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Illinois Governor Speaks Out; Auto Bailout is a Go; Obama Expands Economic Team

Aired December 19, 2008 - 16:00   ET


WOLF BLITZER, CNN ANCHOR: Happening now, breaking news. The Illinois governor finally speaks out about those allegations of corruption. In remarks just a short while ago, Rod Blagojevich talks about what he did, what he didn't do, and what he won't do now.
Plus, a green light for bailing out U.S. automakers. President Bush signs off on a rescue plan saying it's the only way to prevent an economic disaster. Will Detroit live up to its end of this deal?

And Barack Obama expands his economic team and adds more diversity to his cabinet. This hour, why some women's groups are not satisfied.

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

After days of enduring unyielding criticisms, the governor of Illinois essentially says he's mad as ever and not going to take it anymore. We're following this breaking news. Only moments ago, the scandal-ridden governor broke his silence, insisting he's innocent and that no one will run him out of office. He's also blasting what he called a political lynch mob.


GOV. ROD BLAGOJEVICH (D), ILLINOIS: Thank you very much.

I'm here to tell you right off the bat that I am not guilty of any criminal wrongdoing, that I intend to stay on the job, and I will fight this thing every step of the way. I will fight. I will fight. I will fight until I take my last breath. I have done nothing wrong, and I'm not going to quit a job the people hired me to do because of false accusations and a political lynch mob.

Now, that's what I'm going to do. Let me tell you what I'm not going to do.

I'm not going to do what my accusers and political enemies have been doing, and that is talk about this case in 30-second sound bites on "Meet the Press" or on the TV news. Now, I'm dying to answer these charges. I am dying to show you how innocent I am. And I want to assure everyone who's here and everyone who's listening that I intend to answer every allegation that comes my way.

However, I intend to answer them in the appropriate forum, in a court of law. And when I do, I am absolutely certain that I will be vindicated. Rudyard Kipling wrote, "If you can keep your head when all about you are losing theirs and blaming it on you, if you can trust yourself when all men doubt you and make allowance for their doubting too, if you can wait and not be tired by waiting or being lied about, don't deal in lies or being hated, don't give way to hating."

Now, I know there are some powerful forces arrayed against me. It's kind of lonely right now. But I have on my side the most powerful ally there is, and it's the truth. And besides, I have the personal knowledge that I have not done anything wrong.

To the people of Illinois, I ask that they wait and be patient. Sit back and take a deep breath, and please reserve judgment. Afford me the same rights that you and your children have, the presumption of innocence, the right to defend yourself, the right to your day in court, the same rights that you would expect for yourselves.

And one last thing. To all of those -- to those of you who have expressed your support to Patti and me during this difficult time, I'd like to thank you for your thoughts. I'd like to thank you for your prayers. And I'd like to thank you for your good wishes.

Patti and I cannot express to you how grateful we are for your kindness.

Merry Christmas. Happy holidays.


BLITZER: All right. So then he walked out, didn't answer reporters questions. Not every day we hear fighting words like that from a sitting governor. In this case, the governor of Illinois.

Let's go to CNN's Susan Roesgen. She's joining us from Chicago right now.

What was it like there? Because it must have been intense in that room, Susan.

SUSAN ROESGEN, CNN CORRESPONDENT: Oh, Wolf, it really was. We did not know what to expect. We had been told by his press people that he would only speak maybe 60 seconds or something. Then he comes out, Wolf, with the first serious comments about had case.

It was almost two weeks ago that he was arrested and taken away from his home here in Chicago in handcuffs. And since then, as you know, we've seen him wave to reporters at times. He went jogging a couple of days ago, was cheerful and smiling.

This is a guy who always seems to be on the sunny side of the street, but not today. Today he came out with that very powerful statement. And you know, you've heard the line before, but it's true. You could you have heard a pin drop in there -- Wolf.

BLITZER: He's been signing other bills into law as the governor of Illinois. What about this responsibility he's supposed to have to name a successor to Barack Obama in the U.S. Senate? What do we know about plans, if he in fact plans to do that?

ROESGEN: Well, as you know, Wolf, you saw there that the governor himself did not take any questions. But afterwards, one on his defense team, Sam Adam, a very feisty, younger lawyer, got up and there and said, this guy didn't do anything, not only is he my client, he is my governor.

And I asked him specifically about that, Wolf, about that Senate seat. I said, "What does the governor plan to do? Does he plan to appoint someone?"

And the answer was, "We don't know." And so I pressed him on that. I said, "Look, this isn't just important for Illinois voters, this is important for the entire nation at such a critical time with such dire economic straits." And again, the lawyer said, "We don't know when that might be." "And what difference does it make," he said, "whether it's a day or two or a couple of weeks."

