said today -- or what he's talking about in terms of transparency, integrity, what kind of example -- I think it's more hypocritical for her not to take action.

FINNEY: But I'm glad you brought that up, because what you have seen is a real change in tone in Washington since Democrats took over. We have seen sweeping ethics reform and we have seen, you know, holding ourselves accountable.

When these allegations came up, Charlie Rangel himself called for an ethics investigation, as did the speaker. That process is ongoing. When we saw the charges against Blagojevich, you saw the leader of our party...

(CROSSTALK)

BLITZER: All right.

SANCHEZ: You saw people running for the hills.

(CROSSTALK)

FINNEY: ... rather than covering up, like the Republicans...

(CROSSTALK)

BLITZER: Guys, we have got to leave it -- we have got to leave it right there. We will see how sweeping these ethics reforms are in practice.

(CROSSTALK)

BLITZER: But we will watch it very closely. Karen, Leslie, guys, thanks very much.

A major terrorist plot interrupted with only hours to spare. A notorious female recruiter for al Qaeda was arrested. We have a CNN interview with her. You are going to hear her explain why she loves -- repeat, loves -- Osama bin Laden.

An amazing video of Americans battling for their lives in Afghanistan. You are going to see what happened and why 10 soldiers are being awarded -- awarded for their bravery.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Hey, I'm hit, I think. I'm hit. I'm hit.

UNIDENTIFIED MALE: Roger. I'm trying. (EXPLETIVE DELETED)

I think we just got hit. We're going south.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: Let's check with Jack for "The Cafferty File" -- Jack.

CAFFERTY: The question this hour is: Should the United States send additional troops into Afghanistan? Robert Gates wants to move three additional combat brigades, about 20,000 soldiers, into that country this summer.

Conor in Chicago writes: "No. Pull them out. If Osama builds a camp, bomb it. If the Taliban takes Kabul, bomb it to the ground. Changing this country into something stable and modern is impossible."

Circy in New Mexico: "Doesn't anybody remember the Russians, who were there for 10 years, and all they had to show for it was dead Russians? Like the French in Indochina. We didn't learn from that either, and the result was more than 50,000 American deaths in Vietnam. The people in Afghanistan will fight us to the death to get us out of their country, and it's got nothing to do with terrorism."

D.J. in Detroit says: "We definitely need more troops in Afghanistan, but we also need a better strategy. Seven years, we still haven't been able to find a 6 foot 5 inch old Arab guy. Here's a clue. He's the one laughing out loud in that cave over there."

Jim in Chicago writes: "We can send more troops to Afghanistan. It will probably help gain control over more of the country for the time being. However, until there's considerably more economic development in Afghanistan, Pakistan, and the rest of that part of the Muslim world, it will continue to be a powder keg of resentment."

David in California says: "We ought to send more or get the ones we have there now out. Ideally, there would be a NATO force in which we would play a leading role. In time, Pakistan will become the problem. And I'm not sure a foothold in the Afghanistan mess will help us that much."

And, finally, Mike in Arkansas writes: "It does not take much of a student of history to understand how futile sending more troops to Afghanistan will be. It is insane to keep pressing that issue. We ought to make arrangements to buy their opium crop. That will do more to solve their economic problems than anything else and will remove quite a bit of the world's heroin supply from the consumers market."

If you didn't see your e-mail here, you can go to my blog, CNN.com/caffertyfile, and look for yours there, among hundreds of others that we post every hour.

BLITZER: Jack, thank you.

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

Happening now: president-elect Barack Obama sucked into what's being called the black hole of Illinois politics -- the governor accused of trying to sell Obama's Senate seat so far refusing to step down.