Wolf, I don't think that's the answer that people here wanted to hear. That is a very critical seat, the seat left open by President- elect Barack Obama. And people here and nationally want to know, who's going to get that seat/ And will the governor still appoint someone himself?

BLITZER: Susan Roesgen watching the story in Chicago.

I want to bring in our senior legal analyst. Jeff Toobin is watching this as well.

From the legal perspective, I guess his lawyer said, you know what? Just fight it. You're innocent until proven guilty, and don't give an inch. And he certainly didn't.

JEFFREY TOOBIN, CNN SR. LEGAL ANALYST: No, I think you can sum up what he said as, come and get me, copper. I mean, he is not conceding anything in the impeachment proceeding, he's not conceding anything in the criminal case against him.

He is going to make, it appears, the prosecution make its case in criminal court and his enemies in the state legislature make their case in an impeachment. And in the meantime, Illinois is going to have kind of half a governor who is essentially powerless but maintains the powers that he can exercise as he tries.

BLITZER: You know, there's no doubt that he's got a legal defense, because some lawyers, criminal defense lawyers that I've checked in with, they think he might actually have a pretty good case.

TOOBIN: Well, the issue is the quid pro quo. Is this simply a normal give and take of politics where people say, in return for a campaign contribution, I'll support you on the issues, which is something that goes on in every campaign? Or is this a specific illegal exchange?

I think he is going to have a tough time arguing that this is just politics as usual. If he is on tape, as the complaint suggested, saying, you give me a $25,000 campaign contribution or you are not getting $8 million for the children's hospital, that is going to be a very tough case to make to a jury.

It's not just about the Senate seat. There are lots of other accusations here, and this is only presumably a small part of the government's evidence. So I think we need to see before we decide how strong or weak this case is.

BLITZER: And I'm sure his lawyers are saying, you know, you have some leverage if their case is better than we might think it is. One issue is you could do in a plea agreement is you could step down and maybe get some reduced kind of charges against you.

TOOBIN: Absolutely. The governorship is the best leverage he has, because Patrick Fitzgerald, if it comes to plea negotiations, has to recognize that getting Illinois a functioning government, getting Illinois a governor who could legitimately appoint a senator, is a real public benefit. And he might be willing to give something on a sentence in return for that benefit. And there is certainly no way Blagojevich is going to give away that card before he's negotiated, because as we know, this is a guy who knows how to negotiate.

BLITZER: Jeff, stand by for a moment.

Susan Roesgen, I want to bring her back in. She's been covering this story for us.

He's hired some pretty well-known criminal defense attorneys who aren't cheap. How does he pay fur these guys?

ROESGEN: You know, we asked one of those lawyers about that today, Wolf, and he said, "I don't care how he pays me. I don't care if he does pay me." And that's when he made that comment about, "He is not only my client, he's my governor."

That was Sam Adam, the younger person of this two-person duo that I saw in the R. Kelly trial. You've seen Ed Genson, the older gentleman who is a well-known 40-year lawyer, tough criminal defense lawyer in this town. And then he has the younger guy, Sam Adam, who in the R. Kelly case, went first and made some really strong statements and kind of left Ed Genson to tie it all up at the end.

So, you know, he was probably just blustering, Wolf, saying "I don't care who pays me." Obviously he does, but it looks like the governor has the best of the best here in the city of Chicago.

BLITZER: All right. We're going to ask both of you to stand by, Susan Roesgen, Jeff Toobin. This story clearly not going away. A very defiant governor of Illinois.

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

Oh, unfortunately, Jack Cafferty is not here today. He has the day off. Good to know that.

Coming up, Barack Obama's cabinet is pretty much stocked, but not everyone likes what they are seeing. What's driving the criticism?

Plus, dozens of Chrysler plants are temporarily shutting down. And surprisingly, some dealerships are cheering the move.

And the tables are turning in the Minnesota Senate recount. What's going on? One candidate edges ahead of the other for the first time, but the final showdown of this election 2008 is heading into a new round.

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


BLITZER: The U.S. auto industry is getting the bailout it's been desperately seeking for months. President Bush today announced a rescue plan for General Motors and Chrysler. It will make more than $13 billion in federal loans available almost immediately.

Our Senior Congressional Correspondent Dana Bash has been working the story. She's here.

You got the details and the reaction.

DANA BASH, CNN SR. CONGRESSIONAL CORRESPONDENT: That's right. And you know, I think it's important to note this is a Republican whose first choice would be to let the markets work their will. And basically, that would mean to let failing companies go bankrupt. But adding to the collapse of the auto industry, adding that to President Bush's already tarnished legacy, was not an option.


BASH (voice-over): The beleaguered president said had he no choice but to spend billions in taxpayer dollars to rescue U.S. auto companies from bankruptcy because that would crush the already bad economy.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: But these are not ordinary circumstances. In the midst of a final crisis and a recession, allowing the U.S. auto industry to collapse is not a responsible course of action.

BASH: The Bush administration will immediately give $13.4 billion in loans to two auto companies on the brink of ruin -- $4 billion to Chrysler and $9.4 billion to General Motors. In return, they must drastically restructure to prove financial viability. If Chrysler and GM can't show by March 31st they can be profitable for the long run, they would have to pay back their government loans and then face certain collapse.

In Detroit, the relieved CEO of GM expressed confidence he can meet the government's deadlines.

RICK WAGONER, CEO, GENERAL MOTORS: We are more energized than ever now that we have the funding support we need to do the rest of our plan. BASH: The president is bailing out Detroit with funds already approved for Wall Street, money he did not want to use but had no choice after fellow Republicans in Congress blocked his auto rescue plan last week. Those Republicans are now furious he went around them, issuing an avalanche of blistering statements.

REP. TOM PRICE (R), GEORGIA: All we're doing with this now is kicking the can down the road another three months with no prospect fur a solution at that point.

BASH: Congressional Republicans are most concerned there is no hard guarantee auto companies will adequately restructure. The Bush plan does lay out conditions like slashing wages and benefits by next December and limiting executive compensation, but it will be Barack Obama's administration that will decide whether automakers meet enough conditions to keep government loans.


BASH: Now, Bush officials did consult with the Obama transition team as they formulated their plan, and Obama actually applauded the president's decision today to throw Detroit a lifeline. But Wolf, he also warned auto executives not to "squander their chance at reform" of what he has called some really bad management.

BLITZER: A lot at stake in all of this. And we're going to have to watch these next three months to see what they do.

Dana, thanks very much.

Carmakers aren't only asking Washington for help. GM, Ford and Chrysler, they're seeking some help from Canada, as well. Volvo and Saab have asked Sweden for cash. And GM's Opal (ph) division wants some help from Germany. Chinese automakers, by the way, have asked Beijing for a bailout, as well.

Meantime, the European Union is taking the initiative to try to help carmakers stay competitive. The 27 EU member nations have set aside more than $6 billion of a $252 billion economic stimulus plan to help it the European auto industry produce cleaner cars.

New additions today to Barack Obama's inner circle. As expected, he nominated Congresswoman Hilda Solis to be labor secretary, Congressman Ray LaHood to be the transportation secretary, and the former Dallas mayor Ron Kirk as the U.S. trade representative. They'll play key roles in the efforts to jumpstart the overall U.S. economy.

Our National Political Correspondent Jessica Yellin is in Chicago. She's watching all of this for us.

He defended his plan, his economic stimulus plan, as you know, Jessica. And some say it might not be $600 billion or $800 billion. It could be approaching maybe $1 trillion.

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: Well, Wolf, that is the issue he took on, and he took it on directly, drawing a line in the sand. Obama made it clear that he will not put his name on a check to the U.S. for a trillion dollars. He says his stimulus will be somewhere south of that, but he wouldn't speculate as to how much it would cost, although a top Democrat official tells me it will be somewhere as much as $850 billion.

Now, this was Obama today.


BARACK OBAMA (D), PRESIDENT-ELECT: I'm concerned about the numbers that are being talked about. We're not intending to spend money lightly. You know, the tax burden on Americans are already high. We are going to be inheriting a deficit that is probably above a trillion dollars. And so, look, I'm a taxpayer like everybody else and I don't want to see money wasted.


YELLIN: Now, he made the point that economists on both extremes of the political spectrum have said spending is essential to jumpstart the economy. He made it clear he plans to choose projects based on the merits and not give out political pork.

And finally, that he will focus on reducing the deficit in due time. But spending, he believes, is essential first. So it's going to be a big check whatever it is -- Wolf.

BLITZER: His cabinet basically complete here and there. But, you know, some women's groups, even though Hilda Solis has been named today to be the labor secretary, Hillary Clinton is going to be secretary of state, Janet Napolitano secretary of Homeland Security, Susan Rice is going to be the U.N. ambassador which will be cabinet level, some women's groups aren't happy, right?

YELLIN: That's right. They say, look, they have a number of very prominent and impressive women on the cabinet, but in total, there are just five women who hold cabinet-level posts. They say that matches what we saw in the Bush years and in the Clinton years.

And a lot of women's groups, including the National Organization for Women, even the head of EMILY's List, have spoken out saying they gave enormous support to Barack Obama, especially after Hillary Clinton dropped out of the race. They expected better. They're very disappointed -- Wolf.

BLITZER: All right. We'll follow up on that point, as well. Disappointment here and there.

Thank you, Jessica.

Many of you certainly want change. So how's this? Barack Obama makes an audacious promise when he becomes president. It involves your money, and here's the question: Can he deliver?

President Bush earns an honor no other president has, and then jokes about it at his own expense.


BUSH: I suspected there would be a good-sized crowd once the word got out about my hanging.




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

Happening now, crowds of people carrying shoes are growing all in support of that journalist who threw his shoes at President Bush in Baghdad. And now a cleric is chiming in with praise.

Caroline Kennedy proclaims this is a time when no one can afford to sit out. So what will the public think when they learn the U.S. Senate hopeful missed a number of recent elections?

And pirates paid by the millions. The U.S. military says it could happen only days from now.

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

President Bush is throwing drowning automakers a lifeline. He's announced a rescue plan for GM and Chrysler that will make more than $13 billion available almost immediately. This amid Chrysler's announcement it will soon shut down all its manufacturing plants for at least a month.

Why would a production stoppage make some dealerships happy?

CNN's Chris Lawrence is in Los Angeles with more -- Chris.

CHRIS LAWRENCE, CNN CORRESPONDENT: Wolf, Chrysler dealerships like this one are clearly in their worst shape ever. But this shutdown may actually help them save money in the short term.


LAWRENCE (voice-over): Some people hear "shutdown" and think the sky is falling, that Chrysler is closing up shop. But some dealers welcome the news.

UNIDENTIFIED MALE: I think it's a good economic move.

LAWRENCE: Howard Sells (ph) says he and other dealers are having trouble moving the inventory they already have, and he pays a fee every day these cars sit on his lot. Since Chrysler extended the normal two-week holiday break to a full month, that means fewer cars being delivered.

UNIDENTIFIED MALE: And everything in shorter supply is more in demand.

LAWRENCE: That's not to say he's doing well.

UNIDENTIFIED FEMALE: Guillermo to the showroom.

LAWRENCE: Chrysler says its dealers are losing 25 percent of potential sales because customers who want a new car can't get financing. Since the summer's credit crunch, Big Valley (ph) says their sales are down 60 percent.

(on camera): How do you cope with losing that kind of revenue?

UNIDENTIFIED MALE: You have to cut expenses.

We had 109 employees in the beginning of the year. We are down to 78. And I probably have to make a few more cuts. I have been here 43 years, and I have never seen anything like this.

LAWRENCE (voice-over): He's worried the shutdown will make customers think the worst.

UNIDENTIFIED MALE: We have got people that are coming in, talking to us, as well: I'm going to wait to see what -- if you guys go into bankruptcy.

LAWRENCE (on camera): The dealers say tell me there is pent-up demand for new cars. And if consumers could get credit, they may be able to weather this storm next year -- Wolf.



BLITZER: And joining us now, the Secretary of Commerce, Carlos Gutierrez.

Mr. Secretary, thanks for coming in.



GUTIERREZ: ... Wolf.

BLITZER: You know, a lot of your fellow Republicans are not very happy with what the president decided to do today. John McCain, who was the Republican presidential nominee, he said, "I find" -- he said this: "I find it unacceptable that we would leave the American taxpayer with a tab of tens of billions of dollars, while failing to receive any serious concessions from the industry."

GUTIERREZ: Well, we wanted to -- to do this through Congress. And wanted to put it in legislation, make it part of the law. Congress was not able to come through for us.

So, the buck stops with the president. And he had to make the decision. And, when he made the decision, based on the fact that we are going through a recession, this is the wrong time to let these companies collapse, to let them default on their loans, and then we would have this chain effect, this ripple effect, throughout the economy.

We're talking about hundreds of thousands of jobs. I think the president made a leadership call. And -- and -- and, again, it's just -- it's one of these things where somebody had to make the decision. The president stood up and he made the decision. I think he made the very right -- right call.

BLITZER: He's getting some negative reaction from the leadership in the Senate and the House.

The Republican leader in the Senate, Mitch McConnell: "I have strong objections to the Troubled Asset Relief Program, TARP, funds for industry-specific bailouts, and I do not support this action."

That's the $700 billion that was supposed to be going to the financial sector.

And John Boehner, the Republican leader in the House: "By declining to take the responsible approach, Washington has failed both autoworkers and taxpayers. The use of TARP funds is also regrettable, the latest in a growing list of TARP money uses that were not discussed with or envisioned by Congress when the program was authorized."

GUTIERREZ: Obviously, I have a lot of respect for my fellow Republicans, but this is quite remarkable, because, you know, from the very beginning, the president said, we want to use 136 funds from the energy bill. That's why we went to Congress. We wanted Congress to help us.


BLITZER: It was legislation passed last year to make the car industry more green, if you will.

GUTIERREZ: That's right. So, use those funds that were already allocated...


BLITZER: Congress said no to that.

GUTIERREZ: Congress said no. They couldn't come through.

So, the buck stops with the president. And the president's decision is based on the judgment that, right now, in the middle of recession, to throw these companies into a default, to essentially put them in a state of collapse, would be very detrimental to the economy. He made a leadership decision. And, of course, you know, there will be some who always criticize it. But suppose that's the price of leadership. BLITZER: For the president, was this a tough decision to make? Because it -- I think he's -- he even said it goes against his instincts for the free market operating, and, if a company can't make it, you know what? That's the nature of capitalism.

GUTIERREZ: And he said, you know, if these were normal circumstances, and we weren't in the middle of recession, then you could say, well, look, the marketplace worked.

But the reality is, we are in the middle of a recession. Unemployment is rising. This is the wrong time to put the economy on this -- on this course, and -- and having some of the largest companies in the -- in the country collapse on us.

BLITZER: Well...

GUTIERREZ: So, that's the nature of the decision. That's why he made the call.

BLITZER: And let's hope, by March 31, there are some real changes there that will allow these -- these companies to survive.

GUTIERREZ: And the American people are watching, because now they have money in this. And -- and the -- the auto companies have to step up now.

BLITZER: Let me switch gears and talk about this Bernard Madoff scandal, supposedly $50 billion wiped out. This guy was involved, allegedly, in this huge Ponzi scheme.

And it raises questions, all of us wondering, how safe is our money out there?

GUTIERREZ: Well, this is -- I mean, it's been an amazing set of events.

We do have regulatory bodies. And...


BLITZER: But they were apparently asleep at the switch.

GUTIERREZ: And I know that Chairman Cox has talked about that we have got to look into this, because, apparently, since 1999, some of these allegations were surfacing.

But, you know, it goes back to -- if anyone ever promises you a guaranteed 10 percent or 12 percent, you should be a little bit suspicious. But I would hope that the SEC will look into this, that we will get some answers, and that, most importantly, that we will be able to prevent something like this in the future.

BLITZER: We better learn some lessons, because there are a lot of, not only individuals, but a lot of charities that have simply been wiped out as a result of this. GUTIERREZ: Yes. Yes. It's a big shame. It's just incredible, to think that can happen. But let's get on with it and let's find out what happened.

BLITZER: Mr. Secretary, good luck. Thanks for coming in.

GUTIERREZ: Pleasure. Always a pleasure. Thank you, sir.


BLITZER: President Bush just gave the auto industry a lifeline. That's our top story.

You have been watching it, understanding it. Michigan's Democratic governor is applauding this president for doing it. I will speak about that. Governor Jennifer Granholm of Michigan will talk about the bailout and something she calls a lot of bunk.

And Howard Dean's exit as the Democratic National Committee chairman -- should he be getting more credit for the party's victories on Election Day? Stand by for our "Strategy Session."

And the Minnesota Senate recount is serious business, indeed, but not entirely.


UNIDENTIFIED FEMALE: As long as you don't do a write-in, you can be goofy. I think it's a vote for Franken.




BLITZER: The political drama unfolding in the last election race to be decided this year taking on a new twist today.

It's the race between Republican incumbent Senator Norm Coleman and the Democratic challenger, Al Franken.

CNN's Mary Snow has been covering this story for us.

Mary, you were out in Minnesota not that long ago.

Who would have thought? It's now approaching the end of December. We still do not know a winner.

MARY SNOW, CNN CORRESPONDENT: So many twists and turns, Wolf.

And Al Franken has taken the lead now, for the first time in this race. The latest count shows him with an edge over rival Norm Coleman by more than 250 votes. Now, we should stress this is an unofficial tally. And this is being posted on "The Minnesota Star-Tribune"'s Web site that's keeping tabs of this race. But this race is by no means over.


SNOW (voice-over): It's a nail-biter in slow motion. Former "Saturday Night Live" comedian Al Franken now leads Republican Senator Norm Coleman in an unofficial count in the Minnesota Senate race.

But, one month after a recount began in a contest that was too close to call, the maze of legal battles continues. The latest turn? The Coleman campaign wants the Minnesota Supreme Court to wade into the recount, saying there are ballots being double-counted.

UNIDENTIFIED MALE: We now have a situation in perhaps a dozen precincts where we have significant numbers of votes that are going to be counted twice.

SNOW: The Franken team disputes that.

UNIDENTIFIED MALE: There is a systemic effort by the Coleman to prevent all the votes from being counted, for one reason and one reason only, which is that they know that they are behind and that, if all the votes are counted, they will lose this election.

SNOW: But there are wild cards. Roughly 4,000 ballots were in a pile of challenges, but now they have been withdrawn. And then there's still a fight over roughly 1,600 rejected absentee ballots. One political observer says, the race is far from over.

UNIDENTIFIED MALE: I think there's a chance the cherry blossoms in Washington will be blooming before we have a senator out of Minnesota.

SNOW: Minnesota Governor Tim Pawlenty says he's looking into the possibility of appointing a temporary senator if the race isn't resolved by the start of the new Senate session in January. Pawlenty says he doesn't think it will come to that

But political observer Larry Jacobs (ph) expects legal fights to stretch out the contest.

UNIDENTIFIED MALE: Lots of twists and turns in Minnesota. It's quite possible that Senator Coleman will move back in the lead. So, stay tuned. Get your bucket of popcorn and get comfortable.


SNOW: And political science professor Larry Jacobs also says there's another potential thorny issue. And that is if the canvassing board in Minnesota declares a winner before legal issues are resolved -- Wolf.

BLITZER: What a mess up there.

All right, we will watch it, together with you, Mary, every step of the way. The Minnesota Senate recount is no laughing matter at all. In the course of tallying all those ballots, there were, though, some lighter moments, and they were captured on video.

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

Abbi, what are we seeing?

ABBI TATTON, CNN INTERNET REPORTER: Wolf, what do the flying spaghetti monster, Brett Favre, and lizard people all have in common? Well, if you have been following the Minnesota recount, you will know that they all appeared as write-in candidates on Minnesota ballots, which has led to some rather bizarre moments in the review that has been going on this week.

Here, a panel of experts, judges, lawyers, discussing whether lizard people could actually be a real person.


UNIDENTIFIED MALE: My argument would be that "Lizard People" -- "Lizard People" is not a genuine write-in. In other words, it's not a person.


UNIDENTIFIED MALE: It, therefore, shouldn't be considered under that rule.

UNIDENTIFIED MALE: Do we know that for sure?

UNIDENTIFIED MALE: If it said Moon Unit Zappa, would you say, oh, no...


UNIDENTIFIED MALE: ... there is no such person as Moon Unit Zappa?

Thank you.

UNIDENTIFIED MALE: Actually, I would say that that would be permissible.

UNIDENTIFIED MALE: Well, but you don't know that there's not someone named "Lizard People."




TATTON: Five minutes later, five minutes of discussion after this was happening, they finally came to the conclusion that this ballot that was for Franken should actually be thrown out and -- and ruled unpermissible.

But, a few minutes later, Franken did make it up, because a person who appeared to be trying to vote for "Al Frankenstein" was allowed -- Wolf.


BLITZER: Wow. All right, thanks to Abbi very much.

Let's take a look at the closest Senate race ever, ever. In New Hampshire's 1975 general election, Republican Louis Wyman beat Democrat John Durkin by 355 votes on Election Day. That sparked two recounts, in the first, the result flipped, the Democrat winning by 10 votes.

Another flip after the second recount, the Republican winning by two votes. The Senate stepped in, but, after maneuverings, even it deadlocked. The candidates agreed to a new election, and, almost a year after the first vote, the Democrat won by 27,000 votes.


Coming up in our "Strategy Session": President-elect Barack Obama vows to end business as usual here in Washington.


OBAMA: We want it spent on projects that are there not because of politics, but because they're good for the American people.


BLITZER: But how realistic is that goal? Donna Brazile and John Feehery, they are standing by live.

And Deep Throat, the man who changed American history, we're taking a closer look at how Mark Felt changed the world of journalist as well.

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


BLITZER: It's fair to say that the president-elect, Barack Obama, will be inheriting an economy in shambles right now. And one of the ways to try to fix it, he says, is to adopt a policy many American families already use in their own households: Spend money only on things we need.

But is that realistic for the federal government?

Joining us now in our "Strategy Session," our CNN political contributor the Democratic strategist Donna Brazile, and Republican strategist John Feehery.

I will let the president-elect put it in his own words, Donna. Listen to this.


OBAMA: Myself and others on the economic team are going to be changing how business is done in Washington. Every dollar that we spend, we want it spent on projects that are there not because of politics, but because they're good for the American people. You know, if we're building a road, it better not be a road to nowhere.


BLITZER: All right, easier said than done, though, given the nature of politics in Washington.

DONNA BRAZILE, CNN POLITICAL ANALYST: Yes, but you can't spend what you don't have, and you shouldn't buy what you can't afford. And, clearly, the president-elect understands that you should not throw good money after bad projects.

So, I'm sure someone is combing through all of these projects to say, OK, this one looks good; this one, well, let's leave on the drawing table.

BLITZER: But -- but, you know, you worked in Congress for a long time, John. You know -- you know there are a lot of political constituencies out there with enormous clout.

JOHN FEEHERY, REPUBLICAN STRATEGIST: It's awfully hard to change the patterns of Congress.

He's going to have to do two things. He's going to have to work with Republicans, like John McCain and John Boehner, who are the original pork-busters, to try to identify that pork he doesn't want. And then he's going to have to veto some bills, which is extraordinarily difficult to do, when it's your own party.

You know, a lot of these things are deals that are cut all -- all along. And, if he wants to actually change the way spending is done, he's going to have to get in the process early and identify it, and then veto some bills early.

BLITZER: Because one member's pork is another member's, you know, absolutely vital issue.

BRAZILE: But we shouldn't take issue with the fact that we need to do something about education, health care, climate change. That will cost money. That's an investment. That's not pork.

And I think President-elect Obama knows the difference between the two.

BLITZER: And he's also talking about a huge economic stimulus package, you know, not $60 billion or $100 or $600 -- maybe $800 billion -- some saying it could be a trillion dollars, at a time when the deficit this year could already be a trillion dollars.

FEEHERY: Yes, I think he's trying to shock the economy back in.

But some economists, even Democratic economists, say that's too much money. We should only do $400 billion to begin with, not $700 billion, $800 billion, $900 billion.

You know, he's got to spend the money very wisely. Too much overspending is something that our grandchildren will pay down the line. And they -- we need to be very careful on this budget.

BLITZER: Because everybody is asking, where is this money coming from...


BLITZER: ... given the deficits and the national -- the national debt that we already have?

BRAZILE: You know, there's a big money tree behind the White House. We just haven't seen it over the last eight years.


BRAZILE: And I think he will just shake it down, and we will just pay for all these projects.

No, but the truth is, is I think President-elect Obama needs to get in there, see the size and scope of the problem, and the stimulus package should really fit the size of the problem.

BLITZER: Yes, he doesn't want to wait until he's actually sworn in. He wants the new Congress in early January to start moving this -- this issue as quickly as possible.

BRAZILE: Nancy Pelosi can use her political capital, and then Barack Obama can come in there and say, I signed the bill.

FEEHERY: And the appropriations committees are already working on a package. And I know that it goes beyond the Appropriations Committee. But they're already starting to pre-conference a big package. So, that's going to be interesting, to see how that works out.

BLITZER: A lot of Democrats will agree -- and I'm sure you will agree -- that Howard Dean, former governor from Vermont, once ran for president, he was the chairman of the DNC -- he's leaving right now -- that he's not getting the kudos, and certainly not getting, at least so far, a job in the incoming administration, that maybe he deserved.

BRAZILE: I don't know if Howard Dean is looking for a job. After all, he's a doctor. They make house calls.

But, you know, the one thing we do know about Howard Dean is that he's an unsung hero of the Democratic Party. For two straight elections, he has carried the Democrats to victory, along with others, of course. But, Howard Dean, there's no question. He's been, as one writer put it today, a prophet. But, more than that, he's been a street fighter for justice and equality.

BLITZER: I will read from Ari Berman's article in the "Nation" magazine entitled "The Prophet." You read it before.

"Obama's extraordinary campaign and Bush's remarkable mishandling of the country's domestic and foreign policies deserve much of the credit for the Democratic Party's resurgence, but so does Howard Dean. Before virtually any major politician, Dean not only sensed that the era of Republican ascendancy could be stopped, but also how to do it."

FEEHERY: Howard Dean might be a left-wing lunatic, but, at the same token, he was a really good DNC chairman.

And what he did is, his first presidential candidacy was extraordinarily important, because it showed Barack Obama the way to use the Internet, which really helped Barack Obama become an extraordinary candidate.


FEEHERY: And the second thing he did is, he developed a 50-state strategy, which meant, I think, Republicans had to compete all over the place. And I think that Republicans are going to learn a lot from both of these tactics. And I hope they do.

BRAZILE: There's nothing nutty about Howard Dean. He has actually been a good chairman of the Democratic Party.


BRAZILE: I know that.


BLITZER: He didn't really mean to say he was a left-wing lunatic.

Is that what you said?


FEEHERY: He might be.


BRAZILE: In this era of bipartisanship, where we're extending prayers to others that we disagree with, I want to make sure that we're...


BRAZILE: ... giving some kumbaya, some love here.


(LAUGHTER) FEEHERY: Yes, absolutely.

BRAZILE: But, no, I fully support Howard Dean.

BLITZER: There were plenty of Democrats who thought that 50- state strategy that Howard Dean wanted to invest hard-earned money on was stupid and ridiculous. Maybe they thought he was a lunatic.

BRAZILE: No, but you ask the people in Oklahoma, and you ask the people in Nebraska, and you ask the people across the country if this was a winning strategy, they will tell you, yes, because, for the first time, we saw Democrats campaign in all 50 states, and we saw Democrats being elected to Congress...

FEEHERY: Well, one of the guys he clashed with was Rahm Emanuel, so that might explain why he's probably -- if he does get an ambassadorship, it's going to be somewhere far, far away.

I think Howard Dean deserves a lot more credit than he's getting for the strategy.

BLITZER: Should he be getting a job, do you think? Should he be rewarded for his tenure as the DNC chairman?

BRAZILE: Well, look, Howard Dean and many, many others, I'm sure, are still on someone's short list, but we will see what happens once President-elect Obama continues to fill out all of these wonderful positions.

BLITZER: Maybe he will go back to Vermont and become a doctor again. You know, there's a shortage of doctors.


BRAZILE: He makes house calls, Wolf. He can come on this show anytime.


BLITZER: His wife is a doctor, too.


BLITZER: All right, guys, thanks for coming in.

BRAZILE: Thank you.

FEEHERY: Thank you.

BLITZER: For much of his life, he kept his identity a secret. Just ahead, the passing of a man known as Deep Throat and how he really felt about the secrets he revealed in the Watergate scandal.

And Caroline Kennedy says she is committed to public service, but why didn't she cast her own votes in several recent elections?

And why incoming first lady Michelle Obama is being compared to Jacqueline Kennedy.

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


BLITZER: One of the most shadowy and significant figures in modern American politics has died, his code name, Deep Throat, his real name, Mark Felt, a former FBI official who leaked Watergate secrets to "The Washington Post" and helped bring down the Nixon presidency. Felt died yesterday, just a few years after revealing the secret he kept for three decades.

Let's go to Howard Kurtz of CNN's "RELIABLE SOURCES" -- Howie.


HOWARD KURTZ, CNN CONTRIBUTOR: Wolf, he was a 59-year-old man who became a footnote to history, but Mark Felt changed the nature of politics and journalism.

(voice-over): It was three years ago that we learned the former FBI official had spilled the Watergate secrets that helped sink the Nixon presidency.


ROBERT REDFORD, ACTOR: The money is the key to whatever this is.





KURTZ: In scenes immortalized by the film "All the President's Men," Felt confirmed information for a young "Washington Post" reporter named Bob Woodward, helping Woodward and his partner, Carl Bernstein, crack the scandal.


BOB WOODWARD, "THE WASHINGTON POST": We were, Carl and I, and Ben Bradlee, and -- and "The Washington Post" were and are committed to protecting confidential sources. They are our lifeline, so we can get to a better version of the truth.


KURTZ: Bernstein talked about Felt's death on Friday.

CARL BERNSTEIN, CNN CONTRIBUTOR: I think had he mixed feelings about his identity being revealed. You know, he had mixed feelings about what he did. But he knew it was the right thing.


UNIDENTIFIED ACTOR: Bernstein got another source. The guy (INAUDIBLE) confirmed.


KURTZ: The portrayals by Robert Redford and Dustin Hoffman sent a generation of starry-eyed students to journalism school. Scandal reporting was in. The press became more adversarial, perhaps too prosecutorial, some critics say. Minor allegations became a gate, Travelgate, and Filegate, during the Clinton administration.

Government officials and political operatives realized they could shape the news by leaking. One adviser to President Bush called John Edwards a Breck Girl, and "The New York Times" published it.

But protecting anonymous sources carried a price, as "Times" reporter Judith Miller learned when she was jailed for 85 days refusing to reveal that White House aide Scooter Libby had told her about undercover CIA operative Valerie Plame. Miller wound up testifying anyway.

National security leaks remain the most controversial. Bush denounced "The Times" revealing the administration's secret eavesdropping program.

Former Justice Department official Thomas Tamm told "Newsweek" this week that he was the secret source.

Mark Felt was in poor health when "Vanity Fair" outed him as Throat three years ago, but he defended himself against those who questioned his motives.

MARK FELT, "DEEP THROAT": I'm proud of everything Deep Throat did. Yes, I'm -- I like being related to him.

KURTZ (on camera): Unnamed sources who have their own agendas are often overused by the media these days, but sometimes there's no other way to get a story than by meeting someone in a parking garage -- Wolf.


BLITZER: All right, Howie, thank you.

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

Happening now, breaking news: fighting words from the embattled Illinois governor, defiant, and giving no ground in his most detailed statement yet of the scandal threatening to bring him down.

Also, President Bush tosses Detroit a $13 billion lifeline, but will automakers squander it by repeating past mistakes? I will speak about that and more with the Michigan governor, Jennifer Granholm.

And Russian warships only miles from U.S. shores -- what's behind Moscow's show of force in Cuba?

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